Row Breaks Out At G-20 Over Future Of Global Trade

Tyler Durden's picture

One day after yesterday's at times painfully uncomfortable first official meeting between Angela Merkel and Donald Trump, it will hardly come as a surprise that during today's G-20 meeting in Baden Baden, Germany- the first for the Trump administration, whose delegation is led by Treasury Secretary Steven Mnuchin - where the dominant topic is trade, and specifically globalization vs protectionism, that a row would break out over how the post-Trump world will deal with trade.

At stake is the language in the official communique to be released later on Saturday and which is expected to serve as the blueprint for future trade relations, which pressured by Trump may be increasingly transformed from multi-lateral to bilateral.

As Bloomberg reports, at the heart of the disagreement are globalist (and mercantilist) powers such as Germany (and China) defending the existing rules-based system, on the other the U.S. is calling for a recognition that trade must be "fair" without however explicitly stating what that means. Chinese
Finance Minister Xiao Jie said in a Saturday statement that the G-20
should be “adamantly against” protectionism.  According to reports,
China has been the most insistent on a commitment to the current system
that the World Trade Organization represents, which is understandable: together with such exporting powerhouses as Germany and South Korea, China has the most to lose from a dramatic overhaul of the status quo.

Yet while many had expected difference to emerge, the degree of immediate animosity and disagreement caught most by surprise. According to Bloomberg, negotiations were bogged down on Saturday with the U.S. rejecting the latest German compromise on wording over trade. Meanwhile, an earlier German suggestion that accommodated some U.S. concerns was rejected by delegations including France, the U.K., Italy, Brazil and the European Union.

The standoff is over how to deal with trade pledges from previous G-20 meetings, such as a commitment to “resist all forms of protectionism,” Bloomberg's sources reported. The surprisingly bitter impasse reflects the atmosphere the previous day at the White House, where U.S. President Donald Trump met German Chancellor Angela Merkel and repeated his complaints that his country has been treated “very, very unfairly” in trade arrangements.

Meanwhile, the French who are likewise facing a bitter presidential election and where the topic of protectionism is at the top of political issues, are desperate to avoid giving in to US demands to unwind multilateral trade as Marine Le Pen would promptly seize on the weakness and demand similar terms for France, ostensibly boosting her approval.

“It’s an administration, the fruit of American democracy, that needs to be respected, but also with a lot of resolve on the French position, which is shared by a lot, if not to say all the members of the G-20 except for this country,” French Finance Minister Michel Sapin told reporters on Friday. “We don’t want a rollback on what was said before by the G-20.

"We" don't, but Trump does, and therein lies the rub.

Of course, if Trump is successful at overturning years of draft language in G-20 communiques, all those nations reliant on the status quo would be impacted. If Trump sees Germany, with whom the US has a $68 billion trade deficit... 

... as having gotten the better of trading arrangements, then China (and South Korea, Taiwan, and many other smaller Asian nations) would also fall into the same category. Its newly found stance as the prime defender of the status quo reflects its economic gains under the rules-based system since it joined the WTO in 2001.

“China has been able to do well based on the multilateral system; it has been able to leverage the gray areas,” said Dominico Lombardi, director of global economy at the Centre for International Governance Innovation in Waterloo, Ontario. “The Trump administration is for a level trading field. In the case of China, there are complaints of subsidies so ‘fair’ trade is what Washington wants to push for.”

* * *

Reflecting just how important the trade relationship between China and the US is, Bloomberg adds that Mnuchin and Xiao held a bilateral meeting in Baden-Baden on Saturday, a G-20 official said. While Trump started his presidency by shooting down regional trade deals and floating measures such as a border tax, his Chinese counterpart Xi Jinping laid out his position at the World Economic Forum in Davos this year when he said protectionism was like “locking oneself in a dark room.”  That his sentiment is shared by many in Baden-Baden was shown when delegations knocked back a proposal by Germany to compromise by referring to “fairness, openness and inclusiveness” in trade: terms demanded by Trump and whose inclusion would suggest admission of creeping change to the status quo.

“We’ve been having these G-20 summits for quite some time and there is an appropriate wording there” on trade, Turkish Deputy Prime Minister Mehmet Simsek said in Bloomberg Television interview on Saturday. “Openness to trade is key. There is no evidence that trade is destroying jobs.”

Yet while most nations remain adamant in not conceding to any changes to the G-20 draft, Germany is - perhaps surprisingly - the nation most willing to concedde and accommodate some U.S. concerns to keep it involved in the multilateral process, rather than to isolate and antagonize the delegation, giving the Trump administration an excuse to turn its back.

That approach, of course, assumes that Trump would be content with a modest diplomatic concession instead of a shortgun transformation to global trade overnight, which is dubious at best. For his part, Mnuchin stressed that trade is only fair if it’s balanced, and although he argued that the U.S. is unfairly treated, he didn’t elaborate on what that meant in detail, a G-20 official told Bloomberg.

Finance ministers and central bankers aren’t usually the key officials for trade talks, but their statements normally reflect a consensus. This time, if they can’t agree, the topic could be pushed to a leaders’ summit in July, France's Sapin said.

Needless to say, such an acrimonous end to the weekend's summit would likely result in a surge in FX volatility when markets open for trading late on Sunday, reflecting the new state of global trade flux, in which the future of the US Dollar is completely unknown, and reflecting the emerging chaos over the future parameters of trade.

Which is why in the summit's last hours, delegates are making a last ditch scramble to reach an agreement before they head out of the German spa town. Japan, whose Prime Minister Shinzo Abe has been keen to foster relations with the Trump administration, has joined Merkel in pushing for a compromise language, and isn’t opposed to mentioning fairness.  Likewise, Canada's Finance Minister William Morneau referred to “fair trade” in a Frankfurt speech one day before the G-20. Canada, like Japan, may be tempted to avoid conflict as it prepares for potential NAFTA talks, while also carrying on exploratory talks with China and pushing for ratification of its EU trade deal. That said, Morneau is pushing for pro-trade language in the final communique, a Canadian government official said on Friday, adding that the inclusion of such a reference is more important than the precise wording.

The nations who will be most vocal in their opposition to inclusion of the "fair" language are those whose net trde surplus with the US is measured in double digit % of GDP terms as they stand to lose the most.

* * *

And speaking of Sunday's FX open, Bloomberg also notes that among the other language in the communique under review is a pledge to refrain from currency manipulation, which however is expected to remain unchanged from last year. Little time is being devoted to global banking regulations, with major developments not expected. In a move that is set to infuriate environmentalists, the whole section on climate change is set to be dropped.

In any case, the focus remains trade: “The U.S. has been pushing a more protectionist agenda -  the high uncertainty at the moment is what that will exactly look like,” said Torsten Slok, chief international economist at Deutsche Bank in New York. “It makes sense that in this case the Chinese, who benefit from a rules-based trade system, are trying to preserve it. We just don’t have any firm ideas about what the alternative will be.”

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ThanksIwillHaveAnother's picture

The Fleecers and Rentiers are nervous!  Stick it to them, hard!

AlaricBalth's picture

The Great Unravelling has commenced.
Expect the repercussions to be onerous.

SWRichmond's picture

Is Schweinfurt still a town?  Send in the motherfucking B-17s

stizazz's picture

"Trump is president of the world's biggest economy"


China is the world's biggest economy. We're too busy warmongering.

techies-r-us's picture
techies-r-us (not verified) stizazz Mar 18, 2017 8:40 AM

Since 2014 China has been the biggest economy.

Talk about FAKE NEWS.

Arnold's picture

"...Turkish Deputy Prime Minister Mehmet Simsek said in Bloomberg Television interview on Saturday. “Openness to trade is key. There is no evidence that trade is destroying jobs.”

What are you trading for those 15,000 Middle Eastern "refugees" per month for.

Where is the value added in that?

xythras's picture
xythras (not verified) Arnold Mar 18, 2017 9:05 AM

The Globalists heard the rumors, so they got their panties in a bunch.

Guess WHO's coming back?

VIDEO: Hillary Clinton Says She’s “Ready to Come out of the Woods”




hope_talk's picture
hope_talk (not verified) xythras Mar 18, 2017 9:16 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

Mahatma Coat's picture

Good to see the two of you together.  Let me guess.  You're making $7k a month peddling xythras's site?

Theosebes Goodfellow's picture

~"Chinese Finance Minister Xiao Jie said that the G-20 should be “adamantly against” protectionism,..."~

...said the guy from the country counterfeiting the rest of the world's shit.

East Indian's picture

There is no evidence that trade is destroying jobs.”


But there is incontrovertible proof for global warming, right?

fx's picture

"But there is incontrovertible proof for global warming, right?"

Not quite. Though that is actually a totally minor issue. Suppose, there is indeed a global warming trend happening. It has everything to do with solar cycles and solar activity asnd little to nothing to do with human activity and even less with CO2. Al Gore fooled everybody with a corellation chart going back hundreds of thousands of years. What he didn't mention, but what has been proven since then with each and every ice c ore examination: The rise in CO2 levels LAGS global warming by average 800 years. Rising CO2 is  a result of global warming, not the other way around.

BetterRalph's picture

I know man I was trying to figure this logic out in my head last night where "ally a" threatens "ally b", how does that end.
playing games with the word "refugee" they are young men invaders to overthrow the country being exploited.

Muad'Grumps's picture

But the US will not get out of this arrangement w/o painful restructuring.

SoDamnMad's picture

Hey, I was stationed in Schweifurt for 2 years. My landlord, a wonderful family, spoke about going out and rounding up all the allied pilots shot down by the Luftwaffe whose hangers we used as the motor pool for the armor units of our 3rd Inf battalions. That was the longest raid distance to and from the bases in England and we didn't do too well. The bearing works were back up in weeks and the critical factories weren't hit.

fx's picture

You should thank Germany - without them there would have been no Donald Trump as POTUS. His grandpa came from Germany.

That said, he should really stick it very, very hard to Merkel. This cunt is a German version of Killary. Thanks god, she has no offspring trying to follow her into politics, contrary to the Clintons.

Jubal Early's picture

Thats the ticket.  Genocide the Germans for the Jews one more time.  But why Schweinfurt?   Dresden is still helpless and it still hosted the First International Anti-Jewish Conference in 1882.  Thats why the zionists burned it and its inhabitants to the ground during the war.

The Wizard's picture

The Edomite/Bolshevik's, who created a revolution in Russia, were successful creating a guilt complex on Germans in order for Germany to capitulate to their desire for control of a world order. Merkyl is one of their puppets.

Through the central bank system and the IMF they want to control the rules of commerce and banking. It's not rocket science.

GUS100CORRINA's picture

For decades, I have asked myself the question "When are these CRAZY trade deficit numbers ever going to matter"?

Well, it looks like that time has now arrived. America is at the end of its rope and President TRUMP knows it. 

America can start with OIL. America should stop importing oil from the Middle East on its path to becoming energy independent. America is the Saudi Arabia of natural gas.

It is time for a change. OBAMA has done great damage to America that will take a long time to unwind. Did everyone notice how the trade deficit numbers increased double digit under the OBAMA administration?

TheReplacement's picture

As long as we can import oil, add value, and turn it around then we should.  Oil is a finite resource and the more of it that we refine and consume in an economically positive manner the better for our geopolitical position in the world.  The less we frack and drill out of our own lands the more we will have in reserve for the day when the global oil supply is running out.

This is not to say we should use our military to protect oil producing nations.  Our military should only be employed in the oil industry to protect actual American assets such as American oil tankers and such.

Save the domestic natural gas for the future when oil is running out.  Else, the only country of significance, with a strong military and the resources to employ it, will be Russia.  While most of us have no problem with Russia, it is not in our best interests to deplete our reserves and leave ANY foreign power with a significant advantage over us.

Think long term and be conservative.  Conserve what we have and use up what other people are willing to give away for mere paper first.

Oldwood's picture

Corporations and government love it. Deficits don't matter. The only thing that matters is CONSUMPTION. How we pay for it is irrelevant, unless you consider the massive debt WHOM?

It is the debt that matters as whoever holds that debt can call the shots. Debt servitude is not a lost notion for these people. They have created "money" from nothing, lent it out by the trillions, that debt, public AND private eventually finds its way back onto US, whom now live to serve our governments, to service OUR debt.

So lets just keep spending money we don't have.

and lets just keep believing that debt doesn't matter.

And lets keep believing the LIE that "protectionism" is foolish and self destructive JUST LIKE they tell us about owning weapons with which to "protect" ourselves.

Please notice the correlation between protectionism and self protection. The same people are disparaging both. The same people are telling us to TRUST government to look out for us even though all evidence is to the contrary. The same people are telling us to buy foreign, to bring MORE foreigners into our countries, to borrow ALL that will be lent, to throw ALL caution to the wind, willingly sacrificing ALL that we have accomplished for the DREAM yet never realized.

What WE want, what WE value matters not one shit to these people. We are but a means to an end and beyond that simply an impediment to the utopian construct in their minds.

We will be lied to, placated with promises of future peace and prosperity that will never us. We KNOW what they truly think of us. They made THAT abundantly clear....and still do. So what would ANY rational person see as our future?

Meaningful decent paying jobs? PLEASE! We are the filth, the the waste, the byproduct of their sausage making. Like the pedophile offering their young victims candy laced with drug to make them more pliable, they ply us with debt and wonderful new toys, none of which make our personal lives more meaningful or productive. We set for HOURS playing with them. Look at the statistics on this shit, the money spent on entertainment compared to our debt. This is madness, plain and simple and we are BUYING it. We are buying ALL of it.

TheLastTrump's picture

These nations have been abusing America with the help of her elected leaders for decades. Time for a change.

MFL5591's picture

The countries benifiting from unbalanced trade deals in their favor want to continue?  Wow, what a shockl!

Nexus789's picture

They benefit as they make competitive products and services that people want to buy.  The US has not figured out that the only way to compete is to do the same.  Any strategy that ignores this will never be successful. 

Oldwood's picture

And when harley Davidson is charged a 100% tariff in some countries, they are just supposed to work harder and smarter, right?

Don't be stupid. This is anything BUT a level playing field and we all know it. Our single greatest advantage will be our downfall...the dollar, and our ability to print seemingly to infinity.....or NOT.

Muad'Grumps's picture

Not really. Just like Germany guaranteed an export market by  vendor financing the PIIGS, the rest of the world did the same by vendor financing American consumption. 


What balanced trade means is the end of UST accumulation.

loves the truth's picture

No, its the Zionists who are the enemy of the Goy

Escapeclaws's picture

They are probably discussing trade in pizzas and hotdogs.

ThanksIwillHaveAnother's picture

G-20 should be renamed The Communist Council of Trade (enabled by Central Banking).

Mahatma Coat's picture

Many hidden subsidies.  Beware a Chinese businessman pushing the win/win line.  He means China wins twice.

Dilluminati's picture

The Chicoms are always atrting problems.

There wasn't a problem until the Chcoms entered the WTO.

Get rid of the Chcoms and the Muslims and we're good again.



IridiumRebel's picture

Let's load these fuckers onto a rocket and jettison them out to the sun.

Dilluminati's picture

throw them into an erupting volcano to appease the gods of animal spirits

I'd settle for a guillotine

slicktroutman's picture

Costs too much. ZH had a comment I liked last week. "Load them into containers and sink them in the ocean". Much more feasible since there will be an excess of containers anyway.

TheReplacement's picture

Rebuild the Great Barrier Reef.

So double plus good that even the environmentalists will support it.

Escapeclaws's picture

I'm tired of having leaders.

edotabin's picture

We have them only so that we can take the aliens to someone when they arrive. Apparently it's all their good for anyway.

Escapeclaws's picture

I hope the aliens are hungry from their long voyage.

shovelhead's picture

I have no problem with "if you want to sell more, buy more". We'll match tariff for tariff. No big deal.

Dragon HAwk's picture

Lets turn the word Foreign Aid, into American Aid,   I am tired of sending taxpayer money to foreign countries that just show us the finger behind our back and steal the aid anyway.

scoutshonor's picture

I have done several tours doing medical missionary work in central america.  Each year I would attend a conference in Copan where groups would meet with locals to discuss what they needed.  I was involved in a discussion with Honduran farmers about obtaining fertilizer--I offered to contact our New York office to have a container or three sent down.  

Farmer: "if you do that the government will just repackage it for export and sell it overseas."

This is what happens to much of what we donate to poor countries.

kenzo7's picture

as if any decision of G-20 has an effect on anyting

Solio's picture

No decision? Just disband and the looting will stop.

Stan522's picture

We've been the world's pansy for long enough. It's time to pay a little more attention to what's good for American's. There is still plenty of middle ground here and I believe Trump has the ability and desire to find it.

geno-econ's picture

Sooner or later the American consumer will not be able to afford the Mercedes Benz, BMW, Audi, Porsche and Passat and the trade deficit will dissappear.   

slicktroutman's picture

No they'll just start 10-15 year loan/leases so the idiots who need them as a status symbol can continue their materialistic debtor condition.

SheepDog-One's picture

' a row breaks out' I've never heard of that before.

opport.knocks's picture

In the photo shoot the tallest were told to stand behind the shortest, yet they stubbornly stayed in single file. Rebels, all of them