Global free trade at risk as G20 drops pledge at summit
The formal agreement between the world’s 20 largest economies, or the G20, to trade freely with each other has been imperilled amid concerns about US President Donald Trump’s “isolationist” policies.
America First
President Trump’s “America First” rhetoric, has included pledges to impose huge import tariffs on foreign-manufactured goods. These included German cars and Chinese steel. This tone has deeply concerned businesses around the world as their access to the US market appears increasingly at risk.
Senior finance ministers and central bank governors gathered in Germany this week to agree on economic and international trade policies. According to German Finance Minister Wolfgang Schauble, the attendees reached deadlock. After two days of talks, there was still no agreement on the wording. It has in the past included a vow to avoid protectionist policies – but this year, Mr Schauble said US delegates did not agree to the vow’s inclusion.
China And Australia Clash With US
It appears that China and Australia were particularly insistent on maintaining the previous agreement. The US however, having repeatedly stated that American firms have been “treated very unfairly in the past”, declined.
World leaders reaffirmed their efforts to boost free trade following the 2008 financial crash, in an bid to prevent the same events from reoccurring.
G20 vs Trump
Many of the G20 nations will have been worried about a potential inability to trade with the world’s biggest economy. In the two months since his inauguration, President Trump has already abandoned the 11-country Trans-Pacific Partnership (TPP) deal. That included trade agreements with major economies including Australia, Japan and Singapore. He has also voiced his discontent with the North American Free Trade Agreement (NAFTA), which commits to barrier-free trade between the US, Canada and Mexico.
Unlike his predecessor Barack Obama, he believes these deals contribute to rising unemployment in the US and put American firms on the back foot. By putting America first, Trump believes he will create more jobs in the US.
The final agreement was ratified by the US. It included a bland pledge for strengthening trade within the G20’s own economies. It also omitted a pledge to fight climate change. This came after President Trump recently announced plans to cut funding for the environment.