US aim to “reform” global trading order could be driving G7 rift

US aim to “reform” global trading order could be driving G7 rift

11/06/18

Luke Foddy, Communications Manager

US President Donald Trump’s withdrawal from the joint communique following the G7 summit on Saturday has caused global headlines, with analysts focusing on personal motives behind the decision.

The US reportedly agreed to endorse the communique, which emphasised a commitment to the “international rules-based order.” In a press conference after the summit, Canadian Prime Minister Justin Trudeau indicated that all G7 members had reached an agreement.

However, tweeting on board Air Force One en route to Singapore, President Trump said he’d instructed US representatives “not to endorse the communique.” He said the decision was based on “Justin’s [Trudeau] false comments in his news conference and the fact that Canada is charging massive tariffs to our US farmers, workers and companies.”

According to a diplomat present at the talks, speaking to the Financial Times, the communique was “negotiated to get them [the US] on board.” The US “then pulled,” which was “a shock.”

One BBC analyst described President Trump “rescinding his signature over something Justin Trudeau had said at his news conference,” as “unbelievable.”

And perhaps it is. As details emerge from the summit, it is possible that there are deeper motives behind the US abandonment of the G7 consensus which suggest President Trump was never likely to sign a communique – a possibility that was rumoured ahead of the summit.

Illuminating coverage of the talks by Canadian newspaper Toronto Star suggests that there was wrangling over the wording about the ‘rules based global system’ in the communique.

Quoting a source, The Star reports: ‘The Americans, led by Trump economic adviser Larry Kudlow, said they couldn’t agree to language that supported the global rules-based trading system because they were trying to reform the system… but agreed to a nod to the World Trade Organization. Trudeau argued that the two were linked.

‘The leaders went back and forth for up to an hour. The Americans could agree to language on the WTO, and “a rules-based global system” not “the rules-based global system,” said the source. All agreed to “commit to modernize the WTO to make it more fair as soon as possible.”’

The Trump administration has made no secret of its disapproval of the current global trading system, but much of this has been perceived to focus on China. If the President is seeking to shake up the wider system, it would have been difficult for him to square his position with that of the G7 – a group which is the embodiment of the established order.

Credence to such a view can be seen in President Trump’s comments to reporters during the summit, when he said his ultimate goal was the elimination of all trade duties.

“Ultimately that’s what you want,” he said, CNN reports. “You want no barriers. And you want no subsidies. Because you have some cases where countries are subsidising industries and that’s not fair.

“We’re like the piggy bank that everybody is robbing. That ends.”

Where this leaves US relations within the G7 – and with Canada in particular, given that Prime Minister Trudeau bore the brunt of President Trump’s tweets – remains to be seen. The President is now in Singapore for much-anticipated talks with North Korean leader, Kim Jong-Un.

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