G20 statement drops anti-protectionism, climate change clauses

Pablo Tucker
March 19, 2017

Finance ministers from the world's biggest economies struggled Friday to find common ground at global trade talks, in the face of Donald Trump's "America First" policy and his scepticism towards climate change.

Mnuchin wasn't able to deliver a clear view on how the "America First" thrust of the Trump administration will mesh with the rules embodied in the World Trade Organisation system that now stand - or even if the USA will remain substantially engaged over the long term.

Finance chiefs of the world's largest economies yesterday set aside their previous commitment to avoid protectionist policies and fudged their statement on the desired nature of worldwide trade, in response to the Trump administration's view that global commerce arrangements need to be reworked.

US Treasury Secretary Steven Mnuchin, taking part in his first global meeting since being sworn in, sought to downplay the wording issue.

Trump, whose tough protectionist talk helped win him the presidency, has withdrawn the United States from a trans-Pacific free trade pact and attacked export giants China and Germany.

In two days of meetings in Baden-Baden, delegates split under the pressure of the new US rhetoric on the balance of global trade, with most favoring a multilateral, rules-based system as now embodied in the World Trade Organization.

The G20 is a platform where 19 countries plus the European Union discuss economic cooperation. This breaks with a decade-old tradition of the G20 endorsing free trade and rejecting protectionism.

Chinese President Xi Jinping and Merkel also took the unusual step of stressing their commitment to free trade ahead of the G20 meeting. They also said the US delegation at the G-20 was routinely checking back with its counterparts in Washington on certain issues, leading some Europeans to wonder with whom they were negotiating, Mnuchin or Trump.

Mnuchin's German counterpart, Wolfgang Schaeuble, admitted later that the American "didn't have a mandate to negotiate new or creative wordings" on trade policy. And the pickup in the US economy that preceded Mr Trump's election, now confirmed by last week's US Federal Reserve Board, will tend to strengthen the US dollar and perhaps widen its trade deficit with China.

The language on trade had been the main sticking point at the two-day meeting of G20 finance ministers and central bankers.

G20 also walked back on a pledge to support climate change finance, an anticipated outcome after Trump called climate change a "hoax".

Delegates said the United States team was unable to commit as they had not been given instructions from Washington to do so at the meeting in the western German spa town of Baden-Baden. Mnuchin said he'd had 18 bilaterals and meetings on the sidelines. "He's getting around, he's getting to know his colleagues, I think he sent some very positive messages in terms of engaging all the economies".

French Finance Minister Michel Sapin expressed "regret that our discussions today were unable to reach a satisfying conclusion on two absolutely essential priorities", trade and climate.

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