President Trump continued with his promise to put “America First” recently when he withdrew the United States from the Paris Climate Accord. This followed his week of visits in Europe where he did not reaffirm the collective defense provision of NATO (later reaffirmed). Both of these policy positions, although shocking, were in line with what the President’s past views. The foreign reaction was swift . German Chancellor Angela Merkel summed it up by saying that Europe would have to look to its own devices and could no longer depend on the “others” – clearing meaning only one – the United States.
Lost in this high-profile series of steps where America was seemingly distancing itself from its allies in dealing with issues of common economic and security concern, was a positive statement on trade policy that the U.S. and its major allies issued at the G7 Summit meeting in Italy on May 26-27. The G7 unanimously condemned protectionism – something that the Trump administration had refused to do since it came into office on January 20. In international meeting after international meeting throughout the spring, the Trump administration had made a point of refusing to make this pledge.
For American business, what was vitally important in the G7 Summit declaration was the first view of the likely shape of U.S. trade policy in the Trump administration beyond the rhetoric. True, while condemning protectionism, the statement did not opt for total and unconditional free trade. Doing so would be hypocritical. Each of the G7countries, even if much more open than most of the other 157 members of the World Trade Organization (WTO), still protect some sensitive industries and agriculture.
What is noteworthy is that the G7 statement called for all seven nations to stand firm against unfair and trade distorting measures. It condemned dumping, forced technology transfer, subsidies, and non-tariff barriers. The Seven committed to strengthening their cooperation to address global excess capacity in “steel, aluminum and other key industrial sectors and to avoid its emergence in other areas, … viewing with concern market-distorting measures targeted at promoting key technologies.”