IMF Panel Drops Anti-Protectionist Pledge in Nod to Trump Viewby
Statement echoes trade language from G-20 meeting last month
Trump’s election continues to shake up economic consensus
Global policy makers dropped another pledge to resist protectionism on trade, as Donald Trump’s election win continues to shake up the consensus at gatherings of finance ministers and central bank governors.
A communique from the IMF’s steering committee, released Saturday in Washington, said that officials “are working to strengthen the contribution of trade to our economies.” Such language echoes a statement last month from Group of 20 nations reflecting the Trump administration’s call to rethink the global order for commerce. Like the G-20 communique, the committee’s statement omits a call from its last statement in October to “resist all forms of protectionism.”
The Trump administration has threatened to raise tariffs if partners don’t agree to renegotiate trade agreements and create fairer conditions for U.S. goods. Since the joint statements at gatherings such as the G-20 and the IMF require assent from members, the change in the U.S. position on trade from the Obama administration is forcing modifications in language that was previously uncontroversial.
In addition to the trade stance, the latest communique omits language from October that welcomed “the entry into force of the Paris Agreement on climate change.” Trump is contemplating whether to make good on his campaign promise to withdraw from the deal.
The panel, known as the International Monetary and Financial Committee, released the statement during the spring meetings of the International Monetary Fund and World Bank. The IMFC is the IMF’s top advisory panel, and is composed of 24 ministers and central bankers from nations including the U.S., China, Germany, Japan and France.
Some positions remained little changed. The IMFC statement reiterated pledges from October to “refrain from competitive devaluations” of currencies and to avoid targeting “our exchange rates for competitive purposes.”
The outlook for the world economy is sunnier than six months ago, with the statement saying that the “global economic recovery is gaining momentum, commodity prices have firmed up, and deflation risks are receding.” At the same time, “while the outlook is improving, growth is still modest and subject to heightened political and policy uncertainties.”
It’s not clear if the U.S. is winning anyone over with its trade stance. The differences in some countries’ positions on protectionism were evident in comments delivered by officials at the IMFC’s meeting.
Germany, holder of this year’s G-20 presidency, “commits to keep the global economy open, resist protectionism and keep global economic and financial cooperation on track,” Finance Minister Wolfgang Schaeuble said in his statement to the IMFC. “There is evidently a need to better communicate the benefits of trade and globalization.”
The IMFC comments from U.S. Treasury Secretary Steven Mnuchin, by comparison, don’t refer to resisting protectionism. Instead, Mnuchin said that “we will continue to promote an expansion of trade with those partners committed to market-based competition, while more rigorously defending ourselves against unfair trade practices.”
In addition, in language that could be seen as a jab at Germany -- which posted a record trade surplus last year -- Mnuchin said that “countries with large external surpluses and sound public finances have a particular responsibility for contributing to a more robust global economy.”