BUENOS AIRES: Group of 20 members pleaded on Sunday (Jul 22) for increased dialogue to defuse escalating trade tensions that could hit global economic growth hard.
Finance ministers and central bankers from 20 leading economies closed a two-day meeting in Buenos Aires warning that "heightened trade and geopolitical tensions" threaten the economic expansion.
It comes at a time when US President Donald Trump's protectionist policies have provoked ire from traditional allies such as the European Union, Canada and Mexico, and sparked a series of retaliatory measures.
The G20's final communique stressed "the need to step up dialogue and actions to mitigate risks and enhance confidence" amidst fears of an escalating global trade war.
While the statement did not mention the United States, which is at the centre of trade disputes with G20 members China, the EU and others, it demonstrated more concern than in March, when the group avoided the issue altogether.
Argentina's Economy Minister Nicolas Dujovne hinted that the group could not afford a rupture over trade disputes which he said should be resolved directly between governments or through the World Trade Organisation.
"It's not about denying differences," Dujovne told reporters at the conclusion of the meeting. But "we have to try to emphasise consensus because we recognise the importance of keeping this group alive and in harmony."
During the 2008 global financial crisis the G20 was critical in preventing an even worse outcome and saved millions of jobs, he said, noting that "it's in the bad times when you see how essential it is."
But Treasury Secretary Steven Mnuchin reiterated his claim that the US merely wants "more balanced trade" with other countries.
Mnuchin also dismissed the economic impact of the raft of tariff hikes and retaliatory duties, saying so far they have only affected the US on a "micro" scale. But from a "macro standpoint we do not yet see any significant pattern on the economy."
US businesses have been hit with a series of punitive measures by China, the EU, Canada and Mexico, including tariffs on soybean, motorcycles, bourbon and other goods, while manufacturers are complaining about rising prices of key supplies subject to new US duties.
'ALLIES NOT FOES'
EU finance chief Pierre Moscovici hit out at Trump's protectionist policies, but said cool heads are needed to resolve the dispute.
The US and EU have been at loggerheads since Trump angered European allies by imposing tariffs on steel and aluminium. He has also threatened to hit auto imports with duties which would be especially hard for Germany.
While the EU is "willing to build bridges," Moscovici told reporters "we believe that targeting us (the EU) is certainly inappropriate ... and that we must act with the US as allies - not foes but allies."
International Monetary Fund chief Christine Lagarde spoke out against the tit-for-tat tariffs and urged that "trade conflicts be resolved via international cooperation without resort to exceptional measures."
On Saturday, US Treasury Secretary Steven Mnuchin spoke at the summit about wanting to "balance" the country's trade relationships with China and the EU, calling on both to respect "free, fair and reciprocal trade."
Trump's protectionist policies came under fire from all sides at the meeting, which includes finance ministers and central bankers from the world's 20 largest economies.
On Saturday, French finance minister Bruno Le Maire called on Trump to "return to reason."
As well as imposing tariffs of 25 per cent on steel and 10 per cent on aluminium, Trump hit China with a 25 per cent punitive levy on US$34 billion of goods, an additional US$16 billion on the way.
In addition, he has threatened to target autos and auto parts and to impose duties on the entire US$500 billion of goods the US imports from China.
"The impact of protectionist measures already implemented has been, luckily, so far limited, but the risk of escalation is there," said Moscovici.
The IMF predicts that in a worst-case scenario, US$430 billion of global GDP - or a half percentage point - could be lost in 2020 if all tariff threats and retaliations are carried out.
"Further trade escalation conflicts would negatively affect welfare in all countries involved - in the US also," Moscovici said.
Protectionism, he said, benefits no one, creating "no winners, only casualties."
Lagarde had warned last week that the US economy was "especially vulnerable" to trade conflicts "because so much of its global trade will be subject to retaliatory measures."
But on Saturday, Mnuchin was inflexible in his approach to the EU, and said the US was "ready to sign a free trade agreement with no tariffs, no non-tariff barriers and no subsidies. It has to be all three."
That brought a stern rebuke from Le Maire saying Europe would "refuse to negotiate with a gun to the head."