(Bloomberg) — As Steven Mnuchin dug in, resisting the rest of the Group of 20, an ally emerged to help the U.S. Treasury Secretary dial back the bloc’s multilateral-trade pledges — his biggest customer.
Canada, the top buyer of U.S. goods, led a last-ditch push to reach an agreement on what to say about trade in the communique issued Saturday by G-20 finance ministers and central bankers. The final wording — “we are working to strengthen the contribution of trade to our economies” — grew out of Mnuchin’s own suggested wording, decidedly less specific than the club’s pledges to resist protectionism a year earlier.
Wrangling over variations of that line occupied much of the summit, proving so contentious that nations warned trade might not be mentioned in the communique at all. It was a last-minute effort by Canadian Finance Minister Bill Morneau and others that reached a compromise, officials from two countries said at the meeting in Baden-Baden, Germany, speaking anonymously because they were not authorized to speak publicly.
Canada’s belief is, essentially, that the precise wording matters less than finding common ground backing the notion of trade. They insist, despite Donald Trump’s protectionist pledges, that the U.S. is just like Canada and the rest of the G-20 — they know trade is good for their economy, they just might want some changes in the way it’s organized.
“I think Secretary Mnuchin came in here saying that trade is important, that we need to make sure trade is working in a way that benefits all parties. It seems to me that might be a consistent American approach, just like it’s a consistent Canadian approach,” Morneau said in an interview.
“They just want to make sure that they reexamine the benefits from an American perspective. I expect that will take a little bit of time. So nothing here surprised me.”
19 vs. 1
The outcome wasn’t universally hailed. French Finance Minister Michel Sapin said the U.S. was at odds with 19 other nations. “There wasn’t a G-20 disagreement, there was disagreement within the G-20 between a country and all the others. This isn’t a caricature, this is the reality of things,” he said.
Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, Taxation and Customs, said a commitment to fight protectionism and favor an open economy was the single-most important decision that prevented another Great Depression following the financial crisis in 2008.
“I cannot overstate the importance of avoiding any rollback on this,” he said, adding he hopes the G-20 leaders’ summit in July produces a stronger commitment against protectionism.“I hope, and I think we need it. Because it is the raison d’etre of the G-20.”
Nafta Talks
Canada is preparing for potential new talks on renegotiating the North American Free Trade Agreement with the U.S. and Mexico, and has mounted a widespread lobbying campaign aimed at convincing Trump and his administration about the benefits of trade with their northern neighbor.
Canada wanted to press Mnuchin to make what Canada believes is a genuine support of the notion that trade drives growth.
“I think what led to the conclusion was every party in the room recognizing that trade was positive for our economies,” Morneau said. “My view is that the Americans were doing what any new administration would do. They were looking at the language through their lens. Their lens is how can trade benefit the United States. Everyone else has the same lens.”
–With assistance from Alexander Weber and Alessandro Speciale
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