Finance leaders defend trade, worry about those left behind
WASHINGTON (AP) —
World finance leaders, confronted by a growing backlash against globalization, will seek to build support for free trade by finding ways to help those left behind.
World Bank President Jim Yong Kim said he was "very much aware of the fact that there are many who have not benefited from globalization, who are very angry at the fact that they have not benefited."
Christine Lagarde, managing director of the International Monetary Fund, noted that the global economy is expanding at a healthier clip this year but said, "We need to make that global growth more inclusive." She suggested raising the minimum wage in some cases, providing tax breaks to the poor, and offering the unemployed training and financial help moving to where the jobs are.
Lagarde and Kim spoke Thursday at the opening of three days of meetings of global finance leaders representing the 189 countries that are members of the IMF and its sister lending organization, the World Bank. The meetings continue Friday and will wrap up Saturday.
The United States is being represented at the gathering by Treasury Secretary Steven Mnuchin and Federal Reserve Chair Janet Yellen.
The IMF reported this week that the world economy will expand 3.5 percent this year, up from 3.1 percent in 2016 and a sign that it is escaping a long period of lackluster growth that Lagarde once lamented as "the New Mediocre."
But in the United States and Europe many feel left behind and vulnerable to low-wage competition from immigrants and laborers in countries like China and Mexico. They took their anger to the voting booth last year. The British stunned the world by voting to leave the European Union. And American voters sent Donald Trump to the White House, rewarding his promises to upend decades of U.S. policy in favor of ever-freer trade. France might vote in another populist when it elects a president Sunday.
Trump has backed away from some of his campaign threats on trade. But on Thursday, he ordered the Commerce Department to speed up an investigation into whether steel imports jeopardize U.S. national security — a move that could lead to tariffs on imported steel from countries such as Canada, Brazil and South Korea.
Lagarde said that the IMF and its member nations needed to "protect free, fair and global trade." In an interview Thursday with CNBC, Lagarde said that the goal of all nations should be to promote a level playing field in trade.
It's not just globalization. Machines are replacing human workers in a growing number of occupations.
"These processes of modernization, which are barely comprehensible to many people, are triggering defense reactions," said German Finance Minister Wolfgang Schaeuble, speaking to a different Washington audience on Thursday. "People have a growing need for the familiar and a stronger sense of groundedness in their regional or national identities. Skepticism toward openness and change is rising."
In a news conference, Kim said a recent study showed that of all the job losses that have hit industrial countries in recent years, at most only 20 percent could be blamed on increased trade competition. He said the biggest factor in the job losses was increased automation.
"My message is you're not going to bring these old jobs back," Kim said. "Every country in the world has to think about how it's going to compete in the economy of the future."
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