World Economy

G20 Ministers Call for WTO Overhaul

The joint declaration sent a powerful signal about the importance of strengthening WTO especially in times of ‘America first’ and increasing global protectionism
After the meeting in Argentina, trade ministers from the Group of 20 countries said they would seek to keep markets open.After the meeting in Argentina, trade ministers from the Group of 20 countries said they would seek to keep markets open.

Trade and investment ministers from the Group of 20 countries meeting in Argentina said there was an “urgent need” to improve the World Trade Organization, a joint statement issued from the summit said on Friday.

With US President Donald Trump readying tariffs on another $200 billion in Chinese goods, the ministers said they were “stepping up the dialogue” on international trade disputes, according to the statement, news outlets reported.

It did not provide any details of possible WTO reforms or how dialogue on trade was being increased.

“Obviously the new tariff measures are not positive,” Argentina’s production and labor minister, Dante Sica, said in a news conference at the end of the meeting. “But we need to see how things evolve.”

Sica also said that talks on a free trade deal between the European Union and the Mercosur trade bloc of Argentina, Brazil, Paraguay and Uruguay were wrapping up, with an agreement likely by the end of the year.

“We are in the final stages regarding the most delicate aspects of an EU-Mercosur agreement and we are concluding with the political and technical details,” Sica said.

After the meeting, trade ministers from the Group of 20 countries said they would seek to “keep markets open”.

German Deputy Economy Minister Oliver Wittke said the joint declaration sent a powerful signal about the importance of strengthening WTO "especially in times of 'America first' and increasing global protectionism", with next steps to follow when G20 leaders meet in Argentina at the end of November.

"We have to use this momentum," Wittke said in a statement released by the ministry after the summit.

The statement by the G20 ministers was a tacit acknowledgment by world leaders that Trump’s criticism of the WTO and his tariffs have significantly weakened the international trading system. Just two years earlier, when Barack Obama was still president, the G20 trade ministers, who represent countries including China, Japan and the United States, called on world leaders to further reduce barriers to trade.

Defusing Trade Tensions

Diplomats had said they hoped to use the trade ministers meeting in Mar del Plata, a coastal city, to defuse trade tensions—and they claimed a modicum of victory on that score on Friday.

“The fact that we are talking about the reform of the World Trade Organization means that we all agree that we need to have an organization that allows us to establish rules and allows us to work within the framework of international trade,” Jorge Faurie, the foreign minister of Argentina, said at a news conference.

What the overhaul will entail, however, remains a mystery.

The United States and the European Union agree that the WTO is dysfunctional, but they disagree on what should be done to fix it. The Trump administration has blocked the reappointment of judges to the WTO’s dispute resolution panel, threatening to cripple it.

“The EU, along with many partners, wishes to see political support from the G20 to strengthen the WTO’s negotiating, monitoring and dispute settlement functions,” the European Commission said in a statement Friday.

In a reflection of how much things have changed since Trump took office, the statement was much less detailed than the one the G20’s trade ministers agreed to in 2016 in Shanghai.

Then, the ministers agreed to “further work towards trade liberalization and facilitation”. There was no such language in Friday’s statement, a week after Trump threatened China with another round of tariffs.

The Trump administration broke with the longstanding international consensus on free trade soon after Trump took office, when G20 finance ministers and central bankers met in Germany.

Protests Against Trump

Outside the meeting, smoke filled the air in the normally tranquil seaside city of Mar Del Plata where the conference is being held. Protesters burned makeshift American flags and chanted against free trade orthodoxy and Trump’s support of Argentina’s cash-strapped President Mauricio Macri, whose fiscal belt-tightening has garnered a backlash from the country’s working-class, Reuters reported.

“We’re standing here in solidarity with the workers of Latin America. While those politicians sleep in fancy beds, communities starve because of trade and adjustment policies that hurt the most vulnerable,” protestor Maralin Cornil, 30, said.

Argentina holds the G20’s rotating presidency this year, and is currently renegotiating a $50 billion stand-by financing deal with the International Monetary Fund, cutting its fiscal deficit targets and reducing costs to ensure it can continue paying its international debts.

Trump has said he would attend the summit’s final meeting with other heads of state, to be held in Buenos Aires on November 30.

While Trump has threatened to pull the United States from the WTO, China has called for WTO reform to make the global trade system fairer and more effective.

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