Financial leaders of the world's biggest economies dropped a pledge to keep global trade free and open, yielding to an increasingly protectionist United States after a two-day meeting in Germany failed to yield a compromise.
Breaking a decade-long tradition of endorsing open trade, G20 finance ministers and central bankers made only a token reference to trade in their communiqué, a clear defeat for host nation Germany, which fought the new U.S. government's attempts to water down past commitments.
In the new U.S. administration's biggest clash yet with the international community, G20 finance chiefs also removed from their statement a pledge to finance the fight against climate change, an anticipated outcome after U.S. President Donald Trump called global warming a hoax.
In a meeting that some said was at times 19 against one, the U.S. did not yield on key issues, essentially torpedoing earlier agreements as the G20 requires a consensus. Still, the dialogue was friendly and non-confrontational, leaving the door open to a future deal, officials who attended the meeting said.
This is my first G20, so what was in the past communiqué is not necessarily relevant from my standpoint, U.S. Treasury Secretary Steven Mnuchin said in Baden Baden and added he had been very clear that we do believe in free trade but we believe in balanced trade.
I understand what the president's desire is and his policies, and I negotiated them from here, Mnuchin said. I couldn’t be happier with the outcome.
Seeking to put America first, Trump has already pulled out of a key trade agreement and proposed a new tax on imports, arguing that certain trade relationships need to be reworked to make them fairer for U.S. workers.
We believe in free trade, we are in one of the largest markets in the world, we are one of the largest trading partners in the world, trade has been good for us, it has been good for other people, Mnuchin said. Having said that, we want to re-examine certain agreements.
International trade makes up almost half of global economic output and officials said the issue could be revisited at a meeting of G20 leaders in July. While some expressed frustration, like French Finance Minister Michel Sapin, others played down the dispute.
It is not that we were not united, German finance minister Wolfgang Schaeuble said. ”It was totally undisputed that we are against protectionism. But it is not very clear what (protectionism) means to each (minister).
He added that some ministers did not have a full mandate to negotiate since they were not fully in charge of trade issues. Others suggested that the G20 leaders' meeting in Hamburg this July could be the real opportunity to bring the U.S. on board.
It is not the best meeting we had, but we avoided backtracking, EU Economic Affairs Commissioner Pierre Moscovici said. I hope in Hamburg the wording will be different. We need it. It is the raison d’etre for the G20,” Moscovici said.