G7 Finance Leaders Seek Common Ground in Banff

The Sun

22-05-2025

BANFF: Finance leaders from the Group of Seven industrialized democracies sought to downplay disputes over U.S. President Donald Trump's tariffs and find some common ground to keep the forum viable as they met in the Canadian Rocky Mountains on Wednesday.
G7 finance ministers put a positive spin on discussions in Banff, Alberta, to try to reach an agreement on a joint communique largely covering non-tariff issues. The discussions included support for Ukraine, the threat from non-market economic policies of countries including China, and combating financial crimes and drug trafficking.
'I had a very productive day,' U.S. Treasury Secretary Scott Bessent told reporters when asked about his bilateral meetings as he departed the venue for a mountaintop dinner with fellow G7 ministers and central bank governors.
The finance leaders were striving to avoid a repeat of a fractured G7 finance meeting hosted by Canada in 2018, when Trump's first-term steel and aluminum tariffs made a joint statement impossible.
That meeting, described as the 'G6 plus one,' ended with Canada, Japan, Germany, France, Britain and Italy expressing 'unanimous concern and disappointment' over Trump's tariffs.
Trump's tariffs are far more extensive this time, but G7 sources said there was an effort to find compromise with Bessent.
'There's been a marked improvement in the mood,' a spokesperson for French Finance Minister Eric Lombard said after Lombard's bilateral meeting with Bessent. 'We had sincere and honest discussion between allies.'
Earlier, Lombard said that he was willing to live without a joint statement as long as the G7 reached a better understanding on how to reduce trade imbalances, better growth policies and the war in Ukraine.
'And making progress is what matters ultimately. It's not just a question of agreeing on a statement today for the sake of it,' Lombard said.
But Italian Economy and Finance Minister Giancarlo Giorgetti took a different tack, saying on X that reaching a communique compromise was 'a step we consider crucial.'
Ukraine discord
G7 delegation sources said it remained unclear whether the leaders could agree on joint communique language. One European source said, for example, that U.S. officials wanted to delete language describing Russia's invasion of Ukraine as 'illegal' from the draft.
Giorgetti said that Italy is pushing a proposal to bar countries that have done business in support of Russia's war effort from being part of Ukraine's reconstruction. The idea echoes what Bessent said last month that 'no one who financed or supplied the Russian war machine will be eligible for funds earmarked for Ukraine's reconstruction.'
China has been key in helping Russia circumvent Western sanctions and has served as a conduit of high-tech and battlefield goods such as drone components.
Delegates were also discussing a possible lowering of the $60-a-barrel G7 price cap on Russian crude oil.
'We expect a thorny discussion on the price cap,' one of the officials said.
The EU is pushing to lower the price level as it works on an 18th package of sanctions against Russia aimed at Russian energy and the financing of sanctions circumvention.
'There is no agreement yet on the communique but it's fundamental that we get this communique. It would be serious if not agreed,' a European official said.
Calming Influence
A second European official said Bessent's participation in the G7 meeting and efforts to try to find common ground provided some comfort to participants, describing him as 'flexible.'
Bessent skipped a much broader G20 finance meeting in South Africa in February, and a testy White House exchange between Trump and South African President Cyril Ramaphosa raised more questions about Trump's participation in a November G20 leaders summit.
A U.S. source briefed on Bessent's positions said on Monday that Washington would not agree to a joint statement unless it served U.S. priorities, which include stronger G7 steps to combat non-market practices such as China's subsidies that have led to excess manufacturing capacity.
'The message we're passing on to Bessent is that tariffs are not the correct response to dealing with global imbalances,' another European official said.
In a bilateral meeting, Bessent and Japanese Finance Minister Katsunobu Kato agreed that the current dollar-yen exchange rate reflects fundamentals, the Treasury said in a statement, that added that they did not discuss specific currency levels.
Currency issues are a factor in Japan's effort to negotiate a tariff-reducing trade deal with the U.S.
Canadian Finance Minister Francois-Philippe Champagne told reporters that he had a good meeting with Bessent.
'We get along very well. We got along very well,' Champagne said but declined to provide specifics.
Bessent also met with Germany's new Finance Minister Lars Klingbeil on Wednesday.
A German source at the G7 meeting described the discussion as an open and constructive exchange that lasted longer than planned, and the two men agreed to meet again in Washington after Bessent extended an invitation.
Japan, Germany, France and Italy all face a potential doubling of U.S. duties to 20% or more in early July. Britain negotiated a limited trade deal that leaves it saddled with 10% U.S. tariffs on most goods, and host Canada is still struggling with Trump's separate 25% duty on many exports.