Day One at the G-20: Where We Stand on Top World Economic Issues

(Bloomberg) -- Finance ministers and central bankers from the leading economies tried to work out some of their differences on the most pressing economic issues during meetings in Buenos Aires on Monday.

When all is said and done, the G-20 will issue a statement on Tuesday that tries to reach the least common denominator between them all.

Here are some of the key issues under discussion at the G-20:

Trade and Tariffs

Trade is probably the most contentious issue, stoked by the Trump administration’s reluctance to embrace multilateral agreements and its push to re-balance global commerce in America’s favor.

U.S. plans to slap tariffs on steel and aluminum imports have rankled many in the G-20, and Treasury Secretary Steven Mnuchin took heat on Monday from several of his colleagues who said U.S. measures were threatening multilateral, rule-based trade.

The European Union and Brazil have threatened to retaliate while others such as Argentina and South Korea lobby for exemptions.

The U.S. is standing firm and, along with Canada, has called out Germany for running major current account surpluses. On the eve of the meeting, America also targeted China, with top Treasury Department official David Malpass rebuking Beijing for moving away from free-market capitalism.

Cyptocurrencies

Policy makers are struggling to come up with a unified strategy to oversee digital currencies, which have soared in popularity and pose a challenge to regulators who are concerned about their volatility and potential use in money laundering and tax evasion.

While a draft G-20 statement circulating mid-afternoon Monday said cryptos lack many of the attributes of sovereign currencies, delegates provided limited details on any specific and coordinated steps member nations might take to regulate the assets. Bank of Japan Governor Haruhiko Kuroda advocated for consumer protections, and Saudi Arabia’s Monetary Authority Governor Ahmed Alkholifey called for strategies to limit their ability to destabilize markets.

Also Monday, the Trump administration banned U.S. purchases of a cryptocurrency the Venezuelan government is rolling out.

Venezuela

The U.S. wasn’t the only nation concerned about Venezuela, as Argentina’s Finance Minister Luis Caputo hosted a meeting of counterparts from the Americas, Europe and Japan to discuss the country’s deteriorating economic and humanitarian crisis. Venezuela’s economic troubles -- and its citizens -- are spilling over into neighboring Latin American nations.

Most delegates agreed in principle on measures to put pressure on the Maduro administration. Treasury Secretary Steven Mnuchin offered to host a follow-up meeting next month in Washington.

Digital Taxation

Taxation is also a controversial topic at the G-20, as the European Union considers imposing a levy on online companies such as Amazon.com Inc. that have considerable clout in Washington. Secretary Mnuchin said last week the administration “firmly opposes” the measure.

But the EU hasn’t dropped the idea, which one official at the meetings said had become a major sticking point in the G-20.

Monetary Policy

While the Federal Reserve’s new chief Jerome Powell isn’t in Buenos Aires, his presence was felt, as global policy makers brace for the impact of higher U.S. borrowing costs.

Investors widely expect Powell to hike interest rates during his first meeting as chairman on Tuesday and Wednesday, and he may need to accelerate the pace of tightening this year as fiscal stimulus and a pickup in global growth provide tailwinds to the U.S. economy.

Gone already from last year’s G-20 communique, based on a draft statement, is any reference that “monetary policy will continue to support economic activity.” The draft also highlights the risks associated with rising interest rates.

--With assistance from Saleha Mohsin Yoshiaki Nohara Ye Xie Carolina Millan Jessica Shankleman and Jana Randow

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net.

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Randall Woods, Raymond Colitt

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