Realistically, sweeping changes in G20’s architecture are unlikely in the very near term, and the focus is likely to be on the “art of the possible”, most notably with respect to resolving the trade disputes among the largest economies.
The upcoming G20 summit in Japan is perhaps one of the most anticipated events of the year as the global community is hoping for a breakthrough in the US-China trade stand-off. Indeed, last year’s G20 summit brought a temporary resolution to trade tensions between the two heavy-weights. This time around, however, the prospects of headway in the bilateral negotiations look problematic as the US side is playing down expectations in the markets of progress during the summit. Rather than looking for short-term quick fixes to the trade dispute the G20 needs to address the longer term challenges associated with the effectiveness of this platform as well as its inclusivity and scope of outreach vis-à-vis the rest of the world community.
Throughout the past decade a number of initiatives and proposals on the strengthening of the G20 platform for international cooperation were advanced. According to Jörg Asmussen, former Member of the Executive Board of the ECB, “four interconnected dimensions of global economic governance account for its lack of effectiveness”, namely leadership, coherence, efficiency and legitimacy1. Among the proposals advanced to counter these weaknesses are the introduction of a system for monitoring the implementation of commitments of G20 countries (to ensure greater transparency and accountability in the operations of G20) as well as the creation of a secretariat to attain greater coherence in the operations of the grouping.
Another important proposal coming from Jörg Asmussen has to do with the creation of a set of common values that would provide a greater sense of direction for the G20. As regards the issue of legitimacy of G20, Jörg Asmussen writes that “from a global perspective, it still excludes over 80% of the countries in the world which some see as weakening its legitimacy as the global economic rule setter”2. In a similar vein, Paola Subacchi and Stephen Pickford from Chatham House argue that “developing the G20’s outreach to a broader range of countries and building a permanent secretariat could make it more representative but this will take time and be very contentious”3.
In order to boost G20’s legitimacy and develop its outreach to cover a wider array of countries Jörg Asmussen calls for greater engagement of international organizations rather than accepting new countries as core members of the group. The scope of international organizations, however, need not be circumscribed in our view to global organizations, but may also include regional integration blocs. In this respect Valdai club’s proposal of creating an R20 platform of cooperation among regional development institutions and integration blocs4 may be seen as dovetailing the calls to expand the outreach activities of the G20 to more countries. In order to widen the coverage of the outreach undertaken within the R20 framework, the G20 may also invite representatives of the pan-continental unions, such as the African Union as well as CELAC. The inclusion of such regional groupings will serve to raise significantly the share of countries engaged in the outreach activities undertaken through the R20 format. Realistically, sweeping changes in G20’s architecture are unlikely in the very near term, and the focus is likely to be on the “art of the possible”, most notably with respect to resolving the trade disputes among the largest economies. The G20 may also be the right forum to discuss the recent proposal advanced by President Putin to exclude humanitarian goods such as medicine from trade restrictions. Apart from the humanitarian value associated with this initiative it would at least deliver some degree of greater economic openness that the G20 can present to the world community.
Thus far empirical research on the impact of G20 summits on financial markets in the pre-Trump era suggested that the scale of the impact has been moderate at best5. More recently, however, the G20 is emerging as one of the very few platforms where leaders of the largest economies may discuss and resolve the increasingly acute economic tensions. This in turn increases the urgency for global leaders and leading policy-makers to address not only the short-term challenges, but also raise G20’s longer term capabilities to serve as a crucial pillar of multilateralism in the global economy.
(1) The future of global economic governance. Speech by Jörg Asmussen, Member of the Executive Board of the ECB, Hertie School of Governance, Berlin, 22 February 2013 https://www.ecb.europa.eu/press/key/date/2013/html/sp130222_1.en.html
(2) The future of global economic governance. Speech by Jörg Asmussen, Member of the Executive Board of the ECB, Hertie School of Governance, Berlin, 22 February 2013 https://www.ecb.europa.eu/press/key/date/2013/html/sp130222_1.en.html
(3) P. Subacchi and S. Pickford. Legitimacy vs Effectiveness for the G20: A dynamic approach to global economic governance. Chatham House. October 2011. IE BP 2011/01
(4) See Yaroslav Lissovolik, Andrei Bystritskiy. Regional Trade Blocs as Supporting Structures in Global Governance. March 31, 2019. http://t20japan.org/wp-content/uploads/2019/04/t20-japan-tf6-6-regional-trade-blocs-global-governance.pdf
(5) Marco Lo Duca and Livio Stracca. The effect of G20 summits on global financial markets. 2014 https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1668.pdf
