Leaders tackle protectionism in the era of Trump
Gathering focuses on shifting attitudes during protectionist era of Trump
BADEN-BADEN Top finance officials including new U.S. Treasury Secretary Steven Mnuchin are debating what stance to take on free trade at a meeting that will help set the tone for the global economy.
The gathering of finance ministers and central bank heads from the Group of 20 countries has focused on shifting attitudes toward trade, particularly after U.S. President Donald Trump vowed to impose border taxes and rewrite free trade deals he says have shortchanged the U.S.
Mnuchin has said trade needs to be “fair,” which would be a step back from the group’s previous blanket condemnation of trade barriers.
Attention at the two-day meeting in the German spa town of Baden-Baden has centred on a joint statement that is being prepared for Saturday. Early drafts have dropped an earlier ban on protectionism, but there was no agreement on what would replace it, said officials Friday on condition of anonymity because the talks were ongoing.
The meeting’s host, German Finance Minister Wolfgang Schaeuble, told reporters that the discussion was about “the right formulation regarding the openness of the world economy.”
The last such gathering, in July 2016 in Chengdu, China, issued a strong statement in favour of free trade, saying “we will resist all forms of protectionism.” Possible replacements include support for “fairness.”
Angel Gurria, secretary-general of the Organization for Economic Cooperation and Development, downplayed differences over the exact language. The OECD is one of several global organizations invited to participate in the meeting.
Gurria said it was “important to create a comfort zone” where leaders could have their first discussions with the new administration, “to make them feel that this is a place where we can talk, we can ventilate the areas where we have common ground and the areas where we may have differences.”
European countries and others that depend on exports, such as China, were said to be pushing for a stronger statement in favour of trade with fewer tariffs and other barriers in a rule-based system.
The gathering will help set the tone for global commerce and finance, and will give Mnuchin a chance to clarify what the U.S. position is. The G20 is an informal forum on economic co-operation made up of 19 countries with more than 80 per cent of the world economy, plus the European Union. The finance ministers’ meeting will pave the way for a summit of national leaders in Hamburg, Germany, on July 7-8.
Trump has repeatedly emphasized the U.S. needs a tougher approach to trade that would put American workers and companies first. He has pulled the U.S. out of the proposed Trans-Pacific Partnership agreement with Japan and other Pacific Rim countries, and has started the process to renegotiate the North American Free Trade Agreement with G20 members Mexico and Canada.
In a visit to Berlin ahead of the G20 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 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 scheduled to meet one-to-one with China’s Finance Minister Xiao Jie and central bank
Our objective is getting more balanced trade agreements. It is not our desire to get into trade wars.
governor Zhou Xiaochuan.
The G20 meeting is taking place with the global economy in relatively good shape: the International Monetary Fund predicts growth of 3.4 per cent this year and 3.6 per cent next year, compared with 3.1 per cent last year. Yet the British vote last year to leave the European Union and Trump’s victory on an “America First” platform have underlined discontent with globalization.
Advocates for free trade such as the IMF say that trade restrictions will only hurt growth and won’t benefit ordinary people, while urging measures to spread the benefits of trade more widely.