Blogs & Comment

G20: No to protectionism, yes to stimulus

Did I saythe G20 governments were going to give $500 billion to the IMF? Make that more than $1 trillion. The meeting has wrapped up and results are in no to protectionism, yes to more stimulus and tighter regulation.
It was predictable that the G20 nations would voice a resounding no to protectionism, but like TD’s Craig Alexander asks in a story I wrote yesterday, does this just mean no to tariffs or will other protectionist measures, like the Buy American clause in the U.S. budget, be abandoned as well?
It’s tough to tell how far the anti-protectionism sentiment will go after hearing what Stephen Harper had to say about this issue. He told reports in London that protectionism is “the greatest risk to the economy, and I’m not going to tell you it’s solved.”

There are, in many cases, very good arguments for [protectionist demands].
They will assist certain industries, sectors, and even individual companies, but they will do so at the expense of the wider economy and at the risk of a general drift in this direction globally. We absolutely must avoid that. All leaders are agreed to that.

According to a CBC story, he was then asked about auto industry bailouts, which the World Bank says is a protectionist measure. He said that he “agreed there are risks in that regard.”
Barack Obama told reports that they have “rejected the protectionism that could deepen this crisis. … This cooperation between the world’s leading economies signals our support for open markets.”
So we’ll have to wait and see what this all means, but it sounds like Canada should still be concerned.
Regulation was also a major theme at the G20 and some ground was made there, mainly that hedge funds will come under a global regulatory framework. The Financial Stability Board, as it’s been dubbed, will be made up of G20 and European commission members. It’s still unclear how they will police hedge funds, but we’ll get more details soon enough. (The Alternative Investment Management Associationhas already decried this move saying the hedge fund industry is being used as a scapegoat.)
Oh yeah, and that $1 trillion dollars that’s going to the IMF to help out cash-strapped countries? Everyone seems to be on board with that huge figure, even France and Germany. I’m not sure what Canada’s share of all that money will be, but when I find out I’ll let you know.
UPDATE:Just received a press release from the PM’s office. It revealed that Canada would contribute $10 billion to the IMF, and other $200 million to the International Finance Corporation’s global trade liquidity program.
Read more:
CBC – Deal part of ‘unprecedented’ response to crisis: HarperPrime Minister Stephen Harper spoke out against protectionism Thursday and said the agreement reached at the conclusion of the G20 summit in London was a “remarkable statement” that should give financial markets “an awful lot of confidence.”
BLOOMBERG G-20 Backs Regulation Crackdown, $1.1 Trillion Aid World leaders agreed on a regulatory blueprint for reining in the excesses that fed the worst financial crisis in six decades and pledged more than $1 trillion in emergency aid to cushion the economic fallout.
CNN – G20 pumps $1 trillion into beating recessionBritish Prime Minister Gordon Brown heralded the emergence of a “new world order” Thursday as the G-20 issued details of an “unprecedented” package of measures to tackle the global economic crisis.