G7 to avoid protectionism

by mazevedo | February 14, 2009 at 11:05 am

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Finance ministers at a G7 meeting in Italy said raising barriers to free trade would make the downturn worse. Hours earlier, the US Congress approved an $787bn economic recovery plan that includes a 'Buy American' clause. G7 ministers said stabilising the world economy and financial markets was their priority. They said they would work together to support growth and jobs. The 'Buy American' clause has raised fears that protectionism could be growing in the world's largest economy. But in a statement after the meeting, new US Treasury Secretary Timothy Geithner dismissed such concerns." All countries need to sustain a commitment to open trade and investment policies which are essential to economic growth and prosperity," he said.

Another action which was considered urgent besides avoiding protectionism to the Ministers was an urgent need for a reform on the IMF. A couple of other things also mentioned at the meeting were help for banks and the necessity to speed up Doha talks on world trade.

I believe it will be really interesting to see how the G7 nations are going to avoid protectionism. As when you think about it, it is only a natural move to protect your own.