G20 finance ministers drop anti-protectionist pledge after US pressure

G20 Finance Ministers and Central Bank Governors at the meeting in Baden-Baden, Germany. Credit: PA

The world's top economic powers have failed to agree a joint position explicitly opposing trade protectionism amid pressure from the US.

The statement issued by finance ministers at the G20 meeting was milder than 2016's.

It said countries "are working to strengthen the contribution of trade" to their economies.

Last year's meeting called on them to resist "all forms" of protectionism.

Protectionism can include border tariffs and rules that favour a country's business over those in another economy.

The statement, while non-binding, is important as it helps set the tone for global economic and financial policy.

Wolfgang Schaeuble, the finance minister of host country Germany, sought to play down any disagreements.

"It's not true we are not agreed. It's completely clear we are not for protectionism. But it wasn't clear what one or another meant by that," he said.

US President Donald Trump, who campaigned on an "America First" platform, has already pulled his country out of the proposed Trans-Pacific Partnership agreement with Japan and other countries.

He also has started the process to renegotiate the North American Free Trade Agreement with Mexico and Canada.

During the meeting in Baden-Baden, European countries and China were said to be pushing for a stronger stance in favour of free trade and cooperative, multi-country frameworks for trade such as the World Trade Organisation.

Chinese finance minister Xiao Jie said his country would "unswervingly oppose trade protectionism".

Canada, like China a major trade partner of the US, took a nuanced approach.

Finance minister Bill Morneau is said to support a general statement on the importance of trade for growth, while not insisting on particular language.

The G20 is an informal forum on economic cooperation made up of 19 countries plus the European Union.

The finance ministers' meeting will pave the way for a summit of national leaders in Hamburg, Germany, on July 7 and 8.

Its decisions do not have the same force as an international treaty and depend on individual countries' promises to follow through on them.