The prevailing mood of déjà vu following U.S. President Donald Trump’s unfolding ‘America first’ agenda could not have eluded the attention of Finance Ministers and Central Bank heads of the Group of Seven countries (G-7) meeting in the Italian town of Bari . Their failure on Saturday to agree on a strong defence of free trade in their final communiqué, in the face of Washington’s lukewarm response to commit to countering protectionism, is but a continuation of a worrying trend evident at other multilateral forums. Their concern was more on preventing a repeat of the confrontation witnessed during a G20 meet of Finance Ministers in Baden-Baden in March , which eventually led to a watered-down declaration to promote global trade, in a reversal of the robust 2016 declaration to “resist all forms of protectionism”. Similarly, the International Monetary Fund and World Bank spring meetings could not mask differences with the U.S. administration, which sought to deflect attention to the U.S.’s trade deficit with other countries and currency imbalances. As a result, discussions on global cooperation were relegated to bilateral meetings, on the sidelines of the Bari gathering. The six other delegations reportedly emphasised to their counterparts in Washington the risks of turning their backs on international cooperation.
Ironic were the discussions on inclusive economic growth in Bari, and Nobel Laureate Angus Deaton’s critique of Mr. Trump’s tax reform proposals, which he said will accentuate inequalities in the long run. But Steven Mnuchin, U.S. Treasury Secretary, still insisted that the administration’s target of 3% growth in gross domestic product is good both for his country and the rest of the world. Such an exclusivist stance should perhaps temper the expectations from the Sicily summit of the G7 heads of government later this month — the first major global engagement for the new U.S. and French Presidents.
Washington’s recent trade dialogue with Beijing, and its decision not to walk away from the North Atlantic Free Trade Agreement (NAFTA) indicate a stunning about-turn of Mr. Trump’s stance on specific bilateral agreements. However, it should be seen as signalling a welcome caution to eschew conflict after the shrill pre-election rhetoric and the string of executive orders after the inauguration. The shift in approach in relation to Beijing is quite telling — Mr. Trump had called Beijing a currency manipulator until the other day. Conversely, his administration struck an agreement with the Chinese last week on market access in specific areas, even though there is, according to commentators, no guarantee of a reversal of the trade imbalance.
Similarly, notwithstanding domestic political compulsions, Mr. Trump’s recent readiness to renegotiate NAFTA brings some diplomatic relief after months of incendiary attacks against neighbouring Mexico and misleading propaganda on the treaty. It seems unrealistic to expect a let-up on his rhetoric on the big questions. It may nevertheless not be too unreasonable to hope that his intransigence will give way, if only gradually, to some rethink on matters of detail. To show patience with the world’s most powerful President may be a price worth paying to pursue peace.
