First Day of G20 Meeting Weighs in on Protectionism and Cryptocurrencies
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- Protectionism and the threat of a trade war were weighty topics with G20 meeting open Monday
- Cryptocurrency regulation gains support amid security concerns
- Taxation of digital companies is said to have been a point of spurious debate
- Infrastructure spending and Venezuelan refugee aid were also topics of discussion
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Protectionism and Free Trade
The G20 summit began on Monday with the threat of steel and aluminum tariffs from the US still looming on most participants’ minds. Members of the meeting have strongly opposed tariffs and have accused the US of potentially igniting a trade war, with five steps for tariff exemption becoming public today for the European Union. US Treasury Secretary Steven Mnunchin is said to have received criticism and pressure from other representatives due to the planned tariffs.
- Canada and Mexico are the only member countries to have received exemption from US steel tariffs
- Argentina and Germany agree dissuading the US from imposing sanctions is a key issue
- Mnunchin said the US has been very transparent with tariffs and hopes to win a consensus on opening Chinese markets
- French Minister of Economy Bruno Le Maire claimed Europe is not the origin of trade problems and expects full exemption at the EU level
Stricter Monitoring and Regulation of Cryptocurrency
Cryptocurrency was another topic of discussion headed into the talks as many members seek to further regulate and understand the digital currencies. Talks were already in progress when US President Donald Trump banned US investment into the Venezuelan national cryptocurrency, the Petro. Trump asserted the digital currency was an attempt to bypass sanctions and ministers going into the talks had echoed similar sentiments.
- Concerns over money laundering and the funding of terrorism were cited as major reasons for increased regulation and monitoring
- Cryptocurrency is said to lack the traits of a sovereign currency
- Deputy Governor of the Bank of France Sylvie Goulard wants to make cryptocurrency as safe as other products
- A report from the FSB heading into the meeting suggested cryptocurrencies do not pose an imminent systemic risk to the financial system
Taxation of Digital Companies
With little coverage approaching the meeting, the issue of taxation on digital companies was said to be a sticking point in the first day of talks. Last week the US said it was strongly opposed to any taxation of digital companies like Facebook, Amazon, or Google while Brazil stood in favor of them.
- Germany and France will try to increase the tax on large digital companies through the European Commission.
- A tax rate of 3% was discussed, potentially raising $6 billion annually in the EU.
Fund for Venezuealan Refugees
A less controversial topic was the suggestion of a fund for Venezuealan refugees. The International Monetary Fund would handle the relevant matters as it seeks to assist the thousands of people fleeing from Venezuela amid hyperinflation.
- IMF would control the capital inflows and outflows meant to assist refugees
- Little clarification on how the fund would distribute aid
Increased Spending in Infastructure
A final discussion in the Monday meeting was increased spending on infastructure, however the nature of infastructure development was not explicity outlined.
- Brazil and Germany said to have supported increased infastructure development
- The US is still awaiting details on an infrastruture spending program that President Trump vowed during his campaign and has since reiterated was under development
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