Germany is to press G20 members to sign off on a set of principles including free trade at this week’s meeting of the group’s financial leaders, in what the administration of US President Donald Trump might perceive as a challenge to its more protectionist stance.
In an unusual move, Germany, the host of the meeting, will stress the importance of global free trade in a document separate from the group’s main communique, sources said.
The move underscores Germany’s desire to rebuff any explicit US demands to water down the group’s commitment to free trade, as German Chancellor Angela Merkel prepares for her first meeting with Trump tomorrow.
Attaching a separate document would also allow Germany to clarify its priorities and avoid them from being overshadowed by what could be a more heated debate on protectionism and currency policy.
It is rare for a G20 chair country to issue a document separate from the main communique, especially one that differs on the tone and priorities.
G20 finance leaders are to meet in Baden-Baden, Germany, tomorrow and Saturday. It is to be their first meeting attended by representatives of Trump’s administration.
A draft of the main G20 communique seen by reporters appeared to accommodate Trump’s views on trade by dropping a phrase resisting “all forms of protectionism.”
However, any attempts to dilute the commitment to free trade will likely face resistance from emerging economies reliant on global exports, including China, putting the onus on Germany to seek a compromise.
It was unclear if Trump and his team, which has espoused fair trade more than free trade and has discussed a border tax on imports, would sign the document.
The document, which is currently being circulated among G20 members, detailed about 10 principles on how a “well-performing economy” should act in areas of fiscal, monetary and trade policies, the sources said.
It highlighted areas Germany places importance on, such as the need for countries to make their financial system resilient to shocks and to refrain from excessive fiscal loosening through “prudent management of public finances,” the sources said.
“Among the most important issues from Germany’s point of view, regarding the world’s economy, is the issue of resilience. That’s our top priority,” one of the sources said.
Germany has often argued that economies should not rely too much on short-term stimulus and take steps to strengthen fundamentals so that their economies are resilient against shocks.
The sources spoke on condition of anonymity, because they were not authorized to speak to the media.
Germany hopes to have G20 members sign off on the document in Baden-Baden, although some government officials conceded that not all countries would back it this week.
“Let’s see if we’ll get everyone on board in Baden-Baden, or only after at the summit of leaders [in July],” one official said.
Merkel this week underscored the importance of free trade in a speech to business leaders in Munich, Germany.
Her talks with Trump in Washington are expected to touch on a range of issues, including defense spending.
Causes of friction between Berlin and Washington also include an accusation by senior Trump adviser Peter Navarro that Germany profits unfairly from a weak euro and a threat to impose 35 percent tariffs on imported vehicles.
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