White House says no

New rifts emerge with re­jec­tion of G-20 free-trade state­ment.

The Washington Post Sunday - - FRONT PAGE - BY DAMIAN PALETTA damian.paletta@wash­post.com

baden-baden, ger­many — The Trump ad­min­is­tra­tion on Satur­day re­jected a state­ment from other lead­ing economies that warned against the per­ils of trade pro­tec­tion­ism, the lat­est sign of how the ad­min­is­tra­tion’s more com­bat­ive ap­proach to diplo­macy could cre­ate rifts with U.S. al­lies and leave tra­di­tional part­ners in the dark about the di­rec­tion of U.S. pol­icy.

Trea­sury Sec­re­tary Steven Mnuchin, ap­pear­ing at a gath­er­ing of eco­nomic min­is­ters and cen­tral bankers from the 20 largest economies, re­buffed mul­ti­ple en­treaties from Ger­man of­fi­cials to in­clude in the meet­ing’s joint state­ment lan­guage em­pha­siz­ing the im­por­tance of free trade and that it should be con­ducted in a “rules based” man­ner, fol­low­ing ex­ist­ing stan­dards and agree­ments.

By re­ject­ing lan­guage that would have said the United States is op­posed to pro­tec­tion­ism, the White House sent a clear sig­nal that it would not ac­cept ex­ist­ing trade norms and could pur­sue a more an­tag­o­nis­tic ap­proach with trad­ing part­ners around the world. Such lan­guage has been con­sid­ered or­di­nary and non­con­tro­ver­sial in re­cent meet­ings of the Group of 20.

“I un­der­stand what the pres­i­dent’s de­sire is and his poli­cies and I ne­go­ti­ated them from here, and we couldn’t be hap­pier with the out­come,” Mnuchin said at a news con­fer­ence Satur­day.

Don­ald Trump made op­po­si­tion to nu­mer­ous trade deals a cor­ner­stone of his pres­i­den­tial cam­paign and pulled the United States out of a broad Asia trade deal shortly af­ter tak­ing of­fice, but has not yet fol­lowed up with other concrete steps to re­vamp the terms of Amer­ica’s eco­nomic relationship with the world. He has threat­ened tar­iffs and other mea­sures to cor­rect what he says are other coun­tries’ un­fair ad­van­tages in their trade re­la­tion­ships with the United States, mostly tak­ing aim at China and Mex­ico.

For many years, the United States has been the coun­try ral­ly­ing other na­tions to the cause of free trade and com­mon lan­guage in the com­mu­niqués that fol­low meet­ings of eco­nomic min­is­ters and cen­tral banks. Sev­eral Euro­pean of­fi­cials and one former U.S. of­fi­cial who had at­tended past G-20 meet­ings said it was the first time the United States had blocked such an ef­fort.

The move fol­lows new strains in the U.S. relationship with Bri­tain and Ger­many, tra­di­tion­ally two of the coun­try’s most stead­fast al­lies.

The White House on Fri­day cited an un­cor­rob­o­rated Fox News re­port to ac­cuse a British spy agency of surveilling Trump at the be­hest of the Obama ad­min­is­tra­tion — an ac­cu­sa­tion the agency said was base­less.

Then the pres­i­dent launched a pair of tweets Satur­day morn­ing ac­cus­ing Ger­many of fail­ing to ful­fill its obli­ga­tions af­ter sev­eral neg­a­tive head­lines about his meet­ing Fri­day with Ger­man Chan­cel­lor An­gela Merkel in Washington.

“De­spite what you have heard from the FAKE NEWS, I had a GREAT meet­ing with Ger­man Chan­cel­lor An­gela Merkel,” Trump said on Twit­ter. “Nev­er­the­less, Ger­many owes vast sums of money to NATO & the United States must be paid more for the pow­er­ful, and very ex­pen­sive, de­fense it pro­vides to Ger­many!”

(Ger­many does not owe vast sums of money to NATO, the de­fense al­liance. Mem­ber na­tions are ex­pected to spend 2 per­cent of their gross do­mes­tic prod­uct on de­fense spend­ing, but Ger­many spends 1.2 per­cent. It’s un­clear what Trump is re­fer­ring to when he says the United States must be paid more for its de­fense of Ger­many.)

Ger­man eco­nomic of­fi­cials spoke Satur­day in Baden-Baden at about the same time Trump sent the ac­cusatory tweets.

Ger­man Fi­nance Min­is­ter Wolf­gang Schäu­ble said the United States was at an “im­passe” with oth­ers about what they should say on trade pro­tec­tion­ism, so they de­cided to say noth­ing. He also ac­cused the Trump ad­min­is­tra­tion of not hav­ing a firm view on what it was seek­ing in a trade pol­icy.

“Ob­vi­ously he had no man­date to talk about any def­i­ni­tions or in­ter­pre­ta­tions of what the U.S. ad­min­is­tra­tion means by ‘fair trade,’ and that is some­thing we have to ac­cept for the time be­ing,” Schäu­ble said.

Schäu­ble said that the fi­nance min­is­ters strug­gled to reach a con­sen­sus on how to ap­proach trade.

“We have agreed on some word­ing and lan­guage on trade pol­icy, which may be help­ful or not,” he said at a news con­fer­ence.

The Ger­mans had tried to get Mnuchin on board. Sens­ing op­po­si­tion to the ini­tial lan­guage from the Trump ad­min­is­tra­tion, Ger­man of­fi­cials had wa­tered it down but Mnuchin re­sisted.

About 1 p.m. Satur­day, Ger­many’s top cen­tral banker, Jens Wei­d­mann, told his col­leagues that the ef­forts to reach an agree­ment had failed.

Mnuchin then spoke up and asked whether they could agree on more generic lan­guage that said the coun­tries wanted to “strengthen the con­tri­bu­tion of trade.” Sev­eral other fi­nance min­is­ters balked, say­ing such lan­guage was mean­ing­less.

Still, a ver­sion of Mnuchin’s pro­posal ended up in the fi­nal agree­ment, which con­tained just a brief generic ref­er­ence: “We are work­ing to strengthen the con­tri­bu­tion of trade to our economies.”

The new lan­guage was markedly dif­fer­ent from last year’s, when the fi­nance min­is­ters is­sued a joint state­ment that said, “We will re­sist all forms of pro­tec­tion­ism.”

Joint state­ments is­sued af­ter G-20 meet­ings are difficult to fi­nal­ize and are only as mean­ing­ful as the coun­tries want them to be. They aren’t for­mal treaties, but they do sig­nal whether there is con­sen­sus.

The White House has said it thinks ex­ist­ing U.S. trade deals are un­fair to Amer­i­can work­ers be­cause the deals al­low coun­tries to lure away Amer­i­can jobs and send their goods to the United States at un­fairly low prices. In ad­di­tion to scrap­ping the Asian trade deal, Trump also has said he will rene­go­ti­ate — or dump — the North Amer­i­can Free Trade Agree­ment.

Crit­ics of this ap­proach have said it could iso­late the U.S. econ­omy, make goods more ex­pen­sive for Amer­i­cans and hurt Amer­i­can ex­porters.

Dur­ing a closed-door meet­ing Fri­day with other fi­nance min­is­ters and cen­tral bankers, Mnuchin re­peat­edly as­serted that what’s good for Amer­ica’s econ­omy is good for global growth.

“My pri­mary fo­cus is on eco­nomic growth in the United States,” Mnuchin said af­ter meet­ing with Schäu­ble in Ber­lin. “I think that eco­nomic growth in the United States is good for us and good for the other ma­jor economies in the world.”

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