WASHINGTON – The world’s major economies are united in their belief that free trade delivers healthy economic growth. But they also agree that more needs to be done for those left behind, and the new Trump administration is letting it be known that it intends to make sure that America’s trade deals are fair for U.S. workers.
German Finance Minister Wolfgang Schaeuble told reporters Friday that if more isn’t done “we will see more protectionism and countries retreating from globalization.”
Schaeuble spoke with reporters Friday at the conclusion of two days of talks among finance ministers and central bank presidents from the Group of 20 major world economies. Germany is chairing the G-20 this year.
The G-20 discussions were being held in conjunction with the spring meetings of the 189-nation International Monetary Fund and its sister lending organization, the World Bank, which are scheduled to conclude Saturday. Treasury Secretary Steven Mnuchin and Federal Reserve Chair Janet Yellen were representing the United States at the discussions.
In comments prepared for the IMF meeting, Mnuchin said the United States wanted to see the IMF “more robustly fulfil its surveillance mandate,” which includes monitoring the currency policies of IMF member nations to make sure they do not manipulate their currencies to gain trade advantages.
President Donald Trump has vowed to sharply reduce America’s huge trade deficits, which Trump says have cost the country millions of well-paying jobs.
“In our view, excessively large trade surpluses, like excessively large trade deficits, are not conducive to supporting a free and fair trading system,” Mnuchin said in his remarks to the IMF panel.
All of the talks this week have been dominated by concerns about growing anti-globalization sentiment represented by such events as Trump’s surprise election victory last November and the vote by Britain last summer to exit the European Union.
At his news conference, Schaeuble dodged questions about whether other countries expressed concerns during the G-20 meetings, which got underway with a dinner Thursday night, about Trump’s America First trade rhetoric.
Schaeuble stressed widespread agreement on the benefits of free trade.
The G-20 finance officials generally agreed with the assessment made by the IMF on Tuesday in its latest economic outlook — that global growth should pick up this year, helped by improving conditions in the United States and China, the world’s two biggest economies.
Schaeuble warned that economic policymakers needed “to prepare ourselves” for the end of easy money policy from the world’s central banks. “This will be challenging,” he said.
In the U.S., the Federal Reserve has raised short-term interest rates twice since December, is on target for more hikes this year and is weighing whether to begin selling part of its vast portfolio of bonds, a move that also could drive up rates.
Federal Reserve Vice Chairman Stanley Fischer said in a CNBC interview on the sidelines of the meetings that he had not seen anything yet to change the view that the Fed will raise rates two more times this year, but he said the actual rate hikes “are dependent on what happens to the economy.”
On when the Fed might begin reducing its massive $4.5 trillion balance sheet, Fischer noted that the minutes of the last meeting showed that central bank officials discussed making a decision on when to begin trimming assets by the end of the year. But he said no decision had been made yet on whether the reductions in bond holdings would start by December or just be announced.
Rising interest rates in the United States could drive up the dollar, hurt American exporters and squeeze foreign borrowers who took out loans they have to repay in the U.S. currency.
At a time of rising tensions over Syria and North Korea’s nuclear weapons program, Schaeuble said “the geopolitical risk is by far the (biggest) risk for stable economic development.”
In addition to the prospects of the global economy, finance officials also grappled with problems facing individual countries.
IMF managing director Christine Lagarde held what she described as “constructive discussions” with Greek Finance Minister Euclid Tsakalotos, but her statement gave no indication that the parties were close to a new agreement.
The IMF has refused to participate in a bailout of Greece until it is convinced that the troubled country can pay its debts over the long haul — something the IMF says will require debt relief from Greece’s eurozone creditors.
Bailout inspectors from the IMF and European Union institutions are expected to return to Athens next week to discuss Greece’s budget targets and whether the country needs to further cut pensions and make it easier for employers to fire workers.
The meetings in Washington attracted protesters. Anti-poverty activists said that the World Bank must expand its definition of poverty so more needy people around the world can be helped.
Terri Ford of the AIDS Healthcare Foundation said that 75 per cent of the world’s poor and the majority of people living with HIV/AIDS reside in countries which the World Bank currently classifies as some bracket of middle-income.