Trade overshadows G20 summit in Buenos Aires

The leaders of the world's largest economies are set to converge on Buenos Aires for the G20 summit on Friday and Saturday, where sideline meetings with broad implications on global trade may outshine the official functions of the gathering.

Almost two years into his mandate, US President Donald Trump is scheduled to make his first official visit to Latin America, ending a string of cancelled trips to attend the signing ceremony for the USMCA - Trump's own moniker for the hard-fought agreement to replace Nafta some 25 years after its initial enactment.

Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto - on his last full day in office - are also set to attend the event Friday, with all the leaders there to observe trade representatives from their countries who will be signing the deal.

The signatures will start a 60-day clock for the legislatures of all three nations to ratify the deal, with US internal politics posing the most serious remaining risk to its enactment.

Manuel Padrón, a trade lawyer and auto industry specialist at Baker McKenzie, speaking to BNamericas, characterized the signing event as "perhaps the most important result of the summit for Mexico", though it comes under "unusual circumstances" with president-elect Andrés Manuel López Obrador (AMLO) set to be sworn in on Saturday.

AMLO and his incoming cabinet will be in Mexico readying for inauguration day, and the attending Mexican officials, such as economy minister Ildefonso Guajardo, will have essentially fulfilled their last major duties once the signing ceremony is complete.

"[The G20] will begin at the end of the current administration and will end during the inauguration of the new administration," said Padrón. "This fact limits to a certain extent the interaction that Mexican officials would have with their counterparts from other countries because there will be no clear direction and position of any of the groups, the outgoing and incoming administrations."

Trade war

Global markets will be scanning hardest to find any signs of diplomatic advances on the US-China trade war with both Chinese President Xi Jinping and Trump set attend.

The outcome of that meeting, however it transpires, will have impacts on global equity markets, as the investment community looks for signs of light at the end of the bleak bear-market tunnel that sent stocks tumbling worldwide in October and November, and multiple Latin American currencies and exchanges along with them.

However, Washington's belligerent tone towards China in recent days does not bode well for markets, and a complete failure to make any progress, or worse - an escalation of the conflict, could make for a very un-merry December for the world's financial markets.

A busy host

Argentina's President Mauricio Macri is set to hold 17 bilateral meetings Friday and Saturday, facing global leaders near the close of a brutal year for Argentina's economy.

Macri's first high-level meeting will take place Thursday with French President Emmanuel Macron. At their third face-to-face encounter, the leaders look to cover details on the proposed EU-Mercosur agreement with other issues on defense, the environment and a road map on bilateral relations.

Macri then starts his day with Trump on Friday. The two are set to discuss a joint action at the triple border of Argentina, Brazil and Paraguay to stop Hezbollah terrorism, as well as the situation in Venezuela. Macri could also ask for help to encourage US companies to invest in Argentina under the PPP format.

Argentina is also on the verge of signing a deal with the US that would allow two-way trade of fresh beef for the first time in nearly two decades.

Trump and Macri's discussions earlier this year were seen to be critical for Argentina to receive support from the IMF in addressing its currency crisis.

Macri's meeting with Xi on Saturday will be his last high-level face-to-face meeting of the summit, but it is perhaps the most important with plans to sign a new bilateral action plan for the next five years. The two are set to sign some 40 agreements on issues including the economy, finance, transportation, science and energy. The leaders may also talk about a new currency swap valued at US$8.5bn, according to local news outlet La Nación.

UK Prime Minister Theresa May is also set to meet with Macri, coming fresh from the latest Brexit drama. The leaders are set to discuss trade and issues surrounding a new flight to the Falkland Islands that links the disputed territory to Argentina's mainland.

Russia's Vladimir Putin will meet with Macri on Saturday afternoon, returning the courtesy made by Macri in his visit to Russia last year. On tap are the possible rapprochement between Mercosur and Putin's trade bloc including Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.

German Chancellor Angel Merkel will visit Buenos Aires as something of a lame duck after announcing she would not seek reelection as the head of her party in December or for the chancellorship in 2021. She meets with Macri Friday to discuss among other things the EU-Mercosur deal she has backed, as well as a number of joint investment projects.

Macri is also scheduled to meet with the leaders of Japan, South Korea, India, Spain, Canada, Italy, Singapore and Rwanda, as well as IMF chief Christine Lagarde and UN Secretary General Antonio Guterres.

Pictured: Journalists wait for the arrival of French President Emmanuel Macron at the Ezeiza airport in Buenos Aires on November 28.