TOKYO (THE YOMIURI SHIMBUN/ASIA NEWS NETWORK) - If the situation remains unchanged, free trade around the world could face a crisis. Relevant countries must solidify their unity to stop the rise of protectionism with the United States at its epicentre.
A joint communique released after the Group of 20 finance ministers and central bank governors meeting held in Germany dropped the statement, "We will resist all forms of protectionism," which had been used up through the previous communique. The US, which participated in the meeting for the first time since President Donald Trump took office, is said to have strongly called for the deletion.
The joint communique failed to refer not only to "anti-protectionism" but also to "free trade."
The meeting left mutual mistrust among participating countries. Finance Minister Taro Aso said at a press conference, "The importance of free trade was shared among G-20 (countries)."
However, French Finance Minister Michel Sapin issued a statement, saying discussions were "unable to reach a satisfying conclusion."
The G-20 has set out an anti-protectionism policy since 2008, when protectionism came to the fore in different countries due to the financial crisis, and has since declared the promotion of free trade.
Free trade aims for growth of the global economy with each country making the best use of its areas of expertise. It conflicts with protectionism, in which countries believe there is nothing wrong with preying on other countries for their own prosperity.
The US insists on "fair free trade," but what it means is "trade that serves US interests." It is nothing but protectionism.
Shouldn't the G-20 have persuaded the US and set forth the importance of truly free trade once again?
Prime Minister Shinzo Abe, who is currently visiting Europe, has good reason to have affirmed the significance of free trade separately with German Chancellor Angela Merkel and French President Francois Hollande.
They should further clarify their stance to counter protectionism, for example, by expediting negotiations on an economic partnership agreement between Japan and the European Union.
Following the Japan-US economic dialogue in April, the summit meeting of the Group of Seven industrialised nations will be held in May and the G-20 summit meeting in July. Taking these opportunities, Japan must explain to the US the importance of mutually beneficial trade relations.
Regarding foreign exchange policy, the G-20 joint communique maintained its conventional wording, "We will refrain from competitive devaluations."
The Trump administration has criticised Japan and China, saying they are guiding their currencies lower. The US did not particularly make an issue of foreign exchange during the recent meeting, partly because the lineup of US monetary officials has yet to be formed, and therefore Japan should not lower its guard.
As the US has raised interest rates for the first time in three months, the possibility that money that flowed into emerging economies due to monetary relaxation may depart from such economies is surfacing as a global risk.
It is essential for each G-20 country to ensure stable growth of the global economy by mobilising all possible policies, combining financial and fiscal measures as well as structural reform.
The Yomiuri Shimbun is a member of The Straits Times media partner Asia News Network, an alliance of 22 news media entities.
