15 Mar 2017

Merkel vs Trump in G20 Summit

Germany will try to persuade G20 members to sign off in a set of principles, including free trade, at this week’s meeting of the group’s leaders. Reuters’ sources suggest, that a draft has already been sent to the participant leaders and will be discussed in the summit which is due in Baden Baden, on Friday and Saturday.

Germany, which currently holds the presidency of the G20, will host the summit and is expected to try to stress the importance of global free trade in a separate document from the group’s main communique. This will be the first meeting of the G20’s financial leaders since the election of Donald Trump in the US presidential seat.

Canadian finance ministry officials told journalists that they expect to listen to Treasury Secretary Steve Mnuchin’s opinion on the North American Free Trade Agreement and other trade deals which have been strongly critisised by the new US administration. However, there seems to be a change of strategy among G20 financial leaders. According to sources, a draft of the main communique shows, that the G20 will no longer explicitly reject protectionism or competitive currency devaluations, bringing it in line with Donald Trump’s rhetoric.

During the summit, the German Chancellor Angela Merkel is scheduled to meet with the US president. Germany aims to rebuff any US demand to water down the G20 commitment to free trade. It is very rare for a G20 chair country to issue a document separate from the main communique, in this case one that differs on the tone and priorities. German officials want to be clear concerning their objectives and expect a heated debate between the G20 members.

Emerging economies, like China and India, that rely on global exports will put stiff resistance to any effort that might dilute the commitment to free trade. In that case, Germany might have to mediate between the two sides and find a compromise. In the draft, Germany stresses the importance of making economies resilient to shocks through “prudent management of public finances.”

Germany hopes that the document will be signed off by all G20 members, despite the fact that there are some countries that have second thoughts. Angela Merkel underscored the importance of free trade during a commerce meeting, in Munich, giving clear signs of what she aims to promote in the G20 summit.

On Monday, Wolfgang Schauble published an article for, in which he wrote that “globalisation is getting increasingly bad press in the West nowadays. Populist movements allege that it doesn’t benefit the average citizen. Instead, they tout protectionism and unilateralism.” The German finance minister continued: “the populist agenda is based on the deeply flawed premise that international trade and cooperation are zero-sum games, producing only winners and losers. We should be seeking ways to deepen and broaden international cooperation instead of abandoning it.”

Schauble and the German side, clearly show what issues they are going to include in their agenda, concerning international economic relationships. It remains to be seen what Donald Trump and his staff have in mind. The G20 summit in Baden Baden will be a good opportunity for revelations.