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IMF members drop pledge to resist protectionism

Finance ministers and central bankers from around the world have dropped a pledge to resist protectionism, in a further sign that the new US administration’s stance on trade is shifting the global debate. 

The group from International Monetary Fund member countries issued a statement on Saturday saying they would “promote a level playing field in international trade” but did not reiterate a previous commitment to “resist all forms of protectionism”. 

The change of stance mirrors a similar move made by the finance ministers and central bank governors of the G20 countries after they met in Baden-Baden in March. On that occasion, the US was unwilling to endorse forthright language on protectionism. 

Agustín Carstens, the governor of the Bank of Mexico who currently chairs the International Monetary and Financial Committee, suggested the previous reference to resisting protectionism had been removed because “the use of the word protectionism is very ambiguous”. 

“Our final goal is just to take advantage of trade. Nobody denies that and I think everybody is in line that we need free and fair trade,” he said at a press conference in Washington on Saturday afternoon. 

The group also pledged not to undertake “competitive devaluations” or to “target [their] exchange rates for competitive purposes”. 

In prepared remarks to the IMF’s governing board published on Friday, US Treasury secretary Steven Mnuchin said the US would “continue to promote an expansion of trade with those partners committed to market-based competition”. 

There had been speculation that the group would also tone down commitments to tackle climate change, following comments made by President Trump on the campaign trail. But they found common ground on this issue. For the first time ever, the entire group endorsed managing director Christine Lagarde’s global policy agenda.

This agenda, which was published on Friday, said “countries should not leave the mounting economic consequences of climate change for future generations”. In October, the group had “welcome[d] the entry into force of the Paris Agreement on climate change”. 

The group noted the pick-up in global economic growth. But, echoing concerns expressed throughout the past week in Washington, Ms Lagarde said the group believed the most serious risks now facing the global economy were geopolitical, rather than the economic and financial issues that have been at the fore in recent years. 

The IMFC comprises 24 finance ministers and central bankers from around the world, including China, Russia, Germany, the UK and the US. The group advises the IMF Board of Governors on the supervision and management of the international monetary and financial system.

Via FT