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G20 finance ministers to tackle trade war impact on global economy
BUENOS AIRES, July 20, 2018 (BSS/AFP) – Global trade conflicts triggered
by the protectionist policies of US President Donald Trump are set to
dominate this weekend’s meeting of Group of 20 finance ministers in Buenos
Aires.
US Treasury Secretary Steven Mnuchin is set to “respond to concerns on US
trade policies” in the meeting that groups finance ministers and central
bankers from the world’s 20 leading economies, including the European Union.
But International Monetary Fund chief Christine Lagarde has warned that
increasing trade restrictions pose “the greatest near-term threat” to the
world economy, despite projected growth of 3.9 percent through 2019.
She also warned Trump on Wednesday that “the US economy is especially
vulnerable” due to “retaliatory measures.”
IMF economists say that in a worst case scenario $430 billion, a half
point, could be cut off global GDP in 2020 if all tariff threats and
retaliation are implemented.
On the sidelines of the wider meetings, Group of Seven officials will also
hold a one-hour session to again discuss what the United States dubs “China’s
economic aggression.”
The future of the North American Free Trade Agreement is also expected to
come up in the main meeting, with high-stakes negotiations underway between
the United States, Mexico and Canada to revamp the pact.
But unlike June’s G7 summit in Quebec, where Trump pulled his support for
the joint communique, the Buenos Aires meeting is expected to produce a
common statement agreed by all, although perhaps one watered down on the
question of protectionism, at the US’s behest.
– ‘Tensions’ –
During the group’s first meeting of the year in Buenos Aires in March, the
ministers were at pains to agree on a statement that proffered the bland
acknowledgement that “economic and geopolitical tensions” threatened global
growth.
And that was before Trump launched a raft of measures targeting US
imports.
He imposed steep tariffs on steel and aluminum, angering allies such as
the EU, Canada and Mexico, and prompting swift retaliation.
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He also hit China with 25 percent duties on $34 billion in goods, with
another $16 billion on the way, and another $200 billion could be targeted as
soon as September.
Last weekend he upped the ante by describing the EU as a “foe” and
reiterating a previous claim that the bloc has “really taken advantage of us
on trade.”
But the gathering won’t exclusively focus on the United States, and its
current strained relations with much of the rest of the G20.
– ‘Delicate situation’ –
Minister will also tackle the economic crises threatening a number of
emerging markets — including host nation Argentina, which recently secured a
$50 billion IMF loan to try to stabilize its economy, after the peso plunged
35 percent between April and June.
“The situation facing certain emerging markets is more delicate with the
rise of the dollar and the question of capital flows,” a French source told
AFP.
As well as the dollar, rising oil prices and US interest rates has helped
fuel the capital flight from emerging economies such as Brazil and Argentina,
with investors taking out $14 billion between May and June.
Economist Rubens Barbosa, former Brazilian ambassador to Washington and
London, says Brazil will try to defend multilateralism in international trade
— notably as upheld by the World Trade Organization.
“In Buenos Aires, what will be on the table is protectionism and the
strengthening of the WTO from the point of view of emerging countries such as
Brazil,” he said.
Amidst such tensions, ministers will discuss the upsurge in debt amongst
the poorest countries in the world, but not everyone believes there is a
genuine resolve to do what’s best for others.
“If you analyze attentively the final communiques of these groups,
historically they only showed what was agreed upon,” Nicolas Albertoni, a
Uruguayan researcher at the University of Southern California, told AFP.
“Now, they also highlight what wasn’t agreed upon, which demonstrates a
rise in nationalism. Now, governments don’t consider reaching agreement a
success, but rather preventing it.”
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