Trade conflicts benefit no one, as there are no winners. That was the message from the Chair of the International Monetary Fund’s top policy steering committee Lesetja Kganyago, who was addressing the media at the conclusion of their deliberations in Washington.
The United States stuck to its guns in calling out what it called unfair global trade practices that impede US and global growth, but the IMFC agreed that increasing trade was critical to broad-based economic growth. The question of land expropriation without compensation was also put to the IMF Chief.
It is Kganyago’s first stint as head of the IMFC and he has given an uncompromising message despite pressure from the largest economy in the world.
“The bottom line here is that trade tensions are not to the benefit of anyone. There can never… if there is a trade conflict… there could never be winners. We could all only be losers, and it is within that context that it is important that, as a global community, we keep trade open, we ensure that we work within the multilateral system that we have to make sure that if there are disputes, that those disputes are resolved… and I think that is for me what is going to be crucial.”
Asked if an African proverb about elephants fighting while trampling the grass below might have helped in explaining the ramifications of a trade war to US Treasury Secretary Steve Mnuchin, Kganyago answered, “I don’t know what Mr Mnuchin had said, the communiqué that we have, that we have released to the extent that it talks about trade, it had been signed off by the entire membership. So, when we say that there are rising trade tensions, it is the collective assessment of the committee. African proverbs are always very nice, but it will be very difficult to explain an African proverb from here.”
South Africa is among the most unequal societies anywhere in the world, and part of addressing that inequity, the country is engaged in the possibility of land expropriation without compensation.
“I would simply say that we have mentioned times over the respect for the rule of law, and I would suspect that South Africa is being a very civilized, sophisticated country when it comes to the law; the rule of law will also be binding on all – and I would just maybe use a proverb. I have no idea whether it’s an African proverb or not, but my recollection is it goes something like trust grows at the speed of a coconut tree, and falls at the speed of a coconut,” says IMF Managing Director Christine Lagarde.
The IMFC is comprised of 24 member states drawn from a pool of 189 IMF Governors. The autumn meeting of the IMF and World Bank takes place in Bali Indonesia in October.
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