Trade ten­sions pose a risk to global growth – G20 min­is­ters

The Malta Business Weekly - - INTERNATIONAL -

The G20 group of fi­nance min­is­ters have said trade ten­sions could un­der­mine the global econ­omy.

They called for greater dialogue to re­duce the risk af­ter a tense, two-day meet­ing in Ar­gentina.

The sum­mit comes as the US ramped up trade ten­sions on Fri­day, say­ing it was ready to slap tar­iffs on all $500bn of im­ports from China.

France's fi­nance min­is­ter, mean­while, said the EU should not ne­go­ti­ate trade with "a gun to its head."

In a joint state­ment, the G20 min­is­ters said risks to growth "over the short and medium term have in­creased. These in­clude ris­ing fi­nan­cial vul­ner­a­bil­i­ties, height­ened trade and geopo­lit­i­cal ten­sions."

"In­ter­na­tional trade and in­vest­ment are im­por­tant en­gines of growth," they said, adding that they "recog­nise the need to step up dialogue and ac­tions to mit­i­gate risks and en­hance con­fi­dence."

The G20 sum­mit comes as a trade war has es­ca­lated in re­cent weeks af­ter the US opened fire on 6 July with tar­iffs on $34bn of Chi­nese goods.

The US has since listed an­other $200bn worth of Chi­nese prod­ucts to be tar­geted and has threat­ened tar­iffs on an even greater amount.

US Pres­i­dent Don­ald Trump also de­scribed the EU as a "foe" on trade last week.

French Fi­nance Min­is­ter Bruno Le Maire warned that a trade war was now a re­al­ity at the G20 sum­mit. He said the cur­rent US trade pol­icy of im­pos­ing uni­lat­eral tar­iffs was based on "the law of the jun­gle".

But US Trea­sury Sec­re­tary Steven Mnuchin de­fended the tar­iffs and urged the EU and China to open their mar­kets to al­low free com­pe­ti­tion.

The US has large trade deficits with both the 28-mem­ber EU and China.

Given the US buys nearly four times as much from China as it sells to them, an­a­lysts fear it could seek al­ter­na­tive ways to get back at the US.

The two-day sum­mit in Buenos Aires brought to­gether fi­nance min­is­ters and cen­tral bankers of the world's top 20 economies.

"World trade can­not base it­self on the law of the jun­gle and the uni­lat­eral in­crease of tar­iffs is the law of the jun­gle," Mr Le Maire said on Satur­day.

"The law of the fittest - this can­not be the fu­ture of global trade re­la­tions. The law of the jun­gle will only turn out losers, it will weaken growth, threaten the most frag­ile coun­tries and have dis­as­trous po­lit­i­cal con­se­quences."

He added that a trade war was now a re­al­ity, and that the EU could not con­sider ne­go­ti­at­ing a free trade deal with the US with­out Amer­ica first with­draw­ing its tar­iffs on steel and alu­minium. Mr Mnuchin said it was pretty sim­ple. "My mes­sage is pretty clear, it's the same mes­sage the pres­i­dent de­liv­ered at the G7 (last month in Canada): if Europe be­lieves in free trade, we're ready to sign a free trade agree­ment with no tar­iffs, no non-tariff bar­ri­ers and no subsidies. It has to be all three," he said.

Mr Mnuchin said China had to open its mar­kets "so we can com­pete fairly".

Lit­tle has caused Don­ald Trump more an­noy­ance than the trad­ing deficits be­tween the US and its ma­jor part­ners.

He be­lieves that if you have a trade deficit - if you im­port more than you ex­port - you are los­ing out.

Tack­ling what he has called "un­fair trad­ing prac­tices" has be­come a key plank of his ad­min­is­tra­tion.

The Euro­pean Union, China and the North Amer­i­can Free Trade Agree­ment coun­tries, Mex­ico and Canada, have been his main tar­gets.

Mr Trump has pulled out of the TransPa­cific Part­ner­ship trade deal and wants a rene­go­ti­ated Nafta deal.

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