G20 Finance Ministers Agree on Trade Provisions in Draft Communique

Mar 19, 2017, 00:57
G20 Finance Ministers Agree on Trade Provisions in Draft Communique

In his first multilateral meeting as US Treasury Secretary, Steven Mnuchin is tasked with relaying the new US President Donald Trump orientation-which is at odds with the G20's sacred notion of free trade.

In an unusual turn of events, hinting growing tensions, German Chancellor Angela Merkel and Chinese President Xi Jinping emphasized in a telephone conversation the importance of free trade for a growing global economy, according to a statement from Merkel's office.

French Finance Minister Michel Sapin said leaders would be asked to step in when they meet in Hamburg if no agreement can be found.

Wolfgang Schaeuble, the finance minister of host country Germany, argued that it was not true that officials failed to find common ground.

Following pushback from US officials, led by US Treasury Secretary Steve Mnuchin, the communique of G20 finance minister backtracked on past commitments such as open trade and outright rejection of protectionism. The OECD is one of several worldwide organizations invited to participate in the meeting.

Conspicuous by its absence was the phrase "we will resist all forms of protectionism" that was contained in the communique from the last meeting of the group in China, July 2016.

The G20 has in the past pledged support to the existing multilateral trade system, including the World Trade Organisation (WTO).

The outcome of the first face-to-face talks between Aso and Mnuchin could be a relief to Japanese officials concerned about the USA piling pressure on Japan over currency policy.

The summit of finance ministers from the Group of 20 countries comprising more than 80 percent of the global economy is in progress in the southern German resort town of Baden-Baden.

Trump and other critics of free trade argue that it can cause jobs, such as in the labor intensive manufacturing sector, to move to lower-cost countries.

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The G-20 is an informal forum on economic cooperation made up of 19 countries plus the European Union.

In the new US administration's biggest clash yet with the global community, G20 finance chiefs also walked back on a pledge to support climate change finance, an anticipated outcome after U.S President Donald Trump called climate change a "hoax".

Trump has suggested global warming was a "hoax" concocted by China to hurt USA industry and vowed to scrap the Paris climate accord aimed at curbing greenhouse gas emissions.

In a visit to Berlin ahead of the G-20 meeting, Mnuchin said the U.S.is interested in trade that is not only free but fair.

"We want to reexamine certain agreements, we have talked about reexamining NAFTA", he told journalists, referring to the North American Free Trade Agreement between Canada, Mexico and the United States.

"There is a lot of pressure at this meeting to get leaders on the same page on trade", said LeCompte.

By failing to explicitly reject protectionism, the G20 summit may have set the stage for growing divergence between the United States and other major economies on globalization.

Advocates for free trade such as the International Monetary Fund say that trade restrictions will only hurt growth and won't benefit ordinary people, while urging measures to spread the benefits of trade more widely.

- Alanna Petroff contributed to this article.