G-7 Leaders Race to Salvage Consensus as Trade Roils Summit
(Bloomberg) -- Leaders from the world’s richest industrialized nations downplayed expectations they will agree on a formal statement at the end of their meeting, as a brewing trade dispute threatens to upend relations between the traditional allies.
Speaking to reporters on the sidelines of the two-day Group of Seven summit in La Malbaie, Quebec, German Chancellor Angela Merkel said it remains uncertain whether the talks will produce a joint communique. Instead, the host, Canadian Prime Minister Justin Trudeau, could issue a less-formal chair’s statement.
“I cannot say whether there will be a common statement or just a summary,” Merkel said on Friday.
It would mark a rare break in protocol for the group. The consensus documents typically outline a shared vision of global affairs, where the seven countries also undertake commitments on everything from currencies, development aid and international security.
Donald Trump, for his part, told reporters at his bilateral meeting with Trudeau that he thought there would be a joint statement coming out of the summit, though he didn’t specify whether he was referring to a final joint communique or to separate side agreements.
The U.S. president is facing a backlash from leaders in Canada and Europe over tariffs he imposed last week on steel and aluminum, as well as his decisions to walk away from international deals to address Iran’s nuclear program and climate change. Leaders have struggled to find ways of getting through to Trump and persuading him to budge from his pre-established positions.
“This should not come as a surprise to anyone,” said Colin Robertson, vice president at the Canadian Global Affairs Institute and a former Canadian diplomat, but “I wouldn’t say the walls have come down if we don’t have a communique.”
Robertson said there are other issues on which there will be agreement and the primary significance of these meetings anyhow is that “leaders get together and have those frank discussions.”
Sharp disagreements on trade are making it difficult for nations to come up with the traditional concluding statement from the agreement. French President Emmanuel Macron has said he’ll refuse to sign a formal communique if there’s no progress on U.S. tariffs and other sticking points.
One solution, Merkel said, might be for Trump to withhold his signature from a final document.
“In a culture of open discussion, it’s possible that we don’t agree on all points,”’ Merkel said. “It would be more honest to address the different viewpoints and to continue the work of overcoming these differences, rather than pretending that everything is in order."
Canadian Foreign Minister Chrystia Freeland, speaking to reporters at the summit, said officials are still in talks and “we’ll see where we land." The G-7 is also working on side agreements for issues such as gender and supporting democracy.
“What we want to see is getting the substance right and in the past that has been done in a number of ways -- a chairman’s statement, for example,” James Slack, a spokesman for U.K. Prime Minister Theresa May told reporters.
A senior government official meanwhile said May would warn that countermeasures from the EU would be unavoidable unless tensions were eased quickly. She would also tell other leaders that rather than imposing tariffs on each other, pressure should be increased on China to reduce its excess steel capacity, the person said.
Concerned about Trump’s approach to tariffs, Merkel on Friday proposed the creation of a "shared evaluation mechanism" on U.S. trade, a forum aimed at defusing tensions between the U.S. administration and the European Union. It’s an idea that has the support of Macron and European Commission President Jean-Claude Juncker, a French official said.
The other six nations are pushing for the G-7 to affirm “collective trade rules” in the communique, the French official said. Trump brought his hawkish trade czar, U.S. Trade Representative Robert Lighthizer, along for the trip.
The tariff standoff is a complicated issue for the EU -- each country is exposed to different sectors, and could be impacted differently in the event of an escalation. Trump, for instance, is considering imposing tariffs on auto imports on national security grounds, a move that would hurt major foreign auto producers like Germany.
Merkel has repeatedly called for a strengthening of the World Trade Organization and for the establishment of mechanisms aimed at preventing future trade disputes. It wasn’t clear how her proposed trade forum at the G-7 would differ from the WTO’s dispute resolution functions.
“We need again a multilateral trade agreement,” Merkel said at a business summit last month. “As we all see right now, something has become unstable and the situation is quite difficult. It is therefore important to create a reliable common legal framework and mechanisms for settling trade disputes, which are accepted by everybody.”
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