G7 finance leaders look to address inequities as trade tensions fray unity
G7 finance ministers meeting in Paris on Monday will seek common ground on addressing global economic concerns and co-ordinating vital raw material supplies, even as geopolitical disagreements threaten to challenge the cohesion of the group.
The two-day conference followed a summit between US President Donald Trump and Chinese President Xi Jinping in Beijing that achieved few meaningful economic accomplishments as tensions over Taiwan and trade simmered behind a show of diplomatic cordiality.
The Paris agenda will focus on what French Finance Minister Roland Lescure said are “deep-rooted global economic imbalances that are creating trade friction and could result in a turbulent unwinding in financial markets.””The way the global economy has been developing for the past 10 years or so is clearly unsustainable,” he added, referring to a pattern where China under-consumes, the United States over-consumes and Europe under-invests.
UPDATE FROM THE SUMMIT US-CHINA
Lescure, who will chair the talks, said the G7 provided a chance for open discussion among allies at a time of growing disagreements with Washington.These are not easy topics. “I am not going to say that we agree on everything, including, of course, first and foremost with our American friends,” he told journalists before the meeting.
The Trump administration allowed a sanctions waiver on Russian seaborne oil to lapse on Saturday, and finance ministers will be seeking for an update on US-China ties after the Trump-Xi summit and on the latest US efforts to re-open the Strait of Hormuz.
The success would be if the sides just accept each has some responsibility for the trade and financial flow imbalances, French officials participating with preparations said, but the US side is expected to be reluctant.
FALLOUT FROM MIDEAST CONFLICT””I’d be shocked if they’re going to sign on to the idea this is the US’s fault in some way,” said Philip Luck, director of the economics program at Washington’s Center for Strategic and International Studies.
Ministers are also set to examine the economic effects from the Mideast conflict and volatility on global bond markets, which are of particular concern to Japan.
Rachel Reeves will “push for coordinated action to limit inflation and supply chain pressures and restore freedom of navigation through the Strait of Hormuz” at the meeting, and also reassert the government’s desire to reduce trade barriers between Britain and the European Union, Britain’s finance ministry said.
G7 divisions make it harder to show unity as ministers prepare for a June 15-17 leaders summit in the resort town of Evian.
CRITICAL MINERAL DEPENDENCE
A second target will be critical minerals and rare earths, where G7 governments are aiming to coordinate efforts to lessen reliance on China, which dominates supply chains important for technology from electric vehicles to renewable energy and security systems.
The G7 will call for tighter collaboration to monitor markets, anticipate disruptions and establish alternative sources, including through cooperative initiatives across allied economies, Lescure said. “The goal is to make sure that no country can ever again have a monopoly” of such materials, he said.
G7 countries are aiming to create a shared toolbox of measures to stabilise markets and boost domestic investment, possibly with price floors for manufacturers, pooled purchases and also tariffs.
Luck, who worked on the topic in the Biden administration, said the program is a long-term undertaking that would do little on the finance ministers’ meeting. “”This is very early innings of trying to figure this out,” he remarked. “I don’t think there is agreement on a strategy even within the U.S. government, let alone being able to articulate that in a convincing way to our partners in order to get them to sign on,” he said.