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G20 leaders drop pledge to fully oppose trade protectionism

The world's top economic powers have dropped a pledge to fully oppose trade protectionism amid pushback from the U.S. government of President Donald Trump, who wants to favour American companies and workers more.

U.S. President Donald Trump wants to favour American companies and workers

U.S. Treasury Secretary Steven Mnuchin was downplaying the role of the U.S. in changing language around trade protection, calling it 'not really relevant.' (Uwe Anspach/Associated Press)

The world's top economic powers have dropped a pledge to fully oppose trade protectionism amid pushback from the U.S. government of President Donald Trump, who wants to favour American companies and workers more.

Finance ministers at a Group of 20 meeting in Germany issued a statement Saturday that said only that countries "are working to strengthen the contribution of trade" to their economies.

By comparison, last year's meeting called on them to resist "all forms" of protectionism, which can include border tariffs and rules that favour a country's businesses over those in another economy.

The statement by the G20, which brings together the world's top economic and diplomatic powers, is important as it helps set the tone for global economic policy.

U.S. Treasury Secretary Steven Mnuchin sought to downplay the divisions, saying that the language opposing protectionism was "not really relevant" any longer.

"We believe in free trade," he said, adding however that "balanced trade needs to be what's good for us and what's good for other people, a win-win situation."

Trump and other critics of free trade argue that it can cause jobs, such as in the labour intensive manufacturing sector, to move to lower-cost countries. Proponents say technological advances, such as automation, are more to blame for the loss of jobs in such sectors.

Trump, who campaigned on an "America First" platform, has already pulled the U.S. out of a proposed free trade deal with Japan and other Pacific Rim countries. He also has started the process to renegotiate the North American Free Trade Agreement with Mexico and Canada.

Off to a rocky start

Wolfgang Schaeuble, the finance minister of host country Germany, suggested Saturday that the two days of talks at the G20 had been somewhat rocky.

"Maybe one or the other important member state needs to get a sense of how international co-operation works," he told reporters, without mentioning a country by name.

He argued, however, that it was not true that the officials had not found some common ground.

"It's completely clear we are not for protectionism. But it wasn't clear what one or another meant by that," he said.

There had been much anticipation to see how Mnuchin and the U.S. administration would handle a forum of talks that typically requires compromise when the U.S. administration had in recent weeks threatened to change some of its trade deals.

During the meeting, European countries and China were said to be pushing for a stronger stance in favour of free trade and co-operative, multi-country frameworks for trade such as the World Trade Organization.

Chinese Finance Minister Xiao Jie said his country would "unswervingly oppose trade protectionism." Canada, like China a major trade partner of the U.S., took a nuanced approach, with Finance Minister Bill Morneau said to support a general statement on the importance of trade for growth — while not insisting on particular language.

The G20 is an informal forum on economic co-operation made up of 19 countries plus the European Union. The finance ministers' meeting will pave the way for a summit of national leaders in Hamburg, Germany, on July 7-8. Its decisions don't have the same force as an international treaty but simply depend on individual countries' promises to follow through on them.

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