G7 summit kicks off in Canada amid trade disputes between US, allies

The G7 summit is expected to be a tough meeting between the United States and its allies amid raising concerns over US tariffs on steel and aluminum imports.
G7 summit kicks off in Canada amid trade disputes between US, allies

Participants of the Group of Seven summit European Union Council President Donald Tusk, British Prime Minister Theresa May, German Chancellor Angela Merkel, US President Donald Trump, Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, Japanese Prime Minister Shinzo Abe, Italian Prime Minister Giuseppe Conte and European Commission President Jean-Claude Juncker (from L to R) pose for a group photo on the first day of the G7summit in La Malbaie, Quebec, Canada, on June 8, 2018. 

The Group of Seven summit, which kicked off on Friday, is expected to be a tough meeting between the United States and its allies amid raising concerns over US tariffs on steel and aluminum imports.

The leaders of the G7, the world's most powerful industrialized countries namely Canada, France, Germany, Italy, Britain, Japan and the United States, meet every year to discuss collaboration on issues like world economy, climate change, security and peace.

Upon his arrival in the Charlevoix city of La Malbaie, Quebec, US President Donald Trump had a brief discussion with French President Emmanuel Macron on issues concerning trade and the Democratic People's Republic of Korea, according to media reports.

The official themes for this year's summit include increasing investments and creating jobs to boost growth and advancing gender equality.

However, the confrontation over Washington's unilateral decision to impose metal tariffs on imports from the European Union and Canada might dominate the summit.

Trump's rejection of the global climate accord and Iran nuclear deal have also divided the G7.

"It appears to be one against six since none of the other countries took aggressive action against the US and it is the US attacking its own allies," said Perrin Beatty, president and chief executive officer of the 200,000-member Canadian Chamber of Commerce, in an interview.

The head of Canada's largest business association is at a nearby media center looking for signs as to whether Canada, the United Kingdom, France, Germany, Italy and Japan -- and the European Union as a participant -- can convince the United States to rethink its anti-trade strategy.

"What we have is a president who has undermined the trust of the other six leaders around the table, and that will make it much more difficult to have a common front on other issues as well," said Beatty, a former senior Canadian cabinet minister.

In response to the US import tariffs on Canadian steel and aluminum, Canada followed the EU's lead and threatened to impose its own retaliatory tariffs on US goods.

Canada has announced import duties against US steel and aluminum as well as 71 categories of consumer and industrial goods that target the home states of prominent Republican members of Congress, such as fruit jams from Wisconsin -- the home state of House Speaker Paul Ryan -- and whiskies from Kentucky, -- the home state of Senate Majority Leader Mitch McConnell.

"We are hurt and we're insulted," said Canadian Foreign Affairs Minister Chrystia Freeland in a recent CNN interview on the US tariffs against Canada.

Beatty credited the Canadian government with crafting the tariffs -- which would come into effect on July 1 if the Trump administration didn't withdraw its import taxes -- to "maximize the impact within certain regions of the US while minimizing the impact on Canada, and trying to find, wherever possible, a Canadian or other supplier to provide the products."

However, he said Canada's business community has a "real concern" with how Trump is attacking what should be the goal of having "free and open" trade.

"We've seen a succession of measures taken by the president directed at close allies and friends of the US that are destructive, and that will inflict serious and direct damage on the US economy as well as its partners' economies," said Beatty. "Yet he seems oblivious to the consequences."

A tariff the US Commerce Department imposed earlier this year on Canadian newsprint has increased costs for newspaper publishers and now imperils the fate of local papers across the United States, Beatty said.

The Trump administration has also slapped tougher tariffs on Canada's softwood lumber industry, but that has resulted in driving up the cost of housing and furniture in the United States and making American furniture manufacturers less competitive, Beatty said.

The trade war could heat up further if Trump next targets Canada's auto industry, which exports about 80 percent of the vehicles it manufactures to the United States, or Canada's dairy industry, based on the president's recent tweet that "Canada has treated our Agricultural business and Farmers very poorly for a very long period of time."

All of these actions further erode any hope that the North American Free Trade Agreement, currently under renegotiation by the United States, Canada and Mexico, will survive, according to Beatty.

"President Trump has made it clear that he is less interested in having an agreement when the United States wins than in having one where everyone loses," he said.

"It is a great irony that he casts himself as a businessman. In business, whether you are a customer or a supplier, you want to ensure that both have a fair deal that is mutually beneficial and you never want a situation where someone feels victimized."

"Yet this seems to be President Trump's strategy. He sees trade as a zero-sum game in which the United States can advance only if others lose," he said.

Beatty said he has never before witnessed such rancor directed from a US government to its Canadian counterpart since coming to Ottawa in 1972 when he was elected to the House of Commons as a Member of Parliament for the then-Progressive Conservative Party at the age of 22.

"I have never seen an instance like this where doing trade with each other is a bad thing - particularly when Canada is a close trading partner with the US, and has the closest relationship with the US militarily, diplomatically, culturally and economically than with any other country in the world," he said.

The White House said that Trump will miss the G7 meeting on climate change as he will leave the two-day meeting earlier than originally planned.

Trump on Friday fired off tough tweets directed at Canadian Prime Minister Justin Trudeau, French President Macron and the EU on trade issues, saying he is looking forward to "straightening out unfair Trade Deals" with the G7 countries.

At the end of the summit, the leaders hope to sign a joint statement detailing the policy positions and initiatives they agree on.

France and Germany have warned that they will not sign the final agreement unless Washington makes some major policy concession.

The summit took place against a backdrop of Trump creating the highest level of tension between the United States and its allies in decades, from trade to the Iran deal to NAFTA, according to an article published on the latest issue of the New Yorker.

On Thursday morning, Trump tweeted that he was "getting ready to go to the G-7 in Canada to fight for our country on Trade." But other G7 leaders were preparing for an America more alone than ever before, and now Trump faces the very real risk of allies teaming up against him, the article said.

"The American president may not mind being isolated, but neither do we mind signing a 6 country agreement if need be," Macron tweeted later on Thursday.

"Under Trump, 'America first' really is turning out to be America Alone," the New Yorker's article said. Before departing to Canada for this year's G7 summit, Trump told media that Russia should be invited back into the G7 meeting. His claim was unanimously opposed by the European members of the G7, the French president's office said on Friday.

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