The Lost Spirit of the G20
As Japan prepares to host its first G20 leaders’ summit later this month, little remains of the open and cooperative spirit that marked the first such gathering in 2008. But although the United States will most likely continue its protectionist drift, other G20 countries should use the occasion to make a clear case for free trade.
MADRID – On June 28-29, Japan will host its first G20 summit. The initial gathering of G20 leaders, back in November 2008, took place amid the turmoil that wracked global financial markets following the collapse of Lehman Brothers. It produced a clear statement: “We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty.” In other words, the leaders of the world’s largest economies agreed not to repeat the policy mistakes that aggravated the Great Depression in the 1930s.
Unfortunately, little of that open and cooperative spirit remains today. Even before Donald Trump was elected US president, the world’s leading economies were yielding to protectionist temptations. But Trump has brought the problem to the boiling point: his withdrawal of the United States from the Trans-Pacific Partnership (TPP) was the first of many reckless trade measures, among which his current tariff offensive against China stands out. And Trump’s inflexibility at last year’s G20 summit in Buenos Aires resulted in the first communiqué that did not include a vow to resist protectionism.
Although Trump’s commercial crusade is constantly improvised and meshes confusingly with other vectors of US foreign policy, it nonetheless reflects a set of clear economic beliefs. Essentially, Trump regards international trade as a zero-sum game in which countries win solely by exporting more than they import. For countries that run external deficits, like the US, he believes that “trade wars are good, and easy to win”: it’s enough, he claims, for the US simply to stop trading with countries that run a large bilateral surplus with it.