G-7 Echoes Watered-Down Trade Language as Mnuchin Holds Firm

  • Communique echos statement from March G-20 in Baden-Baden
  • Finance ministers, central bankers met in Bari, Italy

Group of Seven finance chiefs signed up to a pared-down pledge on global trade as the presence of Donald Trump’s administration of the world stage continued to challenge prevailing economic doctrine.

The G-7 nations, meeting in Bari, southern Italy, said in a statement that they are “working to strengthen the contribution of trade to our economies” -- a repetition of the language used at the Group-of-20 gathering in March that fell short of an explicit promise to avoid protectionism. While trade was not specifically on the agenda, its presence loomed large as U.S. Treasury Secretary Steven Mnuchin came under pressure to engage on the matter.

“People are much more comfortable today now that they’ve had the opportunity to spend time with me and listen to the president and listen to the economic message on what the economic agenda is, and that’s about creating growth in the United States,” Mnuchin told reporters after the meeting. “We don’t want to be protectionist but we reserve our right to be protectionist to the extent that we believe trade is not free and fair.”

The finance chiefs did agree that while global growth was gaining momentum, it remains moderate with risks tilted to the downside. Monetary policy should continue to support the economy, they said, while recognizing the world faces a prolonged period of modest growth and rising inequality. The group also reaffirmed a commitment to avoid competitive currency devaluations.

For a QuickTake Explainer on free trade, click here.

The U.S. Treasury Secretary’s first G-7 outing came in the wake of an announcement a deal to boost the country’s exports of gas and beef to China. The meeting saw his French and German counterparts attempt to draw him toward the previous consensus of free trade, according to France’s Michel Sapin. That follows two G-20 gatherings where Mnuchin refused to sign up to an well established explicit shunning of protectionism, and pressed for trade to be “fair” and “reciprocal.”

“It is important, protectionism is off the table, I think that there was no disagreement over the fact that trade promotes growth, and has to be inclusive,” Italian Finance Minister Pier Carlo Padoan told Bloomberg Television. “So I am very satisfied. Of course we need to make steps forward, there are different views across the G-7 and the G-20 for that, but I am confident, we can reach common views.”

The U.S.’s deal to boost exports of gas and beef to China -- agreed on Friday -- also gives an indication on how the world’s biggest economy may progress going forward, according to German Finance Minister Wolfgang Schaeuble told reporters.

“The U.S. has just concluded an agreement with China,” Schaeuble said. “I am quite confident that the development will continue, that the U.S. administration will engage more strongly in this process.”

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