U.S. to con­front trade part­ners

Trea­sury chief us­ing G-20 meet­ing to press coun­tries for fair trade.

Austin American-Statesman - - BUSINESS -

U.S. FRANKFURT, GER­MANY — Pres­i­dent Don­ald Trump has vowed to get tough on trade part­ners like China, Mex­ico and Ger­many. Now his Trea­sury chief, Steven Mnuchin, will get his first op­por­tu­nity to con­front them all in one room.

The meet­ing of the most pow­er­ful economies’ fi­nance min­is­ters in Ger­many this week is likely to be dom­i­nated by talk about whether to com­mit to free trade, as pre­vi­ous meet­ings have — or im­plic­itly ac­cept that some coun­tries may put up bar­ri­ers, like tar­iffs, as Trump has promised.

The Group of 20 — 19 coun­tries worth most of the global econ­omy, plus the EU — are also due to dis­cuss their long-stand­ing ban on ma­nip­u­lat­ing cur­ren­cies to gain eco­nomic ad­van­tage. Weak­en­ing a cur­rency can help a coun­try’s ex­porters, but can also end up dump­ing its trou­bles with busi­ness costs and com­pet­i­tive­ness on its trade part­ners.

The gath­er­ing Fri­day and Satur­day in the south­ern Ger­man re­sort town of Baden-Baden will help set the tone for in­ter­na­tional com­merce and fi­nance and will give Mnuchin a chance to clar­ify what the U.S. po­si­tion is.

The fo­cus will be on the fi­nal state­ment is­sued jointly by the fi­nance min­is­ters on Satur­day.

Last year’s gath­er­ing of the Group of 20 fi­nance min­is­ters in Chengdu, China, is­sued a state­ment op­pos­ing “all forms of pro­tec­tion­ism.” This time, such

un­equiv­o­cal lan­guage could be soft­ened to re­fer to trade that is “open” and “fair,” with­out the ab­so­lute op­po­si­tion to im­port re­stric­tions to ben­e­fit do­mes­tic work­ers.

Trump has re­peat­edly em­pha­sized that the U.S. needs a tougher ap­proach to trade that would put Amer­i­can work­ers and com­pa­nies first. He has al­ready pulled the U.S. out of the pro­posed Trans-Pa­cific Part­ner­ship agree­ment with Ja­pan and other Pa­cific Rim coun­tries and he has started the process to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment with Mex­ico and Canada, both of whom are G-20 mem­bers.

Ad­di­tion­ally, Bri­tain is prepar­ing to pull out of the Euro­pean Union and its free-trade zone that per­mits cross bor­der busi­ness with­out im­port and ex­port taxes, or tar­iffs, after vot­ers chose to leave in a ref­er­en­dum last year.

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.

“Our ob­jec­tive is get­ting more bal­anced trade agree­ments,” he said, con­firm­ing that hav­ing bor­der ad­justed taxes is an op­tion. He said, with­out pro­vid­ing specifics, that some U.S. trade agree­ments need to be re-ex­am­ined, while adding that, “It is not our de­sire to get into trade wars.”

Mnuchin is ex­pected to press his coun­ter­parts to live up to their com­mit­ments to re­frain from pur­pose­fully weak­en­ing their cur­ren­cies. Dur­ing the cam­paign, Trump said he planned to name China a cur­rency ma­nip­u­la­tor right after he took of­fice. But since tak­ing of­fice, he has not dis­cussed the topic.

Fed­eral Re­serve chair Janet Yellen will join Mnuchin in rep­re­sent­ing the United States. Other prom­i­nent par­tic­i­pants will be Euro­pean Cen­tral Bank Pres­i­dent Mario Draghi, China’s fi­nance min­is­ter, Xiao Jie, and the host fi­nance min­is­ter, Wolf­gang Schaeu­ble of Ger­many.

The G-20 is due to also dis­cuss ways to strengthen the global econ­omy and cre­ate more jobs.

After meet­ing Thurs­day with Schaeu­ble, Mnuchin said the U.S. wants to still play an “es­sen­tial lead­er­ship role” in the world econ­omy. He and Schaeu­ble, he said, agreed it was im­por­tant to work to­gether to pro­duce “growth, stim­u­late job cre­ation, and work co­op­er­a­tively on bal­anced trade across the economies.”

The G-20 meet­ing is tak­ing place with the global econ­omy in rel­a­tively good shape: the In­ter­na­tional Mon­e­tary Fund pre­dicts growth of 3.4 per­cent this year and 3.6 per­cent next year, com­pared with 3.1 per­cent last year.

Yet the elec­tion re­sults in Bri­tain and the U.S. have un­der­lined dis­con­tent with trade and glob­al­iza­tion and a sense among many that the ben­e­fits of a glob­al­ized econ­omy — that is, with fewer bar­ri­ers to trade and busi­ness — do not reach enough peo­ple. Ahead of the sum­mit, IMF head Chris­tine La­garde said that it was clear that highly ed­u­cated work­ers ben­e­fit more from glob­al­iza­tion and called for the G-20 to fo­cus on “greater ef­forts to equip lower-skilled work­ers with the tools they need to seek and find bet­ter-pay­ing jobs.” Those could in­clude tar­geted job train­ing and ed­u­ca­tion.

The G-20’s mem­bers make up more than 80 per­cent of the world econ­omy. The fi­nance min­is­ters’ meet­ing will pave the way for a sum­mit of na­tional lead­ers in Ham­burg, Ger­many, July 7-8.

MICHELE TANTUSSI / GETTY IM­AGES

Ger­man Fi­nance Min­is­ter Wolf­gang Schaeu­ble (left) and new U.S. Trea­sury Sec­re­tary Steven Mnuchin ar­rive to speak to the me­dia Thurs­day in Ber­lin after their meet­ing prior to this week­end’s Group of 20 meet­ing.

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