Anti-protectionism language dropped from G-20 document

In a significant victory for the Trump administration, the G-20 nations have dropped anti-protectionist language from the group's communique, substituting more general thoughts on trade instead.


Group of 20 nations said in a communique on Saturday that they are “working to strengthen the contribution of trade to our economies.” While the U.S. didn’t get all it wanted -- such as a explicit pledge to ensure trade is fair -- that’s a much pared-down formulation compared with the group’s statement last year, and omits a promise to “avoid all forms of protectionism.”

In two days of meetings in the German town of Baden-Baden, the argument by U.S. Treasury Secretary Steven Mnuchin, in his first appearance at an international forum in the role, reflects claims by President Donald Trump that his nation has had a bad deal from the current global trade setup. That attitude pitched him against most other delegates, who favored a multilateral, rules-based system as embodied in the World Trade Organization.

“My view is that the Americans were doing what any new administration would do -- they were looking at the language through their lens,” said Bill Morneau, Canada’s finance minister, who made a last-ditch push for the 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.”

The mood was highlighted the previous day at the White House, where Trump met German Chancellor Angela Merkel and repeated his complaints that his country has been treated “very, very unfairly” in trade arrangements.

While delegates greeted Mnuchin and said that he had been engaged in the process, they said he didn’t elaborate on how the U.S. considers itself to be treated unfairly. It wasn’t possible to reconcile his stance and that of the other members in any substantive way. Officials may continue to seek greater consensus on trade between now and the G-20 leaders summit in Hamburg in July.

I “regret that our discussions today didn’t end in a satisfactory manner,” French Finance Minister Michel Sapin said in a statement. In a press conference later, he said that “there wasn’t a G-20 disagreement, there was disagreement within the G-20 between a country and all the others. This isn’t a caricature, this is the reality of things.”

The communique also committed to “further strengthening the global financial architecture” and said members support work to finalize the Basel III framework on bank regulation. It dropped a reference to climate change, in the face of resistance from countries including the U.S., China, India and Saudi Arabia.

The compromise is a blow to Germany who has championed free trade as the central core of the European Union. But some smaller countries are beginning to openly question Germany's position on trade - especially after the Brexit vote in Great Britain emboldened opponents of the EU. 

The White House took advantage of this growing skepticism to try and drive a wedge between the larger EU nations and others who see Germany and French dominance as a threat to their economies. As the article mentions, they didn't get everything they wanted. But what they achieved can be built on at the heads of state meeting in July.

President Trump's trade policies threaten to upend the world economic order. But so far, the Europeans are content to give a little, hoping that they will get a little in the end. It will take a recognition on both sides that a trade war would be ruinous and that seeking more protection for US goods does not necessarily mean an end to free trade.

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