G-20 Finance Chiefs Are Optimistic About Settling Trade Disputes
Finance chiefs representing 20 of the world’s largest economies are hopeful they can help resolve the trade tensions that have emerged over the past year among their membership but achieved no breakthrough this week.
The Group of 20 finance ministers met on the sidelines of the annual meetings of the International Monetary Fund and World Bank, to discuss the importance of settling trade disagreements that have begun to take a toll on economic growth and financial markets, according to Argentina’s Treasury minister, Nicolás Dujovne.
“We agree that international trade is an important engine for growth and we need to resolve tensions that can negatively affect market sentiment and market volatility,” said Mr. Dujovne, whose country is G-20 chair this year.
The group’s finance ministers meet several times throughout the year, culminating in a summit of heads of state, which is set for November in Buenos Aires. President Trump and Chinese President Xi Jinping are planning to meet there to seek a path forward in a trade spat that has led to each side imposing significant tariffs on the other’s imports.
While the G-20 reached no new resolution this week, even achieving agreement on how to talk about trade principles has sometimes eluded global finance ministers this year. A gathering of a smaller group of finance ministers in Canada in June ended with Canada, Japan, the U.K., Germany, Italy and France issuing a unified rebuke of U.S. trade policy. That gathering—characterized as a “G-6 plus one,” with the U.S. pointedly on the outside—marked a low point in relations among the world’s most important finance ministries.
In a contrast to that tense meeting, Mr. Dujovne said, the G-20 is “keeping channels for productive dialogue open,” though he said it would fall to member countries to resolve their disputes.
“The G-20 can play a role in providing the ground for discussion, but the differences that still persist should be resolved by the members that are directly involved in the tensions,” he said.
Tensions among many advanced economies have eased since June. The U.S., Mexico and Canada have agreed to the terms of a renegotiated version of the North American Free Trade Agreement, and the U.S. has begun trade talks with Japan and the European Union. Treasury Secretary Steven Mnuchin held bilateral meetings with officials from China, Japan, the U.K. and Italy, among others, in Indonesia.
Germany’s finance minister, Olaf Scholz, expressed optimism about the state of Europe’s talks with the U.S., telling reporters in Bali that he expected trade negotiations between the U.S. and EU “that do not lead to the expectation of a trade escalation” and that there is trust on both sides.
The China-U.S. trade dispute, however, has progressed from threats to the implementation of tariffs, and there are signs that the actions are denting the global economy. This week, the IMF downgraded its forecast for global economic growth this year and now expects 3.7% expansion, down from an estimate in April of 3.9%.
Last year, global trade grew by 5.2%, the best since the 2010 and 2011 rebound from the financial crisis. This year, trade appears on course for 4.2% growth, the IMF said, a 0.9 percentage point downgrade from forecasts in April.