Draft com­mu­nique shows it only prom­ises ‘open and fair in­ter­na­tional trad­ing sys­tem’

New Straits Times - - Business -

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 Group of 20 ma­jor de­vel­oped and de­vel­op­ing economies will meet next Fri­day and Satur­day in the Ger­man town of Baden-Baden to dis­cuss the world econ­omy.

It will be the first meet­ing of G20 fi­nance min­is­ters at­tended by rep­re­sen­ta­tives of the ad­min­is­tra­tion of United States Pres­i­dent Don­ald Trump, who has more pro­tec­tion­ist pol­icy views on trade.

The draft com­mu­nique seen by Reuters, which may change be­fore next Satur­day, ap­pears to ac­com­mo­date the US po­si­tion.

The draft, dated March 1, drops the phrase adopted by G20 fi­nance min­is­ters last year to “re­sist all forms of pro­tec­tion­ism”.

A warn­ing against pro­tec­tion­ism has ap­peared in G20 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 G20 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”.

G20 com­mu­niques last year be­gan in­clud­ing a phrase that was part of Group of 7 lan­guage for years: “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 from the draft.

Ja­panese pol­i­cy­mak­ers would not con­firm if the lan­guage on cur­ren­cies will change but said any mod­i­fi­ca­tion wouldn’t mark a de­par­ture from the G20’s stance on ex­change rates.

“Cur­ren­cies are im­por­tant, but it’s too early for me to say any more”, said a govern­ment of­fi­cial.

Ja­pan, as well as some other Asian G20 mem­bers, fret more about Wash­ing­ton’s pro­tec­tion­ist rhetoric and its im­pact on the G20 de­bate.

“Pro­tec­tion­ism has be­come the new tsunami and we all have to en­deav­our to pro­tect our­selves from it,” said an In­dian govern­ment of­fi­cial who deals with G20 ne­go­ti­a­tions.

“We will main­tain an open and fair in­ter­na­tional trad­ing sys­tem” and “We reaf­firm our pre­vi­ous ex­change rate com­mit­ments.”

G20 draft com­mu­nique

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