The G20’s dilemma: US or free trade?
By Henrik Böhme
This was not the outcome German Finance Minister Wolfgang Schäuble had envisaged. At the start of the G20 finance ministers' meeting in his homeland of Baden, the host of the summit was still convinced that a common policy could be agreed with the United States. A profession of the G20 countries' support for free trade and opposition to protectionist measures was supposed to appear in the final declaration, as it always does after meetings like this. However, the minister failed to wring a compromise out of his American counterpart Steven Mnuchin. All they were able to agree on was a weak statement that they were "working to strengthen the contribution of trade to our economies." A mere platitude.
Is a trade war on the horizon?
At least Baden-Baden has made one thing clear: The new team in the White House apparently means business. US President Donald Trump said it outright at his meeting with Chancellor Angela Merkel: "The negotiators for Germany have done a far better job than the negotiators for the United States." Americans must become more successful at this, he chided. Baden-Baden gave us a taste of what this meant. Not even Wolfgang Schäuble, a highly experienced political strategist, could breakthrough the American blockade.
Describing the finance ministers' summit as a failure would not, however, be a fair assessment. Meetings like this are often informal in character; the concluding documents are not legally binding, but rather a kind of template for the ongoing work of the G20 States. And even if in the preceding years they had always promised each other that they would promote free trade and reduce trade barriers, the trend towards protectionism has actually been apparent for some time. Since 2008, the World Trade Organization (WTO) has counted well over 2,000 measures restricting trade. Given that the G20 countries represent 80 per cent of trade worldwide, it's obvious that they aren't keeping their promises.
What about Africa?
The argument about trade policy also overshadowed some very positive developments the G20 was able to present. Good progress has been made, for example, by those working on fiscal transparency, or the taxation of big international corporations, and the Americans were also involved in that. Then there's Schäuble's new Africa plan: more security for private investors to encourage them to set aside their reservations about committing to projects on the African continent. General agreement here, too, although this initiative is by no means a major coup.
At the end of the two days, though, no one was interested in any of this. The only question asked, again and again, was: Are we heading for a trade war?
It's not a concern to be dismissed. When Trump's trade adviser describes Germany's trade deficit (too many exports, too few imports) as a 'threat to national security;' when the American negotiators are already getting out the 'big guns' on trade issues in the preliminary talks for Baden-Baden, then yes, there are reasons to be worried. The criticism of Germany is not new; it was made by Trump's predecessors George W. Bush and Barack Obama, too, and is also regularly heard in Brussels. The German answer is always the same: Are we supposed to make worse products that no one wants to buy?
No grounds for optimism?
A reminder that it is the EU that is responsible for trade policy will not wash with the White House. When the United States imposes the first punitive duties on German exports, it will not have to wait long for a reaction from Berlin. In the past few days, the German Minister of the Economy, Brigitte Zypries, has been speculating about the possibility of lodging a complaint with the WTO. That would really put the wind up the administration in Washington. Donald Trump's only interest in the WTO is in what it can do for him. For some time now the US Government has already been looking into how it can bypass the WTO and impose sanctions.
The 20 countries' pronouncements on exchange rate policy do offer hope that a trade war is not inevitable: No manipulation of the exchange rate to favour national economies.
That does provide a little reason for optimism, after some criticism from across the Atlantic with regard to the 'weak euro.'
Baden-Baden, then, was a foretaste of meetings to come. It's hard to imagine that things are likely to go smoothly at the big G20 summit in Hamburg in early July: There will be considerably more controversial issues on the agenda there than on the finance ministers' much more manageable list.
- China to provide 90 water bowsers worth Rs 1b 2291
- Wag the Dog 2288
- A brief look at FARC’s origins in Colombia 2235
- ‘Panama Papers’ bags Pulitzer 2258
- SAITM will cooperate with Govt 2262
- dead man was near fashion mall 2300
- Japanese MPs back Lanka’s development 2264
- CB Bond earnings whitewashed – JVP 2273
- Talks to extend Lanka’s Continental Shelf 2282
- Ex-DIG and son re-remanded 2274
- Government can be sent home 2814
- GMOA flogging SAITM for Mahinda– Rajitha 2282
- Ranil invites Japan to invest in S. Asia 2250
- Somali Pirates’ Captives Back Home 2267
- Customs in Rs 8 M bust 2261
- Redefining Rape 2431
- The march of folly Our mad Cabinet system 1912
- First adventures in Europe 1998
- Inspiration for writers 1969
- Sri Lanka’s sustainable development dream 2285
- Sinhala and Tamil New Year with Easter 2167
- Filipino Oconer wins overall title 1903
- Unsporty conduct by Joes 1954
- Bertie Wijesinghe, pre-Test era Sri Lankan cricketer, dies aged 96 1927
- CEAT revs up for 2017 1918
- Palace shock Arsenal 1891
- Argentina fire coach Bauza 1913
- BCCI postpones SGM to 18 April 1883
- Murray returns from injury 1903
- New mum Azarenka to return to WTA 1861
- Galle win by 188 runs 1873
- Keeping Cool 1901
- Do the right thing and do it now! 1906
- Ravi Jayewardene Pious son of a political giant 2502
- In the heart of the old country 2325
- Sarath Weerasekera’s Geneva adventure 2153
- No moral right to play with public funds 2084
- No need for fine if route permits are issued in fair, just manner 1998
- UDA incurs Rs 330M Loss 1922
- DOUSING A MEGA SHIP FIRE 1740
- Health authorities in denial? 2226
- Minorities’ frustration a powder keg – VIDURA 2249
- Administrative powers a must for the Plantation Tamils –Radhakrishnan 1504
- Rajapaksa sought advice from McGuinness– Indika Perera 2650
- I will lead SLFP to victory in future elections – President 2029
- Hang the ‘traitors’– RTD. REAR ADMIRAL WEERASEKARA 2441
- We oppose Nationalism and Federalism – Samarasinghe 3104
- SilkAir launches direct flights to Colombo 1964
- Rupee falls on thin volumes 1937
- SriLankan, Japan Airlines add new routes 1924
- Colombo Port box volume up 5.6-pct in Jan 1919
- Private sector to transform into main domestic growth engine 1926
- Oil eases from 5-week top, rising US production weighs 1889
- Tight fiscal and monetary policies constrain SL’s growth 1917
- Shell admits dealing with money launderer 1898
- Toshiba may sell chip business to Foxconn for $27bn 1908
- Asian shares pressured by geopolitical risks; Nikkei down 0.25% 1892
- SLIM launches Certificate in Digital Marketing 1895
- Microsoft Hosts Second ‘Device Day’ in Sri Lanka 1896
- Emirates named Best Airline in the World 1877
- Turkish Airlines and social media assist Somalia 1897
- Brain cell therapy ‘promising’ for Parkinson’s disease 1891
- Trump pushed into bombing Syria 1951
- Thailand discovers Power of Women Travellers 1917
- Economics of gambling 1823
- Trans National Aural Identity 3479
- Queen Anula The Shadow of Cleopatra 3540
- Poetry and its possibilities Part 2 3540
- The Enigma of Labyrinths 3631
- From Couture to Kutir 3529
- Hybrid Sources 4919
- Offering Riddles & Enigmas 4982
- Poetry and its possibilities 5037
- With a festive bang! 1140
- Easter Fun 1130
- Arrogance and crowing is the way of the doomed 1178
- Avurudu on the streets 1187
- Tick control 1169
- Sunny Sunday on the beach 1148
- It’s time to save the world 1196
- From viewer to YouTuber! 1216
- Expert skincare and makeup 1238
- Avurudu at Induruwa 1206
- Exo 1234
- Remembering our fallen heroes 2324