Trump Wins: G-20 Drops 'Anti-Protectionist, Free-Trade, & Climate-Change Funding' Pledge

Tyler Durden's picture

After delays and hours of discussions amid tensions over 'trade' comments between the United States and the rest of The G-20, it appears President Trump has 'won'. While China was "adamantly against" protectionism, the finance ministers end talks without renewing their long-standing commitment to free trade and rejection of protectionism after US opposition.

The world's financial leaders are unlikely to endorse free trade and reject protectionism in their communique on Saturday because they have been unable to find a wording that would suit a more protectionist United States, G20 officials said.

This would break with a decade-old tradition among the finance ministers and central bankers of the world's 20 top economies (G20), who over the years have repeatedly rejected protectionism and endorsed free trade.

But the new administration in the United States is considering trade measures to curb imports with a border tax and would not agree to repeat the formulations used by previous G20 communiques, clashing with China and Europe, the officials said.

"Unless there is a last minute miracle, there is no agreement on trade," one official, who declined to be named, told Reuters.  "This is not a good outcome of the meeting," a G20 delegate quoted Bundesbank President Jens Weidmann as saying.

In a partial face-saving move, as The FT details, G20 finance ministers meeting in the German resort town of Baden-Baden noted the importance of trade to the global economy, but dropped tougher language from last year that vowed to “resist all forms of protectionism”.

The new communique said: “We are working to strengthen the contribution of trade to our economies. We will strive to reduce excessive global imbalances, promote greater inclusiveness and fairness and reduce inequality in our pursuit of economic growth.”

 

The watered-down commitments on free trade reflected the anti-globalisation mood that Donald Trump has brought to Washington and came in the first G20 meetings between Steven Mnuchin, the new US Treasury Secretary, and his foreign counterparts.

US Treasury Secretary Mnuchin spoke to reporters after the meeting:

  • *MNUCHIN: LOOKING FORWARD TO WORKING CLOSELY W/ G-20 COLLEAGUES
  • *MNUCHIN: CONFIDENT U.S. CAN WORK CONSTRUCTIVELY WITH PARTNERS
  • *MNUCHIN: U.S. BELIEVES IN FREE, BALANCED TRADE
  • *MNUCHIN SAYS WILL LOOK AT TRADE SURPLUSES WITH VIEW TO CORRECT
  • *MNUCHIN SAYS MULTILATERAL AGREEMENTS HAVE VERY IMPORTANT PLACE
  • *MNUCHIN SAYS U.S. WANTS TO RE-EXAMINE TRADE DEALS INCL. NAFTA
  • *MNUCHIN: U.S. BELIEVES IN APPROPRIATE REGULATION
  • *MNUCHIN SAYS IMPORTANT BANKS CAN PROVIDE LIQUIDITY IN MARKETS

Reuters also points out another potential win for Trump as the communique will also drop a reference, used by the G20 last year, on the readiness to finance climate change as agreed in Paris in 2015 because of opposition from the United States and Saudi Arabia.

Trump has called global warming a "hoax" concocted by China to hurt U.S. industry and vowed to scrap the Paris climate accord aimed at curbing greenhouse gas emissions.

 

Trump's administration on Thursday proposed a 31 percent cut to the Environmental Protection Agency's budget as the White House seeks to eliminate climate change programs and trim initiatives to protect air and water quality.

 

Asked about climate change funding, Mick Mulvaney, Trump's budget director, said on Thursday, "We consider that to be a waste of money."

The G20 do agree, however, to show continuity in their foreign exchange policies, using phrases from the past on foreign exchange markets.

As we noted earlier, 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.
 

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EternalAnusocracy's picture

Bullshit headline.  The Agreement fell apart because China and India did not sign up the bullshit being pushed by the western economies.  Trump is more aligned with China and India on this issue.  This is not a Trump win, rather its China and India telling the western "globalist" economies to fuck off.

Batman11's picture

China did have an advantage with free-trade.

Imagine a Chinese wage paying Western rent.

Why the West can't compete internationally, its labour has been priced out of the global market place.

We may want free trade but we had to understand its requirements.

A low cost of living.

What if you don’t get the cost of living down?

You need protectionism.

Trump has the protectionist solution.

Bernie had the re-distributive solution, taxes for free and subsidised services.

Free trade and a high cost of living causes the populists to rise (aka those priced out of global labour markets by national rentiers).

Quantum Bunk's picture

THIS IS TOOSH. But you are right in that the Chinese currency is fixed by government. Therefore, no free trade can exist between the US and China

 

HOW MANY GERMANS ARE CRYING ABOUT CHINA'S LOW WAGES ? NONE. GERMANY HAS BALANCED TRADE WITH CHINA YET HIGHER WAGES THAN THE US.

 

CHINA IS USING THE "RESERVE CURRENCY" "STATUS" OF THE US TO CHOKE THE US ECONOMY OUT AND ITS WORKING.

GreatCaesar'sGhost's picture

If the Germans start having to pay more for their defense, their trade balance might not be that big a deal. The Germans made some very good manufacturing choices ove the last thirty years, but soon someone in Asia will learn to make better machines and parts and the Germans will lose their advantage.

TheVillageIdiot's picture

No they wont. There is no recorded history, not ancient, distant nor current supporting your throw away sound bite. Further to this, the Chinese in particular - are parasitic manufacturers, whereas the collective corporate fabric of even the largest German multinational - is vertically integrated for supply line...they even own and control the universities that pump out the type of graduates they need...

TheLastTrump's picture

"even the largest German multinational - is vertically integrated for supply line...they even own and control the universities that pump out the type of graduates they need..."

 

LIARS.

 

Volkswagon showed us German corporate culture needs LIARS.

Winston Churchill's picture

Same was said of Japanese product.It was tota crap for more than two decades.

Your assertions are bullshit.

IndyPat's picture

Comparing anything Chinese to anything Japanese is what's bullshit.

TheReplacement's picture

All China needs to do is steal the technology and plans from Germany the same as they have been doing to the US (or have insiders sell it to them ala Clinton's Chinagate).  When you start seeing lots of Chinese nationals in German universities you will know this is underway.  I am not in a position to know, perhaps it is in play already.

Even a Chinese knockoff that is a gen behind but at half price will put German manufacturing on its ass the same as happened in America. 

What is more, Germany does not control its own currency.  China does.

The EU is teetering on the brink of extinction due to mismanagement of truly epic proportions.  China is said to have internal weakness too.  I think China will easily outlive the EU.

Germany has imported millions of highly educated and motivated engineers and scientists from the middle east and Africa who will most definitely influence the future of the country in ways few non-regular readers can even imagine.  Ethnic Germans are in not position to cope.  China does have a similar challenge but on a far smaller scale and the government is already moving to put out the fire.

A lesson from natural history is that parasites usually kill the host, not the other way around.

Spitball's picture

One problem with your argument. What great wonder has Communist China come up with in the last century that's changed the ways of man ? 

Communism doesn't propel innovation. They may be able to steal, and copy intellectual property, but they'll always be behind the curve in innovation.

Even the things they copy, such as steel castings, leave much to be desired. 

Byte Me's picture

Tyrranical censorship.

And unless the current administratin can stamp it out, it looks like this Chinese innovation is a game changer.

The chicoms have been quietly poisoning the well with this crap for quite a while.

Charming Anarchist's picture

Oh, I get it!
All the bullshit that "changed the ways of man" are good!
Tossing out Facebook, Google, MSN, etc. are bad!

GreatCaesar'sGhost's picture

A good example would be the Japanese stealing high tech manufacturing from the US. Another would be the US stealing manufacturing from Britain after the turn of last century.

Quantum Bunk's picture

This is garbage

 

Germany will pay LESS for its defence if it stops having to subsidize the US military through treasury debt.

https://gefira.org/en/2017/01/24/eu-not-china-or-japan-is-the-biggest-us...

FIAT CON's picture

I don't think that Germany's technology  is any better than china's, Germany just set higher standards.

tmosley's picture

Germany is a high tax, low regulation regime. It is thus easier to start a business there, even if big ones are less profitable than they might be elsewhere. There is a reason Germany is the growth engine of the EU.

A low tax, low regulation regime would put them to shame.

Tsipras the Great's picture

Germany is a high tax, low regulation regime.

 

Nope.

Spitball's picture

Germany doesn't have to worry about China, we buy plenty of their over engineered shit cars, and other products to the tune of 270 Billion in trade surplus for them.

China? They don't give a fuck about China when you have the U.S. lapping up their garbage, and wanting more.

MEFOBILLS's picture

China is using the reserve currency status.

Reserve currency status is part of the game.  China can spend dollars in any dollar zone economy, like Brazil or Africa.  This is to their benefit.

Wall Street is in on the China Gambit.  The China price is used to take wage arbitrage.  

Wage Arbitrage is taken by exporting industry from the U.S.  Wage arbitrage is taken by importing low wage Mexicans.

Finance Capitalism helped create China- Wall Street Gambit.

tmosley's picture

Protectionism is a bandaid. What you really need (and what Trump is working on) is reduced regulatory burdens. Without that, and without the burden of supporting so many non-productive government employees, we could see a five-fold increase in productivity, something which would fully justify higher American wages. Current high American wages are an artifact of precisely that type of policy, abandoned around the same time as the gold standard, ie the early 70's, and it has been getting only worse since then. Eventually, if we stay on the path of increasing regulations, wages will be forced to fall to third world levels. Our credit card is maxed out, so no supporting our lifestyle with that any more either.

TheLastTrump's picture

Could be a new Golden Age if President Trump is unleashed. But the enemies of freedom in both parties stand in the way.

randombraindead's picture

Regulatory burdens suck, but don't forget all the tax credits and hand out a the gov, including states, give to big businesses.  The hand outs massively distort or economy and culture.  Just think Tesla and all the stupid arenas and convention centers.  Not to mention aerospace and defense contractor s.  Unfortunately economy would collapse without all the corporate welfare.  But ultimately I agree.   Trump should cut a hell of a lot more.  Like NASA.  If some duck wants move to Mars let them make a donation to NASA.  Let's not just pay SpaceX to dream big with my money.

BigJim's picture

The large players in the economy would collapse if corporate welfare dried up, but it's inaccurate to say the economy "would" collapse; the economy IS collapsing, and only increasing amounts of debt are hiding the fact.

FIAT CON's picture

Yes it is a big problem when the big banks fail, but it is an entirely bigger problem when all of the citizinery cannot pay any of their debt.... The sky falls.

TheLastTrump's picture

I just saw a story that said that the USA had the most relaxed trade laws? of it's 5 top trading partners put together.IIRC.

 

We've been made into a whore lying on her back. Time to stand up, dust off, douche and move on.

Philthy_Stacker's picture

BULL ... SHIT!

China did have an advantage with free-trade.
True

Imagine a Chinese wage paying Western rent.
Imagine Chinese people standing up for a higher cost of living wage, so they don't have to live in a Factory owned complex with 15 others in the same room. (Think Tiananmen Square)

Why the West can't compete internationally, its labour has been priced out of the global market place.
No. The lower wages in developing countries are an open door to the Industrial Complex where, until rules are changed, they exploit EVERY resource, labourer and govt. official to their advantage. Not  to mention the environmental impact of effluence into the ecology of millions of gallons of toxic paint, plastic, chemicals, etc.,etc.,etc. There are no protections in these place, unlike NA, where we have developed a better (sic?) relationship with our environment, our workers and our standard of living.(Notwithstanding our greed.)

We may want free trade but we had to understand its requirements.
A low cost of living.
Bullshit again. There is NO FREE TRADE!! I cannot trade freely with Korea or Brazil or UK for that matter. I bought a USA made Gibson guitar on EBay. When UPS came to my door, they extorted another $150, ostensibly for 'import duties'. Canada and the US have a 'no duty' policy on domestic made products. When I explained 'the law' to my delivery guy, he said oh well you can apply for a refund from Canada Revenue.

What if you don’t get the cost of living down?
The 'cost' of living is the deflation of the particular currency. US currency is severely over printed and thus, it costs $30,000.00 for a car. In 1969 a Chevy cost around $1500. So, if the automaker is not taking advantage of you, the cost of living increase over that time would be 20X. So, if you made $4/hr in 1969, you should be making $80/hr at the same job today.

You need protectionism.
Yeah! From corporations and the elite scumbags that are leveraging our environment and future for profit.

Trump has the protectionist solution.
No he doesn't because the banker wolves are running the hen house.

Bernie had the re-distributive solution, taxes for free and subsidized services.
Also wrong. Eliminate personal income tax as it serves NO purpose. Consumption only tax will immediately bring underground economies to the surface, doubling the official GDP overnight, maybe more. If you want healthy people to work, put them to work for their entitlements. Infrastructure work is only impeded by the unions, as the worker is already 'getting paid'. I can't pick up a wrapper off the ground because the City workers union won't let me. (Health & Safety issue, wouldn't you know)

Free trade and a high cost of living causes the populists to rise (aka those priced out of global labour markets by national rentiers).
Priced out in what way? NA drives ALL innovation, ALL mass production, most entertainment revenue. Without NA in the world market, there would be no nouveau riche Chinese to buy German luxury cars.

Look, the future is this. Wages don't matter when the money is worthless. Just get your assets in order, stop worrying about the new Samsung EVO-SMART-WIRELES-IOT-SELF-DRIVING THING-A-MA-JIG AND GET A REAL LIFE.

MEFOBILLS's picture

Consumption and Income tax = bad idea.

You want to encourage production and consumption, as that is what humans do.  But, you want to discourage rent seeking.  The taking of unearned income is where taxes should land.  

Taxes are punitive, and they should punish bad behavior.  Rents are the stealing of unearned income and life energy of others.  

TAALR Swift's picture

The words FREE Trade sound nice and are presumably intended to elicit a Conditioned or Pavlovian Response, so that people won't stop to think and ask deeper questions. 

What you probably want, may be called JUST & EQUITABLE Trade, with a Quid Pro Quo relationship of Balanced Reciprocity. 

If these bureaucratic parasites had the honesty and spine to speak in such candid and direct terms, then real progress might actually be achieved. 

As it is, their communique sounds like a 'stretch-goal' made by leftist politicians. 

MEFOBILLS's picture

There is no such thing as free trade.  It is an implanted memory.

 

Markets of are of three types:  Elastic, Inelastic and Mixed.   All trade is fully encompassed by these three market mechanisms.  In none of these markets is there anything free.  Even fully elastic markets, with price competiton, require rules and law.

Gavrikon's picture

Hahahaha!  Fuck you guys!!!

TheVillageIdiot's picture

Western world has been doing that for long enough thanks

Paul Kersey's picture

Who's winning? "But the new administration in the United States is considering trade measures to curb imports with a border tax"

 

It will be the American consumers (76% of whom are living from paycheck to paycheck, and 69% of whom have less than $1,000 in savings) who will pay for that tax, by paying higher prices for imported goods. Even if the U.S. starts opening up new factories, the great percentage of the work will be done through automation. Even in China, where labor is cheap, new factories are eliminating up to 95% of workers through a vast increase in automation. It's the Smoot-Hawley Tariff Act redux. Under Smoot-Hawley (1930), US imports decreased 66% , and exports decreased 61% by 1933. The Great Depression was in full swing. Winning?  Yeah, if you are a Goldmanite.

MuffDiver69's picture

Bullshit. Trumps energy policies will lower gas prices,utility bills and all sorts of fucking environmental BS that adds to Price of food...If assholes can't afford luxury items like smart phones, then grow the fucjk up like the rest of us did...

Paul Kersey's picture

Food stamps add to the price of food. The Supplemental Nutrition Assistance Program (SNAP) serves as a big agribusiness farm price support system, and banks like J.P Morgan get paid billions in taxpayers' money to run SNAP.

http://ruthless-politics.com/j-p-morgan-makes-billions-profits-food-stam...

TheLastTrump's picture

BbbbbbbullShit.

 

Raise the price with a border tax PEOPLE DON'T BUY. They substitute UNTIL AMERICAN MADE IS AVAILABLE.

 

Why does anyone need that explained to them.

TheLastTrump's picture

Oh yeah, there's that fallacious Smoot-Hawley bullshit again.

 

The rest of the world was ALREADY IN TROUBLE and so was the US. SH simply sped up the process.

 

Equating 1930's US trade with US trade in 2017 is disingenuous at best. We've been conquered by internal subversion, our trade laws benefit other countries.

 

AMERICA FIRST.

Paul Kersey's picture

" We've been conquered by internal subversion,"

True

"our trade laws benefit other countries."

Nope, because the vast majority of citizens from other countries are debt-slaves, just as they are in the U.S. The trade laws benefit international corporations, many of them with platform headquarters here in the U.S., and banksters, who make all the laws that will further enable them to extract more wealth from the commoners, and fund their politicians, and work the "revolving door" that goes in and out of one administration, into private corporations, and then back into another administration. Rubin, Paulson, Cohn and Mnuchin are all revolving door goldmanites.

MEFOBILLS's picture

The Smoot-Hawley B.S. is thrown into the trash here:

https://docs.google.com/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnw3a...

 

America's protectionist takeoff.

mofreedom's picture

Non-US exporters currencies should depreciate to the point of the added import tax.

bloofer's picture

I'm not seeing the big downside of a decrease in imports and exports. Say the net effect of tariffs is that Americans buy and sell chiefly from other Americans? That goods are produced in America and sold primarily to other Americans? I see no problem with this.

 

Paul Kersey's picture

"Say the net effect of tariffs is that Americans buy and sell chiefly from other Americans?"

We are already seeing that with pharmaceuticals. U.S. citizens pay the highest prices for drugs in the world, because they are blocked from buying them directly from countries like Canada and Ireland (where much of big pharma manufactures the drugs). Largely because of these drug prices, the U.S. has the highest medical costs in the world.

Here's what happens when U.S. monopolies have total control of an industry.

http://time.com/money/4462919/prescription-drug-prices-too-high/

What we need is another Teddy Roosevelt monopoly buster, not an administration with Carl " Money Changer"Icahn, Gary "Goldmanite President" Cohn, Wilbur "Rothschild" Ross and Steven "Soros Partner" Mnuchin.

MEFOBILLS's picture

 That goods are produced in America and sold primarily to other Americans? I see no problem with this.

 

It creates a balanced economy.  The term for this is autarky.  It is actually good to be self sufficient, and only buy what you cannot produce easily from others.

Why?  Because labor must make goods as prices in order to survive.

Russia's descent in the 90's was due to neo-liberal monetary orthodoxy that insisted Russia could go into dollar debts, and export minerals.  This then meant that their labor was limited to digging holes in the ground.  And yes, those promoting neo-liberalism are our ((friends)).

otschelnik's picture

If you think automation is disadvantageous for employment, that would make you a Luddite. 

randombraindead's picture

The problem in my mind is how much of this automation is based on technology research that was funded by the government.  I am all for Private industry conducting research.  What I don't like is when government and universities fund research that leads to "advances" because those advances are usually at the expense of the working class.  Same with most infrastructure spending.

 

Like those stupid comparisons between Amtrak, Greyhound and airlines.  No way it could be any way as cheap to take a flight City to City as to take a bus or train if the true cost of the airports and flight control was captured in the ticket price.

Canary Paint's picture

I don't understand what you are saying. Is not the point of a university, other than to educate obviously, to advance the body of human knowledge?

Private research has produced a great many things, Bell Labs comes to mind, but I don't see how university research is harmful.

randombraindead's picture

Educate fine- just maybe, but to a much more limited extent.  Problem is too much of big corporate needs have been pushed onto the public- including education.  I don't know how old you are, but I remember a time when Corporations used to actually train employees in skills.  Now big corporations expect new employees to already know how to do the job.  And the burden is on the employees and govt to foot the bill.  Or they import workers because they don't want to train citizens.

Research is out of control.  So much of University research is not to increase academic/human knowledge.  The research centers are run as businesses.  They maximize profits from grants, partner with private businesses, then license their research and inventions for more money.  The research is driven by the corporate interests.  Those interests are usually counter to those of existing small businesses and workers.

Do you see how any government welfare programs are harmful?

Canary Paint's picture

Okay, my mind went in this direction as well, but I didn't want to get too wordy. Several things come to mind:

- many contrarian academics complain that taking on really tough problems is almost impossible because, for example, one has to print certain quantities of articles to get tenure or to get grants. So, I suppose you are referring, at least in part, to this. The result is professors who get good at being "article factories." So, yeah... Government and the private sector do seem to have had a very short-sighted (think quarterly or at most annual horizons for wanting to see results) influence on the directions of science, which isn't terrible if that extent of influence is not too overwhelming, but many think it is to the point of having damaged scientific integrity.

- It was not always this way. "Back in the day" Bell Labs would often just set nerds loose, and they came up with good stuff.

- I do have suspicions about corporate interests influencing higher education. It seems fishy to me that universities should be job training, and yet, I think for quite some time it will have to be that way for a country to stay competitive.

- I was a teacher, but I am making a career change. Went back to school for it... A couple of years ago, I was probably the oldest intern in Romania ;-p And yes... Even entry-level positions want one to know certain things right from the beginning. I think that is more due to multiple internships before graduation having become somewhat a norm.

Thanks for the reply! 

Paul Kersey's picture

You can call me any name you want, but I'm just stating the facts. If you don't believe me, then maybe you'll believe Fortune Magazine (hardly a publication run by Luddites).

"The U.S. has lost 5 million factory jobs since 2000. And trade has indeed claimed production jobs - in particular when China joined the World Trade Organization in 2001. Nevertheless, there was no downturn in U.S. manufacturing output. As a matter of fact, U.S. production has been growing over the last decades. From 2006 to 2013, “manufacturing grew by 17.6%, or at roughly 2.2% per year,” according to a report from Ball State University. The study reports as well that trade accounted for 13% of the lost U.S. factory jobs, but 88% of the jobs were taken by robots and other factors at home."

I am just stating that algorithms and automation do away with human labor. If you can post a documented counter-argument, then please do so. I guess you haven't been reading ZH all that long, or perhaps you missed this ZH article, that shows that stock prices go up when U.S. companies lay off workers:

http://www.zerohedge.com/news/2015-06-06/what-happens-stock-prices-after...

otschelnik's picture

Productivity gains through the classical model of economic inputs labor+capital which spawned Luddism -when capital (machines) replaced labor, is now being replicated through the neoclassical model of inputs labor+capital+intelligence, when microprocessors are replacing managers and operators.  At the end of the 19th century 70% of the US population was occupied with mostly subsistence farming but machines changed that, now about 2% of the population is engaged in agriculture.

Labor always comes out on the short end. The transition has never been smooth, and looks like we are going to go through one of those periods now.  However pessimism isn't really warranted, if you believe in classical economics.  The new era will open new possibilities which we cannot fathom at this time will become the norm.  Hopefully our children will study more programming and less gender and feminism studies, it'll get them off to a better start. 

And thank you for your reasoned response to my snarky comment.