National / Politics | ANALYSIS

After trade feuds in Tsukuba, Japan faces uphill task at G20

by Reiji Yoshida

Staff Writer

At the end of November last year, a high-ranking official at the Foreign Ministry looked deeply worried.

Earlier that month, Beijing and Washington were bashing each other over trade, which left the member states of the Asia-Pacific Economic Cooperation forum unable to issue a joint statement after their summit for the first time since the group was established in 1993.

The diplomat was worried the same battle could occur during the Group of 20 meetings chaired by Japan this year, including the two-day leaders summit in the city of Osaka starting June 28.

“China became supersensitive about the use of words,” said the government official, who spoke on condition of anonymity in November. “The U.S.-China trade war has intensified. There will be big trouble if they are so defensive at the G20 meetings.”

The official found his concerns had turned into reality earlier this month.

On June 8 in Tsukuba, Ibaraki Prefecture, the G20 trade ministers got together for a two-day session to lay the groundwork for the Osaka summit.

According to Japanese officials, China, the United States and the European Union continued their fierce war of words during marathon negotiations before and during the meeting while hammering out the draft of the joint statement to be issued afterward.

Beijing and Washington vehemently opposed to the use of the phrases “unfair trade practices” and “fighting protectionism,” respectively. Neither appeared in the joint communique.

In the past, those phrases were “almost automatically used” in joint statements to reaffirm the merits of free-trade systems, but those words have become untouchable now, another senior Foreign Ministry official in charge of economic affairs said.

“We’ve entered a really difficult age. That has been proven at Tsukuba,” the official said on condition of anonymity.

The joint statement issued for last year’s G20 summit in Buenos Aires also avoided the key phrase “fighting protectionism.”

But “the trade friction between the U.S. and China is now fiercer than last year,” handing Japan a tougher task as chair of this year’s meeting, the official said.

Thus Japanese diplomats are expecting a tough, long battle of words to ensue over the joint communique until the very last minute.

The first official said the reality of the trade talks at Tsukuba was so harsh that the inclusion of any key phase in the joint statement might not make much difference anyway.

“It’s true the phase ‘fighting protectionism’ was not included in the statement. But even if it was included, would it have any meaning now? It wouldn’t change (the behavior) of America anyway,” the official said.

The senior diplomat also pointed out that the Group of Seven countries are likewise deeply divided on trade, in particular the U.S. and EU.

“The G7 doesn’t include China so members can agree on issues related to China. But otherwise, they can’t agree because their own interests are involved,” the first official said.

At the G20 trade session in Tsukuba, the EU strongly demanded that tougher wording against U.S. trade policies be included in the statement, the official added.

In fact, the G7’s deep discord became apparent on May 23 in Paris at a meeting of the Organisation for Economic Co-operation and Development. The OECD ministers issued a joint statement pledging to promote the use of artificial intelligence and digital technologies for growth but skipped any mention of trade.

This is because the U.S. and EU were at loggerheads. The U.S. was threatening to restrict auto imports from the EU and the EU was refusing to start any negotiations on opening more of its agriculture market to U.S. produce.

“Protectionism slows down the economic growth of the world and could pose grave problems,” warned Shujiro Urata, a professor at Waseda University Graduate School of Asia-Pacific Studies who is an expert on international economics.

Major countries such as the U.S., China and Japan occupy a large part of the world economy and their responsibilities are “accordingly heavy,” Urata said, but “the U.S. doesn’t remind itself of its responsibility at all.”

In the meantime, the ministry officials emphasized that the results of the Tsukuba meeting trade were “better than expected” for many other participating countries.

According to the Tsukuba statement, “Many members affirmed the need to strengthen international rules on industrial subsidies,” a phrase that apparently refers to China’s much-criticized policy of subsidizing state-backed enterprises.

The joint statement, based on the consensus of all G20 members, also said the group will work to “undertake necessary (World Trade Organization) reform with a sense of urgency,” although many members are split over how to do that and some were opposed to the inclusion of the sentence, the ministry officials said.

Still, the wording used is rather abstract and the statement lacks specific measures or any road map to prevent protectionism, said Urata of Waseda University.

As chair of the G20, Japan should have proposed concrete plans and used stronger wording in the chairman’s statement, which does not require the group’s consensus, he said.

However, G20 summit sessions may be too big in the first place for any meaningful discussion to be held by top world leaders.

In addition to the 20 heads of the member states, the heads of eight additional guest states and nine international organizations are invited to the G20 summit meeting.

This means as many as 37 top leaders sit in one conference room for two days, with each of the 20 member states holding the right to veto any part of a joint statement draft, making consensus-building extremely difficult for the chair state, Japanese officials said.

According to Japanese diplomats, there are effectively no “interactive exchanges” among the top leaders, as each basically gets the chance to express a view only once per agenda item during the summit .

The individual presentations are useful to learn about the official stance of each country, but they are hardly present the opportunity to build a consensus. Instead, the marathon talks held by the working-level officials to draft the joint statement are a more substantial part of the G20 , the diplomats said.

Urata of Waseda University concurred that the G20 is not a good place for consensus-building because it includes dozens of countries with conflicting interests.

Still, the group is important because it includes fast-growing economies such as China and is perhaps the only forum where those kinds of countries and developed nations can form shared views of the economic problems confronting the world, he said.