German Chancellor, Economic Agency Leaders Issue Defence of Global Trade Cooperation

14 June 2018

Leaders from a host of international economic organisations met with German Chancellor Angela Merkel on Monday 11 June, calling for global approaches to policy problems of international concern, while warning that failing to do so could make it harder to ensure a long-term economic recovery and meet sustainable development objectives. 

Merkel met with top officials from the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the International Labour Organization (ILO), the World Trade Organization (WTO), and the African Development Bank (AfDB). While these meetings occur at least annually, this event marked the first time that the head of the AfDB was present, and also came after a notably contentious meeting of G7 leaders just days before in Charlevoix, Canada. (For more on the G7, see story in this edition)

Trade collaboration of “utmost importance,” officials say

Trade was one of the headline items of the meeting’s agenda, which took place in the German capital city of Berlin. The past several months have seen growing public rifts and debates among the international community on trade, as different international policy steering bodies, country coalitions, and policy analysts have all issued warnings over the worsening state of trade tensions among major players.

Other related concerns include what these trade tensions could mean not just for the post-war international economic order that has laid the groundwork for present-day commercial relations, but also what they mean for the global economic recovery, especially for other countries of varying economic weights. 

“Trade policy cooperation and coordination are more than ever of utmost importance to us,” leaders said in their joint press statement. “Increasing protectionist tendencies provide us with a clear incentive and opportunity to express our strong support for the multilateral trading system.”

The press statement also highlighted the importance of the WTO in this context, including in its role as a stabilising force in the global economy. More specifically, they referred to the need to “strengthen” the Geneva-based trade club, highlighting in particular the organisation’s dispute settlement arm.

The statement did not refer specifically to how country governments and others should do so, however. The WTO is facing a challenging moment in its history, as members debate how to resolve a relatively recent impasse with the US that has caused the organisation’s Appellate Body to have three of its seven seats vacant, along with dealing with more long-standing questions on how to reinvigorate its negotiating arm and strengthen the work of its regular, non-negotiating bodies.

“Many would agree that the trading system is imperfect and that it needs reform. I would agree with that, but I would also say that the core principles of the system have tremendous value,” said WTO Director-General Roberto Azevêdo, who was on hand at the Berlin meet.

The impact of the US’ tariffs on imported steel and aluminium have been among the most controversial topics in recent international meetings, and officials referred to the challenges of unilateral trade actions in their press conference with journalists later that day.

“I must point out that the US has focused much more on bilateral, unilateral action. This is not something that would greatly support the rules-based trading system. We also do not see the US proactively advancing, bringing in initiatives, or taking the lead in negotiations. Nor have they been constructive with the WTO Appellate Body, including the dispute settlement mechanism of the WTO ,” said Azevedo, according to an informal translation of his remarks to reporters.

He did note, however, that the US is participating in WTO negotiations, along with Washington’s role in an e-commerce initiative currently being pursued by a subset of the organisation’s membership.

During the same press conference, other officials also referred to the discussions of last weekend’s G7, and what it could mean if some recent approaches in the trade and economic landscape become longer-term trends.

“The sun is still shining, not only here in Berlin, but also in the global economy as a whole. We did not have to revise our forecasts for economic growth, [which were at] 3.9 percent for this year, 3.9 percent for next year. But these clouds, which have appeared on the horizon six months ago, are getting darker, especially since the last weekend, if I may say so,” said IMF Managing Director Christine Lagarde.

Among these “clouds” she referred to were the growing build-up of mistrust among some countries, including on trade, as well as limitations on financial flows and questions about confidence in multilateral institutions.

Agenda 2030, Paris Agreement

Global challenges, along with international frameworks for addressing them, were also hot-button topics on the Berlin meeting agenda, with leaders again touting the value of cooperation in this context.

“We live in a time of multiple, overlapping crises that affect us all: climate shocks and natural disasters, pandemic emergencies, and conflict, violence, and forced displacement,” they said.

Across multiple policy areas, 2018 is set to be a pivotal year for either crafting new international frameworks or assessing the implementation of others.

On climate change, UN negotiators are due to reconvene in September and in December, with the goal of wrapping up a “rulebook” for implementing the Paris Agreement on climate change. A previous meeting this year in Bonn saw limited progress in this effort, with delegations dealing with both renewed political divergences on allocation of responsibilities among countries, along with the technical challenges inherent in many issue areas. (See Bridges Weekly, 17 May 2018)

“In our efforts to improve prospects for present and future generations around the globe, we are guided by the internationally agreed 2030 Agenda as well as the Paris Agreement,” leaders said in Berlin this week. The 2030 Agenda they referred to is the UN framework endorsed by leaders in late 2015, which also set up the Sustainable Development Goals (SDGs).

“We require new ideas and sustainable approaches to fighting poverty and tackling inequality worldwide; including ramping up climate-related investments, providing innovative bonds to insure countries against natural disasters, and responding to major health crises like the Ebola outbreak,” officials added in Berlin, highlighting the role of international organisations in this respect.

They later devoted a full paragraph to climate action, and the role that each agency involved in the Berlin meeting could play “within their mandates,” with a particular focus on the role of climate finance.

Coming up

Merkel is due to reconvene the same group in October to review the state of play of these various issue areas. By then, it will be just over one month before the G20 leaders’ summit in Argentina, as well as the annual UN climate conference, which will be held this year in Katowice, Poland.

In the near term, some other key events on the international calendar with sustainable development implications include a ministerial-level meeting of the Global Forum on Excess Steel Capacity, which is expected in the coming weeks, as well as the annual gathering of the High-Level Political Forum (HLPF) under the UN Economic and Social Council.

That latter event is set for next month and will look at the implementation of select Sustainable Development Goals (SDGs), as well as voluntary national reviews from various country governments.

That meeting will also come after key elections in various major advanced and emerging economies, including congressional midterm elections in the United States and presidential elections in Mexico and Brazil, to name a few, which could give some clarity to the direction of political and policy discussions.

ICTSD reporting.

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