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dpa
Davos, Switzerland
New carbon-neutral techologies could be the secret weapon to overcome global economic challenges, financial leaders agreed at the end of the World Economic Forum summit, with the notable exception of US Treasury Secretary Steven Mnuchin.
“If we have the right policies and incentives, we can create momentum for the tremendous liquidity in the world that is sitting idle, and have a new upswing,” International Monetary Fund chief Kristalina Georgieva said at the final debate of the gathering in the Swiss mountain resort of Davos.
The recent trade truce between the United States and China has boosted optimism about the economy, Georgieva said, but noted that downside risks remain in the form of relatively low growth, slow productivity gains, as well as low inflation and interest rates.
Environmentally friendly investments “may very well be the silver bullet” to deal with these four problems, she added.
Georgieva and European Central Bank chief Christina Lagarde stressed that financial institutions must find ways to assess and forecast climate risks to the financial system.
“We are going to have to drill down on how we measure,” Lagarde.
Mnuchin bristled at all this climate change talk.
He proposed that this term should not be used and argued that the climate is only one of many environmental issues. Geopolitical risks and global health issues deserve just as much attention, he added.
Mnuchin also rejected the idea of taxing carbon emissions. “I don’t think we know how to price these things,” he said.
While the United States has decided to pull out of the Paris Agreement to stem the temperature rise, the European Union this month unveiled plans to leverage up to 1 trillion euros (1.11 trillion dollars) in the next decade to achieve carbon neutrality by 2050.
German Finance Minister Olaf Scholz countered Mnuchin by saying that energy-effient technologies must be developed now, to avoid massive emission increases that come with economic development in poorer countries.
“Waiting for others is possibly a very dangerous strategy,” Scholz warned.
Even though many of the leaders who were assembled this year in Davos lauded Washington’s recent partial trade deal with China as a sign of easing global trade tensions, the US also appeared somewhat isolated at the World Economic Forum when it came to the rules of international commerce.
The European Union’s 28 members and 16 other countries agreed on Friday in Davos to create a new mechanism for settling trade disputes, because the World Trade Organization’s (WTO) appeals chamber has stopped functioning, thanks to US pressure.
Washington has blocked the reappointment of new judges to the WTO body, demanding that its judicial process must be reformed because it argues the panels have been overstepping their mandate and been working much too slowly.
Ministers from the 44 countries - not including the United States - said in a statement that overcoming this deadlock “is of the utmost importance for a rules-based trading system.” In the meantime, the countries will work on contingency measures to settle appeals to WTO rulings amongst themselves, they said, inviting other WTO members to join this interim arrangement.
The initiative includes Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, the European Union, Guatemala, Mexico, New Zealand, Norway, Panama, Singapore, South Korea, Switzerland and Uruguay.
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26/01/2020
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