G-20 Leaders Unveil National Growth Strategies, Eyeing US$2 Trillion Boost
This past weekend, leaders from the G-20 coalition of major advanced and emerging economies unveiled a collection of “national growth plans” which combined, they say, will yield a 2.1 percent in growth over the group’s GDP above current trajectories by 2018, and a 0.5 percent increase for non-G-20 members.
The release of these plans came after two days’ worth of meetings that touched on issues ranging from trade deals to energy issues and the Ebola crisis. However, the talks were also nearly overshadowed by continued disagreements between Russia and other G-20 members over the Ukraine situation. (For more on Russia, see related story, this edition)
The high-level discussions, while focused primarily on the state of the global economy, also included the release of national plans aimed at raising employment levels, as well as an agreement to set up a Global Infrastructure Hub that will help in the implementation of the multi-year Global Infrastructure Initiative, which aims to improve quality public and private infrastructure investment.
US$2 trillion by 2018
“[The national growth plans] will add more than US$2 trillion to the global economy and create millions of jobs,” leaders from the group said in their final communiqué, which was issued on Sunday in the Australian coastal city of Brisbane, where the meetings were held.
All combined, the measures featured in these growth plans number at nearly 1000, of which over 800 are new, officials say. Among these are measures focused on trade, employment, investment, competition, and macroeconomic policy.
The 2.1 percent GDP increase is in comparison to the trajectories implied by the existing G-20 policies at the time of last year’s summit in the Russian city of St. Petersburg. (See Bridges Weekly, 12 September 2013)
Whether the raft of commitments being prepared by individual members would amount to the 2 percent goal announced earlier this year had been questioned repeatedly in the run-up to the conference, with Australian officials – including Prime Minister Tony Abbott, who hosted this year’s event – stressing the need for quality over quantity. (See Bridges Weekly, 24 July 2014)
Ultimately, the total effect of the measures announced this weekend is now expected to slightly exceed that original 2 percent target, with analysis by the International Monetary Fund (IMF) and Organisation for Economic Co-operation and Development (OECD) placing the expected GDP gains at 2.1 percent. About a quarter of these gains, the international organisations have said, will come from the expected positive spillovers from these various policies being enacted concurrently.
The commitments made under the auspices of the G-20 are, by nature, non-binding, which has in the past led many critics to deem the annual summits as more of a “talkfest” than a forum for action. That notion has been one that Abbott had hoped to counter in his presidency of the group, with the leader stressing repeatedly that the meet would be “about real results, not lofty words.”
“The Brisbane Action Plan and individual country growth strategies and employment plans have been made public so people around the world can see our commitments, hold us to account, and witness our progress,” said a statement from the Australian premier’s office after the summit.
WTO notes rising trade restrictions
In past meetings, G-20 members had pledged to institute a standstill on any new protectionist measures on trade and investment, while rolling back any that had been introduced since the start of the crisis. The standstill commitment was extended last year, through 2016.
However, the latest report from the WTO on restrictive trade measures introduced by G-20 economies since the onset of the 2008 financial crisis found that such policies continue to rise. According to the 6 November study, there have been 1244 such measures put in place since 2008, and only 272 have been removed.
This year’s communiqué and associated action plan do not explicitly refer to the standstill and rollback pledges, though the latter document does note that “resisting protectionism” continues to be one of the group’s “core” commitments.
The group has asked the WTO to continue its monitoring in this area, and for the OECD and the UN Conference on Trade and Development (UNCTAD) to do the same with regards to their review of investment restrictions.
Multilateral trading system
Leaders also welcomed the recent breakthrough between India and the US over the implementation of two of the outcomes from the WTO’s Ninth Ministerial Conference in Bali, Indonesia last December.
The stalemate, which dated back to July, had threatened to put the entire Bali package at risk, and had raised serious questions over the future negotiating agenda of the global trade body. (See Bridges Weekly, 13 November 2014)
WTO Director-General Roberto Azevêdo, in a press conference at the G-20, noted that last week’s news had “breathed new life” into the global trade body, and suggested that efforts at finalising the US-India understanding across the whole WTO membership could potentially be done within two weeks’ time. (For more on this process, see related story, this edition)
In this context, G-20 leaders pledged “to implement all elements of the Bali package and to swiftly define a WTO work programme on the remaining issues of the Doha Development Agenda to get the negotiations back on track.”
The group also raised the need to “discuss ways to make the system work better” when they gather for next year’s summit, in an apparent nod toward the growing questions over the difficulties WTO members have faced over the years in advancing their negotiations.
On the sidelines, leaders give TTIP push
The high-level meetings also provided an opportunity for leaders of the countries involved in negotiations for some of the mega-regional trade talks, such as the Transatlantic Trade and Investment Partnership (TTIP), to meet and give a political push to these processes.
These trade deals have grown in both number and scope over the past several years, particularly amid the slow progress in multilateral talks at the WTO.
While some critics have warned that the proliferation of such deals could lead to problems such as a “spaghetti bowl” of overlapping regulations, while also cutting out smaller countries from trade rule-making processes that could have global impacts, advocates have noted that these deals could help set new global standards and boost economic growth.
Talks for a bilateral EU-US trade pact were launched in June 2013, with officials initially saying that they hoped to see a deal by late 2014. Since then, however, the talks have slowed, which has partly been blamed on the leadership transition that was underway this year in the EU institutions, as well as the midterm elections held this month in the US.
In the meantime, technical talks have continued, in the hopes of setting out the groundwork for the more difficult political decisions later on. (See Bridges Weekly, 2 October 2014)
In a joint statement on Sunday, leaders from the US and EU, as well as from EU member states France, Germany, Italy, Spain, and the United Kingdom, pledged their continued commitment to “comprehensive and ambitious negotiations” aimed at reaching a high standard TTIP deal.
“We commend the work of the negotiators over the last 16 months, and direct them to make all possible progress over the coming year,” leaders continued, without suggesting any target deadline.
Speaking to reporters after the meeting, UK Prime Minister David Cameron said that the leaders aim to “put rocket boosters” under the TTIP talks, adding that it was time for officials to address opponents of the pact and their respective arguments.
“I think there is a sense that these deals only work if you… get on with the negotiations and start making agreements because otherwise people who for whatever reason oppose these agreements start gaining some traction,” Cameron continued.
While a separate meeting was also held between Obama, Abbott, and Japanese Prime Minister Shinzo Abe, all from countries involved in separate negotiations for the 12-country Trans-Pacific Partnership (TPP), a statement released afterward made no specific reference to the talks.
However, the US President did stress in a speech given in Queensland that same weekend that the TPP’s value as a potentially “historic achievement” that could help improve global economic integration across the board.
“That’s also why it’s hard – because we’re asking all these countries at various stages of development to up their game,” he said. “And it requires big transitions for a lot of these countries, including for the United States. And TPP is just one part of our overall focus on growing the global economy. That’s what the G-20 meetings are all about.”