US to confront trade partners at global finance meeting
FRANKFURT: US President Donald Trump has vowed to get tough on trade partners like China, Mexico and Germany. Now his Treasury chief, Steven Mnuchin, will get his first opportunity to confront them all in one room.
The meeting of the most powerful economies' finance ministers in Germany this week will likely be dominated by talk about whether to commit to free trade, as previous meetings have — or implicitly accept that some countries may put up barriers, like tariffs, as Trump has promised.
The Group of 20 — 19 countries worth most of the global economy, plus the EU — are also due to discuss their longstanding ban on manipulating currencies to gain economic advantage. Weakening a currency can help a country's exporters, but can also end up dumping its troubles with business costs and competitiveness on its trade partners.
The gathering Friday and Saturday in the southern German resort town of Baden-Baden will help set the tone for international commerce and finance and will give Mnuchin a chance to clarify what the US position is.
The focus will be on the final statement issued jointly by the finance ministers on Saturday.
Last year's gathering of the Group of 20 finance ministers in Chengdu, China, issued a statement opposing "all forms of protectionism." This time, such unequivocal language could be softened to refer to trade that is "open" and "fair," without the absolute opposition to import restrictions to benefit domestic workers.
Trump has repeatedly emphasised that the US needs a tougher approach to trade that would put American workers and companies first. He has already pulled the US out of the proposed Trans-Pacific Partnership agreement with Japan and other Pacific Rim countries and he has started the process to renegotiate the North American Free Trade Agreement with Mexico and Canada, both of whom are G-20 members.
Additionally, Britain is preparing to pull out of the European Union and its free-trade zone that permits cross border business without import and export taxes, or tariffs, after voters chose to leave in a referendum last year.
In a visit to Berlin ahead of the G-20 meeting, Mnuchin said the US is interested in trade that is not only free but fair.
"Our objective is getting more balanced trade agreements," he said, confirming that having border adjusted taxes is an option. He said, without providing specifics, that some US trade agreements need to be re-examined, while adding that, "It is not our desire to get into trade wars."
Mnuchin is expected to press his counterparts to live up to their commitments to refrain from purposefully weakening their currencies. During the campaign, Trump said he planned to name China a currency manipulator right after he took office. But since taking office, he has not discussed the topic.
Federal Reserve chair Janet Yellen will join Mnuchin in representing the United States. Other prominent participants will be European Central Bank President Mario Draghi, China's finance minister, Xiao Jie, and the host finance minister, Wolfgang Schaeuble of Germany.
The G-20 is due to also discuss ways to strengthen the global economy and create more jobs.
After meeting Thursday with Schaeuble, Mnuchin said the US wants to still play an "essential leadership role" in the world economy. He and Schaeuble, he said, agreed it was important to work together to produce "growth, stimulate job creation, and work cooperatively on balanced trade across the economies."
The G-20 meeting is taking place with the global economy in relatively good shape: the International Monetary Fund predicts growth of 3.4 percent this year and 3.6 percent next year, compared with 3.1 percent last year.
Yet the election results in Britain and the US have underlined discontent with trade and globalization and a sense among many that the benefits of a globalised economy — that is, with fewer barriers to trade and business — do not reach enough people. Ahead of the summit, IMF head Christine Lagarde said that it was clear that highly educated workers benefit more from globalization and called for the G-20 to focus on "greater efforts to equip lower-skilled workers with the tools they need to seek and find better-paying jobs." Those could include targeted job training and education.
The G-20's members make up more than 80 percent of the world economy. The finance ministers' meeting will pave the way for a summit of national leaders in Hamburg, Germany, on July 7-8.