Editorial: G-20 leaders must stand up for free trade
United action is needed to combat the tide of protectionism
The global economy seems to be getting back on track, but there are major downside risks, the most dangerous of which is the spread of protectionism. Leaders of the Group of 20 major economies should stand at the vanguard of efforts to promote free trade and resist protectionist tendencies.
The G-20 finance ministers and central bank governors wrapped up their two-day meeting in Washington on April 21 by reaffirming their various commitments, such as a pledge to refrain from competitive currency devaluations.
UNDER PRESSURE Global growth is projected to hit 3.5% this year, up from 3.1% in 2016, according to a forecast by the International Monetary Fund. It is worth noting that developed and emerging economies alike are generally recovering steadily.
The high degree of uncertainty over U.S. policies and politics, however, is causing grave concern. The administration of President Donald Trump, promoting his "America First" agenda, has been pushing through highly protectionist trade policies. When G-20 financial chiefs met in March, they were forced to drop the familiar pledge to resist "all forms of protectionism" in a joint statement due to objection from the U.S. side.
This time, the financial chiefs did not issue a statement, but Jens Weidmann, president of German central bank Bundesbank, said at a press conference, "Almost everybody underscored the importance of open markets and free market access." Germany currently chairs the G-20 and will host its annual summit in this summer.
Actions by G-20 economies are now being called into question. The U.S. government, for example, has decided to slap anti-dumping duties on steel products from Japan and other exporting nations, and is getting ready to curb steel imports.
Anti-dumping duties are allowed as an exception under the rules of the World Trade Organization. But if trading partners respond by raising their own tariffs, countries may become locked in a vicious, retaliatory cycle that hampers trade and harms the global economy.
The number of trade-restrictive measures applied by G-20 members is still fairly high, according to the WTO. Policymakers in these economies must resolutely refrain from taking measures that undermine free trade, such as raising tariffs.
The discussion on protectionism must not be left to finance ministers and central bankers -- who are not directly tasked with dealing with trade policies -- any longer. G-20 leaders need to demonstrate their unity in fighting protectionism and agree on concrete actions at their summit in Hamburg in July.
Turning its back on free trade does not help any country become affluent. But it is also true that any part of the population that fails to catch up with rapid technological innovation will be left behind by economic globalization.
While making the most of the benefits of free trade, governments should provide support for the unemployed, through finely tuned vocational training, re-education and any other means necessary. We hope G-20 leaders will recognize anew that steady efforts along these lines will enable their economies to achieve stable, balanced growth.