G20 : Economic Cooperation ahead

G20 : Economic Cooperation ahead

Expanding the G7

Note4Students

From UPSC perspective, the following things are important :

Prelims level : G7 countries

Mains level : Paper 2- Should India join expanded G7 if invited to join as a member?

There has been a call for expansion of G7 by the U.S. President. Against this backdrop, this article examines the historical background in which the group emerged. But a lot has changed since. So, it would be appropriate for G7 to adjust to the new reality. But what would be the focus of a new mechanism? What are the areas in which India would be interested? All such questions are answered in this article.

Call for expansion of G7 and China’s objection

  • Recently, the U.S. President proposed the expansion of G7 to G10 or G11,  with the inclusion of India, South Korea, Australia and possibly Russia.
  • Elaborating this logic, the White House Director of Strategic Communications said the U.S. President wanted to include other countries, including the Five Eyes countries.
  • Five Eye is an intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom and the United States.
  • The U.S. also stressed said the expanded group should talk about the future of China.
  • A Chinese Ministry of Foreign Affairs official immediately reacted, labelling it as “seeking a clique targeting China”.

Should India care about China’s objection if invited to join?

  • China’s objection to an expanded G7 is no reason for India to stay away from it, if invited to join.
  • India has attended several G7 summits earlier too, as a special invitee for its outreach sessions.
  • India’s Prime Minister was guest invited to Biarritz, France to the G7 summit last year, along with other heads of government.

The historical background of G7

  • The G7 emerged as a restricted club of the rich democracies in the early 1970s.
  • The quadrupling of oil prices just after the 1973 Arab-Israeli War, when  OPEC imposed an embargo against Canada, Japan, the Netherlands, and the United States, shocked their economies.
  • Although the French were spared the embargo, the chill winds of the OPEC action reverberated around the world.
  • So, French President invited the Finance Ministers of five of the most developed members of the Organisation for Economic Cooperation and Development, the United States, Germany, Japan, Italy, and the United Kingdom, for an informal discussion on global issues.
  • This transformed into a G7 Summit of the heads of government from the following year with the inclusion of Canada in 1976.
  • And the European Commission/Community (later Union) joined as a non-enumerated member, a year later.
  • On the initiative of U.S. President Bill Clinton and British Prime Minister Tony Blair, the G7 became the G8, with the Russian Federation joining the club in 1998.
  • This ended with Russia’s expulsion following the annexation of Crimea in 2014.

Declining share G7 and rising of E7 in world GDP

  • When constituted, the G7 countries accounted for close to two-thirds of global GDP.
  • According to the 2017 report of the accountancy firm, PwC, “The World in 2050”, they now account for less than a third of global GDP on a purchasing power parity (PPP) basis.
  • And less than half on market exchange rates (MER) basis.
  • The seven largest emerging economies (E7, or “Emerging 7”), comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey, account for over a third of global GDP on purchasing power parity (PPP) terms.
  • And over a quarter on MER basis.

Predictions for India

  • India’s economy is already the third largest in the world in PPP terms, even if way behind that of the U.S. and China.
  • By 2050, the PwC Report predicts, six of the seven of the world’s best performing economies will be China, India, the United States, Indonesia, Brazil, and Russia.
  • Two other E7 countries, Mexico and Turkey, also improve their position.
  • It projects that India’s GDP will increase to $17 trillion in 2030 and $42 trillion in 2050 in PPP terms, in second place after China, just ahead of the United States.
  • This is predicated on India overcoming the challenge of COVID-19, sustaining its reform process and ensuring adequate investments in infrastructure, institutions, governance, education and health.

Limitations of G7

  • The success or otherwise of multilateral institutions are judged by the standard of whether or not they have successfully addressed the core global or regional challenges of the time.
  • The G7 failed to head off the economic downturn of 2007-08.
  • This failure led to the rise of the G20.
  • In the short span of its existence, the G20 has provided a degree of confidence, by promoting open markets, and stimulus, preventing a collapse of the global financial system.
  • The G7 also failed to address the contemporary issues, such as the COVID-19 pandemic, climate change, the challenge of the Daesh, and the crisis of state collapse in West Asia.
  • It had announced its members would phase out all fossil fuels and subsidies, but has not so far announced any plan of action to do so.
  • And their coal fired plants emit “twice more CO2 than those of the entire African continent”.

Turmoil in West Asia and failure of Europe to act

  • Three of the G7 countries, France, Germany, and the U.K., were among the top 10 countries contributing volunteers to the ISIS.
  • West Asia is in a greater state of turmoil than at any point of time since the fall of the Ottoman Empire.
  • This turmoil has led to a migrants crisis.
  • Migrant crisis persuaded many countries in Europe to renege on their western liberal values, making the Mediterranean Sea a death trap for people fleeing against fear of persecution and threat to their lives.

So, to deal with the unprecedented challenge, we need new institution

  • The global economy has stalled and COVID-19 will inevitably create widespread distress.
  • Nations need dexterity and resilience to cope with the current flux, as also a revival of multilateralism, for they have been seeking national solutions for problems that are unresolvable internally.
  • Existing international institutions have proven themselves unequal to these tasks.
  • A new mechanism might help in attenuating them.
  • It would be ideal to include in it the seven future leading economies, plus Germany, Japan, the U.K., France, Mexico, Turkey, South Korea, and Australia.
  •  The 2005 ad hoc experiment by Prime Minister Tony Blair in bringing together the G7 and the BRICS countries was a one-off.

What should be the focus of this new institution?

  • A new international mechanism will have value only if it focuses on key global issues.
  • A related aspect is how to push for observing international law and preventing the retreat from liberal values on which public goods are predicated.
  • Global public health and the revival of growth and trade in a sustainable way -that also reduces the inequalities among and within nations- would pose a huge challenge.

What should be India’s priority in new institution?

  • India would be vitally interested in three: 1) international trade, 2) climate change, 3) the COVID-19 crisis.
  • Second order priorities for India would be cross-cutting issues such as counter-terrorism and counter-proliferation.
  • An immediate concern is to ensure effective implementation of the 1975 Biological Weapons Convention .
  • And the prevention of any possible cheating by its state parties by the possible creation of new microorganisms or viruses by using recombinant technologies.
  • On regional issues, establishing a modus vivendi with Iran would be important to ensure that it does not acquire nuclear weapons and is able to contribute to peace and stability in Afghanistan, the Gulf and West Asia.
  • The end state in Afghanistan would also be of interest to India.
  • And also the reduction of tensions in the Korean Peninsula and the South China Sea.

Consider the question “There has been a clamour for expanding G7 and India is being considered as one of the prospective candidates in the expanded group. In light of this examine the challenges and opportunities for India if it gets entry into the expanded group.”

Conclusion

The decaying influence in geopolitics and declining share in the world GDP calls for the formation of the new institution. IF and when that institution comes into being India should try to address its immediate concern with the help of new mechanism based on values.

G20 : Economic Cooperation ahead

Setting agenda for G-12

Note4Students

From UPSC perspective, the following things are important :

Prelims level : G-7 Members, their combined gdp in the world

Mains level : Paper 2- Expansion of G-7 membership

Recently, there was a call for expansion of the membership of the G-7 by the U.S. President. But the expanded group should not be seen as an anti-China gang-up. Disciplining and not isolating China is what most of the members of the group would want. And to do so, this new group needs to have new agenda. This article discusses the items that must form the part of the new agenda.

Evolution of the G-7

  • When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
  • And it was a cosy club for tackling issues such as the response to oil shocks.
  • Now it accounts for about 40% of global gdp.
  • Since the global financial crisis of 2007-09 it has sometimes been overshadowed by the broader g20.
  • The G-7 became the G-8 in 1997 when Russia was invited to join.
  • In 2014, Russia was debarred after it took over Crimea.

Call for expansion of the membership

  • It was the French who first flew the kite of membership expansion.
  • France had invited heads of government of several “emerging economies” for a meeting of the group at Évian-les-Bains, France, in June 2003. 
  • After 2003, G-8 host countries began organising a meeting on the sidelines of their summits with a select group of five or six developing countries.
  • India and China were invited to all those summits.
  • Now, President Trump has, however, gone a step further.
  • Rather than invite “guests” to a G-7 summit, he has suggested expanding the G-7 to a G-10 or G-11.
  • Trump has come up with an interesting list of new members — Australia, India, South Korea and, possibly, Russia.
  • Inclusion of Russia: Trump’s pragmatism in including Russia should be welcomed.
  • The advantage of getting Russia in is that the group would not be viewed merely as an anti-China gang-up but, in fact, as a club of “free market democracies”.
  • The group could easily be made the G-12 with the inclusion of Indonesia — one of the few democratic nations in the Islamic world.

Discipline China, not isolate it

  • Trump’s motivation in expanding the G-7 to include India and Russia while keeping China out is transparent.
  • If keeping China out was not the intention, the G-7 could easily have dissolved themselves and revitalised the presently inert G-20.
  • There are, of course, good reasons why Xi Jinping’s China requires to be put on notice for its various acts of omission and commission and disrespect for international law.
  • However, disciplining China is one thing, isolating it quite another.
  • If the new group is viewed as yet another arrow in the China containment quiver it would place India and most other members of the group in a spot.
  • Everyone wants China disciplined, few would like to be seen seeking its isolation.
  • Asia needs a law-abiding China, not a sullen China.
  • Japan and Australia, have serious concerns about China’s behaviour.
  • But they may not like the new group to be viewed purely as an anti-China gang-up.
  • That may well be the case with South Korea too.
  • Indeed, even India should tread cautiously.
  • India has more issues with China than most others in the group, spanning across economic and national security issues and yet it should seek a disciplined China, not an isolated one.

So, what should be on the agenda of the new group?

  • The proposed new group should define its agenda in terms that would encourage China to return to the pre-Xi era of global good behaviour.
  • The G-7 came into being in the mid-1970s against the background of shocks to the global financial and energy markets.
  • The G-12 would come into being against the background of a global economic crisis and the disruption to global trade caused both by protectionism and a pandemic.
  • The two items on the next summit agenda would have to be the global response to the COVID-19 pandemic, the rising tide of protectionism and mercantilism and the global economic slowdown.
  • The summit will have to come forward with some international dos and don’ts to deal with the challenge posed by these disruptions.

New rules should apply to both the US and China

  • These new rules of international conduct would have to apply to both China and the US.
  • The G-12— have a shared interest in ensuring that both China and the US respect international law and desist from unilateralism in dealing with neighbours and global challenges.

Widening the agenda

  • To be able to alter China’s behaviour without isolating it, the G-12 will have to widen their agenda.
  • Widening involves going beyond the purely economic issues that the G-7 originally focused on, and include climate change, health care and human rights.

What should the “free market democracies” mean

  • In identifying themselves as “free market democracies” the G-12 must issue a new charter of respect for human rights, adherence to international law and multilateralism in trade and security.
  • This is easier said than done.
  • President Trump will have to re-assure the group’s members that he has their combined interests at heart in proposing a new group.
  • And he also has to show that he has an imagination beyond just an “America First” policy.
  • Even as the world is increasingly wary of an assertive China and of Xi Jinping’s China Dream and his version of a “China First” policy, it is also wary of Trump’s unilateralism on many fronts.

What should the invitee nations consider before joining the group?

  • Many countries share Trump’s displeasure with China for its manipulation of the World Health Organisation.
  • But many of them are equally unhappy with the manner in which the Trump administration has treated the World Trade Organisation.
  • A G-12 cannot ignore such partisan behaviour by either the US or China.
  • If Trump does issue an invitation to the three or four new members to join the new group, they should seek clarity on the terms of membership.
  • Russia’s experience, of being invited and then disinvited and now being considered for being re-invited should be a salutary message to all others invitees.

Consider the question- “The expanded new G-12 with India as its member, should also needs new agenda with its focus beyond China. Comment.”

Conclusion

As the world’s largest free market democracy India deserves to be a member of not just a G-12 but of even a new G-7. India’s political and economic credentials are certainly stronger than those of Canada, Britain and Italy.

G20 : Economic Cooperation ahead

G-7

Note4Students

From UPSC perspective, the following things are important :

Prelims level : G-20, G-7 members

Mains level : Significance of the these groups of counries and their say in global economy

Calling the existing Group of Seven (G-7) club a “very outdated group of countries”, US Prez. Trump said that he wanted to include India, Russia, South Korea, and Australia in the group.

Note the members of G7 and G20. UPSC may puzzle you asking which G20 nation isn’t a member of G7.

The Group of 7

  • The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
  • It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
  • Initially, it was formed as an effort by the US and its allies to discuss economic issues.
  • The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
  • It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
  • Canada joined the group in 1976, and the European Union began attending in 1977.

Evolution of the G-7

  • When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
  • And it was a cosy club for tackling issues such as the response to oil shocks.
  • Now it accounts for about 40% of global gdp.
  • Since the global financial crisis of 2007-09 it has sometimes been overshadowed by the broader g20.
  • The G-7 became the G-8 in 1997 when Russia was invited to join.
  • In 2014, Russia was debarred after it took over Crimea.

Expelling Russia

  • The G-7 was known as the ‘G-8’ for several years after the original seven were joined by Russia in 1997.
  • The Group returned to being called G-7 after Russia was expelled as a member in 2014 following the latter’s annexation of the Crimea region of Ukraine.
  • Since his election in 2016, President Trump has suggested on several occasions that Russia be added again, given what he described as Moscow’s global strategic importance.

Why Trump wants to expand the G7 group?

1.Joint  front against China

  •  The expanded G7 is seen as an attempt by the US to form a joint front against China.
  • The US President has stepped up his criticism of the Asian powerhouse over a range of issues, from initially holding back information on the coronavirus outbreak to its actions on Taiwan and changes in Hong Kong’s special status.

2.Pressure  from G7 countries

  • Another reason is Trump has faced heat from other G7 members in the last two summits, for various controversial decisions taken by him such as pulling out from trade deals, the Iran nuclear deal as well as the Paris climate pact.
  • Trump’s “America First” policy and his attacks on key US allies over various trade and economic issues have created faultlines within the grouping.

3.Add more weight to the grouping’s profile. 

The participation and eventual inclusion of Australia, South Korea, Russia (not favoured by the UK) and India could certainly add more weight to the grouping’s profile.

Why G7 needs a revival?

  • The rise of India, China, and Brazil over the past few decades has reduced the G-7’s relevance, whose share in global GDP has now fallen to around 40%.

Relevance of G7 for India

  • India will get more voice, more influence and more power by entering the G7.
  • After UN Security Council (UNSC), this is the most influential grouping.
  • If the group is expanded it will collectively address the humongous issues created by the Wuhan virus,
  • Diplomatically, a seat at the high table could help New Delhi further its security and foreign policy interests, especially at the nuclear club and UN Security Council reform as well as protecting its interests in the Indian Ocean.

Challenges in India’s entry

1.Lack of consensus:

  • The decision to expand the grouping cannot be taken by the US alone.
  • Other members such as the UK, France, Germany, Italy, Japan and Canada, have to not only agree to Trump’s proposal to expand the grouping but also on the new members that he wants to add, said a diplomatic source of one of the G7 member countries.

2.Upset China:

  • China is upset at the plans to expand the G7, stating that such actions will result in the creation of a “small circle” against Beijing and thus such a plan is “doomed to fail”.
  • China will put pressure on G-7 countries

Discipline China, not isolate it

  • Trump’s motivation in expanding the G-7 to include India and Russia while keeping China out is transparent.
  • If keeping China out was not the intention, the G-7 could easily have dissolved themselves and revitalised the presently inert G-20.
  • There are, of course, good reasons why Xi Jinping’s China requires to be put on notice for its various acts of omission and commission and disrespect for international law.
  • However, disciplining China is one thing, isolating it quite another.
  • If the new group is viewed as yet another arrow in the China containment quiver, it would place India and most other members of the group in a spot.
  • Everyone wants China disciplined, few would like to be seen seeking its isolation.
  • Asia needs a law-abiding China, not a sullen China.
  • Japan and Australia, have serious concerns about China’s behaviour.
  • But they may not like the new group to be viewed purely as an anti-China gang-up.
  • That may well be the case with South Korea too.
  • Indeed, even India should tread cautiously.
  • India has more issues with China than most others in the group, spanning across economic and national security issues and yet it should seek a disciplined China, not an isolated one.

So, what should be on the agenda of the new group?

  • The proposed expanded G7 group should define its agenda in terms that would encourage China to return to the pre-Xi era of global good behaviour.
  • The G-7 came into being in the mid-1970s against the background of shocks to the global financial and energy markets.
  • The G-12(proposed expanded group)  would come into being against the background of a global economic crisis and the disruption to global trade caused both by protectionism and a pandemic.
  • The two items on the next summit agenda would have to be the global response to the COVID-19 pandemic, the rising tide of protectionism and mercantilism and the global economic slowdown.
  • The summit will have to come forward with some international dos and don’ts to deal with the challenge posed by these disruptions.
  • New rules should apply to both the US and China: These new rules of international conduct would have to apply to both China and the US.
  • Widening the agenda: To be able to alter China’s behaviour without isolating it, the expanded group will have to widen their agenda.
  • Widening involves going beyond the purely economic issues that the G-7 originally focused on, and include climate change, health care and human rights.

Back2Basics: The G-20

  • The G-20 is a larger group of countries, which also includes G7 members.
  • The G-20 was formed in 1999, in response to a felt need to bring more countries on board to address global economic concerns.
  • Apart from the G-7 countries, the G-20 comprises Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey.
  • Together, the G-20 countries make up around 80% of the world’s economy.
  • As opposed to the G-7, which discusses a broad range of issues, deliberations at the G-20 are confined to those concerning the global economy and financial markets.
  • India is slated to host a G-20 summit in 2022.

G20 : Economic Cooperation ahead

The deep void in global leadership

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- International cooperation to deal with the coronavirus is a need of the hour.

Context

The coronavirus’s flight across the world at lightning speed has exposed the total void in collective leadership at the global level.

No global plan of action to combat the virus

  • No plan of action: Three months into the catastrophic war declared by an invisible virus, there is as yet no comprehensive, concerted plan of action, orchestrated by global leaders.
  • The G20 meeting: The G20 has just had a virtual meeting, at the prodding of Prime Minister Narendra Modi.
  • $ 5-trillion into the world economy: It is encouraging to learn that the G20 leaders have agreed to inject $5-trillion into the world economy to partially counter the devastating economic impact of the pandemic. This is indeed good news.
  • Need to do more: But taking collective ownership to fight a global war against the virus will require a lot more than writing cheques.

SAARC meeting stands out in the world

  • Pandemic is not treated as a common enemy: World leaders are obviously overwhelmed with their own national challenges and do not appear inclined to view the pandemic as a common enemy against mankind, which it is.
  • Delay in reporting by China: China delayed reporting the virus to the World Health Organisation (WHO), and perhaps, contributed to the exacerbation of the spread of the virus across the globe.
  • Unilateral suspension of flight by the US: It was reported that the Trump administration did not even inform the European Union before it shut off flights from Europe.
  • Why the SAARC meeting stands out? It must be acknowledged that the initiative taken by Mr Modi in the early days to convene a meeting of South Asian Association for Regional Cooperation countries stands out in contrast to the pusillanimous leadership around the world.

Need for leaders of nations to come together for collective global action.

  • Pandemic to persist: There is no evidence that, at the global level, the pandemic has abated yet and would be brought under control soon.
  • Massive lockdown, not a solution: To imagine that nations would be able to tame the virus soon with massive shutdowns might be just wishful thinking.
  • National shutdowns and physical distancing have been a challenge not only in the United States and some European countries, but it would also be more so in populous countries such as India.
  • At any rate, such lockouts come at enormous economic and social costs.
  • The utility of long suspension of international travel: As long as the virus is alive in some corner of the world, it would resume its travel across the world the moment international travel restrictions are relaxed.
  • Is it realistic to imagine that international travel will remain suspended until the last virus alive on this planet is extinguished?
  • This is a war. A good war against a bad enemy, and a common enemy, that respects no borders.
  • It is a global challenge to be fought by collective global leadership: If this global challenge is not a battle to be fought by a collective global leadership, nothing else is.
  • And yet, the typical response by all affected nations has been to impose ‘National distancing’ by closing borders.
  • While this is no doubt, a most appropriate response, there is a much bigger and emergent need for leaders of nations to come together for collective global action.

Two reasons for the lack of collective global action

  • 1. Right-wing nationalism: The swing towards right-wing nationalism, as a guiding political ideology, in large swathes of the world, particularly in the U.S.
  • This ideology posits ‘global good’ being in conflict with and inimical to national interests.
  • 2. Ineffectiveness of the multilateral institutions: The United Nations was the outcome of the shared vision of the world leaders after World War II, that collective action is the only way forward to prevent the occurrence of another war.
  • That institution has notoriously failed to live up to its expectations to maintain peace among nations in the nearly 80 years since its formation.
  • Its affiliate organisations have, in several ways, failed to deliver on their lofty missions.
  • In particular WHO has proven to be too lethargic in reacting to pandemics in the past.
  • Its responses to COVID-19 has come under the scanner, not merely for incompetence, but also for lack of intellectual integrity.

G-20 offers hope

  • A nimble outfit, not burdened with bureaucracy, is required to manage a global crisis of the nature that we are confronted with, today.
  • The G20, with co-option of other affected countries, itself might serve the purpose for the present.
  • What the global leadership must acknowledge: What is important is for the global leaders to acknowledge what every foot soldier knows: winning a war would require the right strategy, rapid mobilisation of relevant resources and, most importantly, timely action.
  • The following actions should come out of such a collective-
  • 1. Dealing with the shortages: The collective should ensure that shortages of drugs, medical equipment and protective gear do not come in the way of any nation’s capacity to contain or fight the pandemic.
  • Assistance from other countries: It is very likely that some nations that have succeeded in bringing the pandemic under control, such as China, Japan or South Korea, might have the capability to step up production at short notice to meet the increasing demand from other countries which are behind the curve.
  •  Development of information exchange: This would typically involve urgent development of information exchange on global production capacity, present and potential, demand and supply.
  • This is not to mean that there should be centralised management, which is not only infeasible but counterproductive, as the attendant bureaucracy will impede quick action.
  • A common information exchange could restrain the richer countries from predatory contracting of global capacities.
  • 2. Protocol among participant countries: Protocols might need to be put in place among participating countries to ensure seamless logistics for the supply chain for essential goods and services to function efficiently.
  • This might be particularly necessary in the context of controls on international traffic and national shutdowns.
  • There would need to be concomitant accord to eliminate all kinds of tariff and non-tariff barriers.
  • 3. Exchange of information: There needs to be an instantaneous exchange of authenticated information on what clinical solutions have succeeded and what has not.
  • A classic example is an issue relating to hydroxychloroquine, which is being used experimentally, bypassing the rigours of randomised clinical trials.
  • While there is no substitute to classic clinical proof, the more field-level information is shared within the medical community, the better will be the success rates of such experimentation.
  • 4.Cross country collaboration on the trials: This is a time to have cross-country collaboration on laboratory trials and clinical validation for vaccines and anti-viral drugs.
  • It must be acknowledged that WHO has already moved on this issue, although, perhaps, belatedly.
  • The best way to ensure speedy research is to pool global resources.
  • This attempt to collaborate might also bring in its wake an acceptable commercial solution that adequately incentivises private research while ensuring benefits being available to the entire world at affordable costs.
  • Such a framework might be necessary for sustained collaborations for future challenges.
  • 5. Easy movement of trained health professionals: There is a need to facilitate easy movement of trained health professionals across the world to train others and augment resources wherever there are shortages.
  • In other words, nations should come together to organise a global army to fight the pandemic, equipped with the best weapons and tools.
  • 6. The anticipation of food shortages: We must anticipate food shortages occurring sooner or later, in some part of the world, consequent to the national shutdowns.
  • Ironically, while we might have saved lives from the assault of the novel coronavirus, we might run the risk of losing lives to starvation and malnutrition, somewhere in the world if we do not take adequate precautions.
  • This requires not only coordinated global action; it would also turn out to be the test of global concern for mankind in general.

Reconstruction of the global economy

  • Devastation no less than after the world war: Eventually, there is no doubt that human talent will triumph over the microscopic virus. But the economic devastation, that would have been caused as a result will be no less than the aftermath of a world war.
  • What should the reconstruction of economy involve? An orderly reconstruction of the global economy, which is equitable and inclusive, will eventually involve renegotiating terms of trade among key trading blocs, concerted action among central bankers to stabilise currencies, and a responsible way to regulate and manage global commodity markets.

Conclusion

Does India have the power to awaken the conscience of the Superpowers and catalyse collective global action? Remember, historically, it is always the weakling or the oppressed, who have caused transformational changes in the world order.

G20 : Economic Cooperation ahead

[pib] Virtual Summit of G20 Leaders

Note4Students

From UPSC perspective, the following things are important :

Prelims level : G-20 countries

Mains level : Global cooperation for COVID-19 pandemic

A Virtual G20 Leaders’ Summit was recently convened yesterday to discuss the challenges posed by the outbreak of the COVID-19 pandemic and to forge a globally coordinated response.

About G20

  • Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies.
  • Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade.
  • To tackle the problems or the address issues that plague the world, the heads of governments of the G20 nations periodically participate in summits.
  • In addition to it, the group also hosts separate meetings of the finance ministers and foreign ministers.
  • The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings. 

Aims and objectives

  • The Group was formed with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
  • The forum aims to pre-empt the balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies.
  • It seeks to address issues that go beyond the responsibilities of any one organisation.

Member Countries

The members of the G20 consist of 19 individual countries plus the European Union (EU).

  • The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States.
  • The European Union is represented by the European Commission and by the European Central Bank.

 Who are the G20 Sherpas?

  • A Sherpa is the personal representative of a head of state or government who prepares an international summit, particularly the annual G7 and G20 summits.
  • Between the summits, there are multiple Sherpa conferences where possible agreements are laid out.
  • This reduces the amount of time and resources required at the negotiations of the heads of state at the final summit.
  • The Sherpa is generally quite influential, although they do not have the authority to make a final decision about any given agreement.
  • The name is derived from the Sherpa people, a Nepalese ethnic group, who serve as guides and porters in the Himalayas, a reference to the fact that the Sherpa clears the way for a head of state at a major summit.

G20 : Economic Cooperation ahead

[op-ed snap] India must build the capacity to make its G20 presidency in the future a success

Note4students

Mains Paper 2: International relations| Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: Basic knowledge of India’s presidency at G20 in 2022.

Mains level: The news-card analyses the issues and challenges that India might face while hosting G20 summit in 2022, in a brief manner.


Context

  • In 2022, India will be hosting the G20 or Group of 20 nations, the world’s most influential economic multilateral forum.

About

  • G20 is the agenda-setting forum that develops and guides rules of global economic governance.
  • The G20 leaders-level dialogue came into being during the western financial crisis of 2008, when the large developing economies including India and China, helped fund the G8 countries out of the crisis.

G20 is unique

  • Here, developing countries can display their political, economic and intellectual leadership on a par with the most powerful countries.
  • The G20’s rotating presidency ensures that no one country dominates the agenda.
  • Instead, the G20 host sets an annual agenda, wielding vast direct and indirect influence on nations’ economies.

Is India ready for G20 leadership?

  • At some levels, India is ready.
  • Indian business and industry is becoming a noteworthy competitor globally.
  • The country’s domestic economy is starting to pick up, thanks to structural economic reforms.
  • The central government is economically stronger, and the states are starting to learn about economic independence, making them more aligned with their global counterparts.

Issues and Challenges

  • India need to have a clear global financial agenda.
  • The country should also have the capacity to lead the G20 year intellectually, financially, managerially and administratively.
  • Geopolitically, India is more internationally engaged but less so geoeconomically.
  • Its narrow focus is on the World Bank, IMF, WTO and foreign investment issues.
  • But India has much to contribute on issues like reconfiguration of global financial regulations, design of a new framework for trade in services and the digital economy and establishing better cross-border standards for transparency in financial flows.
  • To make its G20 year a success, India has to address organisational challenges, where the country has an infrastructure, management and intellectual gap.

Organisational challenges

  1. A G20 presidency brings together several global leaders, their attending delegations, and independent experts.
  • Unlike the Olympics and more like Davos, this effort is focused on a small but powerful group which expects good airports, accommodation, conference facilities, and communications infrastructure all year round.

2. The president of the G20 is tasked with leading and managing the global economic agenda for the year.

  • This is typically undertaken by the finance and foreign ministry and a special appointee as G20 sherpa, which together act as the secretariat to the G20 presidency.
  • In India, the ministries have fine officers with this knowledge, but they are overworked and limited by their short tenures.

Global economic governance is no single ministry’s mandate.

  • For example, the ministries of commerce, energy, agriculture have deep stakes in the emerging global economic architecture.
  • The RBI and SEBI play a crucial role in contributing to the formulation of global financial regulations. They all have to work as one.

3. The logistical exercise is monumental, and unprecedented for India.

  • While India has organised annual conferences like Vibrant Gujarat, the G20’s all-year requirements are more intense and sophisticated.
  • It needs an energetic secretariat to organise over 150 high-level ministerial, sub-ministerial and sub-forum meetings through the year.
  • At least 50 task forces lead scores of meetings including those by sub-forums for think tanks and business.
  • Then there is content management, negotiation and feedback processes and developing and executing the year-long agenda.
  • India’s closest experience was in 2016 when as chair of the five BRICS countries, the government led over 100 meetings but with uneven success in the presidency year.

4. Intellectually, India is constrained on capacity.

  • There is limited expertise within think tanks or academia on this subject.
  • It requires deep inter-disciplinary research on the international monetary system, global financial architecture, global trading system, and global climate, energy and sustainability issues.
  • This restricts India to being a passive rule-taker, not rule-maker or designer of global economic rules.
  • Consequential economic decisions are then driven by the West, and increasingly by China — neither of which are suitable for an India that should be a leading thinker of the new global economic era.

Way Forward

  • Hosting a successful G20 presidency in 2022 is a welcome challenge and the preparations must begin now.
  • Like other countries, the government will have to work together with its think tanks, businesses and civil society to develop a working mechanism and an agenda for 2022.
  • India is a growing, emerging economy but leads no global economic forums.
  • It is said that “those who hold the pen, write the rules”.
  • The time has come for India to both hold the pen and write the rules for a more equitable global economics and governance.

G20 : Economic Cooperation ahead

[op-ed snap] The new trilateralism

Note4students

Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From the UPSC perspective, the following things are important:

Prelims level: JAI trilateral

Mains level: Shredding “hesitations of history” in Indian diplomacy and using new trilateralism for India’s interests


Context

G20 summit and new engagements

  1. That PM Modi could sit down with the leaders of the US and Japan on the margins of the G-20 Summit in Buenos Aires over the weekend and, soon after, parley with the presidents of China and Russia, has generated some surprise and much appreciation of India’s new international standing that the two trilateral summits underlined
  2. This is the first time that the trilateral engagement between India, Japan and the United States has been elevated to the highest political level
  3. PM Modi came up with a new acronym, “JAI”, for the trilateral partnership
  4. His meeting with President Xi Jinping and President Vladimir Putin has taken place after a gap of nearly 12 years

An important marker for Indian diplomacy

  1. Given the history of Indian foreign policy and its deep suspicion of the West, there is no question that the trilateral summit with President Donald Trump and the Japanese Prime Minister, Shinzo Abe, is an important marker in the evolution of India’s foreign policy
  2. Although India’s bilateral relations with the US and Japan and other Western countries have grown significantly in the 21st century and its officials have engaged with those from Washington, Tokyo and Canberra in the trilateral and quadrilateral format, Delhi has been hesitant to participate in these meetings at the summit level
  3. The domestic concern about abandoning “non-alignment” was one reason
  4. The fear of annoying India’s friends in the East — in Beijing and Moscow — has been cited as the other
  5. Delhi’s main weakness has been the inability to fully translate this extraordinary political leverage into substantive economic and military gains

Way forward for India

  1. Modi’s renewed trilateral summitry with Putin and Xi proves India does not have to choose between one camp or the other
  2. China’s main focus at the G-20 summit was on cutting a deal with Trump on trade issues
  3. All major powers are engaging each other and Delhi must do the same without any inhibitions

G20 : Economic Cooperation ahead

G20 summit: India presents 9-point agenda on fugitive economic offenders

Note4students

Mains Paper 2: IR | Important International institutions, agencies & fora, their structure, mandate.

From UPSC perspective, the following things are important:

Prelims level: G-20

Mains level: International Cooperation to counter Fugitive Economic Offenders


News

  • Nineteen leaders of the world’s biggest economies and a representative of the European Union are set to meet on Friday and Saturday in Buenos Aries, Argentina as part of the Group of 20 summit.

9 Point Agenda

  1. India has presented a nine-point agenda to G20 member nations calling for strong and active cooperation among them to comprehensively deal with fugitive economic offenders.
  2. The agenda was presented by PM Modi in the second session of the G20 Summit on international trade, international financial and tax systems.
  3. The agenda rules for cooperation in legal processes such as effective freezing of the proceeds of crime, early return of the offenders and efficient repatriation of the proceeds of crime should be enhanced and streamlined.
  4. The G-20 forum should consider initiating work on locating properties of economic offenders who have a tax debt in the country of their residence for its recovery.

Call for Joint efforts

  1. India also called for joint efforts by G-20 countries to form a mechanism that denies entry and safe havens to fugitive economic offenders.
  2. Principles of United Nations Convention Against Corruption (UNCAC), United Nations Convention Against Transnational Organized Crime (UNOTC), especially related to ‘International Cooperation’ should be fully and effectively implemented asked India at the summit.

Greater role for FATF

  1. India suggested the Financial Action Task Force (FATF) should be called upon to assign priority and focus to establishing international cooperation that leads to timely and comprehensive exchange of information between the competent authorities and financial intelligence units.
  2. FATF should be tasked to formulate a standard definition of fugitive economic offenders.
  3. FATF should also develop a set of commonly agreed and standardized procedures related to identification, extradition and judicial proceedings for dealing with fugitive economic offenders.

Back2Basics

G-20

  1. G-20 is made up of 19 countries and the EU.
  2. The countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States.
  3. The other invited members are Chile, Netherlands, Spain and representatives of regional groups of Jamaica, Rwanda, Singapore and Senegal.
  4. G-20 members represent 75% of international trade, half of foreign direct investment flows, half of foreign flows and 80% of global production.

G20 : Economic Cooperation ahead

[pib] India to participate in G-20, Trade and Investment Ministerial Meeting in Argentina

Note4students

Mains Paper 2: IR | Important International institutions, agencies & fora, their structure, mandate.

From UPSC perspective, the following things are important:

Prelims level: G-20

Mains level: Decline of WTO hegemony in global trade and prospects for India.


News

G-20 Trade and Investment Ministerial Meeting

  • Union Minister of Commerce & Industry will participate in the G-20, Trade and Investment Ministerial Meeting, being held in Mar del Plata in Argentina.

Importance of the meet

  1. The meeting will provide an opportunity for a dialogue on current developments in international trade and its implications for the global economy.
  2. Trade and investment must benefit all and countries must jointly address both the opportunities and challenges of globalization, innovation and technological advancements.
  3. India looks forward to work along with other countries to reform WTO and ensure that it continues to be an engine for global trade.
  4. Further, the key issues that will be discussed include global value chains, the new industrial revolution and the international trade outlook.
  5. The multilateral trading system is facing unprecedented challenges in the wake of protectionist measures by some countries, which is not compatible with the WTO.

Back2Basics

G-20

  1. G-20 is made up of 19 countries and the EU.
  2. The countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States.
  3. The other invited members are Chile, Netherlands, Spain and representatives of regional groups of Jamaica, Rwanda, Singapore and Senegal.
  4. G-20 members represent 75% of international trade, half of foreign direct investment flows, half of foreign flows and 80% of global production.

G20 : Economic Cooperation ahead

G20 nations for global forum to address excess steel capacity

  1. What? Major steel producers China, India and Japan along with other G20 nations have called for increased sharing of information as well as more cooperation
  2. How? By forming a global forum to address the issue of excess steel capacity
  3. Context: The problem caused in international markets due to excess steel capacity amidst softening of prices
  4. It eroded sales and profits of firms across countries, especially at a time when the global economy recovery is weak
  5. Issues: Excess capacity in steel and other industries is a global issue which requires collective responses
  6. Subsidies and other types of support from Govt or Govt-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention

G20 : Economic Cooperation ahead

G20 on employment and skills- II

  1. Would further develop the G20 employment plans in 2017 to address these commitments and monitor progress in a systemic and transparent manner in achieving the G20 goals, especially on youth employment and female labour participation
  2. Recognised that strengthened labour market institutions and policies can support productivity and promote decent work, and therefore higher, sustainable wage growth, in particular for the low-income workers
  3. Recognised the importance of addressing opportunities and challenges brought into the labour market through labour migration as well-managed migration can bring potential benefits to economies and societies

G20 : Economic Cooperation ahead

G20 on employment and skills- I

  1. Generating quality employment is indispensable for sustainable development and is at the center of the G20’s domestic and global agenda
  2. Would work to ensure the benefits from economic growth, globalisation and technological innovation are widely shared, creating more and better jobs, reducing inequalities and promoting inclusive labour force participation
  3. Endorsed the strategies, action plans and initiatives developed by G20 labour and employment ministers to enhance the growth and development agenda
  4. How? By taking effective actions to address changes in skill needs, support entrepreneurship and employability, foster decent work, ensure safer workplaces including within global supply chains and strengthen social protection systems

G20 : Economic Cooperation ahead

G-20 pledge to roll back protectionist measures by 2018-end- III

  1. Endorsed the strategy for global trade growth, under which the G20 will lead by example to lower trade costs, harness trade and investment policy coherence, boost trade in services, enhance trade finance, promote e-commerce development, and address trade and development
  2. Would support policies that encourage firms of all sizes, in particular women and youth entrepreneurs, women-led firms and SMEs, to take full advantage of global value chains
  3. Would continue to prioritise its work on food security, nutrition, sustainable agricultural growth and rural development as a significant contribution to implementing the 2030 Agenda for Sustainable Development
  4. Reaffirmed its commitment to promoting investment with focus on infrastructure in terms of both quantity and quality

G20 : Economic Cooperation ahead

G-20 pledge to roll back protectionist measures by 2018-end- II

  1. Reiterated advancing negotiations on remaining DDA (Doha Development Agenda) issues as a matter of priority
  2. It would include all three pillars of agriculture — market access, domestic support and export competition, non-agricultural market access and services, among others
  3. Highlighted the important role that bilateral and regional trade agreements can play in liberalising trade and development of trade rules
  4. Recognised the need to ensure they are consistent with WTO rules

G20 : Economic Cooperation ahead

G-20 pledge to roll back protectionist measures by 2018-end- I

  1. G20: Would ensure rule-based and transparent multilateral trading system with WTO for global growth
  2. Reaffirmed to continue support the work of WTO, UNCTAD and OECD in monitoring protectionism
  3. Emphasised that the benefits of trade and open markets must be communicated to the wider public more effectively and accompanied by appropriate domestic policies to ensure that benefits are widely distributed
  4. Committed to ratify the Trade Facilitation Agreement by the end of 2016 and call on other WTO members to do the same
  5. Affirmed determination to ensure a rule-based, transparent, non-discriminatory, open and inclusive multilateral trading system, with WTO playing the central role in today’s global trade
  6. TFA: Aimed at promoting global trade through easing Customs procedures

G20 : Economic Cooperation ahead

Modi calls for IMF quota reforms

  1. Modi at G20: The long delayed 15th General Review of Quotas of the International Monetary Fund (IMF) must be completed by the multilateral lender’s 2017 Annual Meetings
  2. Changes: The 15th review in quota shares is expected to result in raising the clout of the emerging and developing countries in the decision making architecture of the IMF

G20 : Economic Cooperation ahead

Modi flags off anti-graft campaign as part of global economic reforms at G-20

  1. It would include a greater say for the emerging countries in the international financial architecture
  2. Mr. Modi: Proposed elimination of safe havens for economic offenders across the globe
  3. How? Track down and unconditionally extradite money launderers and tax offenders
  4. He also targeted the foreign banks for their excessive secrecy, which eventually ended up shielding the corrupt

G20 : Economic Cooperation ahead

G20 to say look beyond ultra-easy policy for growth

  1. News: Recently released communique from G20, finance ministers and central bankers flagged a series of risks to world growth
  2. Series of Risks: volatile capital flows, a sharp fall in commodity prices and the potential shock of a British exit from the EU
  3. G20’s opinion: Need to look beyond ultra-low interest rates and printing money to shake the global economy out of its torpor, while renewing their focus on structural reform to spark activity
  4. Relevance: Faltering growth and market turbulence have exacerbated policy frictions between major economies in recent months
  5. Concerns: expressed over escalating geopolitical tensions and Europe’s refugee crisis
  6. Way ahead: G20 ministers have agreed to use all policy tools – monetary, fiscal and structural – individually and collectively to reach the group’s economic goals

G20 : Economic Cooperation ahead

As economy slows, China urges G20 to focus on domestic reforms

  1. G20 leaders had met at Antalya last month and resolved to persist with collective action
  2. China, the host for 2016 G20 meet and holder of the rotating presidency.
  3. China urged member countries to pursue structural reforms to spur global economic growth even as the Asian giant’s economy slows.
  4. India’s consultation include constructing a new structural reform index to assess progress by member nations on their target.
  5. To add 2 per cent growth to the global economy by 2018 through domestic reforms.

India has initiated consultations on the priorities identified by China for the G20 summit in September 2016.

  1. G20 leaders had met at Antalya last month and resolved to persist with collective action
  2. China, the host for 2016 G20 meet and holder of the rotating presidency.
  3. China urged member countries to pursue structural reforms to spur global economic growth even as the Asian giant’s economy slows.
  4. India’s consultation include constructing a new structural reform index to assess progress by member nations on their target.
  5. To add 2 per cent growth to the global economy by 2018 through domestic reforms.
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