Japan warns G-20 that protectionism will hurt financial markets

In a speech to the G-20 finance ministers and central bank governors, Japan's Finance Minister Taro Aso stressed the need to solve global imbalances under a multilateral, not a bilateral, framework.
In a speech to the G-20 finance ministers and central bank governors, Japan's Finance Minister Taro Aso stressed the need to solve global imbalances under a multilateral, not a bilateral, framework.PHOTO: REUTERS

WASHINGTON (REUTERS) - Japan has warned its Group of 20 (G-20) counterparts that protectionism and exchange of retaliatory measures will disrupt financial markets and heighten volatility.

"I told my G-20 counterparts that no country would benefit from inward-looking policies based on protectionism," Japan's Finance Minister Taro Aso told reporters after a dinner gathering of the G-20 finance leaders on Thursday (April 19).

In a speech to the G-20 finance ministers and central bank governors, Mr Aso stressed the need to solve global imbalances under a multilateral, not a bilateral, framework.

He also said currency markets remained vulnerable to abrupt shocks that could disrupt emerging market capital flows, as central banks of advanced economies start to dial back their crisis-mode stimulus programmes.

But there were no specific discussions on exchange rate moves at the G-20 gathering, Mr Aso said.

Fears of a global trade war are seen dominating talks at the G-20 gathering, with the International Monetary Fund warning that protectionism could hurt otherwise solid global growth.

Mr Aso's comments followed a summit earlier this week between Japanese Prime Minister Shinzo Abe and US President Donald Trump, which exposed differences between the two nations on how to frame trade negotiations.

The two leaders agreed to intensify trade consultations to expand bilateral investment and trade.

But while Mr Trump reaffirmed his desire to address trade imbalances with Japan through a bilateral trade deal, Mr Abe repeated his call for the United States to rejoin the multilateral Trans-Pacific Partnership (TPP) deal.

Mr Aso and his US counterpart Steve Mnuchin will meet for bilateral talks on Friday on the sidelines of the G-20 and IMF meetings, according to Japan's Finance Ministry.