German Chancellor Angela Merkel pledged Tuesday to strive for a broad, rules-based and fair agreement on global trade at the meeting of Group of 20 leaders next month, aiming to convince the U.S. of the benefits of open markets.
"We will do everything in our power to achieve an agreement as broad as possible in Hamburg," Ms. Merkel said.
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"This isn't easy given the new U.S. administration. And yet we have to make the effort," she said at a conference hosted by the BDI Federation of German Industry.
The German chancellor warned against the lure of short-lived, short-term gains that more isolationist trade policies might bring to countries that pursue them.
"Suddenly, thinking patterns are re-emerging that we have actually considered outdated and which strive for isolation for the sake of supposed advantages...Protectionism might perhaps make life of domestic enterprises slightly easier in the short-term by ignoring international competition for some time.
Ms. Merkel said countries ignore the longer-term dangers of protectionism at their peril. "Innovation and competitiveness will suffer, however, in the medium and long term."
Germany holds this year's G-20 presidency and leaders from the world's leading 20 industrialized and developing nations will meet in Hamburg on July 7-8.
Divisions over trade policy emerged when world finance chiefs met a G-20 meeting in Baden-Baden, Germany in March to find common ground on boosting international trade. At the time, U.S. Treasury Secretary Steven Mnuchin got finance officials to drop a disavowal of protectionism from a closely watched policy statement issued by the G-20.
For Washington, the watered-down language ensures the U.S. can still use sanctions or other policy tools to punish trade partners and thwart economic policies the Trump administration believes to be unfair.
In her speech to German business leaders, Ms. Merkel also vowed to discuss the steel industry at the G-20 meeting amid growing tensions about overcapacity and fair trade in the sector.
"It isn't simply about trade, but it must be rules-based, it must be fair," Ms. Merkel.
Germany has sharply criticized U.S. plans for anti-dumping duties that Berlin believes are violating World Trade Organization rules with the aim of damaging international rivals. In its turn, the U.S. has accused Germany and other countries of subsidizing their steel exports and dumping steel in the U.S.
Ms. Merkel also told business leaders that it would make sense for Germany and France to aim for an harmonization of the base rate for their corporate taxation, given plans in the U.S. and U.K. to cut corporate taxes.
"We have to counter with something if this downward tax competition begins," she said.
At the conference, BDI chief Dieter Kempf called on Berlin to do exactly that.
"If two big nations such as the U.S. and the U.K. plan to cut corporate taxes...than we would of course have to react to this tax competition because investment outflows into these countries wouldn't be unlikely," Mr. Kempf said.
Write to Andrea Thomas at email@example.com
Corrections & Amplifications
This article was corrected at 1146 GMT because German Chancellor Angela Merkel's name was misspelled in the first paragraph.
German Chancellor Angela Merkel pledged Tuesday to strive for a broad, rules-based and fair agreement on global trade at the meeting of Group of 20 leaders next month. In "Merkel Pledges to Push For Free Trade at G-20 Summit," at 1115 GMT, Ms. Merkel's name was misspelled as Angel in the first paragraph.
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June 20, 2017 07:57 ET (11:57 GMT)