G-7 finance ministers gather amid warnings against protectionism

The financial ministers and central bank chiefs of the world's seven leading industrial countries (G7) have gathered in Rome to discuss how to deal with the global financial downturn. Representatives from the United States, Japan, Germany, Britain, Italy, Canada and France were expected to consider new financial markets rules and concerns about protectionist measures. A major change in the exchange rate policy was unlikely, however, local media quoted G7 officials as saying. A final statement was likely to be issued Saturday afternoon, and the participants were expected to brief reporters. According to a copy of the draft statement being circulated among reporters, participants would call for governments to stick to fair cross-border competition and free trade. To stabilize the economy and financial markets would be the current priority for all, and undesirable distortions should be avoided with joint efforts, according to the draft. Worries are mounting inside and outside the meeting that protectionism may spread as governments try to protect domestic jobs and their national industries amidst the economic upheaval. Japanese Financial Minister Shoichi Nakagawa said Friday he told his U.S. counterpart Timothy Geithner that Washington should not "pursue protectionism," an apparent criticism of the U.S. stimulus package which included such requirements as "Buy America." Other participants also voiced anti-protectionism stands. British Financial Minister Alistair Darling said protectionism "is very damaging and will hold up the recovery." He called for the awareness of the need to stick to free trade. Meanwhile, German Financial Minister Peer Steinbrueck appealed for full efforts to "ensure history does not repeat itself," referring to the possibility that policy makers may duplicate the mistake made during the Great Depression when a wave of tit-for-tat protectionism choked global trade and prolonged the economic pain. The meeting came as statistics published Friday wiped out any illusions that the euro-zone is getting off lightly in the downturn. According to EU's statistics office, the economy of the euro-zone countries declined by 1.5 percent in the fourth quarter of 2008, which was even worse than the 1-percent fall in the U.S. economy during the same period. Germany, the largest economy in Europe, saw its economy shrink by 2.1 percent in the final quarter of 2008.

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