MILWAUKEE — Trade ministers from the Group of 20 agreed on Thursday to denounce the weaponization of food through coercive trade actions, but failed to reach consensus on statements addressing forced labor in supply chains and structural excess industrial capacity, according to US Trade Representative Jamieson Greer. The G20 brings together the world’s major advanced and emerging economies, whose members account for the large majority of global output and trade.

Speaking at a news conference in Milwaukee, Greer said many of his counterparts voiced concern that excess industrial capacity — particularly in China — is flooding their markets with cheap exports.

“Nearly all countries agree that this is an issue that requires action, and nearly all countries agree that our current system of trade remedies or responses is inadequate to solve this problem,” Greer said, adding that this is why the United States has taken unilateral tariff action to protect its industries. Trade remedies — measures such as anti-dumping and countervailing duties — are applied case by case against specific products and exporters, a design Greer suggested is inadequate on its own against a problem tied to structural overcapacity.

He did not identify which countries objected to the stronger language, but China had blocked a similar G20 statement denouncing forced labor and non-market economic policies that lead to excessive exports at a finance leaders’ meeting held a month earlier in Asheville, North Carolina.

“In the United States, we will continue to have discussions on this topic with like-minded trading partners well beyond Milwaukee,” Greer said.

A joint statement denouncing food coercion was expected to be released later on Thursday.

MFN Reform Debuts on the G20 Agenda

The ministers also discussed a US proposal for a sweeping reform of the Most Favored Nation (MFN) system of published unconditional tariff rates — the framework that has underpinned global trade since the end of World War Two. Under MFN rules, any tariff advantage a member grants to one trading partner must be extended to all others — the non-discrimination principle at the core of the 1947 General Agreement on Tariffs and Trade, the WTO’s predecessor. The topic is new territory for the G20, as past discussions of MFN tariffs have taken place within the World Trade Organization.

Greer said Washington did not put forward a joint G20 statement on MFN tariff reform because it regards the matter as a longer-term conversation that was nonetheless important to begin.

“So for us, we think that the principle of unconditional Most Favored Nation (tariffs) warrants reform,” he said. “We think that it actually fails to promote reciprocity and balance in the trading system. It can actually create free riders.”

His remarks framed the proposal as the opening of a longer-term debate in a new venue rather than a bid for immediate G20 agreement.

Europe Sounds Alarm on Export Pressure

European Trade Commissioner Maros Sefcovic told reporters separately that he welcomed discussion of the need for “concentrated action” to tackle excess capacity, arguing the problem has exploded over the past decade to the point where exports from China are threatening key industries in Europe, including autos and steel — both pillars of European manufacturing.

“Now we are at the stage where, because of these overcapacities and turbulence on the global market, (it) can create such flooding of the markets that whole sectors could be put in danger within a couple weeks or months,” Sefcovic said.

China, a G20 member, has rejected claims that its industrial policies have created excess capacity and accuses Western countries of using the issue to justify protectionist measures.

Diesel Reserves

Greer also said he held positive discussions with French, German and other European counterparts about cooperating to open strategic diesel reserves to help push down high prices driven by supply constraints. Such reserves are government-held fuel stockpiles kept for supply emergencies, and tapping them puts additional volumes into a constrained market.

“I think I won’t put words in their mouth, of course, but I think they would love to have a cooperative path forward with the United States on how we get more diesel to market. Getting some of that diesel that’s in the reserve is part of that equation,” he said.

Greer declined to directly address a Reuters report that US officials have warned France and Germany that they face a potential US diesel export ban if they fail to release emergency stocks of the fuel. Whether the two governments move to release stocks — and how the reported warning is resolved — remains an open question after the Milwaukee talks.

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Source: Reuters via BusinessWorld