End Trade Tensions and Bring Back Growth, Finance Chiefs Say
(Bloomberg) -- The heads of the IMF, OECD, World Bank and WTO made a joint call for the world to resist a rising tide of U.S.-led protectionism and return to the path of liberalization that had lifted millions out of poverty.
Ahead of this week’s annual meetings of the International Monetary Fund and World Bank in Bali, IMF Managing Director Christine Lagarde called for global policy makers meeting on the Indonesian island to focus on de-escalating trade tensions this week.
Hanging over the meetings is both President Donald Trump’s tit-for-tat tariff war with China and his assault on the World Trade Organization -- a global trade system that he argues has worked against American interests and workers for too long.
Lagarde pointed to Trump’s recent renegotiation of the North American Free Trade Agreement with Canada and Mexico as one reason for hope alongside EU efforts to close new trade deals.
“Let us try to use that momentum to turn tension into rapprochement,” she said on Wednesday.
But she also warned that the global trading system was under threat and that the risks of further disruption remained. The IMF this week lowered its forecast for global growth to 3.7 percent this year and next, warning that U.S. tariffs and trade tensions between Washington and Beijing were starting to drag on the global economy.
Jim Yong Kim, the World Bank president, said slowing global growth was already starting to have an effect on poverty reduction around the world. He warned that trade tensions were causing companies to put investment decisions on hold, something that would further hinder growth.
“Every country will feel the negative effects,” he said.
Roberto Azevedo, the WTO’s director-general, said the organization’s members had started to acknowledge the need for reform of the institution and global trading rules. There was also a near-universal acknowledgment that globalization had not benefited everyone in the world and that more needed to be done to help those left behind.
But he warned that abandoning the WTO, as Trump has threatened to do, and killing the multilateral trading system that had evolved since World War II would mean walking away from decades of work that had broadly benefited the world.
“It took a lot of people a lot of time to push the boulder this far up the hill,” Azevedo said. “It is vital that everyone who believes in the system raises their voice.”
Angel Gurria, the head of the Paris-based Organization for Economic Co-operation and Development, called for more to be done to find multilateral solutions to problems such as excess global steel capacity.
While the OECD has been hosting a special steel forum to try to negotiate a solution to the stand-off between China and developed economies over the surge in Chinese steel production in the past decade, those efforts were now largely on hold as a result of U.S. tariffs, Gurria said.
But a multilateral solution remained the best hope for solving that issue, he said, and finding a solution that “sticks.”
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