G7 rejects protectionism

ROME – The Group of Seven finance ministers strongly rejected protectionism Saturday, pledging to work together to support growth and employment and to strengthen the banking system so the world can overcome its worst financial crisis in 50 years.

Still, bad economic news darkened the horizon. The final statement on their two-day meeting in Rome predicted a gloomy forecast, with the severe economic downturn continuing through most of 2009. That came a day after new economic data showed the recession in Europe deepening to its worst levels in decades.The meeting marked the international debut of US Treasury Secretary Timothy Geithner, who 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.’Geithner got a boost coming into the meeting by Friday’s passage of President Barack Obama’s US$787 billion plan to resuscitate the economy over Republican opposition – but the plan has raised concerns abroad of creeping US protectionism.The meeting’s host, Italian Finance Minister Giulio Tremonti, said he didn’t believe the US stimulus package would put Washington in violation of its free-trade obligations.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.The G-7 ministers warned that any protectionist measures to boost national economies would only undermine global prosperity. They also stressed the need to support developing countries to prevent the world’s poorest from being the biggest losers in the downturn.’The stabilisation of the global economy and financial markets remains our highest priority,’ the G-7 statement said, noting that the world’s seven most industrialised countries have ‘collectively taken exceptional measures’ to address the challenges.The ministers endorsed the US and British approach to fixing the banking system by recapitalising banks and said a way must be found to deal with the banks’ toxic assets, but offered no prescription.The G-7 countries urged China to continue allowing its currency to rise in value to even out the world’s massive trade imbalances. But there was no reference to comments Geithner made in Washington that were seen as a strong rebuke of China’s currency policy, which many believe keeps the yuan artificially low to boost exports.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.German Finance Minister Peer Steinbrueck said the ministers also committed to concrete results at the April G-20 summit in London, which brings together the world’s most industrialised nations along with the rising economic stars like China and India.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 April 2 gathering. -Nampa-AP