IMF bins pledge to fight protectionism
The world body has chosen to remain silent on a key issue
washington — International Monetary Fund members on Saturday dropped a pledge to fight protectionism amid a split over trade policy and turned their attention to another looming threat to global economic integration: the first round of France’s presidential election.
Concerns that far-right leader Marine Le Pen and far-left rival Jean-Luc Mélenchon, both critics of the European Union, could top the field in Sunday’s vote added to nervousness over US trade policy at the IMF and World Bank spring meetings.
“There was a clear recognition in the room that we have probably moved from high financial and economic risks to more geopolitical risks,” IMF managing director Christine Lagarde told a news conference. Lagarde, a former French finance minister who has warned that a Le Pen presidency could lead to political and economic upheaval, added that a policy shift from “growth momentum to more sharing and inclusive growth” was now needed.
A communique from the IMF’s steering committee on Saturday dropped an anti-protectionism pledge, adopting language from the Group of 20 nations that the Trump administration sought last month in Germany as it develops a strategy to slash US trade deficits.
Earlier in the week, the IMF had warned that protectionist policies that restrict trade could choke off improving global growth.
Instead, the International Monetary
There was a clear recognition in the room that we have probably moved from high financial and economic risks to more geopolitical risks Christine Lagarde, IMF managing director
and Financial Committee (IMFC) statement pledged that members would “work together” to reduce global trade and current account imbalances “through appropriate policies.”
Mexican central bank chief Agustin Carstens, the IMFC chairman, said most countries have some trade restrictions and that protectionism was an “ambiguous” term.
“Instead of dwelling on what that concept means, we managed to put it in a more positive, more constructive framework,” Carstens told a news conference.
Some officials chose to focus on the brightening global economy instead of the risks posed by the French election, new US trade barriers and Britain’s decision to leave the European Union, said James Boughton, a former IMF official.
“There’s an awful lot of forced optimism about what these people are saying,” said Boughton, who is now with the Centre for International Governance Innovation, a Canadian think-tank. — Reuters
frankfurt — Donald Trump’s America First doesn’t necessarily leave the global economy last.
After three months of agonising by policy makers over what the US president’s combative policy stance would mean for trade and economic stability in the rest of the world, Treasury Secretary Steven Mnuchin is now sending a reassuring message to his counterparts: What works for us can help you too.
“Sustained US economic growth is good for global growth,” Mnuchin said on Saturday during a discussion with International Monetary Fund Managing Director Christine Lagarde in Washington. “If we can grow the US economy, that’s not just good for the US worker, that’s good for international growth and it creates opportunities. So that’s what we’re focused on, and if we do a good job, that can carry over in the spillover.”
That’s a new tone for an administration which has pledged to rebalance global commerce in its favour, repatriate American manufacturing jobs and right the wrongs it sees as emanating from the current World Trade Organisation-centered system. And facing political risks to business confidence and output in Europe and Asia, global finance chiefs attending the IMF and World Bank spring meetings in Washington this week were ready to smooth over conflicts with the leaders of the world’s largest economy.
“Everybody is in line that we need free and fair trade,” Mexican central bank governor Agustin Carstens said in Washington on Saturday. He echoed Italian Finance Minister Pier Carlo Padoan, who put differences over trade barriers that just a month ago stymied a Group of 20 meeting in Germany down to a matter of linguistics.
The IMF’s steering committee adopted the position on trade taken by the G20 last month in an effort to accommodate the US, which is considering how far to go in fulfilling the president’s campaign pledges to impose tariffs and reshape international accords. That meant that a previous commitment to avoid “all forms of protectionism” was excised from the group’s common statement. Still, that doesn’t mean America and the rest of the world are on a collision course, according to Padoan.
“I can assure everybody that at the meetings we had these past days, the general mood is that there is no way protectionism should increase, and this attitude may be with different nuances in the language shared by all members,” he said at a press briefing.
Mnuchin channeled Trump’s intentions on trade, and joked about
If we can grow the US economy, that’s not just good for the US worker, that’s good for international growth and it creates opportunities. So that’s what we’re focused on, and if we do a good job, that can carry over in the spillover Steven Mnuchin, US Treasury Secretary
the number of bilateral meetings he’s had in the two international policy meetings he’s attended since taking office.
“The president believes in reciprocal trade deals, and reciprocal free trade,” he said. “If our markets are open, there should be a reciprocal nature to other people’s markets.”
Mnuchin’s first foray into global policy making last month in BadenBaden, Germany, was marked by an inability to agree on trade language. Now, he said, he feels “much more comfortable” in his new role.
Still, while delegates at the IMF expressed less concern about the Trump administration’s intentions, a few said there’s still no clear direction. A mooted borderadjustment tax that raised greatest alarm among global partners hasn’t been fleshed out yet, and a probe into steel imports announced this week could yet raise tensions with China, the world’s biggest producer of the metal.
“I don’t think it’s clear to anyone at this point” what trade policies Trump will pursue, Philippine central bank governor Amando Tetangco said. France’s Michel Sapin also pleaded for more clarity.
“We’re hoping they’ll move in a rational manner from slogans to arguments and from arguments to decisions that will allow us to see where the American government wants to go,” he said. — Bloomberg