G20’s draft statement omits anti-protectionism pledge

G20’s draft statement omits anti-protectionism pledge

The G20’s longstanding call to resist trade protectionism is in doubt ahead of its upcoming summit in Argentina, according to a leaked draft of the joint statement under consideration by government officials obtained by the Financial Times.

The G20’s longstanding call to resist trade protectionism is in doubt ahead of its upcoming summit in Argentina, according to a leaked draft of the joint statement under consideration by government officials obtained by the Financial Times.

The communiqué, which is still being negotiated and could change before the summit begins in Buenos Aires on November 30, calls for countries to “recognise the importance of the multilateral trading system” and “work to keep markets open and ensure a level playing field”.

However, there is no explicit commitment in the draft statement to fighting protectionism. Anti-protectionist language has been a staple of G20 pledges since the forum was created a decade ago at the height of the financial crisis.

The omission could help avoid a repetition of the friction between US president Donald Trump and fellow world leaders at last year’s G20 summit in Germany, and the G7 gathering in Canada this year, including over that terminology. The Buenos Aires meeting will be dominated by trade tensions and a meeting between Mr Trump and Xi Jinping, his Chinese counterpart.

But some officials and trade analysts feared that the possible absence of anti-protectionist language from the final declaration was a bad sign for the future of global commerce.

“Other countries look to the US as a role model,” said Chad Bown, senior fellow at the Peterson Institute for International Economics, a US think-tank. “And if this is now the new role model, they [will] start to act in the same fashion themselves.”

Mr Trump has turned Washington’s trade policy on its head since taking office in early 2017, imposing tariffs on strategic allies ranging from Canada to Japan and the EU, and plunging the US into a commercial confrontation with China. This stands in stark contrast to efforts by his predecessors, including George W Bush and Barack Obama, to corral the world towards more open trade.

“[Mr Bush] understood that protectionism would impede, not advance, US interests. If the US opposes including such language now it would underscore President Trump’s counterfactual and revisionist view that the US is the victim, rather than the beneficiary, of globalisation and open markets,” said Daniel Price, a G20 official under Mr Bush and now managing director of Rock Creek Global Advisors, a policy advisory group in Washington.

A White House official said: “We are committed to working toward a consensus for the G20 and do not comment on ongoing negotiations.”

The US president has threatened to pull his country out of the World Trade Organization unless it is reformed. Although there is reference to the “importance” of the multilateral trading system in the leaked document, the language is not as firm as it was in last year’s G20 declaration. According to the draft communiqué, trade ministers will be instructed to “develop proposals to ensure that the WTO continues to be relevant” and report back by next year’s meeting.

The statement being negotiated offers support to increased funding for the IMF, which has embarked on a fundraising drive to increase its coffers in the event of another global financial crisis. A new round of IMF funding would require adjusting the voting power of countries within the institution to reflect their standing in the global economy, leading to greater influence for emerging economies such as China.

The draft communiqué also includes much softer language on climate action than previous G20 statements, with a watered-down section on climate the result of lobbying by the US and Saudi Arabia, according to people familiar with the discussions.

The document only briefly mentions the 2015 Paris climate accord, but only in the context of “acknowledging the different circumstances, including those of countries determined to implement the Paris agreement”. The draft stops short of calling for more funding to help developing countries cope with climate change, saying that the issue of climate finance was merely “discussed”.

The draft statement stands in contrast to the sharp language from last year’s G20 summit, which criticised the US announcement on withdrawing from the Paris agreement. That communiqué said: “The leaders of the other G20 members state that the Paris Agreement is irreversible.”

This year’s G20 meeting comes ahead of a UN climate summit beginning in Poland on December 3, the biggest such gathering in three years.

 

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