Economy

Top economies yield to US, drop no-protectionism pledge

Top economies yield to US, drop no-protectionism pledge

Top finance officials including new U.S. Treasury Secretary Steven Mnuchin are debating what stance to take on free trade at a meeting that will help set the tone for the global economy.

Treasury Secretary Steven Mnuchin and Federal Reserve Chair Janet Yellen represented the U.S.in two days of meetings with their counterparts from the world's 20 largest economies in Baden-Baden, Germany.

Asked about climate change funding, Mick Mulvaney, Trump's budget director, said on Thursday: "We consider that to be a waste of money."The G20 did, however, show continuity in its foreign exchange policies, using past phrases on currency markets."We reaffirm our previous exchange rate commitments, including that we will refrain from competitive devaluations and we will not target our exchange rates for competitive purposes", the G20 said.Leaders also upheld their commitments to financial sector regulation, supporting the finalisation of bank rules known as Basel III, provided they do not significantly raise overall capital requirements".

He said, without providing specifics, that some US trade agreements need to be re-examined, while adding that, "It is not our desire to get into trade wars".

Speaking about the viewpoint of the US, Canada's finance minister Bill Morneau said "My view is that the Americans were doing what any new administration would do - they were looking at the language through their lens".

Donald Trump has said his "America First" mantra will be key to the United States approach to trade.

The Association of German Chambers of Commerce and Industry (DIHK) said the token reference to trade was a serious setback for the multilateral trade order.

U.S. President Donald Trump's administration says it wants to make global trade rules fairer, raising concerns among exporting nations like Germany.

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Chinese Finance Minister Xiao Jie said his country would "unswervingly oppose trade protectionism". But attempts to include such language did not find agreement.

Some advocates, like the International Monetary Fund, readily concede that the benefits of free trade have been uneven across societies, as less skilled workers lose out and the better trained prosper.

The combined efforts of Germany, and nascent free-trade champions China, it was thought, would temper some of Washington's threats of imposing punishing border tariffs and renegotiating long-standing trade agreements. Proponents say technological advances, such as automation that replaces workers with robots, are more to blame for the loss of jobs in such sectors.

He has also started the process to renegotiate the North American Free Trade Agreement with Mexico and Canada.

The G20 meeting of world finance ministers has failed to agree a common position on world trade and climate change.

"The lack of a rejection of protectionism is a clear breach of tradition. But it is not very clear what (protectionism) means to each (minister)".

The Group of 20 is comprised of 19 countries plus the European Union.

The finance ministers' meeting will pave the way for a summit of national leaders in Hamburg, Germany, on July 7 and 8. Its decisions don't have the same force as an worldwide treaty but simply depend on individual countries' promises to follow through on them.