Finance chiefs of the world’s largest economies set aside a previous pledge to avoid protectionism and signed up to a fudged statement on trade instead, in response to the Trump administration’s call for a rethink of the global order for commerce.
The Group of 20 nations, meeting in Germany on Saturday, said in a communique that they are “working to strengthen the contribution of trade to our economies.” That’s a much pared-down formulation compared with the group’s statement last year, and also omits a promise to “avoid all forms of protectionism.”
In two days of meetings in Baden-Baden, delegates split under the pressure of the new U.S. rhetoric on the balance of global trade, with most favoring a multilateral, rules-based system as currently embodied in the World Trade Organization. The U.S., represented by Steven Mnuchin in his first appearance at an international forum as Treasury Secretary, argued that trade arrangements need to be made fairer, in line with the administration’s claims the U.S. has had a bad deal from the current setup.
The impasse reflects the atmosphere the previous day at the White House, where U.S. President Donald Trump met German Chancellor Angela Merkel and repeated his complaints that his country has been treated “very, very unfairly” in trade arrangements.
“We met at a time when the global economic recovery is progressing,” the official communique stated. “But the pace of growth is still weaker than desirable and downside risks for the global economy remain. We reaffirm our commitment to international economic and financial cooperation.”
While delegates greeted Mnuchin and said that he had been engaged in the process, it wasn’t possible to reconcile the U.S. stance and that of the other members in any substantive way. Officials may continue to seek greater consensus on trade between now and the G-20 leaders summit in Hamburg in July.
The communique also committed to “further strengthening the global financial architecture” and said members support work to finalize the Basel III framework on bank regulations. It dropped a reference to climate change, in the face of resistance from countries including the U.S., China, India and Saudi Arabia.
I “regret that our discussions today didn’t end in a satisfactory manner,” French Finance Minister Michel Sapin said in a statement. “France is fully convinced of the necessity of regulated free trade beneficial to all, and of a resolution to commercial conflicts in a multilateral framework. Taking into account the recent evolution of the position of the U.S. and of the refusal of numerous countries, including France, to any rollback on these questions, the ministers of the G-20 decided to continue to work in a constructive manner with a view to the Hamburg summit so as to reinforce the advantages of international commerce.”