Japan says G20 communique to reflect fears of protectionism, gap remains

FILE PHOTO - Bank of Japan (BOJ) Governor Haruhiko Kuroda (C) and Minoru Kihara, Japan's State Minister of Finance, pose for the official photo at the G20 Meeting of Finance Ministers 

in Buenos Aires, Argentina - REUTERS

Buenos Aires (Reuters): Group of 20 finance leaders will likely reflect many members’ concerns over “inward-looking” policies like protectionism in a communique to be issued on Tuesday, Japan’s vice finance minister Minoru Kihara said.

In a sign negotiations over the communique’s wording were ongoing, however, another senior Japanese finance ministry official said disagreement remained over whether to address trade friction through a bilateral or multilateral framework.

World financial leaders pleaded for an endorsement of free trade amid worries about US metals tariffs and looming trade sanctions on China, but Trump administration officials said they would not sacrifice US national interests.

Japan told its G20 counterparts that protectionism benefits no country and was among key risks to the global economy as it would shrink trade, Kihara told reporters on Monday after attending the first day of the two-day gathering.

“Many countries expressed concern over inward-looking policies. It’s unthinkable for such voices to not be reflected in tomorrow’s G20 communique,” he said.

Fears of a trade war overshadowed the Buenos Aires meeting of G20 finance leaders, which was meant to discuss a brightening economic outlook, cryptocurrencies and infrastructure. They will issue a communique on Tuesday wrapping up their talks.

The other senior Japanese finance ministry official, who spoke to reporters on condition of anonymity, said the G20 communique’s wording on trade won’t deviate too much from that of the Hamburg summit communique issued last year that underlined the importance of a “rules-based international trading system.”

But he said there was still no consensus on whether to address global imbalances through a multilateral framework - an approach that had largely been a G20 consensus - or a bilateral one preferred by US President Donald Trump.

“While there were concerns raised on bilateral protectionism, many countries also talked about global imbalances ... and how they must be looked at from a global perspective rather than a bilateral one,” the official said.

Market too volatile

Angst over US import tariffs did not deflect G20 attention away from China’s trade practices, which also drew voices of concern from some nations, the official said.

In a sign other countries share Trump’s concerns about Chinese trade practices, the European Union and Japan joined Washington last December in vowing to combat market distorting policies that fuel excess industrial capacity, including subsidies for state-owned enterprises.

While Trump’s tariffs were a concern, there was no change to Japan’s stance of working with the United States and Europe to address China’s structural problems, the official said.

On markets, Japan sought G20 endorsement over its concern the recent market rout, which triggered an unwelcome yen spike for the country’s export-reliant economy, deviated fundamentals.

“The moves (in February) were too volatile and did not reflect economic fundamentals, a view Japan expressed at the G20 meeting,” the official said, signalling hope that its view would be reflected in the communique.

Vice finance minister Kihara also said he called for global coordination in addressing escalating tensions in North Korea.