Group of Seven Reprimands the US; Bumpy Road to the Summit?
Published June 4, 2018
China warned that all commitments so far in talks with the US over trade will be withdrawn if President Trump carries out his threat to impose tariffs. While both the US and China reported some progress in discussions at the weekend about how to reduce China’s $375 billion trade surplus with the US, President Trump’s revival last week of a plan to slap tariffs on $50 billion of Chinese imports has thrown the talks into turmoil.
OPEC and its allies in global oil output cuts stressed the need to maintain their cooperation to stimulate adequate investments to ensure stable oil supply. Energy ministers from Saudi Arabia, the United Arab Emirates, Kuwait, Algeria and Oman held a consultative meeting over the weekend in Kuwait City. The discussion focused on market conditions and the producers’ compliance with global output cuts. The meeting took place after the Saudis and Russia announced a new policy to revive oil production. Many of the other producers weren’t consulted regarding the proposal; oil prices fell following the news. West Texas Intermediate has slipped to $65.47 at the time of writing.
Brexit is back into focus this week as lawmakers return from their recess. UK Prime Minister Theresa May has some important decisions to make on what kind of future customs relationship will be formally pitched to the European Union ahead of a key summit at the end of the month. May and other top ministers have been deadlocked for over a month regarding what kind of proposal to put forward to avoid a hard border on the island of Ireland. The impasse is unresolved, with the pro-EU ministers favoring one option and Brexit supporters preferring another. Neither are likely to be approved by Brussels.
North Korea will receive relief from internationally imposed sanctions only when it has shown irreversible moves toward denuclearization. US Secretary of Defense James Mattis had strong rhetoric for the North Korean regime ahead of next week’s summit between President Trump and North Korean leader, Kim Jong Un. Speaking Sunday at a meeting in Singapore, Mattis cautioned that “we can anticipate, at best, a bumpy road to the negotiations.”
The Group of Seven finance chiefs displayed very public reprimands of the United States, claiming US trade actions will undermine global economic confidence and threaten the effectiveness of the Western alliance. The collective statements singled out the Americans, saying “decisive action” is needed at a leaders summit next week in Quebec. “The international community is faced with significant economic and security issues, which are best addressed through a united front from G-7 countries,” Canadian Finance Minister Bill Morneau stated in a closed group meeting. “Members continue to make progress on behalf of our citizens, but recognize that this collaboration and cooperation has been put at risk by trade actions against other members.”
Singapore Defence Minister Ng Eng Hen criticized both the US and China for taking “unilateral actions” as the two nations were mentioned together as challenging the current global order. In a speech to the annual IISS Shangri-La Dialogue security forum in Singapore, Ng said the world’s largest economies were using security considerations to justify their behavior. Minister Ng went on to state that the US and China are “changing the rules of the international order previously entrenched.” This comes as concerns over Taiwan continue to grow. US Secretary of Defense James Mattis warned China against disrupting the “status quo” on Taiwan, as Beijing steps up air-and-sea maneuvers nearby and accelerates efforts to isolate Taipei.
On Saturday, Pedro Sánchez was sworn in as Spain’s new prime minister by King Felipe VI, a striking reversal for the politician who returned to his party’s leadership only a year ago, after being ejected in a party mutiny. Spain now faces an indeterminate situation, with a delicate Socialist government formed by an establishment party. The challenge for Mr. Sánchez will be how to keep together an unlikely alliance with the far-left Podemos and nationalist parties from Catalonia and the Basque region.