G-20 An Overview

About:

• The G20, or Group of 20, is main international forum for economic, financial and political cooperation which addresses major global challenges and seeks to generate public policies that resolve them.
• Formed in 1999, as an inclusive forum of finance ministers and central bank presidents in response to currency crisis of late 1990s that especially hit Southeast Asia and Russia.
• Its role was earlier overseen by G7 (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States).
• Its members are European Union (EU) and 19 countries: Germany, Saudi Arabia, Argentina, Australia, Brazil, Canada, China, South Korea, United States, France, India, Indonesia, Italy, Japan, Mexico, United Kingdom, Russia, South Africa and Turkey.
• Global financial crisisof 2008 and its aftereffects necessitated wider and highest level deliberations by bringing heads of State and Governments on the G20 platform.
• G20 members draw and commit themselves to an annual agenda every year.

Relevance of G20:

• Gives voice to EMEs: G20 is the most visible forum for accommodating rising powers and Emerging Market Economies (EMEs) into global economic governance framework
• Wide coverage: G20 members represent 85% of the global GDP, two thirds of the world population and 75% of international trade.
• Collective guidance and common policy preferences: G20 makes available collective guidance of developed nations to developing nations for growth of all; ensures goal congruence among all countries by setting common policy preferences
• Global crisis manager:Considering the current global economic turmoil caused by trade wars, slowdown in global growth, rising inequality,G20 can play a constructive role in its management like it played in 2008 by administering Anti-Protectionism Pledge and mainstreamingBEPS.
• Evolved mandate:G20, since its inception, has evolved from economic crisis manager to global custodian of social welfare
• Analysis and coordination: G20provides collective action, policy analysis, coordination and cooperation among countries; developspractical tools and ideas.
• Benefit to Low Income Developing Countries (LIDCs): Broader discussionsand closer dialogue between G20 and LIDCs develop deeper partnership with LIDCs,ensuringthat benefits of stronger global economic and financial integration accrue to LIDCs too.
• Regional development: Participation of regional organizations like Association of Southeast Asian Nations (ASEAN) and African Union in G20 summitssteers G20 efforts in these regions, making it more democratic.
• Broad focus:G20 focuses on three broad areas:
  • Supporting domestic resources (tax, remittances and anti-corruption)
  • Strengthening key areas for growth and development (infrastructure, energy and food security and nutrition)
  • Promoting inclusion and opportunity (trade and global value chains, financial inclusion, human resource development and employment)

Challenges:

• Lack of continuity in policies:The G20 agenda is an annual plan which changes every year with the change of presidency, hence its policies lack continuity and permanence
• Deliberative body with non-binding agenda/Self-appointed group:The G20 is essentially a self-appointed deliberative body for current global pressing problems, with non-binding agenda.
• Lack of follow-up mechanism: G20 lays a roadmap and leaves its implementation on individual governments without any follow-up, thus relegating G20 issues to the background
• Limited extra-G20 outreach: G20 majorly lacks outreach mechanism to connect with countries outside the group, thus functioning as a closed group.
• Lack of formal voting in summits:G20 forum lacks any formal voting mechanism for decision-making which makes it vulnerable to informal influence and lobbying
• Ineffective control:Climate change is an important agenda of G20 but the group has not been able to tame the biggest emitting country US to fall in linewith other members
• Opposing interests:Germany intends to make “open markets, and free, fair, sustainable, and inclusive trade” a key focus of G20 in contrast to global trade barriers setup by other members like US’bilateralism, protectionism, ‘My Country First’ approach and Britain’s exit from EU.
• Failed mandate:its core mandate of maintaining global financial stability and managing structural reforms has been unmet as highlighted by cyber instability of financial structures, persistent inflation and higher market volatility (Global Financial Stability Report 2018).

Recent outcomes of G20:

• Argentina Summit 2018: G20 leaders agreed on
  • The need to reform the WTO which is on the verge of becoming dysfunctional for failing in tackling China’s distorting trade policies and resolving developed and developing countries’ concerns
  • Introducing regulations on crypto assets (crypto-currencies) to counter money laundering and financial terrorism.
  • Reducing gender gap in the labor force by 25 percent by 2025
• Hamburg Action Plan, Germany 2017: Focuses on tackling issues of free trade and climate change, settlement of conflicts in Syria and Ukraine, and North Korean nuclear program, terrorism and harnessing digitalization
• Anti-Corruption Action Plan:Adopted in 2015, to focuses onrecovery and return of stolen assets to rightful owners, identifying challenges in anti-corruption legislation and enforcement;and tackling illicit financial flows
• Global Infrastructure Facility (GIF), 2015 convened in collaboration with World Bank to provide end-to-end support to ensure well-structured and bankable infrastructure projects are brought to market to attract a wide range of private investors.
• G20 Energy Access Action Plan and Action Plan on SME Financing, 2015: to “ensure access to affordable and reliable energy for all”, in line with the SDG 7 (ensuring access to affordable, reliable, sustainable and modern energy for all), with current focus on Sub-Saharan Africa. Also to ensure increased availability of finance for SMEs to grow and create jobs.
• BEPS Action Plan:Base Erosion and Profit Sharingrefers to tax planning strategies that exploit gaps and mismatches in tax rulesto artificially shift profits to low or no-tax locations where there is little or no economic activity.It is OECD/G20 concept and BEPS Action Planensures tax transparency among G20 nations.
• Refugee crisis: At the Hangzhou SummitG20 leaders called for more burden sharing, humanitarian assistance and development funding. G20 members’ climate negotiations at the UN resulted into Global Compactfor Safe, Orderly and Regular Migration

India and G20:

G-20 has become one of the most significant international body and platform for highlighting national and international concerns by member states. Absence of Pakistan as a member in G20 allows India to garner global support against Pakistan’s terror links and activities. G20 platform can be used by India for resolution of following issues:

• Terrorism, Climate change and liberalization of trade in services:
  • India pushes for early resolution of a Comprehensive ConventionAgainst International Terrorism (CCIT)in G20 forums to curb all forms of terrorism along with global terror financing networks.
  • It has expressed its commitment for continued global convergence and coordination for climate change mitigation and has upheld Paris Climate Accord.
  • It plays a major role in leading climate change talks on behalf of developing countries and LDCs.
  • India demands G20 to agree on opening their markets for unhindered trade in services
• Reforms of global finance institutions and multilateralism: India demands increased share of EMEs in IMF and UNSC on the basis of their increased role in global growth and productivity and calls for free, open and interconnected multilateral trading system
• Trade tensions and effect on developing economies: India highlighted escalating trade tensions between US and China and its resultant and collateral damages caused to developing and least developed countries.
• 9 Point Agenda:India submitted a nine-point agenda for dealing with fugitive economic offenders at G-20 summit 2018. It includes:
  • cooperation in the legal processeslike effective freezing of the proceeds of crime
  • establishing a mechanism that denies entry and safe havens to all fugitive economic offenders
  • develop a set of commonly agreed andstandardized procedures related to identification, extradition and judicial proceedings for dealing with fugitive economic offenders
  • common platform for sharing experiences and best practices including successful cases of extradition, gaps in existing systems of extradition and legal assistance
  • Financial Action Task Force (FATF) should focus on establishing international cooperationfor timely and comprehensive exchange of information between the competent authorities and financial intelligence units.

Way ahead:

• Robust implementation mechanism: G20 leaders need to evolve a robust mechanism for implementation of outcomes of summits by mandatory reporting or submission of national actions
• G20 and SDGs: G20 is well placed to contribute towards successful achievement of SDG goals by responding to the needs of LIDCs through more systematic dialogue and alignment of G20 agenda with the SDG goals
• Expanded scope of deliberations: International trade policy issues must become a part of G20’s core agenda;need for broader deliberations on labor-displacing technologies like AI and its solutions like open trading system, lifting curbs on migration;securing rights of refugees, especially environmental refugees.
• Governance and decision-making:In order to bring consensus in its functioning G20 must evolve a formal voting mechanism, to make it more democratic and consensual in decision-making.