G7 finance ministers reject protectionist measures
By COLLEEN BARRY and ARIEL DAVID, Associated Press Writers
1 hr 44 mins ago
ROME – The Group of Seven finance ministers pledged Saturday to avoid resorting to protectionism as they try to stimulate their own economies in the face of the world's worst economic crisis since the 1930s.
The meeting marked the international debut of U.S. Treasury Secretary Timothy Geithner, who assured his counterparts that President Barack Obama's $787 billion plan to resuscitate the economy, approved Friday, would not violate in any way the United States' commitment to free trade.
Geithner, who was among friends and colleagues he had worked with from his days at the Federal Bank, appealed to the "common imperative" to sustain open trade.
"These are global challenges and it is imperative that we work together to address them," Geithner told reporters afterward. "Effective global response will require sustained action by governments working with the international financial institutions."
The meeting's host, Italian Finance Minister Giulio Tremonti, affirmed "strong agreement" among the ministers on rejecting protectionism.
"It is a concrete danger, not only for economies that depend heavily on exports," he said.
Even as gloomy economic news piled up — with Europe sinking deeper into recession and the G-7 itself saying the crisis will continue at least through the end of the year — the ministers touted in their final statement "the exceptional measures" that had been "collectively taken."
The meeting was largely an affirmation of actions already being taken — from the importance of stimulus packages to the need to isolate bad assets — but the final statement didn't indicate how that would happen.
"I do think a huge volume of effort has been taken and the markets are reacting in a better way than before," said Luxembourg Prime Minister Jean-Claude Juncker, who attended the meeting as president of the group representing the 16 countries that use the euro currency. "This is an ongoing process. Maybe this sounds like a repetition ... but you have to put it in perspective."
German Finance Minister Peer Steinbrueck said concrete progress on such measures as drafting regulations on hedge funds must be made at the Group of 20 summit in London on April 2, bringing together leaders of the industrialized nations with rising economic stars like China and Brazil.
Germany and Japan — net exporters — were especially keen to see the group endorse efforts to fight protectionism, Steinbrueck said, noting that 40 percent of German output was export-driven.
"This is the reason why we are the most affected by this worldwide recession," Steinbrueck told a news conference.
French Finance Minister Christine Lagard said the group recognized that protectionism can take many forms in the banking, financial and economic domain.
"The important thing is to coordinate very closely our respective national actions within our relaunch plans, but there were no accusations or criticism against this or that plan, this or that country, so we are all on the same line," she said.
Looking ahead, the ministers hoped to make progress on drafting common principals of transparency within four months, in time for the Group of Eight summit in Sardinia in July.
The recommendations from Saturday's G-7 meeting — attended by ministers from Britain, Canada, France, Germany, Italy, Japan and the United States — are expected to influence that gathering.
AP Economics Writer Marty Crutsinger contributed to this report.
G7 pledges to avoid protectionism
Leading industrial countries have pledged to avoid protectionism as they battle the global economic crisis.
Finance ministers at a G7 meeting in Italy said raising barriers to free trade would make the downturn worse.
Hours earlier, the US Congress approved an $787bn economic recovery plan that includes a 'Buy American' clause.
G7 ministers said stabilising the world economy and financial markets was their priority. They said they would work together to support growth and jobs.
The 'Buy American' clause has raised fears that protectionism could be growing in the world's largest economy.
But in a statement after the meeting, new US Treasury Secretary Timothy Geithner dismissed such concerns.
"All countries need to sustain a commitment to open trade and investment policies which are essential to economic growth and prosperity," he said.
Ministers also called for urgent reform to the International Monetary Fund, saying the crisis had shown weaknesses in the world financial system.
"We agree that a reformed IMF, endowed with additional resources, is crucial to respond effectively and and flexibly to the current crisis," the ministers' statement said.
Other points included:
Praise for recent economic moves by China;
Help for banks; and
The need for a speedy end to the Doha talks on world trade
The G7 comprises the US, the UK, Japan, Germany, France, Italy and Canada.
Britain's Chancellor of Exchequer (Finance Minister), Alistair Darling, said the Italy meeting was a stepping stone to a meeting in London in April of the G20 group, which also includes big emerging economies such as China and India.
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Published: 2009/02/14 17:10:08 GMT