G20 trade ministers meeting has clear differences: the US expressed disappointment over the rejection of the overcapacity statement

(Deutsche Welle Chinese website) The United States, which holds the rotating presidency of the Group of Twenty (G20) this year, said on Friday (October 2) that it was "deeply disappointed" that a "small number" of members rejected a ministerial statement calling for action on industrial overcapacity and "non-market" policies. The results exposed stark divisions within the bloc of major economies. The outside world generally believes that the problem of overcapacity mainly points to China.

Members of the G20 include major economies such as China, India, France, Germany, and Japan. Two days of talks between trade ministers in Milwaukee failed to reach an agreement on tackling overcapacity and forced labor.

Overcapacity statement was firmly rejected by "a few members"

Jamieson Greer, U.S. Trade Representative and Chairman of the G20 Trade Ministers' Meeting, issued a statement saying that the draft ministerial statement received support from all but a few members, but several of them resolutely refused to open up this cooperative action path for overcapacity issues. The draft believes that overcapacity unfairly drives down costs and requires countries to take a number of actions, including eliminating structural overcapacity in their economies. The U.S. statement did not name the countries that expressed opposition.

However, China has made similar statements before. At the G20 financial meeting held in North Carolina in September this year, China objected to a finance minister's statement. The statement condemned forced labor and non-market economic policies that lead to excessive exports, and asked members to "eliminate non-market policies." Asked about the topic at the meeting, China's international trade negotiator Li Chenggang said only that all parties had expressed their opinions.

China's industrial overcapacity and industrial subsidies are key issues at this year's US-led G20 ministerial meeting. Beijing denies that its industrial policies have caused overcapacity and accuses Western countries of using it to justify protectionist measures.

The statement on forced labor was only signed by two countries

Members also failed to form a common position on the issue of forced labor. During the meeting, a U.S.-led statement calling for greater cooperation to remove goods produced with forced labor from supply chains was signed only by Mexico and Argentina.

Before the vast majority of members refused to sign, the Trump administration had imposed tariffs of 10% or 12.5% ​​on goods from 59 countries and the European Union earlier this year, including some G20 members, on the grounds that relevant countries failed to fully implement the forced labor ban. In addition, the Office of the United States Trade Representative (USTR) is also launching a second "Section 301" tariff investigation on 16 trading partners showing signs of industrial overcapacity. The investigation is widely expected to lead to a new round of tariffs in the coming months.

Consensus reached on food weaponization

The only area of consensus at the meeting was grain trade. According to a U.S. statement, G20 trade ministers unanimously agreed that trade in food and agricultural products should not be used as a tool of economic or political coercion. The joint statement defines food weaponization as the use of "delaying, suspending, blocking or directing the flow of food and agricultural inputs" as a means to exert coercive pressure to extract unrelated geopolitical concessions. Ministers said the weaponization of food poses significant humanitarian and economic threats and condemned it.

On the same day, the G7, under pressure from President Trump, agreed to release about 100 million barrels of diesel reserves to push down record U.S. diesel prices. Pressure tactics include threats to ban U.S. exports of diesel, which is widely used in agricultural production.

Reform of the Most Favored Nation System: The United States Did Not Seek a Joint Statement

The fourth topic of the meeting was reform of the "Most Favored Nation" (MFN) system. The most-favored-nation system refers to global tariff rates that are announced and applied unconditionally. It is the foundation of the World Trade Organization (WTO) and has defined the global trading system since the end of World War II. Greer said Thursday that a joint statement was not being sought.

Greer argued that the most-favored-nation principle has been abused by non-market-oriented economies such as China. These economies subsidize industries and the principle does not allow them to be treated differently. The U.S. statement said that some G20 members have expressed willingness to consider changing this system, including expanding the scope of exceptions to the principle and making new legal interpretations to make greater use of existing exceptions.