G20 Finance Ministers Fail to Agree on Free Trade Following U.S. Pressure

The Trump Administration’s America First policy had global implications on Saturday, as the Group of 20 finance ministers failed to agree on free trade and dropped any mention of climate change from their joint statement.

The annual meeting of G20 finance ministers ended Saturday in Germany without a concrete agreement on free trade after the U.S. blocked any language that encouraged past commitments on the open flow of goods and services. U.S. Treasury Secretary Steven Mnuchin also pressured his global counterparts to stabilize their exchange rates and put an end to competitive currency devaluation.

Finance ministers reportedly attempted to draft new language that would satisfy the U.S. on the question of bilateral trade. After failing to do so, the official communique made a very minor reference to strengthening “the contribution of trade” to the world economy.

By failing to explicitly reject protectionism, the G20 summit may have set the stage for growing divergence between the United States and other major economies on globalization.

President Trump has vowed to strengthen Washington’s trade position by scrapping previous agreements that treated the U.S. “unfairly.” The president has singled out China and Germany for currency manipulation and signed executive decrees challenging previous trade commitments. This included executive orders withdrawing the U.S. from the Trans-Pacific Partnership (TPP) and ordering a review of the North American Free Trade Agreement (NAFTA).

In a surprise to many, finance ministers also dropped any reference to climate change funding in their official statement, reflecting President Trump’s commitment to deregulate the fossil fuels industry.

Instead of referencing climate change, finance ministers said: “We reaffirm our commitment to rationalise and phase out, over the medium term, inefficient fossil fuel subsidies that encourage wasteful consumption, recognising the need to support the poor.”

G20 countries represent more than 80% of global GDP. Their stance on issues such as free trade and climate change have major implications on the global economy.

Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.