“Many of us, including myself and Schaeuble, told Mnuchin that it is unthinkable that in the weeks and months to come, we can allow the established framework to be debated,” French Finance Minister Michel Sapin told reporters. “It is unthinkable and it will not happen, that we destroy the framework that has given us stability and economic growth.”
Mnuchin, whose participation was overshadowed by a political storm in Washington, arrived saying he was “excited” about US trade policies after the announcement of a deal to boost exports of gas and beef to China. The Treasury Secretary’s first G7 outing follows Group of 20 meetings that have undermined the existing global economic order after he refused to sign up to an explicit shunning of protectionism, and pressed for trade to be “fair” and “reciprocal.”
“Inequality won’t shrink by denying free trade and supporting protectionism — rather, it’s opposite,” Bank of Japan Governor Haruhiko Kuroda told reporters. “I think that’s the consensus among many of us.”
Mnuchin skipped the start of a seminar on inequality early on Friday, but has kept up a busy schedule of bilateral meetings with counterparts, including from Italy, Germany and Japan. He has previously joked that he speed-dates finance ministers, holding as many as 18 such one-on-ones during the G-0 in March. Officials at that gathering in the German spa town of Baden-Baden gave Mnuchin some breathing room as a Treasury chief who had been in office for just six weeks. Now they are stepping up the pressure.
“We need a strong United States, the United States needs the global economy and global economics on a sustainable way where the United States is still the most important political and economic partner and the best alliance for Europe,” Schaeuble told reporters.
The ability of Mnuchin to speed forward with a pro-growth agenda has been thrown into question after U.S. President Donald Trump’s firing of James Comey as FBI chief this week provided an unwelcome distraction from policy. Comey was leading the FBI investigation into links between Trump’s 2016 election campaign and the Russian government.
At the G20 in March, officials almost left trade out of their communique as Mnuchin pressed for them to agree it should be “fair” rather than “free” — while a month later in Washington, he crystallised that position, citing Trump as favouring “reciprocal free trade.”
Language from the Baden-Baden communique is still likely to be repeated in a statement following this week’s meeting, Italian Treasury officials said on Friday. That included a reference to “working to strengthen the contribution of trade to our economies” — much weaker wording than previous statements explicitly rejecting of protectionism.
The Bari meeting was described by a senior US Treasury official as cooperative and positive.
One official from a European country, speaking on condition of anonymity because talks are confidential, said that the message to US counterparts was now that “fair” trade must still encompass good rules for everyone — not private deals on how many planes or cars each economy can buy.