G20 Leaders Endorse Joint Trade Language, Note Differences with US on Climate

13 July 2017

Leaders from the G20 coalition of advanced and emerging economies concluded their annual summit on Saturday 8 July, which saw them sign off on a final declaration after two days of intense talks and several months of preparations.

Heading into the 7-8 July meet in Hamburg, Germany, questions had emerged over how leaders would handle differing views on various topics, particularly on trade and climate change. Officials from various members of the coalition had previously outlined their respective stances on the topic, setting the stage for a high-profile debate on the future pathways for globalisation. (See Bridges Weekly, 6 July 2017)

Afterwards, German Chancellor Angela Merkel referred to the value of compromise in reaching a final agreed document, particularly given the importance of the G20 as a forum in the aftermath of the global financial crisis and the efforts to shore of the global economic recovery.

“What was true back then is still true today: we can achieve more if we act together than we could alone,” Merkel told reporters on Saturday after the meeting’s close. “Markets must be kept open.”

The outcome was also welcomed by other leaders, including from the United States, while some of these statements also hinted that tensions on policy issues remain, including on trade and climate change.

“The G 20 Summit was a great success for the US. - Explained that the US must fix the many bad trade deals it has made. Will get done!” said US President Donald Trump in a Twitter post following the meeting.

He was not specific regarding which trade deals he was referring to, though in a separate tweet he praised Merkel’s role as summit host, saying the event was a “wonderful success.”

Globalisation, trade language

The final G20 leaders’ declaration and related documents issued on Saturday cover a host of topics. These include trade and investment; digitalisation; pandemic preparedness; the 2030 Agenda on Sustainable Development; women’s role in the digital economy; and inclusive, sustainable economic growth and development in the African continent, among others.

The overarching objective that tied these together, they added, was that of developing a global economy that is fairer and more inclusive, and that also addresses the inequalities which have emerged or been exacerbated within and among nations over the years.

“Progressing our joint objective in the G20 – strong, sustainable, balanced and inclusive growth – remains our highest priority,” the declaration says, describing thereafter the benefits and challenges that have emerged from globalisation and the need to steer it towards a more inclusive model.

“We are resolved to tackle common challenges to the global community, including terrorism, displacement, poverty, hunger and health threats, job creation, climate change, energy security, and inequality including gender inequality, as a basis for sustainable development and stability,” the declaration continues. It also pledges to use the “rules-based international order” as a continued basis for collaboration.

The language specific to trade includes a pledge to tackle protectionism, along with the value of open markets – both of which have been hot-button topics in the run-up to this year’s event. (See Bridges Weekly, 22 June 2017)

“We will keep markets open noting the importance of reciprocal and mutually advantageous trade and investment frameworks and the principle of non-discrimination, and continue to fight protectionism including all unfair trade practices and recognise the role of legitimate trade defence instruments in this regard,” the declaration says.

The language, while referring to the term “protectionism” as in years past, does include some variations from the leaders’ declaration issued last year in Hangzhou, China, framing the issue in different terms.

At the Hangzhou meet, the protectionism language referred to the past “standstill” and “rollback” commitments through end-2018 regarding protectionist measures – both of which were not cited in this year’s document. Furthermore, the 2016 declaration did not refer to “trade defence instruments” and “unfair trade practices” in describing their approach to protectionism.

The reference this year to “reciprocal and mutually advantageous” frameworks is also different from before, and is evocative of language used by US officials prior to the meet.

This year’s declaration also features language on working together to address some of the domestic challenges that have emerged in this wider context, with leaders pledging to “exchange experiences on the mitigation of the adjustment costs of trade and investment liberalisation and technological change, and on appropriate domestic policies, as well as to enhance international cooperation towards inclusive and sustainable global growth.”

They also agreed on language supporting the rules-based international trading system and to making the upcoming Buenos Aires ministerial conference this December a “success,” without expanding on what this success may entail.

Last month, US Trade Representative Robert Lighthizer said that the administration is not seeking “major deliverables or significant negotiated outcomes” for the Buenos Aires meet, while stating that the US would like to see the event be a “success.” (See Bridges Weekly, 29 June 2017)

The US does not yet have a new WTO ambassador in Geneva, though Trump has now nominated Dennis Shea, currently Vice Chairman of the United States-China Economic and Security Review Commission, to serve in that role.

Steel overcapacity

Another topic that had proved contentious heading into the meeting was steel overcapacity, particularly in light of an ongoing, controversial US investigation on whether imports of steel are risking national security. (See Bridges Weekly, 6 July 2017)

US officials had suggested ahead of the summit that their leader would be looking to see further action on the steel issue in Hamburg. Steel overcapacity is not just a concern of the United States, but has instead been raised in multiple contexts in recent years, including at last year’s G20 summit which saw the announcement of a Global Forum on Excess Steel Capacity that would aim to address the issue. (See Bridges Weekly, 7 September 2016)

This year’s statement includes language on next steps for the Global Forum, setting timeframes and outcomes in much greater detail than last year’s declaration.

“We urgently call for the removal of market-distorting subsidies and other types of support by governments and related entities. Each of us commits to take the necessary actions to deliver the collective solutions that foster a truly level playing field,” said the final leaders’ declaration.

It also sets out a timeline for specific outcomes from the Global Forum. These include improving “information sharing and cooperation” by this August, and developing a report with “concrete policy solutions… as a basis for tangible and swift policy action” by November. This would be followed by updates on progress issued next year.

Digital economy

Another landmark feature of this year’s G20 process was a meeting earlier this year of “digital ministers” – a first for the coalition. At the time, ministers released a joint roadmap and a related annex on digital trade that outlined priorities for continued collaboration in this field. (See Bridges Weekly, 13 April 2017)

“We need to bridge digital divides along multiple dimensions, including income, age, geography, and gender,” said leaders in their declaration, tying this objective with the implementation of the 2030 Agenda for Sustainable Development, which they termed in a separate section as a “milestone towards global sustainable development” and reaffirmed their commitment to.

They referred, for example, to connecting all citizens in their countries to the internet by the year 2025, while improving digital literacy and helping poorer countries obtain internet access – along with suggesting that this work can support efforts in other policy areas, such as providing learning opportunities that can help workers adapt to new challenges. Other issues raised were the relationship between data flows and privacy, along with establishing an environment where new technologies in this field can become easier and more secure to use.

The statement also refers to talks taking place in Geneva under the WTO framework, specifically in relation to e-commerce.

“We will constructively engage in WTO discussions relating to e-commerce and in other international fora with responsibilities related to various aspects of digital trade to foster digital economy development and trade,” said leaders on Saturday.

Climate change and the Paris Agreement

How to address differing opinions between the US and other G20 leaders on the UN’s Paris Agreement on climate change was another key issue for Hamburg.

“Where no consensus can be achieved, the declaration must reflect dissent,” Merkel told reporters after the summit.

Ultimately, the final declaration makes a note of the Trump Administration’s decision to withdraw the US from the accord, along with affirming that the rest of the G20 coalition believes the Paris Agreement is “irreversible” and reiterating their commitment both to that UN accord along with past pledges related to climate finance for developing countries.

They also published a separate annex entitled the “G20 Hamburg Climate and Energy Action Plan for Growth,” endorsed by all G20 participants except the United States, which that document says in a footnote is “currently in the process of reviewing many of its policies related to climate change and continues to reserve its position on this document and its contents.”

That 13-page document addresses topics such as G20 support for implementing nationally determined contributions (NDCs) under the Paris Agreement; developing by 2020 “long-term low greenhouse gas emission development strategies”; phasing out inefficient fossil fuel subsidies; supporting the transition towards more sustainable energy sources and systems; and taking additional steps for developing climate resilience and adapting to climate change’s adverse effects.

Coming up

With the Hamburg summit now over, the G20 presidency will now move to Argentina for the 2018 leaders’ summit.

German and Argentine leaders and high-level officials have already met in recent months to prepare for the change in leadership, with Argentina aiming to focus on topics such as jobs and education, tying it into the wider globalisation debate. (See Bridges Weekly, 15 June 2017 and 27 April 2017)

After Argentina, the next two summit hosts for 2019 and 2020 are Japan and Saudi Arabia, respectively.

ICTSD reporting.

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