Free Trade Tidings from the G7
While the results of the G7 meeting in Rome may have been disappointing to some, due to a communiqué light on substance, it can be argued it made a step in the right direction in combating protectionism. The communiqué included this statement:
"An open system of global trade and investment is indispensable for global prosperity. The G7 remains committed to avoiding protectionist measures, which would only exacerbate the downturn, to refraining from raising new barriers and to working towards a quick and ambitious conclusion of the Doha Round.”
Another development at the meeting was the apparent softening of the German government's attitude about "bailouts" of euro-bloc nations needing to refinance debt. Whereas German Finance Minister Peter Steinbreuck said before the G7 meeting that Austria would have to solve its own problems, Steinbreuck's post-G7 statements appear to open the door for assistance to Austria as well as Ireland and Greece, who may also soon need help.
The EU states are now working hard to find a solution that would essentially be a preemptive de facto bailout, bearing in mind the legal limitations of the EU Treaty which has a "no bailout" clause. A common EU policy on state and bank bailouts would constitute a huge leap forward for EU integration.
The G7 meeting was Tim Geithner’s international debut as U.S. Treasury Secretary. His foreign counterparts gave him good marks and were pleased to hear Geithner moving away from the protectionist rhetoric of earlier weeks. The Secretary directly addressed such concerns, saying,
“The United States is very much committed to working closely and cooperatively with China as we move together to address this global economic crisis.”
The foreign finance ministers expressed their desire for more details about the American financial rescue plan but were supportive of the new Secretary. "He knows what he's talking about, he has a very easy way of expressing his views," European Central Bank President Jean-Claude Trichet said of Geithner. European economists were less forgiving, however, echoing the criticisms raised earlier in the week by American economists and media about the vagueness of the Obama financial stability plan. Secretary Geithner helped himself in Rome and bought himself more time with his international colleagues, at least until the April G20 meeting. Unfortunately, he does not have the same luxury back in the United States where the Congress and the public alike are anxious for the Treasury to lay out a detailed and realistic plan for stemming the financial crisis.
With regard to the upcoming G20 meeting in London, UK Prime Minister Gordon Brown recently re-stated his goals that the meeting discuss national and international reforms in regulation of the banking system.
That should make for a lively discussion indeed!
