Brisbane G20 Summit Provides Opportunity to Rescue Grouping’s Slipping Image
November 6, 2014
President Barack Obama will end his trip to Asia in mid-November at the Group of 20 (G20) Leaders’ Summit in Brisbane, Australia, after attending the Asia-Pacific Economic Cooperation leaders’ meeting in Beijing and the East Asia Summit in Myanmar. The G20 summit will give Obama and top world leaders a chance to discuss critical challenges facing the global economy, including China’s slowdown, the tardy pace of reform in Japan, and looming deflation in Europe.
The meeting will give its Australian hosts an opportunity to help the G20 regain the focus and clout it had at the height of the global financial crisis in 2008. Australia’s treasurer, Joe Hockey, said in a speech at CSIS on October 8 that “to reinvigorate the group, the agenda had to focus on achieving outcomes and uniting around an ambitious but deliverable target.”
Journalists will watch whether Russian president Vladimir Putin attends the November 15–16 summit after Australian prime minister Tony Abbott said he would “shirt-front” the Russian leader over the shooting down of Malaysian Airlines Flight 17 by Russian-backed Ukrainian rebels. (Shirt-fronting, in Australian football, refers to tackling a player from the front). Twenty-seven Australians died in that crash. Putin has not indicated that he plans to skip the summit.
The G20 leaders are expected to devote time at the summit to discussing broader global crises, including the offensive by Islamic State fighters in Syria and Iraq and the international response to the Ebola epidemic in West Africa.
One of the key themes Australia is focusing on is developing strategies to tackle the global economic slowdown. The G20 finance ministers meeting in Sydney in September agreed to take new policy actions to generate an additional 2 percent of global GDP in 2018. Each country was called on to develop individual growth strategies, and the ministers reported that roughly 1,000 measures (none of which have been detailed publicly) had been proposed, of which 80 percent were new; together these were expected to raise global GDP by 1.8 percent.
The finance ministers agreed to pivot from government-led growth to growth spearheaded by the private sector. The ministers focused particularly on increased investment in infrastructure and called on governments to remove barriers to private investment in public works projects. Hockey has proposed a still-relatively undefined concept about establishing an “infrastructure hub” run by Australia; it is unclear how this idea will work alongside the new Asian Infrastructure Investment Bank launched by China.
Mike Callaghan, director of the G20 Studies Center at the Lowy Institute in Australia and former senior Treasury official, in an October report called on G20 leaders to bolster their pledges to roll back protectionist trade measures, including nontariff barriers, introduced at the height of the global economic crisis. Callaghan said the credibility of the G20 would be strengthened if its leaders called on the World Trade Organization to monitor their progress in lifting these measures.
The G20 leaders will likely trumpet their achievements in building a more resilient financial regulatory system in the wake of the 2008 global meltdown. Callaghan called on the leaders to adopt strengthened capital requirements, take steps to deal with financial institutions considered “too big to fail,” and launch measures to make derivatives markets less risky.
The leaders will discuss the need to develop a new system of corporate tax rules that will increase transparency, close loopholes, and restrict the use of tax havens. They are also expected to tackle so-called base erosion and profit shifting (BEPS) tactics, under which multinationals move their profits to jurisdictions that collect low or no taxes. Early this year G20 finance ministers discussed launching a common reporting standard that would serve as an automatic exchange of tax information.
The G20 leaders will undoubtedly put pressure on the United States to ratify the International Monetary Fund (IMF) quota commitments to which Washington agreed in 2010. The reform would shift slightly more IMF quota shares to emerging and developing economies such as China, but it has been blocked by the U.S. Congress.
Some G20 leaders, including Obama, could seek to put a discussion of the economic impact of climate change on the agenda ahead of next year’s global climate summit in Paris. But Australia, which under Abbott became the first country to repeal a national carbon tax, has insisted climate change will not be on the agenda and instead wants to focus on energy efficiency and the lifting of subsidies on fossil fuels.
The G20 is often criticized for failing to come up with concrete measures, and its members have less than a sterling record in following through on actions that leaders have agreed on. One problem, of course, is that the G20, with its membership ranging from China and India to the United States and Japan, is very diverse and its members often have conflicting interests. The G20 does not have an enforcement mechanism or a secretariat to monitor whether members are implementing agreed-upon reforms.
“The G20’s reputation has been slipping since its high point in the aftermath of the global financial crisis,” Callaghan wrote in his report. “The Brisbane Summit is an opportunity to reverse that trend.” To reinvigorate the forum, Callaghan argued, Australia will need to ensure that the summit has “a ‘headline’ outcome; engaged leaders; a minimum of rhetoric; [and] a focus on implementation.”
(This Commentary originally appeared in the November 2014 issue of Pacific Partners Outlook.)
Murray Hiebert is senior fellow and deputy director of the Pacific Partners Initiative at the Center for Strategic and International Studies in Washington, D.C.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2014 by the Center for Strategic and International Studies. All rights reserved.