US does G20 U-turn

AMERICA FIRST: BLOCKS ANTI-PROTECTIONISM RESOLUTION

Washington

On free trade, globalisation and multilateral organisations, the United States has done an about-face on international engagement, calling the vaunted “Washington consensus” into doubt. During a meeting of G20 finance ministers and central bankers over the weekend in Germany, the new Trump administration blocked the longstanding resolution opposing protectionism and qualified its commitment to the multilateral trade system, including the World Trade Organisation. “This is obviously a very significant change,” said Edward Alden, senior fellow at the Council on Foreign Relations and a trade expert.

“Donald Trump quite explicitly is the first president in more than 75 or 80 years who has outspokenly said he believes protectionism could make sense for the US.”

Since the start of the post-war era, the US has driven global economic integration, relying on the World Bank, the International Monetary Fund and the General Agreement on Tariffs and Trade, which preceded the WTO, to promote rules-based international trade. But President Trump clinched the White House on a promise to redress the inequity in US trade. He has vowed to renegotiate the North American Free Trade Agreement binding the US, Mexico and Canada and has spoken of slapping import duties on certain goods.

Eswar Prasad, a former IMF economist, said the US may regret its recent ideological turn. “The omission of even a ritualistic paean to free trade in the G20 communique may be a victory for Trump’s protectionist agenda, but it comes at the cost of weakening US leadership on global economic issues,” he said Prasad. –