G20 finance chiefs: Global growth at risk due to trade row

Andrew Cummings
June 10, 2019

A fifth draft of the communique seen by Bloomberg News on Saturday included a reference to a "pressing need to resolve trade tensions", which was omitted in the final statement.

However, the treasury secretary from the United States, which continues to threaten more tariffs on China if there is no trade deal, played down the risk of a global economic conflagration.

Following a G20 meeting Sunday that brought into sharp focus the differences between the United States and other countries, the world's top financial policymakers admitted that trade tensions had worsened and posed a threat to the global economy.

However, the G20 finance leaders agreed to compile common rules by 2020, .in order to close loopholes that are used by global tech giants to reduce their corporate taxes. "We reaffirm our commitment to use all policy tools to achieve strong, sustainable, balanced and inclusive growth, and safeguard against downside risks".

The G-20 finance leaders said in a joint communique that risks from trade and geopolitical tensions were "intensifying".

After rocky negotiations that almost aborted the issuance of a communique, the finance ministers and central bank governors gathered in Fukuoka, southern Japan, agreed to affirm language on trade issued in Buenos Aires last December, the sources with knowledge of the final communique language said. The meeting opened with news of US President Donald Trump's reversal of plans for new tariffs on Mexico, offering a sliver of good news for officials facing a lengthening worry list.

The meetings of financial leaders in the southern city of Fukuoka and of economic ministers in Tsukuba, near Tokyo, are aiming to forge a consensus on a range of issues to be endorsed by leaders who will meet in late June in Osaka.

"A worsening of the worldwide climate and a real trade war would lead to an even more marked slowdown in global growth, with a direct impact on our jobs, companies, factories and sectors", he said. But he said China's central bank, the People's Bank of China, had plenty of room to manoeuvre to help keep the economy growing despite the pounding the country's export manufacturers are taking as the toll from higher tariffs mounts.

Mnuchin departs from the G-20 early evening Sunday and isn't expected to make any further public statements on China trade talks.

In response, retaliatory tariffs ranging from between five to 25 percent on American imports worth 60 billion dollars were applied by Beijing. Together they would encompass nearly everything China exports to the U.S.

President Trump on the timeline for a decision on additional China tariffs.

But there was an evident rift between most participants in the meeting and the USA, which has shifted away from support for tackling issues in multilateral forums such as the World Trade Organization in favor of a country-by-country "America First" approach. "We recognize the contribution that the multilateral trading system has made to that end".

Other reports by iNewsToday