G-7 echoes watered-down G-20 trade language as Mnuchin holds firm

Group of Seven finance chiefs signed up to a pared-down pledge Saturday on global trade as the presence of U.S. President Donald Trump’s administration of the world stage continued to redefine the established economic order.

The G-7 nations, meeting in Bari, southern Italy, said in a statement that they are “working to strengthen the contribution of trade to our economies” — a repetition of the language used at the Group of 20 gathering in March that fell short of an explicit promise to avoid protectionism. While trade was not specifically on the agenda, its presence loomed large as U.S. Treasury Secretary Steven Mnuchin came under pressure to engage on the matter.

“People are much more comfortable today now that they’ve had the opportunity to spend time with me and listen to the president and listen to the economic message on what the economic agenda is, and that’s about creating growth in the United States,” Mnuchin told reporters after the meeting. “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.”

The finance chiefs did agree that while global growth was gaining momentum, it remains moderate with risks tilted to the downside. Monetary policy should continue to support the economy, they said, while recognizing the world faces a prolonged period of modest growth and rising inequality. The group also reaffirmed a commitment to avoid competitive currency devaluations.

The U.S. Treasury Secretary’s first G-7 outing came in the wake of an announcement a deal to boost the country’s exports of gas and beef to China. The meeting saw his French and German counterparts attempt to draw him toward the previous consensus of free trade, according to France’s Michel Sapin. That follows two G-20 gatherings where Mnuchin refused to sign up to a well established explicit shunning of protectionism, and pressed for trade to be “fair” and “reciprocal.”

“The U.S. has just concluded an agreement with China,” German Finance Minister Wolfgang Schaeuble told reporters. “I am quite confident that the development will continue, that the U.S. administration will engage more strongly in this process.”

Finance Minister Taro Aso and Bank of Japan Gov. Haruhiko Kuroda attended the meeting.

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