Global finance leaders are downplaying differences over free trade with US President Donald Trump, saying there is wide agreement that globalization delivers stronger economic growth.
Officials who gathered for the spring meetings of the World Bank and IMF warned repeatedly that too many people have been left behind at a time when low-wage competition and automation have reduced factory jobs in the world’s wealthy economies.
If more is not done “we will see more protectionism and countries retreating from globalization,” German Minister of Finance Wolfgang Schaeuble told reporters after a meeting of the finance ministers and central bankers of the G20, which Germany is chairing this year.
Schaeuble said there was “broad agreement” that “free trade is better for global growth.”
“There was a broad consensus [that] protectionism would be damaging to the global economy and the concerned economies as well,” he said.
The comments came a day after Trump ordered the US Department of Commerce to investigate whether steel imports posed a threat to US national security — a move that could lead to the US imposing tariffs on steel.
In addition, US Secretary of the Treasury Steven Mnuchin on Friday repeated a call for the IMF to police the currency markets and call out nations that undervalue their currencies to gain an unfair price advantage for their exporters.
At a meeting last month in Baden-Baden, Germany, the G20 dropped a pledge to oppose trade protectionism amid pushback from the Trump administration, which says trade policy needs to more clearly benefit US companies and workers.
At his news conference on Friday, Schaeuble dodged questions about whether other nations expressed concerns about Trump’s “America First” trade rhetoric during the G20 meetings.
The G20 finance officials generally agreed with the assessment made by the IMF on Tuesday in its latest economic outlook — that global growth should pick up this year, helped by improving conditions in the US and China, the world’s two biggest economies.
However, there are risks to the sunny outlook. Schaeuble warned that economic policymakers needed “to prepare ourselves” for the end of easy money policy from the world’s central banks.
In the US, the Federal Reserve has raised short-term interest rates twice since December last year, is on target for more hikes this year and is weighing whether to begin selling part of its vast portfolio of bonds, a move that also could drive up rates.
At a time of rising tensions over Syria and North Korea’s nuclear weapons program, Schaeuble also said “the geopolitical risk is by far the [biggest] risk for stable economic development.”
On the issue of regulation, Bundesbank President Jens Weidmann said there was consensus about continuing reforms agreed previously and there were few fears about the risk of seeing erosion of the regulations implemented in the wake of the 2008 global financial crisis.
The “debate about the regulatory ‘race to the bottom’ has disappeared” from G20 discussions, Weidmann said.
However, US actions contrasted with that statement as Trump on Friday signed an order directing Mnuchin to review the US financial regulations known as “Dodd-Frank” that were erected in the wake of the crisis.
Additional reporting by AFP
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