Finance Minister Jim Flaherty says G7 nations want to continue trading with one another in order to stimulate economic growth and begin recovery from the world's worst financial crisis since the 1930s.
Speaking from the G7 meeting in Rome, Flaherty said Saturday that despite hearing murmurs of "protectionist-type sentiments," the finance ministers have all agreed to oppose protectionist policies.
"The easiest thing for politicians to do is be short sighted, only look at the short term, cater to populist sentiment and say, 'OK, we're going to hide within our own countries, we're only going to buy our own products, we're going to stop exporting,'" Flaherty told Â鶹´«Ã½net.
"If you go in that direction we know from the 1930s what it can lead to. It can lead to a very bad situation that's much worse than what we have now."
In a statement issued after Saturday's meetings, the ministers agreed to work together on stimulus and employment measures in a bid to stabilize the devastated global economy.
The ministers also warned against protectionist measures, which they said would compromise a worldwide turnaround in economic fortunes.
"The stabilization of the global economy and financial markets remains our highest priority," the ministers said, while also emphasizing the need to support developing countries during the crisis.
The ministers pointed out that the G7, made up of the world's seven most industrialized countries, has "collectively taken exceptional measures" to address the current economic challenges.
Speaking to reporters after the meeting, U.S. Treasury Secretary Timothy Geithner echoed Flaherty's sentiments and called for G7 nations to keep trade open.
"These are global challenges and it is imperative that we work together to address them," Geithner said. "Effective global response will require sustained action by governments working with the international financial institutions."
Saving banks
The G7 ministers endorsed the moves by both the U.S. and British governments to stabilize their respective financial systems by pouring money into banks.
But they also took aim at China, encouraging the government to continue allowing its currency to increase in value in order to even out trade imbalances. Some critics charge that China keeps the yuan artificially low to boost exports.
The ministers aim to establish a set of common principals for greater transparency in the banking industry within the next four months, ahead of a G8 summit in Sardinia in July.
This weekend's meeting came amid the release of grim economic news in Europe.
Germany's economy fell 2.1 per cent in the fourth quarter over the previous quarter, the most significant downturn since the country reunified in 1990.
Italy also reported a downturn of 1.8 per cent, while France recorded a downturn of 1.2 per cent.
While the ministers predicted a gloomy economic forecast for most of 2009, Flaherty said that both he and Bank of Canada Governor Mark Carney believe the Canadian economy "will get better as we get later in the year and as we get into 2010."
Meanwhile, Congress passed U.S. President Barack Obama's massive US$787 billion stimulus package on Friday, a bill that Obama has predicted will save or create more than three million jobs.
With files from The Associated Press
