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US still at odds with G7 partners on economics

May 13, 2017

US Treasury Secretary Steven Mnuchin said allies were warming to President Donald Trump's 'America first' trade policies, but allies disagreed. Other topics discussed included the Greek bailout and cybersecurity.

Treffen der G7-Finanzminister und -Notenbankchefs
Image: Picture alliance/dpa/A. Medichini/AP

A two-day meeting of finance ministers from the Group of Seven (G7) concluded in Italy Saturday with the United States continuing to oppose a free trade commitment between leading Western industrial nations.

The US refused to abandon its protectionist stance as the G7 - composed of the US, Japan, Germany, Britain, France, Italy and Canada - continued to wrangle over a common trade policy.

The lack of consensus was reflected in the blandness of the meeting's closing statement, which avoided a precise trade agreement.

Treffen der G7-Finanzminister und -Notenbankchefs
US Treasury Secretary Steven Mnuchin talks to journalists at the G7Image: Picture alliance/AP Photo/Andrew Medichini

But US Treasury Secretary Steven Mnuchin claimed afterwards that major trading partners "are much more comfortable" with the Trump administration's trade policies and understand US growth will benefit them.

"We do not want to be protectionist, but we reserve our right to be protectionist to the extent that we believe trade is not free and fair," Mnuchin told a news conference at the end of the two-day gathering.

But ministers from the other G7 countries made it clear they did not share the US secretary's view.

"All the six others ... said explicitly, and sometimes very directly, to the representatives of the US administration that it is absolutely necessary to continue with the same spirit of international cooperation," French Finance Minister Michel Sapin told reporters.

The latest meeting, in the Italian seaside city of Bari, comes ahead of a G7 summit meeting May 26-27 in Sicily, and follows on last month's meeting of the group's foreign ministers.

Free trade is the way

Japan's finance minister, Taro Aso, summed up the fears of America's key allies by speaking out against protectionist economic policies

"We must not backpedal on free trade as it has contributed to economic prosperity," Aso said.

Other issues discussed included debt relief for Greece. The ministers agreed to an 86 billion euro ($94 billion dollar) bailout package, which is expected to be issued on May 22. It potentially brings to an end the harsh austerity measures Greek citizens have endured over the past eight years.

The finance chiefs also vowed to unite against cybercrime, following a globe-spanning wave of cyberattacks that hit computer systems in scores of countries on Friday, notably disrupting Britain's health care service and bringing production at carmaker Renault to a standstill in France.

Trump's plans to cut taxes and raise trade barriers could, theoretically, give a short-term income boost to some workers, but would not deliver the long-term growth that is necessary for reducing the effects of inequality, according to Angus Deaton, a Nobel Prize-winning economist at Princeton University.

Deaton won a Nobel in 2015 for his work on poverty, welfare and consumption. He addressed the ministers at the meeting. Subsequently, during an interview about Trump's economic policies and how they might impact income inequality, he said, "I don't think any of it is good."

bik/cl (dpa, AP, Reuters, AFP)