Janet Yellen used her first meeting of G7 finance ministers as US Treasury secretary to signal the return of multilateralism in the United States, in an apparent change from the Donald Trump administration, according to officials who watched the conference via video on Friday.
The positive American tone at the international meeting gave hope in other capitals that the possibility of reaching agreement this year in difficult areas of global politics such as climate, digital tax and aid for the poorest countries has improved significantly.
As the Coronavirus pandemic continues to devastate the global economy, finance ministers have stressed the need for continued economic support. Yellen asked the rest of the G7 members not to cut financial support this year, saying, “It is time to make significant progress.”
His invitation was warmly welcomed in European capitals. “The withdrawal of political support is premature,” said Italian Economy Minister Roberto Gualtieri, while Bruno Le Maire, the French Finance Minister, called for close coordination within the Group of Seven on recovery plans and economic policies.
The biggest relief in other capitals was when Yellen emphasized the Biden administration’s renewed commitment to multilateralism and constructive dialogue between nations.
British Chancellor Rishi Sunak, who chaired the meeting, welcomed Yellen’s arrival as a chancellor to the treasury and the G7’s support for this year’s UK agenda that prioritizes climate change. Yellen told other finance ministers that the United States now recognizes that it must play a “critical role” in the global effort to combat carbon emissions and should expect a “significant increase in American engagement” on the issue since the Trump years.
One of the most contentious areas among the G7 countries is efforts to reform taxes imposed on multinational companies. Negotiations on a compromise package designed by the Organization for Economic Co-operation and Development stalled for months as the United States threatened to impose tariffs on European countries in retaliation for the new digital sales taxes.
On the contrary, at the meeting on Friday, Yellen gave a positive tone according to the many G7 capitals. The United States agreed to a summer deadline for progress on this issue.
An official familiar with the meeting said Yellen reinforced the US commitment to resolving the digital tax impasse at the Organization for Economic Co-operation and Development and insisted that the deal should work for everyone.
Yellen also spoke encouraging words about international efforts to mitigate the impact of the epidemic on heavily indebted emerging economies.
The United States is considering whether to support the International Monetary Fund’s plan to allocate up to $ 500 billion in special drawing rights to its members, a move that has garnered widespread support from other countries but has been banned by the Trump administration. Yellin said the G7 should work to “address the challenges facing low-income countries.”
The official said the United States was still assessing its support for the increase in the SDR allocations and would decide in the coming weeks. The U.S. Treasury declined to comment on Yellen’s letter on SDRs or the OECD talks.
In a statement, German Finance Minister Olaf Schultz praised the spirit of global cooperation with the new US administration. “It is good that we are looking for a joint dialogue again in the form of the Group of Seven,” he said.
Additional relationships include Miles Johnson in Rome, Jay Chazan in Berlin, and Victor Mallet in Paris