As Hamburg Summit Approaches, G20 Members Prepare for Debate on Trade

22 June 2017

Members of the G20 coalition of major advanced and emerging economies are gearing up for their leaders’ summit in Hamburg, scheduled from 7-8 July. The high-level event, which is being held this year under the German presidency, is slated to see the topic of trade take centre stage.

On Tuesday 20 June, German Chancellor Angela Merkel affirmed that her country is focusing on getting a commitment from leaders on “open markets and free, fair, sustainable and inclusive trade,” according to comments reported by Reuters.

She also indicated that more needs to be done in the “debate on globalisation” and in making societies more inclusive, while also warning that protectionist tendencies can have damaging effects for innovation and economic competitiveness.

“We’ll do all we can to get as broad an agreement on this as possible in Hamburg. Given the new American administration that’s not easy but nonetheless we need to make an effort,” she continued, speaking to a domestic industry group.

Over the past several months, officials meeting in different configurations, including the G7 and the G20, have debated over how to address the topic of trade – such as whether and how to include past pledges on combatting protectionism in their communiqués.

Those pledges, while usually common features of those documents, have sparked debate and criticism over the years as to what falls under the heading of “protectionism,” along with how to define terms such as free and fair trade.

The new administration of US President Donald Trump has publicly pushed back against reaffirming past language on protectionism in most contexts, opting instead in favour of language on free and fair trade, including the value of “reciprocity” in trading relationships.

However, G7 leaders in Taormina, Italy, did endorse language in their communiqué last month on the value of “free, fair, and mutually beneficial trade and investment, while creating reciprocal benefits,” along with including their previous commitments to open markets and tackling protectionism. (See Bridges Weekly, 1 June 2017)

During their meeting in March, G20 finance ministers and central bank governors ultimately did not include a reference to fighting protectionism in their final communiqué, and referred instead to their work to “strengthen the contribution of trade to our economies” and ensure that efforts to pursue improved economic growth are also more fair and inclusive. (See Bridges Weekly, 23 March 2017)

In other contexts, such as the Ministerial Council Meeting (MCM) of the Organisation for Economic Co-operation and Development (OECD) earlier this month, disagreements over how to address trade and investment, among other subjects, ultimately led to the release of multiple statements – one consensus statement, one chair’s statement noting areas of consensus or “near consensus,” and one from the United States on its own behalf. (See Bridges Weekly, 15 June 2017)

TTIP, CETA

In her speech this week, the German leader also referred to her continued interest in seeing EU-US trade and investment negotiations revived, referring to the Transatlantic Trade and Investment Partnership (TTIP) talks that began in 2013 and have been “in the freezer” since late last year. Merkel has previously expressed her hope of renewing the TTIP talks when meeting with Trump in Washington in March, and some US trade officials have since indicated their openness to the possibility. (See Bridges Weekly, 23 March 2017)

Merkel also noted the value of the EU’s trade deal with Canada in this context, according to an informal translation of her remarks. The EU and Canada have negotiated an accord known as the Comprehensive Economic and Trade Agreement (CETA), whose provisional application is expected this year. (See Bridges Weekly, 18 May 2017)

Whether the US may pursue a bilateral trade deal with the UK after it exits the EU also remains an open question, with trade officials from both countries meeting in Washington this week on the subject. The Brexit talks between the EU and UK formally kicked off this week.

Steel update

Merkel also indicated that global overcapacity in steel will likely play a role in the G20 leaders’ discussions, in light of the continued problems plaguing the sector and growing trade frictions due partly to the various investigations underway by national agencies over allegedly unfair practices. (See Bridges Weekly, 4 May 2017)

The steel subject is not new to the G20, with talks at last year’s event leading to the establishment of a Global Forum on Steel Excess Capacity. (See Bridges Weekly, 30 March 2017)

That forum is due to submit a report to G20 leaders in time for the Hamburg meeting.

“Shaping an interconnected world”

The July leaders’ summit is being held under the theme “shaping an interconnected world.” Germany has outlined a series of priorities for the high-level event, built around the pillars of improved economic resilience; advancing sustainable development objectives, including on climate action; and more “responsibility” in dealing with challenges such as migration and supporting economic development in the African continent.

To that end, the process leading up to the Hamburg event has included a series of ministerial meetings, some held for the first time. This included, for example, the first-ever meetings of G20 health ministers in May and G20 digital ministers in April. (See Bridges Weekly, 13 April 2017)

While there was not a meeting of G20 trade ministers under this year’s presidency, there have been meetings of the “Trade and Investment Working Group,” which was established under the Chinese G20 presidency last year.

The meeting may also renew internal tensions on how to address climate action at the international level, in light of Trump’s announcement earlier this month that he plans to pull the US out of the UN’s Paris Agreement on climate change. (See Bridges Weekly, 1 June 2017 and 8 June 2017)

After Germany concludes its G20 presidency, Argentina will take on the role for the 2018 cycle. (See Bridges Weekly, 15 June 2017)

The members of the G20 are a diverse group, with its member countries spanning across continents and together accounting for 80 percent of global GDP and the majority of global trade. Its members include the EU as a whole, along with Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the US.

ICTSD reporting; “Germany to focus on free, fair trade at G20 summit: Merkel,” REUTERS, 20 June 2017.

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