G7 chiefs warn US not to upset global growth

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IMF managing director Christine Lagarde leaves the G7 meeting in the southern Italian city of Bari. Reuters

BARI, Italy (Reuters) – Finance chiefs from many of the world’s leading rich nations pressed the United States on Saturday not to break a decades-long global consensus in areas such as trade and financial regulation criticised by US President Donald Trump.
Inequality, international tax rules and cyber security headed the official agenda for Group of Seven finance ministers and central bankers who kicked off a two-day meeting in the southern Italian port city of Bari.
But Mr Trump’s threats to end a multilateral approach to policies from trade to climate change dominated discussions inside the walls of a 12th century Norman castle.
“We need a strong United States to lead the global economy and global politics in a sustainable way,” said German Finance Minister Wolfgang Schaeuble when asked what his message for US Treasury Secretary Steven Mnuchin.
Later, French Finance Minister Michel Sapin said he and other ministers told Mr Mnuchin not to weaken global policies that had been put together painstakingly over years and had helped the world economy recover from the financial crisis that broke nearly a decade ago.
“It is unthinkable, and it will not happen, that one can destroy these collective achievements that give more stability and at the end of the day are truly in everyone’s interests,” said Mr Sapin, who is likely to lose his job soon following Emmanuel Macron’s election as president this month.
European Economic Affairs Commissioner Pierre Moscovici said he hoped Mr Trump would not abandon multilateralism and free trade. “We can discuss, we can have different appreciations, but we are in the same world and in the same boat,” he told reporters.
Several officials at the G7 raised concerns about risks to global growth from the Trump administration’s policy proposals, including tax reform, a senior US Treasury official said.
Mr Trump has vowed to revamp the US tax code with major cuts for businesses and ease business regulatory burdens.
At a meeting in March of the larger Group of 20 finance ministers in Germany, ministers dropped their traditional pledge to keep global free trade open, bowing to an increasingly protectionist United States.
Mr Mnuchin, who skipped the opening session in Bari where academics spoke on inequality and growth and arrived long after other ministers, told reporters he was “excited” about the emerging new US trade policy.
“I think you probably saw last night we made an announcement of a 100-day economic plan with the Chinese, so I think we are very happy with how we are proceeding on trade,” he said.
In their closing statement yesterday, the G7 used the same language on trade, currencies and monetary policy as the G20 did in March, an
Italian G7 official said.
The G20’s reference to trade said only that they were “working to strengthen the contribution of trade to our economies”.
The US president has already pulled out of the Trans Pacific Partnership and wants to re-negotiate the North American Free Trade Agreement.
Before the G7 meeting, several ministers and officials held an early-morning discussion of Greece’s long-running debt crisis to prepare for a May 22 meeting of euro zone finance ministers on the disbursement of new loans.
Greece’s creditors, including the European Central Bank and the International Monetary Fund, are in Bari. The IMF, which insists on debt relief for Athens, complained that the euro zone was still dragging its heels on the issue.
“There is not enough clarity yet,” said IMF chief Christine Lagarde after the working breakfast. “Our European partners need to be more specific in terms of debt relief, which is an imperative.”
But the priority for most officials in Bari was to get a sense of how far the Trump administration intended to go with its promises of reworking trade agreements, rules to prevent a repeat of the global financial crisis and other key areas.
Asked how pro-active the US delegation had been on the first day of the G7, France’s Mr Sapin said they had been “quite discreet in their presence”, and he appeared to take a swipe at Mr Trump’s frequent use of Twitter.
“You can express yourself with a tweet but you don’t debate things with a tweet and you don’t take decisions with a tweet. We have to do that in a more profound way and I think that is what is going on,” he said.

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