Business

G-20 Drops Anti-Protectionist Language in Communique

Share
Caption President of the German Central Bank Jens Weidmann center talks to US' Federal Reserve Board President Janet Yellen left and U.S. Treasury Secretary Steven Mnuchin during the G20 finance ministers meeting in Baden-Baden southern Germany

And the Trump administration has not yet decided on the specific policies it will use to make good on campaign pledges to shrink USA trade deficits and grow American manufacturing jobs. During his campaign, Trump threatened unilateral tariffs on Mexican and Chinese goods and said he would quit the North American Free Trade agreement unless it is renegotiated to his liking.

Other world powers present played down any disagreement between the countries.

Unable to convince Mr Mnuchin in Baden-Baden, the rest of the G20 must now play a waiting game until that July meeting.

Asked about this, Mnuchin said he knows Trump's desires on trade and negotiated them from Baden Baden, adding: "the new language makes sense".

I "regret that our discussions today didn't end in a satisfactory manner", French Finance Minister Michel Sapin said in a statement.

U.S. Treasury Secretary Steve Mnuchin tried to downplay any division, saying that language in the group's annual statement opposing protectionism was "not really relevant" any longer. "Their lens is: How can trade benefit the U.S.?" The development led to warnings over the weekend on the outlook for trade, a key issue for host nation Germany, which fought the new USA government's attempts to water down past commitments. Finance ministers warned against competitive devaluations and disorderly FX markets but failed to agree on keeping global trade free and open.

Host Germany dropped the no-protectionism pledge in the early drafting process ahead of the meeting, apparently in hopes of not antagonizing the US and finding a substitute that also would uphold free trade.

The G-20, an global forum created in 1999 for the governments from 20 major economies, met in Baden-Baden, Germany, over the weekend, Mnuchin's first official trip as America's top finance man. He met with top officials from France, South Korea, Japan, China, Saudi Arabia, the European Central Bank, Britain, Germany and Argentina, among others.

Gabriel Felbermayr, an economist with the IFO in Germany said that the G20's failure to formally reject protectionism is "a clear breach of tradition" meaning "now everything is possible".

"To a person, they have said they have been pleased with the way he is coming at issues", Morneau said.

Share