In the G20, failure has a hundred fathers

Thank goodness for the presence on the weekend of Australia’s own Scott Morrison at Baden Baden, where G20 finance ministers gathered ahead of the annual leaders’ summit in July. The meeting, where the US was represented by new Treasury Secretary Steven Mnuchin, produced a communique that dramatically watered down the body’s traditional strong commitment to free trade, in response to demands from the Trump administration.

According to sources speaking to the Financial Review, Morrison almost single-handedly — with some support from the Canadians — restored a mention of trade to the meeting communique, thereby preventing its complete obliteration (although foreign media referred to it as a “token” mention). Morrison had talked up American engagement and continued G20 enthusiasm for free trade before the meeting. Now he was the one rescuing it from the Americans.

Only problem is, others are also taking credit for resisting the American protectionist push. “Morneau is pushing for pro-trade language in the final communique… the inclusion of such a reference is more important than the precise wording,” the Zero Hedge blog reported, referring to the Canadian Finance Minister and quoting Canadian sources. But according to a wire service report, “European countries and China were said to be pushing for a stronger stance in favour of free trade.” Host Germany was blamed for pre-emptively removing trade language from the communique in order to keep the Americans on side, although according to yet another report, “Germany managed to rescue some of the previously common G20 language supporting free trade and open markets in a separate document.”

[Good riddance to the trade deal from hell]

It’s all a bit like Murder on the Orient Express, where — spoilers — everyone dunnit.

Whatever the case, the G20 now has a clear polarity between China, now the world’s strongest major supporter of free trade, and the US, now the greatest enemy of free trade (and, separately, of trade agreements, like the Trans Pacific Partnership, which are not really free trade but wilfully confused with it by both supporters and opponents). 

The meeting was the first major outing for Mnuchin, the Wall Street financier appointed by Trump, who bitterly criticised Hillary Clinton for her links to Wall St during his campaign. Mnuchin, who is a part-time film mogul, was dismissive of departures from previous communiques. “This is my first G20, so what was in the past communique is not necessarily relevant from my standpoint. I understand what the president’s desire is and his policies, and I negotiated them from here.”

[Turnbull’s Trans Pacific Protectionism in the Big Apple]

But Mnuchin wasn’t able to explain exactly what the administration’s trade policy is. According to Bloomberg, “Mnuchin wasn’t able to deliver a clear view on how the ‘America First’ thrust of the Trump administration will mesh with the rules embodied in the World Trade Organization system that currently stand — or even if the U.S. will remain substantially engaged over the long term.” But even though it has a trade policy almost diametrically opposed to our own, our government continues its approach of seeking to pander to the Trump administration. “He performed very well,” Morrison said glowingly of the Treasury secretary, even though Mnuchin said little and only read from a prepared statement during the meeting.

The US also forced the deletion of a reference to climate change action at the behest of the US and Saudi Arabia, which has quickly ingratiated itself with the new administration in Washington. 

The G20, like many summits, has become a talkfest with little real relevance. The 2% growth target breathlessly hyped by Tony Abbott and Joe Hockey after the 2014 meeting in Brisbane is now barely mentioned; that meeting is now better remembered for Barack Obama presciently worrying about the future of Great Barrier Reef. But the G20 had its origins in the financial crisis, when it was an important mechanism for coordinating international action to combat the onset of a global recession. In the event another crisis arises — perhaps one induced by the maniac policies of Trump — the body is likely to prove unable to offer similar benefits, however much Australian treasurers want to big-note themselves.