Breaking with decades of tradition, G-20 economic ministers and bankers made only a token reference to open trade in a statement Saturday, a defeat for host nation Germany.
U.S. Treasury Secretary Steve Mnuchin tried to downplay any division, saying that language in the group’s annual statement opposing protectionism was “not really relevant” any longer.
“We believe in free trade,” he said, adding however that “balanced trade needs to be what’s good for us and what’s good for other people, a win-win situation.”
But Mnuchin, on behalf of the White House, shot down several entreaties from German officials to include language in the joint statement that would have called on countries to resist “all forms” of protectionism, which can include border tariffs and rules that favor a country’s businesses over those in another economy.
The communiqué also dropped a pledge to observe the Paris climate agreement.
One day earlier, Trump, standing beside German Chancellor Angela Merkel at the White House, complained about international trade agreements and said that the U.S. has gotten the short end of the stick in the past.
“The U.S. has been treated unfairly and that’s going to stop,” he said.
Trump campaigned on an “America first” platform and has promised to bring manufacturing and other jobs back to the U.S.
He has already pulled the U.S. out of a proposed free trade deal with Japan and other Pacific Rim countries and is trying to renegotiate the North American Free Trade Agreement with Mexico and Canada.
Wolfgang Schaeuble, the finance minister of Germany, suggested Saturday that the two days of talks at the G-20 had been somewhat rocky.
“Maybe one or the other important member state needs to get a sense of how international cooperation works,” he said, without mentioning a country by name.
He argued, however, that it was not true that the officials had not found some common ground.
“It’s completely clear we are not for protectionism. But it wasn’t clear what one or another meant by that,” he said.
European countries and China were said to be pushing for a stronger stance in favor of free trade and cooperative, multi-country frameworks for trade such as the World Trade Organization.
The G-20 is an informal forum on economic cooperation made up of 19 countries plus the European Union.
The meeting will pave the way for a summit of national leaders in Hamburg, Germany, on July 7-8.
|U.S. Treasury Secretary Steve Mnuchin tried to downplay the group's division by saying “balanced trade needs to be what’s good for us and what’s good for other people, a win-win situation.” (PABLO MARTINEZ MONSIVAIS/AP)|
G20 financial leaders acquiesce to U.S., drop free trade pledge
Financial leaders of the world's biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States after a two-day meeting failed to yield a compromise.
Breaking a decade-long tradition of endorsing open trade, G20 finance ministers and central bankers made only a token reference to trade in their communique on Saturday, a clear defeat for host nation Germany, which fought the new U.S. government's attempts to water down past commitments.
In the new U.S. administration's biggest clash yet with the international community, G20 finance chiefs also removed from their statement a pledge to finance the fight against climate change, an anticipated outcome after U.S. President Donald Trump called global warming a "hoax".
In a meeting that some said was at times 19 against one, the U.S. did not yield on key issues, essentially torpedoing earlier agreements as the G20 requires a consensus. Still, the dialogue was friendly and non-confrontational, leaving the door open to a future deal, officials who attended the meeting said.
"This is my first G20, so what was in the past communiqué is not necessarily relevant from my standpoint," U.S. Treasury Secretary Steven Mnuchin said in the German resort town of Baden Baden.
"I understand what the president's desire is and his policies, and I negotiated them from here," Mnuchin said. "I couldn’t be happier with the outcome."
Seeking to put "America first", Trump has already pulled out of a key trade agreement and proposed a new tax on imports, arguing that certain trade relationships need to be reworked to make them fairer for U.S. workers.
"We believe in free trade, we are in one of the largest markets in the world, we are one of the largest trading partners in the world, trade has been good for us, it has been good for other people," Mnuchin said. "Having said that, we want to re-examine certain agreements."
International trade makes up almost half of global economic output and officials said the issue could be revisited at a meeting of G20 leaders in July.
While some expressed frustration, like French Finance Minister Michel Sapin, others played down the dispute.
"It is not that we were not united," German finance minister Wolfgang Schaeuble said. "It was totally undisputed that we are against protectionism. But it is not very clear what (protectionism) means to each (minister)."
He added that some ministers did not have a full mandate to negotiate since they were not fully in charge of trade issues.
Others suggested that the G20 leaders' meeting in Hamburg this July could be the real opportunity to bring the U.S. on board.
"It is not the best meeting we had, but we avoided backtracking," EU Economic Affairs Commissioner Pierre Moscovici said. "I hope in Hamburg the wording will be different. We need it. It is the raison d’etre for the G20," Moscovici said.
CLIMATE PLEDGE DROPPED
The communique also dropped a reference, used by the G20 last year, on the readiness to finance measures against climate change as agreed in Paris in 2015, because of opposition from the United States and Saudi Arabia.
Trump has suggested global warming was a "hoax" concocted by China to hurt U.S. industry and vowed to scrap the Paris climate accord aimed at curbing greenhouse gas emissions.
Trump's administration on Thursday proposed a 31 percent cut to the Environmental Protection Agency's budget as the White House seeks to eliminate climate change programs and trim initiatives to protect air and water quality.
Asked about climate change funding, Mick Mulvaney, Trump's budget director, said on Thursday: "We consider that to be a waste of money."
The G20 did, however, show continuity in its foreign exchange policies, using past phrases on currency markets.
"We reaffirm our previous exchange rate commitments, including that we will refrain from competitive devaluations and we will not target our exchange rates for competitive purposes," the G20 said.
Leaders also upheld their commitments to financial sector regulation, supporting the finalization of bank rules known as Basel III, provided they do not significantly raise overall capital requirements.
The US rejects free trade statement at G-20 meeting
BADEN, Germany (Reuters) - The United States remains committed to free trade but wants to re-examine some trade deals and correct their excesses, U.S. Treasury Secretary Steven Mnuchin said on Saturday after G20 finance chiefs backtracked on past commitments about trade.
Making only a token reference to trade in their communique, finance ministers and central bank chiefs from the world's top 20 economies broke with a decade-long tradition of endorsing open trade, a clear defeat for host nation Germany, which has fought to maintain the G20's past commitments.
"What was in the past communique is not necessarily relevant from my standpoint," Mnuchin told a news conference in Baden Baden after his first meeting with the finance chiefs of the world's 20 biggest economies.
"I understand what the president's desire is and his policies, and I negotiated them from here. I couldn’t be happier with the outcome," Mnuchin said.
In the new U.S. administration's biggest clash yet with the international community, G20 finance chiefs rowed back on a pledge to reject protectionism and maintain an open and inclusive global trade system.
"We believe in free trade, we are in one of the largest markets in the world, we are one of the largest trading partners in the world, trade has been good for us, it has been good for other people," Mnuchin said.
"Having said that, we want to re-examine certain agreements," Mnuchin said, adding that NAFTA would have to be reviewed, some WTO rules needed to be better enforced and older agreements may have to be renegotiated.
Although the government is also reviewing financial regulation, Mnuchin pledged support for the now stalled Basel III accord, a major global attempt to regulate lenders consistently.
"We’re hopeful there will be a resolution on the Basel III/IV changes," Mnuchin said. "We need to make sure we bring unity to the international market."