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Why the G-20’s new language on trade is a big deal

The decision over the weekend by the world’s biggest economies to drop a longstanding pledge to avoid protectionism marks a major symbolic victory for the Trump administration.

On Monday, investors took the development in stride, but it remains a point of concern for investors. Here’s why it’s important:

What changed?

In a communiqué released Saturday, finance ministers from the Group of 20 largest industrialized and developing nations said they were “working to strengthen the contribution of trade to our economies.”

See: Signs of a rift between U.S. and other global partners at G-20

That’s a change from a vow to “resist all forms of protectionism,” in the G20’s statement last July following a gathering of finance ministers and central bankers in Chengdu, China. Some form of the same language explicitly vowing to resist protectionism has appeared in G-20 communiqués since the financial crisis.

Why is it important?

The communiqué marked a change from a consensus that emerged during the darkest days of the financial crisis. At the time, fears ran high that countries would engage in tit-for-tat trade measures in a bid to bolster their own economies at the expense of others, in an echo of moves that are blamed for deepening the Great Depression.

The language is credited with helping prevent an outbreak of protectionism, said Edward Alden, senior fellow at the Council on Foreign Relations, in a phone interview.

“I think the desire of countries to avoid those responses as expressed by that language was important,” he said. The Saturday communiqué “chips away at one…

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