G20 trade ministers have revealed deep divisions over Washington’s initiatives to tackle excess industrial capacity and the use of forced labor within global supply chains. During a recent meeting, most member nations did not endorse the US position, though the group did achieve agreement on measures to prevent the weaponization of food and agricultural trade.
US Concerns and Policy Push
The issue of excess industrial capacity, particularly concerning China’s industrial subsidies and export-driven manufacturing, has been a significant focus of the US G20 presidency this year. The US Trade Representative’s (USTR) office indicated that only a “handful” of G20 members supported a proposed framework for cooperation on this matter.
Washington has also been a vocal proponent of removing goods produced using forced labor from international supply chains. The US administration has imposed tariffs on goods from numerous countries and the European Union, citing insufficient enforcement of forced labor bans. Additionally, a Section 301 investigation is underway against 16 trading partners over signs of excess industrial capacity, potentially leading to further tariffs.
Widespread Pushback from G20 Members
A majority of G20 countries either rejected or declined to support US efforts regarding excess industrial capacity and “non-market” economic policies. This highlights significant differences among the world's leading economies on trade and industrial policy.
At the Milwaukee meeting, only Mexico and Argentina joined a US-led statement advocating for greater cooperation to eliminate forced labor from global supply chains. The USTR expressed “severe disappointment” over the opposition, noting that several members “firmly rejected” establishing a cooperative framework on excess capacity. China, which has previously objected to similar language at other G20 meetings, denies US and Western allegations about its industrial policies creating excess capacity, viewing such claims as protectionist.
Consensus on Food Weaponization
Despite the considerable disagreements on other trade matters, G20 trade ministers found common ground on one crucial issue: the weaponization of food and agricultural trade. Members unanimously agreed that trade in food and agricultural inputs should not be used as a tool for economic or political coercion.
“We condemn food weaponization, as it poses a significant humanitarian and economic threat,” the ministers stated in their joint declaration. They defined food weaponization as actions designed to “slow, stop, block or direct the flow of food and agricultural inputs” to exert coercive pressure for unrelated geopolitical concessions.
Broader Trade Policy Discussions
Beyond the G20 meeting, US Trade Representative Jamieson Greer also commented on reforming the World Trade Organization’s (WTO) most-favored-nation (MFN) system. Greer has argued that the MFN principle does not adequately address economies that provide substantial industrial subsidies, particularly China. While not seeking a joint statement, the US noted that some G20 members were open to considering changes, including broader exceptions or new legal interpretations to utilize existing provisions more effectively.