Photographs by AP/FRANZISKA KRAUFMANN
Federal Reserve Chairman Janet Yellen speaks with Mark Carney (left), governor of the Bank of England, and Mario Draghi, president of the European Central Bank, during the G-20 finance ministers meeting Saturday in Baden-Baden, Germany.
Originally published March 19, 2017 at 03:30a.m., updated March 19, 2017 at 03:30a.m.
BADEN-BADEN, Germany -- The world's top economic powers dropped a pledge to oppose trade protectionism after push-back from President Donald Trump's administration, which wants trade to more clearly benefit American companies and workers.
Finance ministers from the Group of 20 countries meeting in the southern German town of Baden-Baden issued a statement Saturday saying only that countries "are working to strengthen the contribution of trade" to their economies.
By comparison, last year's meeting called on them to resist "all forms" of protectionism, which can include border tariffs and rules that keep out imports to shield domestic companies from competition.
The statement from the G-20 finance ministers and central bankers helps set the tone for further global economic cooperation.
U.S. Treasury Secretary Steven Mnuchin, taking part in his first international meeting since being sworn in, expressed optimism despite the disagreement over wording.
"I understand what the president's desire is and his policies and I negotiated them from here, and we couldn't be happier with the outcome," Mnuchin said.
He added that the statement needed to reflect the discussion at the current summit and that "the historical language was not really relevant," he said.
"We believe in free trade; we are one of the largest markets in the world, we are one of the largest trading partners in the world," he said. "Having said that, we want to re-examine certain agreements ... to the extent that agreements are old agreements and need to be renegotiated, we'll consider that as well."
Mnuchin said the administration would be looking at relationships where the U.S. was buying more than it could sell to its partner and would be more aggressive in seeking the enforcement of existing rules that would benefit U.S. workers through the Geneva-based World Trade Organization. The organization operates a system of negotiated trade rules and serves as a forum for resolving disputes.
Canada took a middle approach in the talks, urging a statement supporting free trade but not taking a position on specific wording.
"My view is that the Americans were doing what any new administration would do -- they were looking at the language through their lens," said William Morneau, Canada's finance minister, who made a last-ditch push for compromise. "Their lens is: How can trade benefit the U.S.? Everyone else has the same lens, but every other country has the advantage of being at the previous meeting."
China and European countries had pushed for a stronger affirmation of cross-border trade without tariffs or barriers. Ironically, China and some European states tend to intervene more often in private-sector business than the U.S. government.
Host Germany dropped the no-protectionism pledge in the early drafting process ahead of the meeting, apparently in hopes of not antagonizing the U.S. and finding a substitute that also would uphold free trade.
Wolfgang Schaeuble, the finance minister of host country Germany, argued that it was not true that officials failed to find common ground.
"It's completely clear we are not for protectionism. But it wasn't clear what one or another meant by that," he said.
French Finance Minister Michel Sapin said in a news conference that "there wasn't a G-20 disagreement, there was disagreement within the G-20 between a country and all the others."
Trump and other critics of free trade argue that it can cause jobs, such as in the labor-intensive manufacturing sector, to move to lower-cost countries. Proponents say technological advances, such as automation that replaces workers with robots, are more to blame for the loss of jobs in such sectors.
Some advocates, such as the International Monetary Fund, readily concede that the benefits of free trade have been uneven across societies, as less-skilled workers lose out and the better-trained prosper. But they argue that trade restrictions will not help those left behind by the globalized economy and point to better training and education as part of the answer.
Trump already has pulled the U.S. out of a proposed free-trade deal with Japan and other Pacific Rim countries. He also has started the process to renegotiate the North American Free Trade Agreement with Mexico and Canada.
Gary Schmitt, co-director of the Center for Security Studies at the American Enterprise Institute, said Trump could be sending a signal to other leaders that this is a negotiation, and the actions by Mnuchin at the meeting are an opening bid.
"You make people come to you by laying out a strident position," Schmitt said, summing up the approach Trump has used for years in real estate and business. "But over the long term, it's much harder to hold to that. These are people who lead countries and have other trade agreements. The U.S. is going to learn it's not as in-the-driver-seat as they think."
Many world leaders are trying to determine how Trump's "America First" mantra will affect existing and future trade agreements, which dictate how goods and services are imported and exported around the world. The U.S. economy is the world's largest, and changes in the way it buys and sells goods have global ramifications.
The G-20 is an informal forum on economic cooperation made up of 19 countries plus the European Union. The finance ministers' meeting will pave the way for a July 7-8 summit of national leaders in Hamburg, Germany. Its decisions don't have the same force as an international treaty but depend on individual countries' promises to follow through.
The new U.S. Treasury secretary quickly became the "center of attention" at the gathering, Canada's Morneau said in an interview. Many sought one-on-one meetings with Mnuchin to explain their positions and hear his views.
Mnuchin agreed to numerous meetings as he said he wanted to develop more relationships with his foreign counterparts. He met with top officials from France, South Korea, Japan, China, Saudi Arabia, the European Central Bank, Britain, Germany and Argentina, among others.
Despite the reservations about a variety of Trump's positions, numerous officials said they were impressed with Mnuchin's presentation and command of issues. So far, he is one of the only members of Trump's Cabinet who has sought to develop relationships with foreign leaders. The leaders said they don't know whether they will be able to influence his thinking, but they feel he has a willingness to listen, several G-20 attendees said.
"To a person, they have said they have been pleased with the way he is coming at issues," Morneau said. "He is very constructive and talking about good relationships with all of his international counterparts."
Information for this article was contributed by David McHugh, Christopher Bodeen and Frank Jordans of The Associated Press; by Damian Paletta of The Washington Post; and by Rainer Buergin, Jeff Black, Josh Wingrove, Alessandro Speciale, Catherine Bosley, Saleha Mohsin, Weixin Zha, Josh Wingrove, Svenja O'Donnell, Raymond Colitt, Toru Fujioka, Olga Tanas and Richard Bravo of Bloomberg News.
A Section on 03/19/2017
Get 24/7 Access. Subscribe Now.
ACCESS. ANYTIME. ANYWHERE.
We hope you've enjoyed your preview of ArkansasOnline.com.
You've now read the maximum number of stories available without a subscription.
Subscribe now for complete and uninterrupted access to the best local, state and national news.