| TRUMP-XI REDUX - EU EYES ITS BIGGEST TRADE DEAL - ABE FRETS OVER TRADE | | | A long-awaited meeting on Saturday between President Donald Trump and Chinese President Xi Jinping could renew a drive to reach a negotiated end to the trade war.
Japanese Prime Minister Shinzo Abe expressed "grave concern" about the world trade situation and called for renewed efforts to reform the World Trade Organisation.
For EU: The G20 final communiqué is at risk as the EU and U.S. fight about climate change. More countries could join the U.S. opposition to the Paris agreement, officials told us
Europe and the South American bloc Mercosur are planning to announce a major trade deal on Saturday. If they successfully wrap up talks today, that is.
WE'RE HALFWAY DONE IN OSAKA! Welcome back to your daily G-20 briefing, with your joint team from POLITICO Europe, POLITICO and the South China Morning Post. Amid all the geopolitical sabre-rattling here in Japan, there is at least one great innovation to report from the land that also gave us the Walkman and the PlayStation. Ever get tired of your plate being swiped at buffets? Well, we have an answer to dinner disorder. Here in Osaka, reporters are escorted to their tables by women in kimonos after an elegantly dressed gentleman has found them a seat. Then, you are given a card that says "Still Eating" on one side and "Finished" on the back. I won't tell you how long my "Still Eating" sign was up at lunch today. But by tomorrow, I'll cheerfully be wearing the "Finished" sign on my back.
Faultines clear: The big picture emerging in Osaka is severe fragmentation. A decade ago, tight co-ordination in the G20 stopped the world economy cracking up in the financial crisis, but this summit is now fast becoming the stage on which geopolitical and commercial tensions boil over, and nobody seems able to pick up the pieces. U.S. President Donald Trump is pushing back against the idea that a tariff ceasefire with China is in the bag, Japan is expressing grave concern over global trade spats, and Russia's President Vladimir Putin even used an FT interview to sound the death knell for liberalism.
Lonely liberals: That leaves the Europeans waging an increasingly lonely campaign to keep the battle against climate change at the heart of the G-20 agenda. As our colleague David Herszenhorn put it in his alarming account of where we are this morning: things haven't looked like such "globalised, gobsmacking mess" for quite some time. In an extraordinary sign of exactly where we are, EU Council President Donald Tusk, a former campaigner against Communist rule in Poland, retorted to Putin: "Whoever claims that liberal democracy is obsolete, also claims that freedoms are obsolete, that the rule of law is obsolete and that human rights are obsolete." The EU's trump card (on the liberal, free-trading side) may be to announce that it has struck a deal (its biggest) with leading South American economies.
Ha, ha, Ras-putin: Trump, by contrast, has been exchanging laughs with Putin over election meddling. After a reporter asked Trump whether he would talk to Putin about election interference, Trump responded: "Yes, of course I will.''
Then he turned to Putin, smiling and pointing his finger in the Russian president's direction, saying: "Don't meddle in the election, president…Don't meddle in the election." Putin, after hearing the translation, laughed. | | | DECISION DAY FOR XI AND TRUMP: The most highly-anticipated meeting of the G-20 summit feels like a summer rerun. Almost seven months after they last met in Buenos Aires, the world is again waiting to see whether Presidents Donald Trump and Xi Jinping will agree to a temporary truce in their trade war.
Trump told reporters on Friday that he had not already promised China to hold off on more tariffs for six months. But he appeared optimistic about the meeting. "It'll be a very exciting day I'm sure," Trump said. "It's going to come out hopefully well for both countries." U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He met Friday evening to set the stage for the Xi-Trump meeting.
When our co-stars last met, it was over a dinner of grilled sirloin steaks paired with a Malbec from the Argentine winery Catena Zapata. Trump agreed not to raise duties on $200 billion worth of Chinese goods to 25 per cent, from 10 per cent at the time, to create space for the two sides to strike a historic trade deal. In the weeks that followed, China's state-run companies resumed purchases of U.S. agricultural goods -- although nowhere near pre-trade war levels.
By the beginning of May, things were unraveling. Trump accused China of backtracking in the negotiations and then belatedly made good on his threat to raise duties on the $200 billion. To increase pressure, he began steps to impose a 25 per cent duty on another $300 billion worth of Chinese goods, which (combined with an initial $250 billion) would raise the total to $550 billion.
Mixed signals: At the family photo shoot on Friday, Xi walked directly to Trump and shook his hand before going to his own place. He didn't talk to anyone else. The two leaders spoke on the phone on June 18 for the first time since December 29. That may sound encouraging, but China has also been carefully managing public expectations on the outcome of the Trump-Xi meeting since a deal to end the trade war was not reached at their last meeting in December. The vague phrasing of Chinese government and official press statements about the meeting is intended to deliver the message that China pins low hope on Saturday's meeting to protect the images of XI and the ruling of the Communist Party if the meeting is deemed a failure.
SENIOR CHINESE OFFICIAL SLAMS BULLYING TRUMP ON TRADE: A Chinese official took aim at Trump's trade policy, saying that Xi's meeting with several African leaders has "sent a new strong message in upholding multilateralism".
"The rise of unilateralism, protectionism, and bullying practises poses a severe threat to economic globalisation and the international order and a severe challenge to the external environment of developing countries," said Dai Bing, Director General of the Department of African Affairs of the Chinese Foreign Ministry.
XI SEEKS SUPPORT FROM PUTIN, MODI AGAINST U.S.: Following a meeting with Putin and India's Narendra Modi, Xi said China, Russia and India should work together to fight protectionism and protect the "fundamental and long-term interests" they share. Whoever could he be referring to there? Xi also called for Putin and Modi's support in the growing tech war with the U.S., urging co-operation in emerging market 5G deployment but he dodged criticism in India that China is protecting Pakistan, saying the three nations should combat terrorism together. | | | THE OLD EMPIRE STRIKES BACK: The Europeans, who are thoroughly fed up with being upstaged by the Trump-Xi palaver, might just have a trick up their sleeve. The messaging from Brussels is that the EU, the world's biggest trade bloc, could well strike a political agreement with the Mercosur grouping of Brazil, Argentina, Uruguay and Paraguay on Friday. Or at least it will be clear whether they are able to or not.
If all goes according to plan, there could then be a big party in Osaka. In terms of tariff reductions, this would be the EU's biggest deal, and you can be confident that the EU will not waste any time parading their liberal, free-trading agenda before Trump. Still, expect French President Emmanuel Macron to be somewhat defensive about it. He's going to have some tough questions about the effect of all that Argentine prime beef coming to Europe, and about the shaky green credentials of Brazilian President Jair Bolsonaro, as deforestation hits a record high.
'RED LINE' ON CLIMATE:
Speaking about green credentials: The EU is facing an uphill battle to maintain a united front at the G20 on climate change. Under pressure from Washington, several countries including Saudi Arabia, Brazil, Australia and Turkey have signalled they want to backtrack on commitments made in the years before, three senior officials told POLITICO.
Such a backtrack would be "unacceptable" to the EU, one said. The Commission plus France, Germany, Spain, Italy as the countries represented in Osaka, met this morning to form a joint position and decided to endorse Macron's stance that any weakening of the language would be a 'red line,' the three officials said.
Magic words: The communiqué must read that the Paris agreement is "irreversible" and that the G20 countries "fully commit" to implementing it, officials explained.
U.S. attack: At the G20s in Hamburg and Buenos Aires, Washington secured a carve-out from those magic words. But as a result of U.S. pressure, there is now a risk that other countries could join the U.S. camp.
Deadlock: The EU is trying to counter the U.S. pressure. Macron suggested the EU would not ratify the trade deal with Brazil if President Bolsonaro abandoned the Paris agreement.
But as of Friday afternoon, sherpas were in a deadlock. The final communiqué was at risk, two officials from different EU countries told us.
Rather than weakening the language, the EU could begrudgingly accept that other countries join the U.S. carve-out. But they could also decide that the positions on climate change have grown too far apart. In any case, the chapter on climate will be the most difficult one, they said.
As Sherpas headed into their nightly round of negotiations one said that the chapter on climate change would have to be left for the heads of state to decide.
ABE EXPRESSES "GRAVE CONCERN" OVER GLOBAL TRADE SITUATION: Japanese Prime Minister Shinzo Abe, as chair of the G-20 summit, urged leaders to redouble efforts to reform the World Trade Organisation, which has been under increased strain from Trump's combative approach to trade policy.
"I harbor grave concern regarding the current situation on global trade," Abe said, speaking through a translator. "Tit-for-tat of trade restrictive measures are to benefit no one. Whatever the trade measures be, they must be consistent with WTO agreement."
That seemed to be a dig at Trump, who has dusted off rarely-used U.S. trade remedy laws to impose tariffs on steel and aluminum imports from around the world and to slap a 25 percent duty on $250 billion worth of Chinese goods.
LEADERS MULL DIGITAL TRADE 'CONSTITUTION': Abe also presided over a special session on digital trade, which accounts for a growing portion of international commerce and depends on the ability of companies to move electronic data across borders. Talks are now underway among 78 members of the WTO on a proposed agreement. But concerns about risks to privacy and national security hang over the talks.
"At the same time that we expand digital trade, we must ensure the resiliency and security of our 5G networks," Trump said in the session, reflecting U.S. concern about Chinese telecoms giant Huawei. "This is essential to essential to our shared safety and prosperity."
Xi, in his own pointed remarks, said any agreement should "respect each country's own governance rights to ensure secure use of data in an orderly manner." WTO Director General Robert Azevedo likened the proposed pact to a "constitution" for 21st century trade.
TRUMP'S LONELY QUEST ON IRAN: Trump spent Friday in Osaka looking to build support an Iran nuclear deal 2.0. But he once again found himself alone. (It's not an unfamiliar place for him.)
Not only do other countries still support a 2015 nuclear pact, they're sceptical Trump can strike a better agreement within the time constraints of his fast-approaching re-election campaign, especially after Iran recently proclaimed the end of diplomacy with the U.S. Macron accused Donald Trump of lacking "coherence" by cosying up to North Korea while talking tough on Iran. | | | XI OFFERS OLIVE BRANCHES YET AGAIN: No big international pow-wow is complete without vague Chinese pledges to open its market. These are usually taken with a pinch of salt, and big EU investors are currently eyeing the country's massive tenders for 5G equipment as the real litmus test of whether the country is serious about opening up. When meeting German Chancellor Angela Merkel, Xi also said China's pledges to reform and opening up are not "empty promises."
Anyhow, Xi kept it all typically theoretical, pledging to: - Have the government compensate victims of intellectual property theft and give foreign investors a regular channel to file complaints about unfair treatment in China;
- Further open up the agricultural, mining, manufacturing and service sectors to foreign businesses;
- Further lower tariffs and remove non-tariffs barriers;
- Implement the new foreign investment law on January 1;
- Give equal treatment to all enterprises registered in China. Remove restrictions on foreign investment and business operations in sectors that are not specifically restricted or prohibited;
- Step up talks on an investment treaty with the European Union and on a trilateral free trade agreement with Japan and South Korea.
NO XI-ABE BROMANCE YET: At the ceremony Friday morning where Abe welcomed each of the leaders, Xi and Abe made it look like they were each meeting the friend they least wanted to see. The body language was tense, and Abe sighed when Xi left the stage. In contrast, the waving, smiling Trump looked like he was having the time of his life.
Chalk and cheese: At the working lunch, Xi sat next to Canadian Prime Minister Justin Trudeau and didn't acknowledge his presence while the cameras were rolling, underscoring the growing troubles over detained citizens.
| | - India presents U.S. with a choice between geopolitics and trade, The Economist reports
- Trump sees "very big" trade deals with Japan, India, the Wall Street Journal reports
- China boosts studies of U.S. on criticism misreading of Trump triggered trade war
- Putin tells the Financial Times that liberalism has become obsolete
- Trump praises Japanese auto investment in U.S. as tariff threat looms, POLITICO reports
| | | FRIDAY
6:00 p.m. - G-20 cultural programme and leaders dinner
6:30 p.m. - Foreign ministers dinner
SATURDAY
8:15 a.m. - Trump has working breakfast with Saudi Crown Prince Mohammed bin Salman
11:30 a.m. - Trump meets with Xi
1 p.m. - Trump meets with Turkish President Erdogan
THAT'S ALL FOR THE G-20 BRIEF! See you again soon! In the meantime, drop the team a line: wendy.wu@scmp.com; kristin.huang@scmp.com; catherine.wong@scmp.com; zhen.liu@scmp.com; dpalmer@politico.com; akumar@politico.com; jhanke@politico.eu; dherszenhorn@politico.eu; | | | From lifestyle to business and breaking news to daily digests, never miss a story. Browse our newsletters. | | | | | | | |
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