Leaders of IMF and World Bank defend globalization

Gladys Abbott
April 21, 2017

World finance leaders have gathered in the USA capital Washington DC - just down the road from President Donald Trump's White House - as they consider how to respond to his protectionist plans.

Separately, World Bank President Jim Yong Kim said he was "encouraged" by his engagement so far with Trump.

Managing Director Christine Lagarde said on Thursday she believes the International Monetary Fund can work successfully with the Trump administration to improve the global trading system, but added that open trade must be preserved as a growth engine.

Lagarde and Kim spoke at the opening of three days of discussions among global finance leaders representing the 189 countries that are members of the International Monetary Fund and its sister lending organization, the World Bank.

Asked about the Trump administration's skepticism about climate change at a news conference, Kim said the World Bank would continue to work with governments and the private sector to boost financing for alternative energy, especially in China, India, Indonesia, the Philippines, Pakistan and Vietnam.

Lagarde's remarks came as Britain heads toward an exit from the European Union and France prepares to stage presidential elections that also raise the prospect of quitting the bloc.

Trump tapped into a rising backlash against free trade during the campaign, pledging that he would impose punitive tariffs of up to 45 percent on countries such as China and Mexico which he blamed for pursuing unfair trade practices that were hurting American workers. "We care about the United States of America, we care about economic prosperity, we care about economic growth, we care about trade, we care about being treated fairly", he said.

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Trump has long promised to also label China a "currency manipulator" but he backed off that stance last week after meeting with Chinese President Xi Jinping.

The IMF has renewed its pleas in favor of trade integration and liberalization this week, as it contends with a rise in nationalist sentiment on both sides of the Atlantic.

But as the IMF raised its forecast for global economic growth to 3.5 percent for this year - a rare upward revision - Lagarde said it is time to address these concerns from "an economic point of view", to help spread the benefits of growth to marginalized groups while preserving worldwide cooperation. "It's something like a lose-lose situation, not a win-win situation", Schaeuble said. While Mnuchin had set a goal of getting it passed by the August recess of Congress, that goal has slipped. He said he would have a report with recommendations to present to the president by June that would address "the major issues" in the drive to revamp the Dodd-Frank law.

"All countries, of course, should guard against what I have called the self-inflicted wounds, such as restrictions, subsidies and other trade distortions that reduce competition and economic openness", she said. "That implies clearly a level playing field, no use of distortive measures, and no protectionist measures going forward", Lagarde said.

In addition they should direct spending toward establishing social safety nets to help with the loss of income, as well as improving education and training, the fund said.

"My message is you're not going to bring these old jobs back", Kim said.

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