G20 ministers give Mnuchin space to
define Trump trade agenda
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[March 20, 2017]
By David Lawder
BADEN BADEN, Germany (Reuters) - Wary of
their first official encounter with U.S. President Donald Trump's
blustery trade agenda, the world's top finance officials were relieved
to find new Treasury Secretary Steven Mnuchin polite and business-like
over the weekend.
But they yielded ground to the newcomer's push for the Group of 20 major
economies to abandon a decade-old pledge to resist protectionism and to
delete communique language on financing the fight against climate
According to G20 officials who interacted with Mnuchin at the meeting in
the spa and casino town of Baden-Baden, Germany, many opted not to
challenge Mnuchin on protectionism language.
Instead they chose to give some space to him and Trump's new
administration to refine their trade views in the hopes for moderation
by the time Germany hosts a G20 leader's summit in July.
Five weeks into his new job, the former Goldman Sachs and commercial
banker is currently the only Senate-confirmed Trump appointee working at
Treasury. And the Trump administration has not yet decided on the
specific policies it will use to make good on campaign pledges to shrink
U.S. trade deficits and grow American manufacturing jobs.
Options under consideration range from more aggressive anti-dumping
enforcement efforts to renegotiating trade deals and enacting a proposed
border tax levied on imports. During his campaign, Trump threatened
unilateral tariffs on Mexican and Chinese goods and said he would quit
the North American Free Trade agreement unless it is renegotiated to his
"We have a new administration in Washington which still has to define
precisely its narrative, especially in the context of what was said in
the campaign," said Pierre Moscovici, European Commission Economic
"I think Mnuchin is an articulate, constructive and pragmatic man,"
Moscovici said. "More work needs to be done to find common ground. It
was not ready here. It is not a total surprise."
Japanese Finance Minister Taro Aso, who tangled with Mnuchin's
predecessor, Jack Lew, last year over dollar-yen exchange rate
volatility, said he was impressed with Mnuchin's understanding of
economics and financial markets.
"Thatís why I think we can do good business together," Aso told
In the G20 plenary sessions, Mnuchin took to the floor only once,
reading from a prepared statement, according to a G20 official, while
counterparts from China and France argued forcefully in favor of keeping
the anti-protectionism pledge.
While Mnuchin concentrated on making good first impressions with his G20
counterparts, U.S. negotiators behind the scenes insisted that they
could no longer accept previous language vowing "to resist all forms of
[to top of second column]
U.S. Treasury Secretary Steve Mnuchin after meeting with German
Finance Minister Wolfgang Schaeuble in Berlin, Germany, March 16,
2017. REUTERS/Fabrizio Bensch
This was replaced with a watered-down pledge to "strengthen the
contribution of trade to our economies" - language viewed by some
participants as preserving U.S. flexibility on trade policy.
German Finance Minster Wolfgang Schaeuble, who met with Mnuchin in
Berlin before the Baden Baden meeting, said consensus could not be
reached on the meaning of protectionism..
He suggested at a news conference that Mnuchin may not have had a
clear mandate to negotiate on trade issues.
Asked about this, Mnuchin said he knows Trump's desires on trade and
negotiated them from Baden Baden, adding: "the new language makes
The deletion of a "ritualistic phrase" in the G20's core language
could over time diminish U.S. influence, said Eswar Prasad, a former
International Monetary Fund official and trade policy professor at
"The U.S. may have won this battle by forcefully imposing its will
on the rest of the G20, but the outcome represents a step backward
in U.S. global leadership on issues such as the promotion of free
trade and tackling climate change," said Prasad.
But the Baden Baden meeting established Mnuchin as a pragmatic
operator in the Trump administration's drive for a more level
playing field on trade, said Domenico Lombardi, another former IMF
official now with the Centre for International Governance
Innovation, a Canadian think-tank.
"It'd be in the interest of Germany and Europe to establish a
strong, bilateral relationship with the new Treasury secretary
rather than questioning his authority," Lombardi said. "The
alternative for them would be to negotiate directly with Trump and
that would be worse."
(Additional reporting by Jan Strupczewski and Leika Kihara; Editing
by Mary Milliken)
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