Group of Seven finance leaders vowed to avoid protectionism as they seek to stabilise the tumbling world economy and financial markets, a draft statement at talks here said Saturday.

US Treasury Secretary Timothy Geithner (R) and the chairman of the Federal Reserve System Ben Bernanke take place for a working session of a meeting of G7 Finance Ministers and Central Bank Governors on Feb. 14 in Rome (Photo: AFP)

“The stabilisation of the global economy and financial markets remains our highest priority,” according to a draft declaration of G7 finance ministers obtained by AFP as the delegates held high-stakes talks in Rome.

So far, “we have collectively taken exceptional measures to address these challenges,” it said, without specifying concrete proposals on the table at Saturday’s talks.

“We affirm our commitment to act together using the full range of policy tools to support growth and employment and strengthen the financial sector,” the draft said.

It also reflected comments by several top delegates that protectionism — when countries take measures that favour their own economies at the expense of others — was a threat to stability.

“G7 remains committed to avoiding protectionist measures, to refraining from raising new barriers” to world trade, the draft said.

The financial leaders were working to hammer out an action plan to confront deepening recession, amid mounting warnings of the talks’ grave economic stakes.

International Monetary Fund chief Dominique Strauss-Kahn set the tone when he said advanced economies were in a “deep recession” ahead of the crisis talks in Rome, which kicked off with a working dinner on Friday.

Delegates from the G7 grouping of Britain, Canada, France, Germany, Italy, Japan and the United States plus Russia were comparing notes on stimulus packages and seeking consensus on the next steps, including possible new rules for global finance.

Us Treasury Secretary Timothy Geithner was set to discuss his vast US financial stabilization plan, which received a sceptical reaction in the United States and has prompted calls for details.

More grim data emerged on Friday showing that the eurozone economy slumped by 1.5 percent in the fourth quarter of 2008. The European Union overall and several individual EU countries — including G7 host Italy — are also in recession.

Ahead of the talks, several delegates voiced alarm over protectionism which they fear may undermine efforts to ease the downturn.

German Finance Minister Peer Steinbrueck warned Friday that “the world (should) not make the same mistake that it made in the 1930s” at the time of the Great Depression, when protectionist measures prompted tit-for-tat reprisals that deepened the global crisis.

Recent proposals by France and the United States have sparked charges of protectionism.

The Italian finance ministry said in a statement that as president of the talks it would also push for “a minimum basic set of rules” on world financial regulation and discuss “cooking security issues.”

SGGP/AFP