Business / Economy

G-20 finance chiefs call for 'further dialogue and actions' as trade war looms

Kyodo

Financial leaders from the Group of 20 advanced and emerging economies on Tuesday recognized the need for “further dialogue and actions” on trade, while reaffirming their commitment to combat protectionism as a trade war looms.

Their conclusions at the end of their two-day talks come as the United States is set to impose heavy tariffs on steel and aluminum imports on Friday, an action President Donald Trump said is aimed at defending national security.

The G-20 finance ministers and central bankers’ views are in line with their leaders’ promise made last July to “continue to fight protectionism” in ways that would also allow countries to take “legitimate trade defense” steps against unfair practices.

“International trade and investment are important engines of growth, productivity, innovation, job creation and development,” they said in their joint statement Tuesday.

“We reaffirm the conclusions of our leaders on trade at the Hamburg Summit and recognize the need for further dialogue and actions. We are working to strengthen contribution of trade to our economies.”

Minoru Kihara, Japan’s vice finance minister, welcomed the statement, saying at a news conference, “We reached a shared recognition that protectionism will not benefit any country. The importance of free trade was shared among us.”

The Organisation for Economic Co-operation and Development had warned that trade protectionism is a “key risk,” saying safeguarding the rules-based international trading system is essential to protecting growth prospects that could be harmed by a retreat from open markets.

Reflecting mounting concerns about bitcoin and other cryptocurrencies, they said they “look forward to” the review of the standards set by the Financial Action Task Force, an intergovernmental body on countering money laundering and terrorist financing.

The reference is thought to point to the need to tighten the standards that already call for registration of virtual currency exchange operators.

The G-20 officials acknowledged that technological innovation, including that underlying cryptocurrencies, has the potential to improve the efficiency and inclusiveness of the financial system and the economy more broadly.

But they also noted that such assets raise issues related to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing.

“Crypto-assets lack the key attributes of sovereign currencies. At some point they could have financial stability implications,” the statement said.

Japanese authorities were alarmed by the recent ¥58 billion ($547 million) theft from the Tokyo-based Coincheck Inc. exchange, with the country’s regulators calling on the operators of virtual currency trading platforms to initiate suitable risk management systems.

On the global economy, the financial leaders said its outlook “has continued to improve” since their previous gathering last October.

But they also agreed to use “all policy tools to support strong, sustainable, balanced and inclusive growth” amid lingering concerns about downside risks ranging from a faster-than-expected monetary tightening to heightened economic and geopolitical tensions.

“This is our moment to take action to address structural growth impediments, rebuild buffers, reduce excessive global imbalances, and mitigate risks,” the communique said. “We will implement structural reforms to enhance our growth potential.”

While keeping intact their earlier pledges to refrain from competitive devaluations, they called for stability and flexibility in exchange rates.

“Strong fundamentals, sound policies, and a resilient international monetary system are essential to the stability of exchange rates, contributing to strong and sustainable growth and investment. Flexible exchange rates, where feasible, can serve as a shock absorber,” the statement said.

Furthermore, the officials welcomed the OECD’s interim report in part calling for taxation on e-commerce firms operating internationally.

They also reaffirmed their plan to seek a consensus-oriented solution to the issue of tax avoidance by multinational businesses by 2020.

The G-20 includes Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.

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