US breaks with allies over trade issues
The United States broke with other large industrial nations over trade on Saturday as the Trump administration rejected concerns among allies about spreading protectionism and made clear that it would seek new approaches to managing global commerce.
At a meeting of finance ministers and central bankers from the Group of 20 industrialised and emerging nations and the European Union, Steven Mnuchin, attending his first major international gathering as Treasury secretary, signalled that American policy would follow the campaign promises made by President Trump to put “America first” and review existing trade agreements to seek better deals for the United States.
As a result, the ministers’ joint statement, normally a study in blandness, became an unlikely focus of controversy here. The representatives could agree only on a tortured compromise stating, in effect, that trade is a good thing. Adjectives like “open” were dropped, and the ministers omitted language used in previous communiqués that condemned protectionism, repudiating decades of free trade doctrine.
For Asian and European officials, many of them meeting their Trump administration counterparts for the first time, it was a startling lesson in how Trump and his team are overturning long-held assumptions about international commerce.
Mnuchin led off the ministers’ meeting on Friday with a declaration that current trade rules were unfair to the United States, positioning the administration against virtually all the other participants, according to an official who attended the closed session and spoke on the condition of anonymity because of the sensitivity of the talks.
“We thought that it was very important for the communiqué to reflect what we discussed here,” Mnuchin said at a news conference on Saturday. “The historical language was not relevant.”
At the insistence of the United States, the communiqué also dropped a pledge to observe the Paris accords on climate change. Mnuchin deflected questions on the issue, saying it was outside his purview.
The American government’s lack of reverence for existing norms and treaties is particularly unsettling to the change-averse Europeans, who are coping with weak economic growth and a surge in populism. The last thing they need is a disruption in commerce with their biggest trading partner.
Some complained privately that the American delegation rode into this stately spa and casino town, where Romans once bathed in the mineral-rich waters, determined to shake up the existing order but without any clear idea of what should replace it.
The disagreement over trade principles was a sharp contrast to the statement issued when the central bankers and finance ministers met in Chengdu, China, last July. “We underscore the role of open trade policies,” the leaders said in the Chengdu communiqué, which used the word “trade” six times. They promised to “resist all forms of protectionism.”
Less than a year ago, such a statement was not questioned. Business leaders on both sides of the Atlantic still hoped for a trade pact between the United States and the European Union that would eliminate already low tariffs and harmonise regulations governing things like vehicle headlights.
Since then, Trump has pulled out of the Trans-Pacific Partnership negotiated by President Barack Obama, vowed to renegotiate the North American Free Trade Agreement with Mexico and Canada, and criticised the German carmaker BMW for building a factory in Mexico.