G-20 Leaders Pledge to Revitalise Growth Agenda at Hangzhou Summit
Leaders from the G-20 coalition of advanced and emerging economies concluded two days of high-level meetings in China on Monday with a pledge to implement a new “Hangzhou Consensus” – a set of policies aimed at shoring up global economic and trade growth, boosting confidence, and responding to anti-globalisation sentiments that have been on the rise in some countries.
The 4-5 September gathering in Hangzhou marked the first time that China had held the G-20 presidency, and comes amid growing worries over the state of the global economy, and the slow nature of the recovery. (See Bridges Weekly, 14 April 2016)
“We met at a time when the global economic recovery is progressing, resilience is improved in some economies, and new sources for growth are emerging. But growth is still weaker than desirable,” said leaders in the final communiqué.
They also noted the “continued shifts and profound transformations” underway throughout the international economy, highlighting both their potential as well as the possible risks such uncertainty may entail.
Given this context, one of the key items on the docket was the expected update on the implementation regarding existing growth plans for each participant. These “national growth plans” were endorsed two years ago, during a summit in Brisbane, Australia. At the time, these plans were heralded as a way to boost the group’s collective growth by US$2 trillion above current trajectories by 2018. (See Bridges Weekly, 20 November 2014)
This past July in Chengdu, however, finance officials affirmed that more work remains to ensure growth and shared prosperity, and that leaders would be issuing updates to the 2014 national growth strategies in Hangzhou. (See Bridges Weekly, 28 July 2016)
“Swift and full implementation of the growth strategies remains key to supporting economic growth and the collective growth ambition set by the Brisbane Summit, and we are prioritising our implementation efforts,” said leaders on Monday.
Doing so, they confirmed, will involve implementing both a new “Hangzhou Action Plan,” as well as additional or revised “macroeconomic and structural policy measures that can provide mutually-supportive benefits to growth” – while also working to address public concerns about inequality and related issues.
Revamping trade, investment growth
Over the past several months, an increasing source of frustration for G-20 member economies has been the persistently slow growth in trade, together with reports from the WTO of the heightened pace of trade restrictions within their group.
Earlier in the summer, the WTO warned that the introduction of new trade restrictions from mid-October 2015 to mid-May 2016 had hit their highest monthly average since the organisation first began this monitoring exercise seven years ago. (See Bridges Weekly, 23 June 2016)
Trade ministers meeting in Shanghai this past July already called for scaling up their collective work on global economic growth, endorsing a strategy aimed specifically at boosting trade, together with a set of non-binding principles relating to investment policymaking. (See Bridges Weekly, 14 July 2016)
To that end, leaders in Hangzhou both issued their backing to the trade ministers’ statement, while making a series of pledges aimed at helping fuel “inclusive, robust, and sustainable trade and investment growth.”
This included a reaffirmation of their commitment to avoid introducing new trade and investment restrictions, referred to otherwise as a “standstill,” as well as rolling back those that have been introduced. Both commitments have been made through the end of 2018.
Leaders also cited the importance of advancing multilateral talks both in the WTO and in other settings, such as bilateral and regional trade deals. Regarding the WTO, the communiqué also included familiar language on the “central role” of the Geneva-based organisation in ensuring the strong, transparent functioning of the multilateral trading system.
The statement further calls for all G-20 members who have not yet done so to ratify the WTO’s Trade Facilitation Agreement by year’s end, along with pledging to collaborate with the organisation’s other members on charting a path toward a successful ministerial conference in late 2017.
“We reiterate our commitment to shape the post-Nairobi work with development at its centre and commit to advancing negotiations on the remaining [Doha Round] issues as a matter of priority, including all three pillars of agriculture (i.e. market access, domestic support, and export competition), non-agricultural market access, services, development, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) and rules,” says the communiqué.
Leaders also noted the potential for having fruitful discussions on so-called new issues, such as those that are already being raised in other trade negotiations forums.
EGA “landing zone” confirmed
Trade watchers had also been eyeing the Hangzhou meeting for political signals on the negotiations for a tariff-cutting deal on environmental goods. That process includes 17 WTO members, counting the EU as one, many of which are part of the G-20.
The G-20 trade ministers’ meeting in Shanghai earlier this year had already flagged the leaders’ summit as the ideal date to announce that EGA participants had reached a “landing zone” in the talks, which would set the stage for finishing them in 2016. The final communiqué affirms this, with language that sources say will likely provide positive momentum to the negotiations ahead.
“G-20 Environmental Goods Agreement participants welcome the landing zone achieved in the WTO EGA negotiations, and reaffirm their aim to redouble efforts to bridge remaining gaps and conclude an ambitious, future-oriented EGA that seeks to eliminate tariffs on a broad range of environmental goods by the end of 2016, after finding effective ways to address the core concerns of participants,” says the communiqué.
The latest EGA round in July had seen the circulation of a revised list of around 300 tariff lines and related “ex-outs” on which to base the negotiations, prepared by the chair of the talks following meetings with various participants. Participants had also agreed a roadmap for the way forward between now and December. (See BioRes, 4 August 2016)
An ambassadors’ level meeting was then held in late August, which sources say served to confirm the results from that latest round as grounds for a “landing zone” announcement at the G-20 level.
At the time, participants also confirmed an overall schedule for the next rounds, given the objective of concluding the talks this year. Sources say that EGA participants are now planning to hold three negotiating rounds for the last part of this year – one in September, another in October, and the third in late November or early December.
Along with bargaining over which products from the overall chair’s list will be featured in the final EGA, participants also have a series of other topics that they are aiming to address in this phase of the talks. These include discussing interests raised by some participants on a possible work programme on environmental services and non-tariff barriers, as well as how to determine “critical mass” and answer concerns over possible “free riders.”
How to determine the staging periods for progressively eliminating tariffs on the final list of goods also needs to be hammered out, sources say.
Multiple sources said that ministerial engagement will be needed to help advance some of the more sensitive parts of the discussions, noting that an upcoming “mini-ministerial” being held in Oslo, Norway, to discuss next steps in WTO negotiations is slated to feature a meeting of EGA ministers in the margins.
That meeting is tentatively scheduled for 22 October, multiple sources said, with the October EGA round being held immediately prior.
A final ministerial to conclude the talks would likely be held in December, assuming talks proceed on schedule.
Global steel forum
Among the notable outcomes in the G-20 leaders’ communiqué is a commitment to establish a “Global Forum” to address excess capacity in steel, a topic that has exacerbated tensions among major steel-producing economies.
China is by far the world’s largest global producer of steel, a fact that has led to sharp exchanges between the Asian economy and some of its key trading partners, such as the US and EU. In recent months, however, the tone of the discussion has appeared to shift more toward finding cooperative approaches at addressing the problem and its root causes.
The G-20 statement includes a reference to how excess capacity in steel and other industries – not referred to by name – have hurt both trade and jobs, while at the same time noting that the problem is “a global issue which requires collective responses.” The section on steel also refers to the negative effects of state aid in this field. The document does not make a specific reference to China in either context.
Addressing the globalisation debate
The past year in global economic governance has been marked by a growing discontent within the broader public over the potential negative ramifications of globalisation. This debate has included but not been limited to the effects of trade deals on potentially exacerbating inequality and reducing competitiveness in some sectors.
The issue has become even more pronounced in light of the ongoing presidential election process in the US, and given various upcoming polls in major EU member states, among other factors. While the elections have created an opportunity for these views to be expressed on a significantly wider scale, the debate is far from new – especially given the long-term fallout from the financial crisis of the late 2000s.
The challenge for officials has been how to respond to these concerns effectively, in a way that makes the case for trade and market liberalisation, while at the same time is cognizant of the fact that while trade deals may lead to overall economic gains, they may also cause painful job losses and increased costs for some.
“Anti-globalisation sentiment is growing, often manifested in strong views against trade,” said WTO Director-General Roberto Azevêdo after the leaders’ gathering. “This is of particular concern given the context of rising protectionism and sluggish economic and trade growth.”
The WTO chief called upon G-20 members to “correct misperceptions about trade in a credible way,” particularly when it comes to the implications for jobs. He also suggested that more must be done for people who have lost their livelihoods in this context so they can receive the skills training and support to find new positions.
Indeed, the G-20 communiqué includes a nod in favour of expressing more clearly the many positive outcomes that can result from trade policy – along with responding to the concerns that have been raised about the negative ramifications that can result.
“We emphasise 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,” says the leaders’ document.
With this year’s G-20 summit now over, the presidency of the group is now set to move to Germany, which will be holding its summit in July 2017. Argentina is due to take the presidency the year after.
Finance ministers and central bank governors from the group are due to meet once more this year, on the margins of the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group. That gathering will be held in early October in Washington.