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Published: Tue, March 21, 2017
Business | By Megan Pierce

Top economies yield to U.S., drop no-protectionism pledge

Top economies yield to U.S., drop no-protectionism pledge

"We couldn't be happier with the outcome", said US Treasury Secretary Steven Mnuchin of the two-day meeting of Group of 20 finance ministers and their central bankers in the German resort town of Baden-Baden.

"That's why I think we can do good business together", Aso told reporters. The G20 summit with each country's government leader will be held in July in Hamburg, Germany.

"We believe in free trade: We are one of the largest markets in the world, we are one of the largest trading partners in the world", Mnuchin said.

Host Germany dropped the no-protectionism pledge in the early drafting process ahead of the meeting, apparently in hopes of not antagonizing the USA and finding a substitute that also would uphold free trade.

The delegations described the approach of their newly confirmed counterpart as level-headed. "But that is something we can live with", said Schaeuble, who was also the host of the talks in Baden-Baden.

The communiqué was revised to a commitment by the members "to strengthen the contribution of trade to our economies", reports Bloomberg.

Mr Trump has made his position clear on what this work would involve.

One day earlier, Trump, standing beside German Chancellor Angela Merkel at the White House, complained about worldwide trade agreements and said that the US has gotten the short end of the stick in the past.

ANALYST TAKE: "A key downside risk for the global economy is an increase in protectionism and an outbreak of trade wars", said Neil MacKinnon, global macro strategist at VTB Capital. Its domestic policies have made these changed priorities clear: last week, the Trump administration proposed a 31% budget cut for the US Environmental Protection Agency.

Some advocates, such as the International Monetary Fund, readily concede that the benefits of free trade have been uneven across societies, as less-skilled workers lose out and the better-trained prosper.

Trump himself insisted at a tense Washington press conference Friday, following his first meeting with German Chancellor Angela Merkel, that "I'm a free trader but also a fair trader".

The divergence in America's ideology stands in contrast to the policy followed by the other prominent G20 members.

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