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G-20 Summit 2018:

Created On: 21-01-2019,9:16 AM

Calls for WTO Reform

- Chandrakant Singh

Background

It is an international forum that brings together the world's 20 leading industrialized and emerging economies which accounts for 85 per cent of world GDP, 80% of total global trade volume and two-thirds of its population. It serves as a convention for deliberate economic communication between industrialized and developing countries.

It started in 1999 as a meeting of Finance Ministers and Central Bank Governors in the aftermath of the Asian financial crisis.

The 19 member countries are (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States) and the European Union (EU). Spain is a permanent invited guest to the group’s meetings.

The respective finance ministers and central bank governors represent the countries, while the European Central Bank and a rotating council presidency. The World Bank and the International Monetary Fund also participate.

Leader’s Summit

Initially attendance at G20 summits was limited to the finance ministers and central bank governors of members. In 2008, the first G20 Leaders’ Summit was held at Washington D.C.

Meetings are held annually, and each summit meeting is hosted and chaired by a different member.

Since then 13 such summits have taken place i.e. London, UK (2009), Pittsburgh, Russia (2009), Toronto, Canada (2010), Seoul, South Korea (2010), Cannes, France (2011), Los Cabos, Mexico (2012), St. Petersburg, Russia (2013), Brisbane, Australia (2014), Antalaya, Turkey (2015), Hangzhou, China (2016), Hamburg, Germany (2017), Buenos Aires, Argentina (2018).

The next summit is scheduled to be held in Osaka, Japan on 28-29 June 2019.

Journey through Past Summits

In the past few years, G-20 summits have been by and large successful as leaders demonstrated a strong political drive to carry out a all-enclosing reform of the global financial system, often quoted as ‘Bretton Woods II’.

For instance, United States made its monetary and fiscal policies stronger by dropping interest rates to a record low and at the same time rolled out the largest-ever stimulus package of $700 billion. On the other hand, China disclosed its own stimulus package of 4 trillion yuan, about $580 billion, with an aim of rejuvenate its economy, which in turn aided to stabilize the global economy. Since then, China has been persistent in its contribution of more than a third of world economic growth, as per the World Bank. A prompt injection of liquidity into the financial sector averted the trend of contraction, and kept the boat of the world economy afloat.

G-20 summits attained a general consensus on ways to work together in key areas to cope with the financial trouble, improve monetary regulation over the medium term to keep away from similar crises in the future, and later on, to unbind growth potential and enhance the resilience of the international financial system to foster sustainable growth.

Though each member has its own mandate, the G-20 Summit is essentially about consensus-building, establishing a workable middle way that can oil the wheels of the world’s crowded and complex financial and economic systems.

Joint Declaration of G-20 Leaders Summit 2018 (Buenos Aires, Argentina)

Every year, the host country can invite countries of their choice to attend. Accordingly Argentina invited Chile and the Netherlands. The conference took place on November 30 and December 1. The statement issued at the end of the two-day meeting in Buenos Aires, Argentina, omitted for the first time a reference to the risk of protectionism, which had been included in every G-20 communiqué since the leaders' first summit.

The leaders recognized the benefits of multilateral trade and committed to reform ofWTO as it was falling short of its objectives and there is room for improvement. The leaders will discuss that at their next meeting in June 2019 in Japan.

For the first time ever, the G20 observed that WTO is currently falling short of meeting its objectives and there is need for reform. The communiquéstated that international trade and investment are critical catalysts of growth, productivity, innovation, employment and development. However, the system is currently lagging in its objectives and there is a great scope for improvement. We therefore support the necessary reform of the WTO to improve its functioning.

The US opposed the positive reference to a “rules-based international order” as they argued the current system is skewed against them and has allowed China to get away with unfair trading practices. The final communiqué signed by all 20 member nations said 19 of them reaffirmed their commitment to the Paris climate accord. The only holdout was the U.S., which has withdrawn from the pact under Trump. On migration, there is minimal language that acknowledges growing migrant flows and the importance of shared efforts to support refugees and solve the problems that drive them to flee their home countries. French President Emmanuel Macron said the absence of meetings like the G-20 would spur trade wars, while the Russian President Putin said the communiqué released at the end of Summit was useful even if it was general in nature.With Trump, we reached an agreement,” Mr Macron said. “The US accepted a text.”

Temporary Halt to US-China Trade War

The high point along the sidelines of the Buenos Aires summit was high-stake meeting between President Donald Trump and China's president Xi Jinping to discuss the ongoing trade war. Both sides agreed to temporarily hold off on the implementation of new tariffs, which could be possibly seen as a tactical pause, giving both sides time to work out the details. They will carry forward negotiations over a 90-day period; if that period expires without a satisfactory comprehensive agreement, then further escalation would take place. US is concerned about China’s alleged theft of U.S. intellectual property and Beijing’s broader push for indigenous advances in its hi-tech sector under the aegis of the “Made in China 2025” initiative, which are yet to be addressed.

India and 2018 G-20 Summit

Along the sidelines of the summit, Prime Minister met Saudi Crown Prince Mohammed bin Salman at his residence which could be seen in the backdrop of Saudi Arabia’s offer to supply oil and petroleum products to meet India’s growing energy demands at a time of great volatility in the oil market. Presently, Crown Prince is facing a backlash in the Western world over the gruesome murder of Washington Post journalist Jamal Khashoggis.

At a broader level, India managed to pull off two seemingly contradictory trilaterals meeting as follows:-

• Firstly, meeting of Indian Prime Minister with United States President Donald Trump and Japanese Prime Minister Shinzo Abe, which he termed as ‘JAI’ - acronym of three countries — Japan, America, and India. The three nations shared their views on a free, open, conclusive and rule-based order in the Indo-Pacific region, based on respect for international law and peaceful decision of all differences. China’s rapid rise and the challenge it is posing to geopolitical stability is at the heart of the evolution of the Indo-Pacific and the trilateral.

• Hours after the “JAI” trilateral, Modi joined Chinese president Xi Jinping and Russian President Vladimir Putin for another trilateral – the “RIC” – the second among the three countries after an interval of twelve years. The three nations conversed about enhancing mutual cooperation in international forums and agreed on the importance of reform and strengthening of multilateral institutions that had aided the world, including the United Nations, WTO and well-established as well as new international financial institutions. They underscored the advantages of a multilateral trading system and an open world economy for global welfare, development and prosperity.

The above developments indicate pragmatism as a key driver of Indian foreign policy behavior as well as India’s ability to manage diverse and at times even contradictory global relationships. India to host G-20 Summit in 2022

During the last day of G-20 Summit at Buenos Aires (2018), Sh. Narendra Modi announced that India will host G-20 Leaders Summit in 2022 and thanked Italy for allowing India to play the host as previously Italy was to host the summit in 2022. It will coincide with India's 75th anniversary of Independence.


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