Tags: g20 | draft | Protectionism | Devaluations

G-20 Draft No Longer Rejects Protectionism or Competitive Devaluations

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Tuesday, 07 Mar 2017 12:49 PM

The world's financial leaders may no longer explicitly reject protectionism or competitive currency devaluations, a draft communique of their meeting next week showed, promising only to keep an "open and fair international trading system."

Finance ministers and central bank heads from the world's 20 developed and developing economies will meet on March 17-18 in the German town of Baden Baden to discuss the world economy.

It will be the first meeting of G-20 finance ministers attended by representatives of the administration of U.S. President Donald Trump, who has more protectionist policy views on trade.

The draft communique seen by Reuters, which may still change before March 18, appears to accommodate the new U.S. position.

The draft drops the phrase adopted by G-20 finance ministers last year to "resist all forms of protectionism". A warning against protectionism has appeared in G-20 communiques for more than a decade.

"The lack of any reference to protectionism in the draft is strange," said one official close to the preparations for the meeting. "Maybe it is a minimum that everybody could agree on."

The draft also no longer contains the sentence, used in previous statements, that the G-20 should "refrain from competitive devaluations" and should not "target our exchange rates for competitive purposes."

Instead, it says: "We will maintain an open and fair international trading system" and "We reaffirm our previous exchange rate commitments."

For years, previous G-20 communiques included a phrase that "excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will consult closely on exchange markets."

This sentence is now also missing.

Trump's trade adviser Peter Navarro said on Monday the $65 billion U.S. trade deficit with Germany, which holds the G-20 presidency this year, was "one of the most difficult" trade issues. Bilateral discussions were needed to reduce it outside of European Union restrictions, he said.

Navarro's comments followed his complaints last month that Germany was exploiting a weak euro to gain a trade advantage -- an accusation rejected by Berlin since the euro exchange rate is set by markets, mainly in reaction to the monetary policy of the independent European Central Bank.

Trump has threatened German car companies with a border tax of 35 percent on vehicles imported to the United States, arguing that would make them create more jobs on American soil.

His protectionist views have alarmed German politicians and managers because Europe's biggest economy gets nearly half its economic output from exports. The United States is Germany's most important single trading partner, taking nearly 10 percent of its exports. 

© 2017 Thomson/Reuters. All rights reserved.

   
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The world s financial leaders may no longer explicitly reject protectionism or competitive currency devaluations, a draft communique of their meeting next week showed, promising only to keep an open and fair international trading system. Finance ministers and central bank...
g20, draft, Protectionism, Devaluations
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2017-49-07
Tuesday, 07 Mar 2017 12:49 PM
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