G-20 tensions mount over U.S. trade policy
HAMBURG, Germany — Divisions between world leaders over the direction of global economic policy were blown open again on Friday as a Group of 20 summit quickly ran into head winds over free trade.
Government officials in Hamburg are struggling to agree on a final statement that would bridge differences between the U.S. and most
of the other G-20 countries on trade, German Chancellor Angela Merkel told reporters. Work on language acceptable to all on climate was abandoned by subordinates, referred to at the summit as sherpas, and left to leaders to hash out. On both issues, officials pointed the finger at U.S. recalcitrance.
“The sherpas still have a big chunk of work ahead on the statement on trade,” Merkel told reporters after leading the first session. “These discussions are very difficult — I don’t want to beat around the bush.”
Some of the clearest divides had to do with climate change after President Donald Trump’s decision to pull the United States from the Paris climate accords. There
were also sharp warnings about U.S. steel policy as Trump considers restrictions on imports.
The tensions were a measure of Trump’s sharp break with previous U.S. policies. They were also a warning signal of Washington’s diminished clout, as the leaders of the other 19 nations gathered in Hamburg considered whether to sign statements that would exclude Trump or to find some sort of compromise. Two European officials said they were leaning toward a united front against Washington.
In a Twitter post Friday, Trump wrote of the G-20 that “I will represent our country well and fight for its interests! Fake News Media will never cover me accurately but who cares!”
After the conclusion of the first day of meetings, Treasury Secretary Steven Mnuchin said Trump’s interactions with foreign leaders were going very well.
“We’ve had very productive economic meetings,” he told reporters at the summit. “There’s been very substantive issues discussed,” he said without going into more detail.
LEADERS TALK TRADE
Merkel is trying to find common ground at one of the most highly anticipated summits in years as leaders struggle to adjust to the era of Trump and his “America First” campaign. The summit of G-7 leaders in May ended with the U.S. isolated on climate and trade, and Chinese President Xi Jinping kicked off this meeting with a coded criticism of how certain “developed nations” have “significantly backtracked” on issues such as trade and climate change.
Talks ran aground as helicopter buzzed over the port city and police sirens blared amid sometimes violent protests from anti-globalization activists and anarchist groups. The negotiations stumbled even after Merkel said most G-20 leaders are committed to trade that’s “free” but also “fair trade.”
Italian Prime Minister Paolo Gentiloni, who hosted the Group of 7 in Sicily, said discussion on bolstering growth without “defensive stands on protectionism” remained open. The issue of climate change is “naturally linked” to trade, with an “overwhelming majority” of G-20 countries supporting Paris climate accords, he said.
The accords seek to limit the planet’s warming to 2 degrees Celsius — 3.6 degrees Fahrenheit — above preindustrial levels.
“We have to decide, either we go for free and fair trade, or each nation protects its own garden,” he told reporters.
Even Russian President Vladimir Putin, who met with Trump for the first time Friday, pushed the U.S. leader on trade, according to Russia’s economy minister.
“Nineteen countries were speaking about free trade, and one country was highlighting that this country — United States — needs reciprocal approach to the trade,” Maxim Oreshkin said in an interview in English with Bloomberg Television. “So that was kind of dissonance between the position of United States and position of all other countries.”
Other countries have also stood in opposition to Trump’s drive to erect trade barriers.
When there is protectionism, “the entire international economy shrinks,” Japanese Foreign Ministry spokesman Norio Maruyama told reporters.
Japanese Prime Minister Shinzo Abe told leaders that all countries in the global economy must abide by “free and fair rules, and these rules need to be maintained at the high level, and need to be respected,” Maruyama said.
Another EU leader, European Council President Donald Tusk, said he was heartened by Trump’s words of support for Western organizations such as NATO during a Thursday visit to Warsaw ahead of the G-20. But he was cautious about whether the American outlook had actually changed after months of strain between Washington and Europe.
“We have been waiting for a long time to hear these words from President Trump,” Tusk said. “But the real question is whether it was a one-time incident or a new policy. President Trump said yesterday in Warsaw that words are easy but it is actions that matter. And the first test will be our meeting here in Hamburg.”
FOCUS ON STEEL IMPORTS
Trump could within days impose the restrictions on steel, a move that would affect trade with more than a dozen major countries.
“We will respond with countermeasures if need be, hoping that this is not actually necessary,” European Commission President JeanClaude Juncker told reporters, adding figuratively: “We are prepared to take up arms if need be.”
Juncker warned that Europe would respond in days, not months, if Trump announces the restrictions.
Commerce Secretary Wilbur Ross is near completion of a multimonth review of U.S. steel imports, and he has said that the large amount of steel imported by the United States puts national security at risk because it has weakened the domestic steel industry. The White House is considering using this rationale to impose new restrictions, either by imposing tariffs or quotas, or a combination of the two.
Ahead of the summit, the White House was close to making a decision, but top Trump administration advisers slowed the process down at the last minute, persuading Trump to meet with other world leaders at the G-20 before deciding how to proceed.
The Trump administration has blamed China for what it says is a “global overcapacity” of steel, essentially arguing that the Chinese government is subsidizing the steel industry and allowing its producers to create and export so much steel that it drives down prices and makes it difficult for U.S. producers to compete.
But any U.S. restriction on steel imports would have a relatively muted effect on China, and would hit other countries much harder.
The largest exporters of steel to the United States are Canada, Brazil, South Korea, Mexico and Turkey, according to IHS Global Trade Atlas. Germany also has a large steel industry, and German officials have been particularly concerned about what a unilateral move to impose restrictions on steel imports to the United States might mean.
Trump and Merkel spoke about trade and steel a few days ago, a reflection of how seriously both sides consider any new action on the issue.
U.S. negotiators were pressing their international counterparts on what they described as a global glut of steel production in the hopes they can reach an agreement by today on how to curb it, a U.S. official said. The official said the issue was consuming significant time.
German Chancellor Angela Merkel (left) talks Friday with French President Emmanuel Macron before the first working session on the first day of the Group of 20 summit in Hamburg, Germany.