U.S. Treasury Secretary Steven Mnuchin rebuffed a concerted push by world finance chiefs Saturday to disavow protectionism, fanning fears that the Trump administration’s pursuit of an “America First” policy could ignite global trade conflicts.
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Instead of hammering out a compromise that allayed those fears, finance ministers and central bankers from the Group of 20 largest economies ended two days of negotiations in stalemate. Their keenly anticipated joint statement papered over differences on trade and largely reiterated a series of longstanding promises to boost growth, avoid currency devaluations and ward off threats to the global economy.
“It was not the best communique that was ever produced by the G-20, certainly,” the European Union’s economics commissioner, Pierre Moscovici, said in an interview.
Saturday’s G-20 statement dropped an earlier commitment to “resist all forms of protectionism,” which had appeared in a similar communique hammered out by finance officials in Chengdu, China last July. Most other G-20 officials pressed Mr. Mnuchin at the meeting to leave that reference in the document, a senior G-20 official said.
At a news conference, Mr. Mnuchin said earlier language on protectionism “was not necessarily relevant from my standpoint.”
He also warned that some global trade agreements weren’t being enforced, and that the new administration would be aggressive in doing so.
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German Finance Minister Wolfgang Schäuble, who hosted the gathering in this tony German spa town, had hoped President Donald Trump’s top economic envoy would offer a vision of U.S. trade policy that tempered the most aggressive threats by the president and White House officials, including unilateral tariffs and other punitive sanctions against trade partners.
But the G-20 treasury chiefs, meeting in a building that houses one of the oldest casinos in Europe, reached an impasse.
Mr. Schäuble said at a news conference that Mr. Mnuchin appeared to have no mandate to negotiate any new or creative commitments on trade.
“Sometimes you have to limit yourself at such meeting to not asking too much of one partner, you can’t ask too much of him anyway because he would then simply not agree to it,” Mr. Schäuble said at a news conference.
In failing to secure a written agreement from the U.S. that would repeat past G-20 vows to reject protectionism in all its forms, many officials said they were departing confused about where the new administration will ultimately land on trade policy.
The Treasury secretary advanced his boss’s view, promoting “free and fair trade.”
“The United States has been treated very, very unfairly by many countries over the years,” Mr. Trump said in Washington on Friday, ahead of a meeting with German Chancellor Angela Merkel, who chairs the G-20 this year. “That’s going to stop.”
Despite the pressure Mr. Mnuchin faced from most of the G-20 membership, Washington showed it still holds significant sway as the world’s consumer of last resort: The G-20 adopted a pledge to promote “fairness” as it pursued economic growth.
Mr. Moscovici, a former French finance minister, described Mr. Mnuchin as “a man who wants constructive engagement,” who came to Europe “in listening mode.” He said the meeting wasn’t confrontational, and that it was a time “to try to identify with the new administration.”
Still, he regretted the absence of a clearer mention of fighting protectionism or climate change, and pledged that the EU would push back against measures that undermined open and functioning markets.
At the meeting, Brazil Finance Minister Henrique Meirelles told the G-20 about his country’s own experience with protectionism as the country has just experienced its worst recession on record.
“We had adopted during the last years some protectionist measures for some sectors of the economy and the net result was not positive,” Mr. Meirelles said in an interview.
“At the end of the day the products became more expensive and Brazil…became less competitive, In Brazil, we are moving towards a more open trade policy.”
G-20 officials said they see both a new U.S. administration struggling to get up and running and competing power centers with different views on trade.
“Nobody knows what the endgame is,” a senior G-20 official said. “Either the meeting is several months too early or it’s perfect timing,” the official said, giving the G-20 an opportunity to help temper U.S. policy before it is cemented.
Investors are still confused, for example, about the administration’s dollar policy, having been given different signals from Mr. Trump and his lieutenants.
Asked who markets should heed, Mr. Mnuchin said: “They should listen to the president first and listen to me as well.”
Evidence that it may just be too soon for the U.S. to offer the G-20 anything substantive on trade, financial regulation, tax overhauls and other policies, Mr. Mnuchin relied on senior civil servants to conduct much of the detailed negotiations at the meeting. The secretary’s international diplomats have only recently been nominated and still must go through a lengthy confirmation process.
If trade czar Peter Navarro and Steve Bannon, a top Trump adviser and self-described economic nationalist, have their way, many officials fear the White House could trigger a trade war. The administration has advocated applying unilateral actions that eschew a rules-based multilateral order, including submission to the World Trade Organization’s authority.
Others in the administration, including Mr. Mnuchin and Gary Cohn, director of the National Economic Council, hold a more internationalist view of the world. If they prevail in guiding administration policy, many G-20 officials see fiery campaign rhetoric being tamed in the coming months.
Mr. Schaeuble said all G-20 delegations had agreed on opposing protectionism, but that it wasn’t always clear what they meant by this.
Some countries are worried that failure to temper aggressive trade policy could not only trigger a round of retaliatory tariffs and a rise in other trade barriers that would damage global growth, it could exacerbate geopolitical tensions.
The U.S. delegation found a rare ally in Japan, which came to the defense of Mr. Mnuchin, saying talks over American protectionism were overblown.
“I feel that many of those talks are exaggerated and made-up,” Finance Minister Taro Aso said at a news conference of general concerns over Mr. Trump’s perceived protectionist instincts. Mr. Aso noted that a summit meeting held earlier this year between Mr. Trump and Japan’s Prime Minister Shinzo Abe involved “no discussions whatsoever that smacked of protectionism.”
Mr. Aso also played down the removal of a passage denouncing protectionism from the G-20 communique, saying: “No one made any opposing comment to free trade as far as I can recall” during the gathering.
Treasury’s Mnuchin Fends Off Push to Reject Protectionism – Fox Business