BARI, ITALY – Group of Seven 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 U.S. President Donald Trump’s stance on trade.
In a communique issued after their two-day meeting in Bari, southern Italy, the G-7 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 Britain, Canada, France, Germany, Italy, Japan and the United States left trade off the agenda at the Bari talks, apparently due to a gap among the members over 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 G-7 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 Saturday that the United States 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,” Mnuchin said at a news conference after the Bari meeting.
Despite Mnuchin’s remarks, Japanese Finance Minister Taro Aso expressed hope that the G-7 leaders, including Trump, will narrow the group’s gap on trade when they gather in Taormina, Sicily, on May 26 to 27.
Recalling his discussions with Mnuchin and other G-7 counterparts, Aso said he thinks Mnuchin “has mostly erased concern that (the new U.S. administration) may transform free trade into protectionism.”
Aso told reporters that he has come to see that 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 G-7 finance chiefs showed unity on the fight against inequality, which — together with populist anger at trade, globalization and manufacturing job losses — fueled Trump’s ascent to the U.S. presidency, played a role in Britain’s decision to exit the European Union, and propelled an antiglobalizm candidate into the French presidential runoff vote earlier this month.
Affirming the group’s determination to strengthen the financial system against cyberattacks, the G-7 directed government institutions to join hands with the private sector to strengthen sharing of cybersecurity information, according to the communique.
On currency, the G-7 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.”
A senior Japanese Finance Ministry official said pro-EU Emmanuel Macron’s victory in the French presidential election injected optimism into G-7 discussions on the world economy and financial markets.
While the International Monetary Fund forecast in April that world economic growth will accelerate to 3.5 percent in 2017 and 3.6 percent in 2018 from 3.1 percent in 2016, some G-7 members referred to uncertainties in the global growth outlook, the official told reporters, requesting anonymity.
Those concerns include faster-than-expected U.S. interest rate increases, which could affect some developing economies by triggering an outflow of capital and investment, and China’s reliance on excessively rapid credit expansion for growth.