G7 finance ministers to avoid trade spat, US official says

[WASHINGTON] Finance ministers from the G7 countries meeting in Italy will focus on inclusive growth but avoid a quarrel over protectionism, a senior US Treasury official said Wednesday.

But even if concerns about the Trump administration's trade stance are not on the agenda for Friday and Saturday in the port city of Bari, they will remain in the background.

And the issue will likely resurface in bilateral talks between US Treasury Secretary Steven Mnuchin and his counterparts from the Group of 7 economies, the official told reporters.

Although "trade itself won't be an agenda item," the official said Mr Mnuchin will be meeting with other ministers individually, when the issue could come up.

However, the topic "is going to be more for the leaders than finance ministers," he said, referring to the G7 leaders summit set for May 26 and 27 in Sicily.

The trade issue created a rift at the Group of 20 finance ministers meeting in March in Baden-Baden - Mr Mnuchin's first foray into international economic relations - after the US blocked inclusion in the final communique of the long-standing pledge to avoid protectionism.

The issue also dominated discussion at the International Monetary Fund meeting in Washington last month, but the word "protectionism" likewise was struck from the final statement.

Heading into the Bari meeting, US partners are now aware the Trump administration's focus is on having a "more fair, balanced, reciprocal trading relationship," the official said.

The United States has a substantial trade deficit with G7 members Japan and Germany, as well Canada, a member of the North American Free Trade Agreement - all countries the White House has targeted for criticism.

Global recovery

The key focus of the ministers discussions will be the state of the global economic recovery, which the US official said will be relatively optimistic, noting that European growth has "picked up".

Although the French election victory by Emmanuel Macron has reduced the risk of a "Frexit", the European Union still faces the prospects of the British leaving the union. The official said this remains one of the risks to the global economy.

But Europe also has to deal with "legacy problems" from the global financial crisis, such as "high debt in some countries or the undercapitalised banking system".

The official noted the prospects for the US economy, and Mr Mnuchin will outline President Donald Trump's plan to boost growth through tax reform, easing regulations and infrastructure investments.

Making growth more inclusive also is a key G7 agenda item.

"The group will likely discuss policy options that could likely boost growth for the benefits of the broader population," as well as the role of institutions like the International Monetary Fund in achieving that goal, the official said.

Several technical issues also are up for discussion, including international taxation, the digital economy and cyber security, as well as cooperation in the fight against financing terror.

AFP