The world’s biggest economies should reaffirm their pledge to reject competitive currency devaluations and protectionism, the head of the European Central Bank said, after rumors this commitment could be watered down.
Finance ministers and central bank chiefs from the Group of 20 top economies are set to meet on March 17-18 for the first time since U.S. President Donald Trump took office.
A draft of their communique, seen by Reuters, appears to accommodate his more protectionist views on trade.
ECB President Mario Draghi, who will attend the meeting, said free trade and free-floating currencies brought economic stability and prosperity and batted back U.S. accusations that Germany was exploiting a weak euro to gain a trade advantage.
“I think it’s important to reiterate the commitments that were undertaken by our leaders and our finance ministers,” Draghi told a news conference after the ECB’s policy meeting.
“Statements like these have been the pillar of the stability that has accompanied world growth in the last 20 years and longer.”
The draft communique, which is dated March 1 and may still change, drops pledges to “resist all forms of protectionism”, “refrain from competitive devaluations” and not to “target our exchange rates for competitive purposes”.
Instead, it says: “We will maintain an open and fair international trading system” and “we reaffirm our previous exchange rate commitments”.
Asked about the communique, Draghi said: “I know of the rumors but I don’t know what to say about that, where they come from, whether they’re true or not.”
Trump has threatened German car companies with a border tax of 35 percent on vehicles imported to the United States.
His trade adviser Peter Navarro has called the $65 billion U.S. trade deficit with Germany, which will host the next G20 in Baden-Baden, “one of the most difficult” trade issues.
Draghi defended Germany, a country where his easy money policy is far from popular, and the ECB’s own approach to the exchange rate.
“I don’t think there is any merit in attacking Germany,” Draghi said.
“The exchange rate of the euro is determined by market forces, which is consistent with the long-standing commitments of the international community.”
Source: Reuters (By Francesco Canepa, Additional reporting by Hugh Lawson in London; Editing by Catherine Evans)