Trade policy headlines are dominated today by the ups and downs of the United States-China relationship, the renegotiation of the North American Free Trade Agreement (NAFTA) and the Brexit process. There is concern on the effects that disintegrating closely linked economic partners could have on growth, jobs, supply chains, and consumers. The perils of a return to unilateralism and power-based mechanisms threaten the relevance of the World Trade Organization (WTO).
At first glance, the communiqué of the G20’s Hamburg Summit is an ordinary piece of international diplomacy. However, as is often the case, context is key to assess its real importance. Two context factors defined this year’s negotiations of G20 leaders in the exhibition halls in the city center of Hamburg. Within the negotiation room, an unruly US president questioned a number of common positions that had already been adopted by the G20 in previous years.
The German Presidency of the Group of Twenty (G20) in 2017 takes place under conditions of uncertainty with regards to the outlook for both the global economy and international policy cooperation. Almost a decade after the Group was launched in its current iteration, G20 economies continue to struggle with the factors that led to the Great Recession of 2007 and losses that resulted from shortcomings in domestic and international governance are still to be recovered.
Unlike the statement made by the G20 Finance Ministers last year, which asked members to resist “all forms” of trade protectionism, the communique released at this weekend’s G20 meeting in Baden Baden contains no such statement, nor does it refer to a commitment to a multilateral trading system. While there is no need to rush to any judgement, as we wait to see the final communique from the G20 leader’s summit in July this year, it may be useful to reflect on some of the lessons learnt about the role of free trade.
According to consistent press reports, drafts of the communiqué prepared for the G20 Finance Minister and Central Bank Governers at their forthcoming meeting at Baden-Baden on 17 and 18 March 2017 have dropped clear statements rejecting protectionism and competitive devaluation of currencies. Apparently, generic language about keeping “an open and fair international trading system” is to be substituted. Does this matter?