G20 meeting

U.S. Blocks Free Trade Endorsement

  • Why it matters

    Why it matters

    As the G20 finance ministers were unable to agree on rejecting protectionism, it is likely that Germany will clash with the United States over this key issue.  
  • Facts

    Facts

    Germany has a $65 billion trade surplus with the United States.
    On Friday Germany’s Chancellor Angela Merkel met U.S. President Donald Trump for the first time.

    Germany holds the presidency of the G20 this year and finance ministers met Friday and Saturday in Baden Baden.

  • Audio

    Audio

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G20 Finanzministertreffen
U.S. Treasury Secretary Steve Mnuchin in Baden Baden, a G20 meeting which broke with the past as officials could not agree on a pledge for free trade. Source: DPA

At the meeting of G20 finance ministers in Baden Baden, the United States blocked a communique in favor of free trade and condemning protectionism.

It proved impossible to agree on a wording for a final statement at the close of the two-day meeting.

For the past decade, at the close of such meetings, G20 finance ministers have agreed to endorse free trade and oppose economic isolationism.

Officials fought long on Friday and Saturday to reach a consensus, sources close to the delegates told Handelsblatt. Ultimately, they left out such a pledge and merely stated that trade is important for the development of the world economy.

“This is not a good outcome of the meeting.”

Jens Weidmann, President of the German central bank, Bundesbank

It is a bitter disappointment for Germany which currently holds the presidency of the G20. While the government had proposed the motto “shaping an interconnected world” for its leadership, this seems unlikely given the policy statements coming from the current government of the United States.

The disagreement comes one day after the first meeting between Mr. Trump and Chancellor Angela Merkel in Washington D.C., where the differences between the leaders seemed palpable.

In Baden Baden, finance officials from the world’s top 20 economies wrangled over whether global trade relations should be organized around rules, as currently defined by the World Trade Organization and other agencies, or whether, as Trump’s team said, trade should be based on “fair” international agreements.

Other G20 members were unwilling to follow the latter, seeing fairer trade as too vague a term. Sources close to the delegates told Handelsblatt discussions of the topic on Friday were very intense. U.S. Treasury Secretary Steve Mnuchin repeated his calls for fairer trade and continued to insist that the United States had not been treated fairly. While he was not more specific, it was clear that the consensus on free trade was a thing of the past.

Officials from the other G20 countries from Asia through Canada and Europe opposed Mr. Mnuchin and argued against falling into protectionist patterns of the past.

At the close of the meeting, negotiators struggled in vain to agree on wording for the joint communique.

German attendees saw the outcome as a failure, with reports that Bundesbank President Jens Weidmann said, “This is not a good outcome of the meeting,” according to Reuters news agency.

Read our in-depth coverage of Germany’s G20 presidency.

Along with trade, no agreement on climate policy could be reached either.

President Donald Trump has emphasized repeatedly his aim to put “America First” in customs and trade. Saturday’s failure to reach a shared consensus in Germany is one of the first concrete results of this position. The U.S., rather than China or Russia, took the role of outsider in blocking the agreement.

Now government leaders of the G20 countries will take up the issue at the summit in Hamburg in June.

And Germany’s government will, in light of the events of the past days in Baden Baden and Washington D.C., wrangle over what to do next about the critical trans-Atlantic relationship.

 

Handelsblatt’s Martin Greive writes about politics. Jan Hildebrand is deputy buro chief in Berlin, where Handelsblatt’s politics correspondents are based. Allison Williams contributed to this article. To contact the authors: greive@handelsblatt.com, hildebrand@handelsblatt.com

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