Member countries of the International Monetary Fund (IMF) on Saturday pledged to work to reduce global imbalances but failed to repeat their past pledge to resist all forms of protectionism.
The International Monetary and Financial Committee (IMFC), the IMF's steering body, also repeated its past commitments on currency exchange rates.
"We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes," the IMFC said in a statement.
"We will also work together to reduce excessive global imbalances by pursuing appropriate policies. We are working to strengthen the contribution of trade to our economies," it said.
United States Treasury Secretary Steven Mnuchin speaks during a conversation on the US economy with IMF Managing Director Christine Lagarde (out of frame) at the World Bank/IMF Spring Meetings on April 22, 2017 in Washington, DC. /VCG Photo
The missing word did appear in the statement following their last meeting in October, which warned about a global economy "increasingly threatened by inward-looking policies, including protectionism."
And US pressure at a meeting of the Group of 20 finance ministers in Germany last month forced the group to strike the commitment against protectionist policies, in place since the early days of the 2008 financial crisis -- a position credited with helping to prevent the Great Recession from becoming worse than the 1930s recession.
Still, Mexico's central bank chief Agustin Carstens downplayed the significance of the latest edit, saying the word is "relative."
People's Bank of China Governor Zhou Xiaochuan (C) is seated with Central Bank of Lesotho Governor Rets'elisitoe Adelaide Matlanyane (L) and Mexico's Finance Minister Agustin Carstens for a "family" photo for the International Monetary and Financial Committee (IMFC), as part of the IMF and World Bank's 2017 Annual Spring Meetings, in Washington, DC on April 22, 2017. /VCG Photo
"The use of the word 'protectionism' is very ambiguous," he told reporters at the conclusion of the meetings.
The ministers agreed on the importance of trade for growth and "promoting a level playing field in international trade," he stressed.
"The final goal is to take advantage of trade. Nobody denies that," said Carstens, who heads the steering committee of the IMF's 189 members.
"I think everybody is in line that we need free and fair trade, and I think that is what is really reflected in the communique."
There was "very strong consensus" among the ministers, he added, "that we should strengthen contribution of trade to our economies."
Fear of the unknown
Concerns about threats to trade have pervaded the normally placid meeting of finance officials, fueled by US President Donald Trump's threats to impose tariffs on countries that have trade surpluses with the United States -- especially China and Germany.
But protectionism is also evident in the British decision to leave the European Union, as well as the rhetoric of some candidates in Sunday's French presidential election.
Some of it represents fear of the unknown, since the Trump administration has not yet announced any actual policy steps. Still, consistent statements from US officials are troubling free trade advocates.
US Treasury Secretary Steven Mnuchin repeated that the US focus will be on "more rigorously defending ourselves against unfair trade practices" including against countries with large surpluses.
The IMF has flagged rising protectionism and possible trade wars as a threat to the global economic recovery just when it is finally gaining momentum.
World growth is expected to hit 3.5 percent this year and 3.6 percent in 2018, the fund said. But it warned rising barriers to trade would hurt those it is supposed to help by curbing growth and raising prices.
However, IMF Managing Director Christine Lagarde, like Carstens, also tried to focus on the areas of agreement among ministers, noting in reference to trade the general "recognition we need to secure what has been conducive to growth."
Other countries on alert
Amid the meeting's strained atmosphere, and despite the final statement's language, officials presented a unified stance in stressing the need to work to prevent new barriers to trade.
"It is especially important to enhance the multilateral system of open and free trade and investment, jointly resist protectionism, and accelerate the liberalization of global trade and investment," China's central bank chief Zhou Xiaochuan said.
Like many other officials at the meeting, he warned in his statement that "rising anti-globalization and protectionism sentiment against international trade and investment pose challenges to global growth."
And Brazil's Finance Minister Henrique Meirelles noted that the "impressive expansion of international trade and finance... generated large and unprecedented welfare gains around the world."
But the benefits have not been shared equally, he said, which is creating a "perception of unfairness" that "fed movements supporting inward-looking and protectionist policies" in some countries.
Meirelles also called for action to help all members of society feel "included in the economic progress," partly because it is "crucial to garner political support for furthering global integration and productivity."
(Source: Reuters, AFP)
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