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G-20 Leaders Find Trade Compromises but Are Split on Climate

Posted by hkarner - 9. Juli 2017

Date: 09-07-2017
Source: The Wall Street Journal

Communiqué reflects differences between U.S., other nations on climate change

HAMBURG—Leaders from the Group of 20 countries vowed Saturday to fight protectionism and secure fair trade, finding a broad consensus after President Donald Trump’s defiantly unilateral stance exposed a rift between the world’s leading economies.

In light of the broad political pushback against globalization and the rise in antiestablishment forces in recent years, however, the G-20 stepped back from an unequivocal commitment to free trade for the first time since its inaugural summit in 2008. Instead, it recognized the need for defensive measures in pursuit of balanced trade.

In another unprecedented move, the group broke from unanimity in its final communiqué, splitting off the U.S. position on climate change from that of the other members.In the summit’s concluding statement, the G-20 noted “the importance of reciprocal and mutually advantageous trade and investment frameworks.” But in a nod to concerns of Mr. Trump and other leaders over trade imbalances, the group also said it would “strive to ensure a level playing field.” The phrase seemed to reflect concerns of the U.S. and some European member states over China’s expanding footprint in the global economy.

Securing the support of Mr. Trump, whose “America First” policies pose a potential clash with the international economic order, was the dominant theme among officials as the gathering drew to a close.

“The negotiations on the climate issue reflected dissent—everyone against the United States of America,” said German Chancellor Angela Merkel, who held the rotating G-20 presidency over the last year. “And that the negotiations on the trade issue were especially tough was also a result of the United States taking certain positions.”

In a tweet on Saturday, Mr. Trump wrote: “The #G20Summit was a wonderful success and carried out beautifully by Chancellor Angela Merkel. Thank you!”

A European official said the talks demonstrated that a new—and different—international consensus on economic issues could be slowly rebuilt despite the challenges thrown up by Mr. Trump’s positions.

One bellwether will be an international effort to curb the world’s excess capacity of steel, as Mr. Trump considers unilateral measures to protect the U.S. market. On Saturday, the G-20 agreed to outline by November steps to temper the global overcapacity upending local markets.

“All things considered, my impression is that we’re getting back in small steps in many areas to a greater degree of business as usual,” the official said.

Yet some leaders warned the statement won’t close deep divides on trade that have emerged since Mr. Trump’s election.

French President Emmanuel Macron took swipes at Mr. Trump and others during the two-day summit for equating fair trade with avoiding bilateral deficits. Brandishing his smart phone during the session on trade, Mr. Macron said many products consumed in G-20 countries rely on global production chains, according to delegates. Mr. Trump had left the room when the French leader spoke, they said.

“A text does not efface tensions that exist and will continue to exist on this subject for a long time,” Mr. Macron said during a press briefing as the summit concluded, describing the trade approach adopted by the U.S. president as “a profound error.”

The U.S. wasn’t alone in its views on trade, officials said. On some points, such as promoting support for defensive measures against unfair trade, Mr. Trump was joined by other leaders, including the Turkish and EU presidents and Mr. Macron.

For most world leaders, however, one of the summit’s achievements was getting Mr. Trump to back international organizations that underpin global trade.

Ahead of the summit, G-20 officials cited concerns that Mr. Trump would go beyond his decision to scrap a 12-country trans-Pacific trade pact and renegotiate America’s trade agreement with Canada and Mexico to undermine broader platforms such as the World Trade Organization. The White House has launched a review of the WTO, with an eye toward proposing reforms.But in Hamburg the U.S. joined the other G-20 members in reiterating a commitment to safeguard rules-based global trade under the WTO umbrella.

‘Working together isn’t just the best option, it’s the only option.’
—Canadian Prime Minister Justin Trudeau

“Working together isn’t just the best option, it’s the only option. Indeed it’s the only way we can meet the challenges of the 21st century,” Canadian Prime Minister Justin Trudeau said at the end of the summit.

Leaders overseeing 80% of the global economy also need to address the anxieties of people disenfranchised by globalization, Mr. Trudeau said, adding that the G-20 had heard the concerns of tens of thousands of demonstrators—a small but violent section of whom rioted in Hamburg throughout the summit.

Signaling the difficulties ahead in squaring cooperation with Mr. Trump’s demands, G-20 members wrangled for days to find a joint position on climate change in the aftermath of Mr. Trump’s decision to reject the Paris Agreement against global warming.

In the end, they could only split the difference. Germany, a staunch supporter of action against global warming, led the “very difficult” negotiations to reaffirm 19 members’ commitment to the Paris accord while accommodating Mr. Trump’s stance, officials said.

To that end, Mr. Trump’s negotiators were able to insert a line into the communiqué on the U.S. helping other countries “access and use fossil fuels more cleanly and efficiently,” according to an EU official.

“The inclusion of this paragraph is the trade-off of having a consensual approach,” the EU official said. “Obviously, to have in the text a reference to these kind of energy sources is not something we like.”

Mr. Macron’s team pushed hard to isolate the U.S. on climate change, a French official said, and safeguard the 2015 accord signed by every country in the world except Syria and Nicaragua. Signatories overwhelmingly rallied behind the deal after Mr. Trump’s decision to pull the U.S. out.

“We don’t want any contagion,” the French official said.

In a move that could further isolate the U.S, Mr. Macron announced a Dec. 12 gathering to mark the second anniversary of the Paris accord, with a focus on financing environmental projects.

While isolated in leaving the climate deal, Mr. Trump wasn’t alone in criticizing its implementation so far. Turkish President Recep Tayyip Erdogan said that despite joining the G-20 communiqué in reaffirming Paris Agreement commitments, Ankara would withhold ratification because financial pledges by Mr. Macron’s predecessor hadn’t yet been delivered.

“Following America’s step, our stance currently is also that this should not pass in parliament,” Mr. Erdogan said, adding that the communiqué papered over unease about the climate pact.

Another sticking point at the annual G-20 gathering was migration. Russia and China blocked an effort by the European Union—supported in principle by the U.S.—to pursue United Nations sanctions against human traffickers, according to EU officials. But G-20 leaders did commit to countering migrant smuggling and human trafficking for the first time in their conclusions, without offering any specifics.

“The reference to countering migrant smugglers and bringing them to justice is a very important step,” another EU official said.

Despite the lack of greater consensus on migration and climate change, the G-20 members did find language suggesting a shared commitment to staving off what many officials had flagged ahead of the summit as a major risk: trade wars.

“International trade and investment are important engines of growth,” the G-20 leaders said. “We will strive to ensure a level playing field, in particular by promoting a favorable environment for trade and investment.”

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