By DAISUKE IGARASHI/ Correspondent
WASHINGTON — The managing director of the International Monetary Fund praised Japan’s leadership in promoting multilateral trade, particularly in efforts to conclude the Trans-Pacific Partnership (TPP) trade agreement, in an interview with The Asahi Shimbun.
With the differing stances between the IMF and its largest contributor, the United States, on free trade and other issues having become clear during the Trump administration’s first year, Christine Lagarde is looking to Japan, the second largest contributor, for even greater leadership.
“Japan plays a key role in upholding the global system that has underpinned decades of growth, and we are particularly encouraged by Japan’s leadership on the TPP, a signal of the Japanese authorities’ commitment to multilateralism,” said the IMF head.
Lagarde also placed high value on Japan’s support to the IMF, and said that the organization is examining whether to take into account each member country’s voluntary contributions as an additional factor when it decides those states’ capital contribution ratios.
Eleven countries participating in the TPP negotiations are aiming to reach a basic agreement in their summit meeting to be held in Da Nang, Vietnam, on Nov. 10 without the participation of the United States.
The Trump administration is taking a stance that the World Trade Organization rules are insufficient. For example, it is considering imposing a sanction on China unilaterally for infringement of intellectual properties.
Acknowledging the need to review the WTO rules, Lagarde said, “It is reasonable to expect that, just as the world changes, the overall trade system be revisited and, where necessary, improved.”
While avoiding naming the United States, Lagarde apparently countered the Trump administration’s preference for bilateral negotiations, which it expects to benefit the United States.
“Trade is a very powerful engine for growth,” Lagarde said. But, she also acknowledged, “The multilateral trading system must be viewed as being even-handed, rigorously enforced, and relevant to today’s global economy.”
The IMF lends money to its member countries when they plunge into economic crises. It is aiming to review member countries’ capital contribution ratios by autumn 2019 as well as deciding whether to increase that capital.
The capital contribution ratios, which are decided based on member countries’ economic scales among other factors, are linked to their voting rights and, therefore, influence their assertiveness.
In the review of those ratios, China is expected to exceed Japan and become the second largest contributor after the United States.
During the international financial crisis in 2008, Japan expressed a credit line of up to $100 billion (about 11 trillion yen), and with this in mind it is asking the IMF to consider Japan’s past contributions to strengthening the organization’s financial basis.
Lagarde placed high value on Japan’s contributions, saying, “In many areas, Japan has been the most generous contributor to the fund.”
She added that the IMF is examining whether to consider the voluntary and positive contributions as an added factor in reviewing the ratios.
The Trump administration, in its negative stance toward the multilateral framework, is intensifying pressure on the IMF so that its operations will become more efficient. Consequently, whether the IMF can increase its capital is uncertain.