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WASHINGTON, July 5 (Reuters) - The International Monetary Fund on Wednesday urged G20 leaders to avoid "myopic" nationalistic policies and to work together to resolve their trade and economic differences during their upcoming meeting in Germany later this week.
In a pointed message before the July 7-8 gathering - the first for U.S. President Donald Trump - in Hamburg, Germany, the IMF said a rules-based and open trading system was vital for a stable world economy.
"Myopic pursuit of zero-sum policies can only end by hurting all countries, as history shows," the IMF said in its G20 surveillance note, which is considered by the leaders in their discussions on the global economy.
"Because national policies inevitably interact in a number of vital areas, creating strong spillovers across countries, the world economy works far better for all when policymakers engage in regular dialogue and work within agreed mechanisms to resolve disagreement," the IMF said.
The G20 includes advanced and emerging economies such as the United States, Japan, Britain, France, Germany, Italy, China, Japan, Canada, Brazil and South Africa.
The IMF's pitch to maintain multilateral cooperation comes as the Trump administration is considering imposing broad new steel tariffs or quotas on foreign steel imports based on national security grounds, a move that has not occurred since the World Trade Organization was launched in 1995.
The U.S. Commerce Department is expected to issue the findings of the review after the G20 meeting.
Shortly before leaving for Europe on Wednesday, Trump dug in on trade, tweeting: "The United States made some of the worst Trade Deals in world history. Why should we continue these deals with countries that do not help us?"
Should tensions over trade policies escalate, the IMF worries that it could disrupt the global economic recovery, which it sees as on track, with growth this year and next year in the 3.5 percent range. Its forecasts do not include a major trade disruption.
German Chancellor Angela Merkel, the host of the G20, has pledged to fight for free trade and press on with efforts to tackle climate change at the G20 summit in a direct challenge to Trump's "America First" policies.
While she has not mentioned Trump by name in her statement on trade, she told the German parliament last week that global problems could not be solved with protectionism and isolation.
Trump has slammed Germany for its trade practices and has pulled the United States out of the 2015 Paris climate deal.
Reporting by David Lawder and Lesley Wroughton; Editing by Chris Reese