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International relations

'America first' shakes decades-long G-7 harmony

Uncertainty grows over common goal to promote open economy

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G-7 leaders and other participants pose for photo on May 27, during the summit in Taormina, Italy.   © Reuters

TAORMINA, Italy -- Group of Seven leaders ended their two-day summit in Taromina on the Italian island of Sicily on Saturday. While they ultimately agreed to continue fighting against protectionism, this year's gathering had a different atmosphere from previous ones. A new force is hampering them from firmly maintaining the basic principle of encouraging free trade system.

U.S. President Donald Trump participated in the G-7 summit for the first time. During the discussion Friday, Trump began speaking calmly, insisting on the importance of fair, free and reciprocal trade. In about 10 minutes, however, while listening to other leaders' opinions, Trump suddenly broke in and said loudly, "Like reciprocal is, if you've got a 30% tariff maybe, you know what, we should have a 30% tariff."

Gary Cohn, Trump's key adviser and the National Economic Council director, who was accompanying Trump during the summit, later defended the president, saying that he probably felt other leaders had not understood at all what his words meant. If the U.S. were to impose a 30% tariff on a specific country, it will breach the World Trade Organization's agreements. This year's summit was unusual in that it accommodated such a statement, neglecting even an internationally-agreed rule.

The joint communique included "fight protectionism," but Trump had insisted "fair and mutually beneficial trade" instead. The G-7 leaders' long-developed teamwork over promoting reliable markets and anti-protectionism has become ever so fragile with the arrival of a leader who focuses on his country's welfare first.

The first meeting among the leaders was held in Rambouillet, France, in 1975. At that time the world was stuck in the middle of an oil crisis and transition of the currency system to a floating exchange rate. The leaders declared that they would make efforts to maintain an open trading system and the prosperity of the entire world.

Since then, the meeting has been a chance for the member countries to reaffirm the common goal, and share the idea that the efforts will in the end promote prosperity and peace in their own countries as well. During the four decades, the world has gone through a number of events and challenges, including the ending of the Cold War as well as a huge expansion of globalization. The membership briefly included Russia.

But Trump's strong push for his "America first" policy is significantly shaking the basis of the harmonized efforts. Coincidentally, the U.K. has decided to leave the European Union. Italy and France have been struggling with high jobless rates. These circumstances can motivate people to support protectionism, posing a risk to the global economy.

The International Monetary Fund projects the world economy to grow at the pace of 3.5% this year, but world trade growth slowed to 2.2% in 2016. Trade frictions are already beginning to spread even among the G-7 nations. Washington in April said it would raise tariffs on lumbers from Canada blaming the neighbor for unfairly offering cheap prices. The step raised criticism from Canada, who are now considering retaliatory action to the U.S. 

The U.S. president even appears to be seeking a new grouping of the summit. A White House senior official reportedly said before the summit that the president will consider whether having the G-7 meeting without China and Russia is fully productive. Trump is urging closer ties with Beijing because of the threat from North Korea, and with Russia for countering terrorist acts led by the Islamic State militant group. The former American businessman is apparently prioritizing his country's economy and national security over the common goals of the G-7 members.

Since the global financial crisis evoked in 2008, the global framework of cooperation has been expanded to 20 countries and regions, including China, Russia and other emerging economies. The extended framework has succeeded the anti-protectionism policy, but the gaps of interests between developing countries and wealthier nations have slowed the efforts to join hands more in trade and investment, as well as for currency measures. This year's summit suggested uncertainty over the global economy is becoming wider and deeper.

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