G20 divisions emerge over overcapacity as Washington faces reservations

The Office of the United States Trade Representative announced clear divisions within the Group of Twenty regarding Washington's calls to curb industrial overcapacity and policies not based on market mechanisms, following the rejection of these appeals by a small number of trade ministers in the group, according to CNBC reports. The United States, holding the G20 rotating presidency this year, released the statement a day after a trade meeting in Milwaukee showed that only two countries, Mexico and Argentina, joined a US-led statement calling for further efforts and cooperation to exclude forced labor goods from supply chains. The rejection by the overwhelming majority of group members came after the administration of US President Donald Trump imposed tariffs of 10-12.5 percent on goods from 59 countries and the European Union, alleging insufficient enforcement of the forced labor ban. The U.S. trade office did not specify which countries objected to the overcapacity statement, but China had previously objected to a similar G20 statement condemning forced labor and non-market economic policies leading to export gluts during a finance ministers' meeting a month earlier in North Carolina. The statement noted that the draft ministerial communique received support from all members except a "small number," with some flatly refusing to create a cooperative work track on overcapacity, adding that this left the US G20 presidency "deeply disappointed." The issue of China's industrial overcapacity and government subsidies for industry has been a central focus of G20 ministerial meetings led by the United States this year, while Beijing rejects accusations that its industrial policies led to overcapacity, accusing Western nations of using the issue to justify trade protectionism. The United States stated that G20 trade ministers reached a consensus on condemning the weaponization of food trade, with members agreeing not to use food or agricultural production inputs as a tool for economic or political coercion. In the joint G20 communique, ministers defined using food as a weapon as taking actions aimed at slowing, stopping, disrupting, or directing the flows of food and agricultural inputs to exert coercive pressure for unrelated geopolitical concessions. G20 trade ministers stated that they condemn using food as a weapon because it poses a significant humanitarian and economic threat. Following pressure from Trump, which included threats of a US diesel export ban, G7 nations agreed to release nearly 100 million barrels of diesel reserves in an effort to lower record-high prices in the United States, where diesel is widely used in agricultural production.