Since the G20 nations account for two thirds of the world’s population and about 85 percent of global GDP, it is no surprise that their annual summit attracts so much attention.
This year’s agenda in Osaka was packed with deliberations over the digital economy, climate change and much else, all overshadowed by trade wars. The world waited with bated breath for what would happen when US President Donald Trump met Chinese President Xi Jinping. Trade tensions between the largest two economies were the main reason for the World Bank downgrading its global economic forecast for this year to 2.6 percent, a far cry from the 3.9 percent promised in January 2018. It was not just US-China trade that was in focus: The rhetoric between Indian Prime Minister Narendra Modi and Trump also intensified after the former levied tariffs on 28 US imports in retaliation for India having lost its most-favored-nation status in the US. Europeans worry about when Trump will focus on them. The car industry is especially vulnerable. Germany is a major car manufacturer and exporter and France’s auto industry is also significant. Considering the supply chain, many countries across Europe stand to lose a lot if the going gets tough.
Confusion was great before the Trump-Xi meeting. US Treasury Secretary Steven Mnuchin said on Wednesday that a trade agreement was 90 percent there, only to be contradicted on Thursday by Larry Kudlow, director of the Economic Council. Trump proved once more that he thrives on contradiction and tension. This gave Xi the opportunity to be statesmanlike, when he advocated free trade. He argued that China and the US both benefited from cooperation and stood to lose a lot from conflict, which made him look like the grown-up in the room.
When they finally met at midday on Saturday, the outcome was that negotiations would continue, new US tariffs on the remaining $350 billion worth of Chinese imports were put on hold, and US companies were again allowed to sell their products to Huawei — a relief to the Intels, Qualcomms and Broadcoms of this world, because Huawei is a major client and a huge percentage of their chips is bound for China. US farmers stand to gain, too, if the Chinese start to buy their products again. Markets will like all this, but we are not at the end of the tunnel. Trade negotiations are detailed processes and a lot can happen in the next few months. It is not the job of the leaders to wallow in the minutiae, which is why Trump’s methodology is unusual. Generally, the negotiating teams iron out most of the detail and leave only a few big issues for leaders to discuss. Trump is unusual in that he dives in and out of the detail and is happy to contradict his leadership team, and no one knows what his next tweet will bring.
China, the Europeans and Japan advocate free trade, but the US is not on board — which is why the final leaders’ declaration in Osaka focused on the need to reform the WTO, rather than the resounding endorsement of free trade that EU Council President Donald Tusk had asked for.
While the world’s 20 most powerful countries need to coordinate the direction of the global economy, some of them are light years apart in their values.
Cornelia Meyer
Similarly, it was hard to find consensus on climate change and the environment. This was Theresa May’s last G20 summit and the departing British prime minister was eager to leave a legacy. She urged the G20 leaders to follow the UK’s example and reduce their greenhouse gas emissions to zero by 2050. Alas, she had few takers. Last year in Buenos Aires 19 countries unreservedly supported the goals of the Paris Agreement on Climate Change, leaving the US the odd country out. This year the US was joined by Russia and Brazil, who also voiced reservations. Turkey and Australia also nudged toward the US position.
In general, the man who really put the cat among the G20 pigeons this time was not, for once, Trump, but Vladimir Putin. In a nicely timed interview with the Financial Times he launched an attack on liberalism, immigration and multiculturalism. He cited the electoral success of the Trump agenda, Brexit and the rise of leaders such as Viktor Orban and Matteo Salvini as proof that the liberal system was broken. This prompted Donald Tusk to declare: “Whoever claims that liberal democracy is obsolete claims that freedoms are obsolete, that the rule of law is obsolete and that human rights are obsolete,” and that all of the above were very much alive in the EU. Fireworks indeed!
Putin was most warmly received by Trump in their first meeting since the publication of the Mueller report into Russian meddling in US elections. Trump flashed a broad grin and jokingly told Putin not to interfere in the 2020 elections. It could not have been further from May’s stern encounter with Putin — grim faced, no eye contact, and a repeated insistence that poisoning a former Russian spy on British soil was unacceptable.
From trade, to climate change, to liberal democracy, this G20 summit showed one thing: While the world’s 20 most powerful countries need to coordinate the direction of the global economy, some of them are light years apart in their values.
• Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources
