G20 finance heads to agree on forex, struggle on trade, climate change

Sat Mar 18, 2017 8:13am EDT
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By David Lawder and Leika Kihara

BADEN BADEN, Germany (Reuters) - The world's financial leaders will renounce competitive devaluations and warn against exchange rate volatility, a document showed on Friday, but are likely to struggle to find common ground on trade and financing against climate change.

The difficulty stems from a major shift in the views of the United States, where the new Trump administration is considering protectionist trade measures to curb imports and considers efforts to try to halt global warming a "waste of money".

Finance ministers and central bank governors of the world's top 20 economies are meeting in the spa town of Baden Baden in Germany to discuss world economic issues and will publish a joint communique on Saturday.

A draft of the statement showed that, for now, the issue of trade and protectionism is not mentioned at all. This breaks with a decade-old tradition of the G20 endorsing free trade and rejecting protectionism.

"It's about the right wording, it's about the openness of the world trade systems in the final communique," German Finance Minister Wolfgang Schaeuble said before talks began.

U.S. Treasury Secretary Steven Mnuchin said on Thursday in Berlin that the Trump administration had no desire to get into trade wars, but certain trade relationships need to be re-examined to make them fairer for U.S. workers.

G20 officials said the United States was ready to accept a phrase backing "free and fair" trade, given that the meaning of "fair" was open to interpretation. Europe was keen on adding that trade should be "rules-based", meaning subject to rules of the World Trade Organisation (WTO).

European delegations have also explicitly rejected protectionism.   Continued...

A general view shows the G20 Finance Ministers and Central Bank Governors Meeting in Baden-Baden, Germany, March 17, 2017.   REUTERS/Kai Pfaffenbach