FRANKFURT: Competing visions of world trade are set to collide at the Group of 20 summit of world leaders in Hamburg, Germany, this week.

US President Donald Trump’s “America First” approach faces off against the European Union and its support for broad free trade agreements, with the Europeans touting a new, far-reaching pact it is completing with Japan.

The summit takes place with the global economy in fairly good shape; the International Monetary Fund sees growth rising from 3.1 per cent last year to 3.5pc this year and 3.6pc in 2018. But trade among countries has not recovered to the levels from before the global financial crisis.

Increasing trade is credited by economists for raising global growth and prosperity over the past decades. Its benefits, however, have been unevenly distributed among workers and industries.

Here’s what’s on the table when the big shots sit down together on Friday.

Trump’s views on trade will put him at odds with most other major leaders.

He says free trade deals that enable goods to pass borders without import taxes or regulatory hurdles have hurt American companies and workers. He is particularly focused on countries that sell more to the US than they buy from American companies. At the G-20, those include China, Japan, and Germany.

The summit’s host, German Chancellor Angela Merkel, said recently that “anyone who thinks that they can solve the problems of this world with isolationism and protectionism is making an enormous mistake.”

The European Union is expected to underline that approach by announcing the outlines of a free trade agreement with Japan on Thursday. The EU also recently completed a trade deal with Canada, whereas Trump pulled the US out of an Asian pact.

“In my view it will be 19 against one at the G-20, and the European Union will try to take over the role of the US in respect to trade,” said Claudia Schmucker, head of the program on globalisation at the German Council on Foreign Relations.

The 28-country EU had been discussing the deal with Japan for four years, but the timing of the announcement is symbolic.

“It’s a direct answer to what Trump stands for,” Schmucker said.

The Trump administration has other countries on edge about one trade issue in particular: steel.

The US government is investigating the possibility of putting new barriers on steel imports based on national security considerations.

The investigation’s primary justification was China, which has flooded international markets with cheap exports, lowering prices and hurting steelmakers in other countries. US import taxes imposed as a countermeasure have already sharply reduced Chinese steel imports. So those hardest hit by new barriers could potentially be countries like Canada, Brazil, South Korea, Mexico, and EU producers.

If the US acts based on the rarely used national security exemption, other countries could follow suit, said Jeffrey J. Schott, senior fellow at the Peterson Institute for International Economics.

“There’s a lot of uncertainty about what is going to be done, because the administration is fighting among themselves,” said Schott. “They realised that there are countries that don’t want to be sideswiped by US actions.”

Published in Dawn, July 6th, 2017