WORLD> Europe
|
WORLD> Europe
|
|
G7 strains to couple crisis response and free trade
(Agencies)
Updated: 2009-02-14 15:00 ROME -- The G7 industrial powers, fearing a rise of protectionism, will do all they can to combat recession and avoid distorting free trade, according to a statement being prepared for publication on Saturday.
The draft statement sought to allay fears that governments determined to protect jobs and national industries would abandon commitments to fair cross-border competition. As the ministers met, the US Congress was in the throes of voting on an economic rescue plan that includes tens of billions of dollars for public building projects, with conditions including that they use US steel and other US-made goods. The US "Buy American" clause is not the only measure that is causing concern within and beyond the G7 group. Governments rescues for French and Italian carmakers have also raised concern as has a campaign within Britain to keep jobs in hard times for British citizens. The draft G7 statement said stabilising the economy and financial markets was paramount right now, meaning all had to work together and use all possible policy options to maximum collective effect. "We will continue to work together to avoid undesirable spillovers and distortions," said the draft. As the G7 meeting began on Friday, Germany and Britain said the risk was that the world would otherwise see a repeat of the damaging protectionist spiral seen during the Great Depression. "The fight against protectionism has never been more needed than today," British Finance Minister Alistair Darling said. "We will have to do everything to ensure history does not repeat itself," Finance Minister Peer Steinbrueck told the German parliament earlier. Closing the Gap Those statements highlighted mounting unease over what looks like a contradiction between commitments of principle to free trade and measures that look different in practice, like a French car aid plan that Germany has attacked or the "Buy American" clause in Washington's $787 billion stimulus package. Britain's Darling said he had discussed that issue with new US Treasury Secretary Timothy Geithner. "I think the US is very aware of its obligations to the world," Darling said. Darling also faces grumbles from his European partners, who see sterling's losses bolstering British firms' position in export markets. The G7 meeting, involving ministers and central bankers of the United States, Japan, Germany, Britain, France, Italy and Canada, is a step on the road to an April summit of the broader G20 grouping, which adds on the large emerging market economies. French Economy Minister Christine Lagarde said she hoped rich and developing countries alike would not lose sight of the target they had set themselves at a summit in November -- better regulation and supervision of banks and markets. The current financial crisis, regarded as the worst since the 1930s, blew out of the United States when a housing boom ended, and with it a boom in mortgage debt derivatives that banks and investors worldwide had bought into. Fresh data from Europe served a reminder of the scale of the economic downturn on Friday and Dominique Strauss-Kahn, managing director of the International Monetary Fund, said the worst had probably still to come. In the last quarter of 2008, economic output in the euro zone shrank more than any quarter on record and the picture was much the same in the 27-country European Union -- with GDP down 1.5 percent in both cases versus the preceding three months. All of the large G7 economies contracted in the last quarter of 2008 and even rising stars such as China are slowing hard, even if they are not in quite the dire state of the more mature economies where the trouble began. |
