Culture Shock News
Members of the G20 Summit have chosen to remove a pledge to resist protectionism. The move comes after President Trump began instituting his ‘America First’ policy in regards to the world trade market.
The G20 Summit, which represents two-thirds of the world’s population and 85 percent of its economy, is made up of finance ministers and bank governors from twenty countries around the world. The G20 includes the eight leading industrialized nations – U.S., Japan, Germany, UK, France, Italy, Canada and Russia. This group of countries also meets on their own, and are known as the G8. Eleven emerging markets and smaller industrialized countries make up the rest of G20: Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey, plus the EU.
The G20 was formed in 1999 to give developing countries a more powerful voice in forming the global economy. The meetings started as an informal get-together of finance ministers and central bankers.
In 2008, the first ever G20 summit meeting was held in Washington, D.C. during the financial crisis. Before then, most of the decisions made for the world market were only discussed by the G8. During the 2008 meeting, financial leaders around the world asked the United States to regulate its financial market more closely by cracking down on hedge funds and debt-rating companies. The United States ultimately refused to do so, which led to the world recession being blamed on a “broken U.S. market.”
Since taking office, President Trump has not been quiet about his opposition to the practices of some of the G20 member countries. Trump claims countries like China, Japan and Germany keep their currencies artificially low for competitive purposes. The countries in question have since denied his claims.
Trump’s opposition to members of the G20 is not the first time someone has spoken out against the group, but it is the first time a sitting United States President has been vocal in calling out practices he sees as unfit. The G20 has witnessed protests from other countries and organizations before.
In 2010, during a summit in Canada, protesters were against the G20’s focus on fiscal responsibility and austerity at the cost of social programs. John Clarke, leader of the Ontario Coalition Against Poverty (OCAP), said, “The whole process of putting together this grouping has been about impoverishing people, and benefiting the richest members of society.” The protesters were also vocal in their opposition to the $1 billion cost of the meeting itself, which was paid by Canadian taxpayers.
During Trump’s presidential campaign, he stated that he would label China a “currency manipulator” as soon as he took office. He also scrutinized Germany in a public statement from one of his financial advisers.
Speaking to the Financial Times, Peter Navarro, the director of President Trump’s new National Trade Council, said the euro’s low valuation relative to other currencies gives Germany a major advantage over its trading partners. Navarro claimed Germany represented one of the main obstacles to a US trade deal with the EU. He also said talks around a United States-to-EU trade deal, known as the Transatlantic Trade and Investment Partnership, or TTIP, would not be happening.
He told the publication, “A big obstacle to viewing TTIP as a bilateral deal is Germany, who continues to exploit other countries in the EU as well as the US with an ‘implicit Deutsche Mark’ that is grossly undervalued. The German structural imbalance in trade with the rest of the EU and the US underscores the economic heterogeneity [diversity] within the EU — ergo, this is a multilateral deal in bilateral dress.”
German Chancellor Angela Merkel vehemently denied Navarro’s claims shortly after his interview surfaced. She claimed Germany had always relied on the Central European Bank to before implementing any policy.
“Germany is a country that has always called for the European Central Bank to pursue an independent policy, just as the Bundesbank did before the euro existed,” she said a news conference with Swedish Prime Minister Stefan Lofven.
President Trump has not backed down from any criticism from foreign nations, especially any related to his policies – many of which started as campaign promises that he is now seeking to fulfill.
President Trump assured the American people that part of his “drain the swamp” agenda is to help fix the world’s economy. He also insists that unlike presidents before him, he will not be open to negotiating what other countries deem as fair. Wasting no time after taking the oath, President Trump kicked off his term by tackling national security.
At the beginning of this week, Trump signed his newest executive order calling for a temporary travel ban from six predominantly Muslim countries to the United States. His actions were in response to his initial order being overturned by a federal court, as well as sparking international outrage from many countries around the world, including a few U.S. allies.
The G20 draft, which was intercepted by Bloomberg on March 1, calls for the removal of the pledge to resist protectionism. The communication states: “We will maintain an open and fair international trading system. We will also strive to reduce excessive global imbalances, promote greater inclusiveness and reduce inequality in our pursuit of economic growth.”
This is a slight change in language from the meeting last July in Chengdu, China, when all of the finance ministers and bankers unanimously vowed to “resist all forms of protectionism.”
Germany holds the place of the presidency over the G20, and will be hosting members from all of the represented countries in Baden-Baden later this month. The communication that was released by Bloomberg is thought to be preliminary, with a final one coming after the meeting in Germany.
Since President Trump has not yet attended a G20 summit meeting in person, it will be interesting to see if his encounter with these foreign leaders is different from the statements he has made regarding their economies. Perhaps he is the driving force the United States needs to help others improve the market and avoid another huge financial crisis.