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G7 partners seek common ground with Trump

Updated: 14:15 15-05-2017

G7 finance ministers met on Friday, looking for common ground amid concern among the United States' partners about the implications of Donald Trump's 'America First' economic agenda.

The talks, the first Group of Seven outing for US Treasury Secretary Steven Mnuchin, followed the overnight announcement of a surprise trade accord between Washington and China.

The deal, securing better access to the Chinese market for US beef, natural gas and some financial services, was welcomed by Mnuchin.

"We are excited about US trade policies and I think you probably saw we made an announcement of a 100 day economic plan with the Chinese so I think we're very happy with how were proceeding with the Chinese," the former banker said.

Among US partners in the club of wealthy democracies there is concern that Trump's arrival in the White House could herald a new era of protectionism – although officials complain mainly that they don't have any visibility on Washington's intentions.

European Finance Commissioner Pierre Moscovici said he hoped the US administration would stick with the existing system of rules-based, largely liberalised global trade.

"The Americans are free to choose their policy," he said. "What I hope is that this policy will be within the international framework, which means also multilateralism, which means also attachment to free trade."

- All in same boat -

The US and Europe could have different views of specific issues but had to have ways of resolving their differences, he added. "We are in the same world, all in the same boat.

"We are getting to know each other better, so let's work together."

Differences over trade had initially been expected to dominate the meeting in Bari, a fortified port on Italy's southern Adriatic coast.

But the issue has been pushed to the sidelines with hosts Italy seeking to to find areas of overlap between Trump's still vague agenda, and the priorities of Washington's chief European partners (Britain, France, Germany, Italy), Canada and Japan.

"There won't be a specific session on issues of trade and protectionism but it could come up in the broader discussion on the state of the world economy," said an Italian official involved in preparing the meeting.

Trade was however expected to feature in bilateral talks, particularly with Japan and Germany, both large net exporters suspected by Trump of benefiting unfairly from their respective dollar exchange rates.

Among the issues officially on the table are transnational tax evasion, including the policing of web-based multinationals, combating the financing of terrorism, defending financial institutions from cyber attacks and how to ensure that the benefits of growth are more evenly shared.

- Web tax taking form -

The latter is an issue that has been on the G7 agenda since the 2007-08 financial crisis. But it has been given added urgency by Britain's vote to leave the European Union and Trump's election triumph, shocks attributed to the negative impact of recent economic trends on key demographics.

Trump's statements during and after his election campaign suggest he favours "inclusive growth" and Mnuchin, 54, has defined his essential role as delivering higher wages for American workers.

Italy tends to frame the issue in terms of taking active steps to reduce inequality, rather than assuming that growth will deliver better living standards for those struggling to get by.

"Inclusive growth means first of all that growth has to be shared with all segment and regions of society," Finance Minister Pier Carlo Padoan said Friday.

Italy has also floated proposals to ensure web-based multinationals pay more tax in the countries where they generate profits, rather than being able to declare them in countries with the most beneficial tax regimes, as currently happens. One idea in a package dubbed "web tax" by the Italian media would require companies like Facebook to collect VAT on all advertising revenues in the countries they are generated in. This might not significantly boost revenues but would give national governments an exact idea of how much a company like Facebook is earning on its soil, making corporation tax claims more straightforward.

"The so-called web tax is something that is taking form," Padoan said. "There are different national positions but the the purpose of the G7 is to get convergence towards a common vision on these issues."

Source: AFP Published: 12:45 12-05-2017

Posted by on May 12, 2017.

Categories: Business World News

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Updated: 09:39 22-Jun-2018