Finance ministers and central bank leaders from the world's largest economies meeting in Argentina said Sunday (22.7.2018) that trade and geopolitical tensions represent an increasing risk to global growth and called for more dialogue, according to the final statement of the meeting.
The weekend event in Buenos Aires comes amid escalating rhetoric in the trade conflict between the United States and China, the world's two largest economies, which have so far imposed tariffs on $34.000 billion of each other's exports.
President Donald Trump on Friday threatened to impose tariffs on all $500.000 billion worth of Chinese exports to the United States.
Short and medium term risks
"Global economic growth remains robust and unemployment levels are at their lowest in a decade. However, growth has been less synchronized recently and short- and medium-term risks have increased," the statement said.
"These include the growing financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies," he said.
Importance of multilateral agreements
The ministers reaffirmed the conclusions of the G20 leaders at their most recent summit in July last year, when they stressed that the Trade is an engine for global growth and reaffirmed the importance of multilateral trade agreements.
"We recognize the need to intensify dialogue and actions to mitigate risks and strengthen trust. We are working to strengthen the contribution of trade to our economies," the statement said.
Trump angered his European allies by imposing tariffs of 25% on steel and 10% on aluminum, prompting the European Union to retaliate with similar tariffs on Harley-Davidson motorcycles, Kentucky bourbon and other products.
Trump, who frequently criticizes Europe's 10% tariffs on cars, is also considering adding a 25% levy on auto imports, which would hit both Europe and Japan hard.
"We listen to each other, I hope this is the start of something", said the European Union's Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, on the sidelines of the G20 meeting. "But the positions are not yet equal," he warned.
U.S. Treasury Secretary Steven Mnuchin has sought to use the Buenos Aires meeting to court Europe and Japan with offers of free trade deals as Washington tries to gain ground with its allies in its escalating tariff war with China.
However, French Finance Minister Bruno Le Maire rejected the invitation on Saturday, saying the United States must first remove its tariffs on Europe before any trade talks could begin.
But the European Council's representative at the G20, Hubert Fuchs, struck a more cautious tone on Sunday, saying that The removal of US tariffs was not a necessary precondition for starting trade talks and welcomed Mnuchin's position at the meeting.
"Even the US Treasury Secretary says he is in favour of fair and free trade, but the problem is that the US has a different understanding of 'fair and free trade'," Fuchs said.
Canadian Finance Minister Bill Morneau said that over the weekend Mnuchin had expressed his goal for all G7 member countries to "abandon all tariffs, non-tariff barriers and subsidies," which Morneau described as a "great idea" and an "aspirational goal" but one that he considered difficult to put into practice.
Final statement
The statement stressed the need for structural reforms to enhance the potential expansion of economies and reaffirmed the commitments made at the March meeting of G20 finance ministers to refrain from competitive devaluations that could have adverse effects on global financial stability.
He also noted that Emerging market economies are better prepared to adjust to external shocks but still face challenges from high market volatility and capital outflows.
The dollar fell the most in three weeks against a basket of six major currencies on Friday after Trump again complained about the strength of the U.S. currency and the Federal Reserve's interest rate hikes, ending a rally that had taken the dollar to its highest level in a year.
Source: Reuters
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