G7 to fight inequality, divided on Trump
BARI: Group of Seven (G7) finance chiefs on Saturday pledged to combat the issue of inequality as part of an effort to ensure inclusive growth, but made no reference to “protectionism” in an apparent division over US President Donald Trump’s stance on trade.
In a communique issued after their twoday meeting in Bari, Italy, the G7 called cyberattacks “a growing threat” for the world economy and vowed to take measures in the wake of a global cyberattack Friday that infected tens of thousands of computers in nearly 100 countries.
While noting “global recovery is gaining momentum”, the communique said the world economy is facing “high and rising inequalities, notably within many countries and affecting in particular middle and lower income earners”.
“Excessive inequality, also at the global level, undermines confidence and limits future growth potential,” it said, vowing to use all policy tools — monetary, fiscal and structural — individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth”.
The finance ministers and central bank governors from the UK, Canada, France, Germany, Italy, Japan and the US left trade off the agenda at the Bari talks, apparently due to a gap among the members over Mr Trump’s “America First” trade policy.
Under pressure from the Trump administration, finance chiefs from the Group of 20 major economies -- which include all the G7 nations -- dropped their traditional pledge to “resist all forms of protectionism” from a communique issued after their meeting in March in Germany.
Highlighting the gap between the Trump administration and other countries, U.S. Treasury Secretary Steven Mnuchin said on Saturday that the US reserves the right to be protectionist on trade.
“We don’t want to be protectionist, but we reserve our right to be protectionist to the extent that we believe trade is not free and fair,” Mr Mnuchin said at a news conference after the Bari meeting.
Despite Mr Mnuchin’s remarks, Japanese Finance Minister Taro Aso expressed hope that the G7 leaders, including Mr Trump, will narrow the group’s gap on trade when they gather again in Taormina, Sicily, on May 26-27.
Recalling his discussions with Mr Mnuchin and other G7 counterparts, Mr Aso said he thinks Mnuchin “has mostly erased concern that [the new US administration] may transform free trade into protectionism”.
Mr Aso told reporters that he has come to see that Mr Trump’s trade policy — widely viewed as protectionist — is no different from previous administrations in favor of free trade.
Shelving differing views on protectionism, the G7 finance chiefs showed unity on the fight against inequality, which — together with populist anger at trade, globalisation and job losses — fuelled Mr Trump’s ascent to the US presidency, played a role in the UK’s decision to exit the European Union, and propelled an anti-globalism candidate into the French presidential runoff vote earlier this month. Affirming the group’s determination to strengthen the financial system against cyberattacks, the G7 directed government institutions to join hands with the private sector to strengthen sharing of cybersecurity information, according to the communique.
On currency, the G7 finance chiefs underscored their existing commitment to ensure orderly exchange rate movements and to refrain from competitive devaluations.
“We reiterate that excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability,” the communique said.
“We underscore the importance of all countries refraining from competitive devaluation.”