BADEN-BADEN, Germany: The world’s financial leaders failed to reach a compromise deal to endorse free trade on Saturday, backtracking on past commitments to keep trade open and reject protectionism, the communique of G20 finance ministers and central bankers showed.
Making only a token reference for the need to strengthen the contribution of trade to the economy, finance ministers and central bank chiefs of the world’s top 20 economies broke with a decade-old tradition of rejecting protectionism and endorsing open trade.
In the new US administration’s biggest clash yet with the international community, G20 finance chiefs also walked back on a pledge to support climate change finance, an anticipated outcome after US President Donald Trump called climate change a “hoax”.
Speaking on the sidelines of the meeting, delegates said that the US was holding out on key issues, unwilling to compromise and essentially torpedoing a deal as it requires all members to sign up.
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 US workers.
G20 financial leaders, however, reaffirmed their a commitment to refrain from competitive currency devaluation, a key agreement as the US has repeatedly complained that some of its trade partners are using artificially devalued currencies to gain a trade advantage.
Juncker warns against EU-US trade war: European Commission President Jean-Claude Juncker warned in a newspaper interview that a trade war between the United States and Europe would not be good for either.
Asked by Bild am Sonntag newspaper whether Europe could withstand a trade war with the United States, Juncker said: “A trade war would neither be in Europe’s nor the USA’s interests.”
He said it was necessary to take protectionist comments being made by US President Donald Trump’s administration seriously and also to be prepared.
On Thursday, US Treasury Secretary Steven Mnuchin said the Trump administration had no desire to get into trade wars but certain trade relationships needed to be re-examined to make them fairer.
Juncker said he was pleased that he would be meeting Japanese Prime Minister Shinzo Abe on Tuesday, adding: “We want to conclude a free trade deal between the EU and Japan this year.”
Trump has accused Japan of exploiting a weak yen to give its exports an unfair trade advantage. In similar vein, Trump’s top trade adviser has accused Germany of using a “grossly undervalued” euro to gain a competitive advantage. — Reuters
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