G7 tackles free trade, says goodbye Mr Greenspan
(Reuters)
Updated: 2005-12-03 15:20

Britain will try on Saturday to resolve the impasse in world trade talks as finance ministers meet to discuss economic problems and say goodbye to Alan Greenspan, the U.S. central bank chief who retires next month.

Britain's Governor of the Bank of England Mervyn King (L) presents U.S. Federal Reserve Board Chairman Alan Greenspan with a traditional British political despatch box at the Advancing Enterprise Conference and G7 Finance Ministers and Central Bank Governors' Meeting in central London December 2, 2005. [Reuters]

London and Washington both hope the Group of Seven club meeting will inject fresh life into faltering talks on trade liberalisation in the run-up to a Hong Kong meeting of 148 countries in less than two weeks' time.

Britain's Gordon Brown, who is chairing the London meeting, has put much of the blame on other European nations and called for an end to subsidies for farmers in rich countries, which the OECD says total about $280 billion a year.

"There is a chance for progress if countries worried about services and market access can make some concessions and America and Europe can look again at agricultural protectionism," said Brown before the meeting got underway on Friday.

The United States has signaled it is ready to deal. "We have to focus on a spirit of reciprocity," said U.S. Treasury Secretary John Snow after meeting with Brown on Friday.

But G7 officials told Reuters breaking the deadlock still seemed unlikely.

France in particular is already very unhappy about concessions being made on the European Union's behalf in the run-up to the Hong Kong meeting, where much of the focus is on giving developing countries greater access to world markets.

The G7 will meet with Brazil, India, China, South Africa and Russia at the start of their Saturday meeting.

Britain said on Friday it might consider an extraordinary leaders' summit on the issue. U.S. President George W. Bush's office also said such an idea could be considered.

STRIKING THE RIGHT IMBALANCE

The G7 spent Friday's dinner discussing the risks facing the world economy such as huge deficits in the United States, weak growth in Europe where the European Central Bank has just raised interest rates and China keeping its currency too low.

Washington wants Beijing to let its yuan rise against the dollar so as to ease pressure on American exporters but Snow would not comment on a report that said China would revalue by 7.2 percent in the New Year.

But the G7 are unlikely to change significantly their language on foreign exchange rates when they issue their final communique at around 1300 GMT.

Global imbalances have also not gone away and the G7 is likely to repeat their familiar message that each continent has to play its part in reducing them.

At the dinner, Brown also paid tribute to Greenspan, who is stepping down next month after 18 years at the helm of the U.S. Federal Reserve, noting he had attended 55 G7 meetings.

Bank of England Governor Mervyn King presented him a cartoon depicting Greenspan as a goalkeeper saving the world from one economic crisis after another.

"It's another great save but the shots keep on coming," it said.