G20 Leaders Summit - Assessing the impact

From the start of the year, Turkey’s Prime Minister, Ahmet Davutoglu, had been clear about what his country’s presidency of the G20 in 2015 would mean: an agenda of “concrete deliverables”.

G20 leaders summit
This would mean global economic growth, financial regulation and employment, all of which were to be signed off at the annual summit of world leaders being held in the charming seaside resort of Antalya on 15 and 16 November.Even as the travails of Syria and the refugee crisis in Europe loomed larger as the months ticked by, it was agreed that such issues should not supersede the economic discussions. Instead, they were to be dealt with at a working dinner of the leaders on the evening of Sunday 15 November.Then, on the night of the Friday before the start of the summit, came the outrage in Paris. More than 120 people died and 350 were injured in the massacre by adherents of the so-called Islamic State. Understandably, the focus of the world leaders switched to immediate security concerns as the G20's list of "concrete deliverables" – from international tax haven reforms to commitments to boost infrastructure spending – slipped out of the public gaze.Yet, for all the understandable focus by both the leaders of the world's largest economies and the international media on terrorism and refugees, the G20 did produce commitments – if not enforceable undertakings – aimed at boosting a global economy that has seen more downs than ups during the course of 2015.Most importantly, perhaps, the summit stuck by the commitment, first made in Brisbane in 2014, to lift global GDP output by 2 per cent by 2018. "Our top priority is timely and effective implementation of our growth strategies that include measures to support demand and structural reforms," the leaders said in the final communiqué of the summit, as they pledged to coordinate and "clearly communicate" policy decisions – the latter seen as a nod towards financial markets, which had suffered a jittery year not just because of a China slowdown but also over uncertainty about when US interest rates would rise.

Exploring international labour mobility

Even so, some delegates in Antalya were sceptical of how the undertaking on growth could be restated at a time when growth varied so sharply between different nations and economies, both in the developed world and in emerging markets.Wang Xiaolong, China's special envoy on G20 affairs, told reporters in the wake of the gathering, "We have seen that economic trends, as well as policies of major economies, have displayed different directions, and it has become more necessary to coordinate macroeconomic policies."The difficulty in such coordination is also rising. We have seen that trade is declining as well as commodity prices, which continue to fluctuate, and there have been some fluctuations on the financial markets."There was, at least, unanimity on the question of global and domestic labour mobility. The final communiqué stated, "We will address current opportunities and challenges brought into the labour markets through such issues as international labour mobility and the ageing of populations."Domestic labour mobility is an important labour market issue in some G20 countries. We recognise, and will further explore, the potential of a flourishing silver economy. We further ask our labour and employment ministers to report to us on progress made in 2016."November's meeting of the G20 heads of government in the Turkish city of Antalya may have far-reaching implications, not least for organisations with ambitions for global growth. Narendra Modi, the Indian prime minister, emphasised the point when he told one of the meetings at the summit, "Stable, long-term global economic growth requires not just capital flows, but also efforts to facilitate labour mobility and skills portability."

Clamping down on tax avoidance

A more pressing issue at the summit, however, involved not the movement of labour across borders but the movement of profits to tax havens, with the leaders endorsing a set of measures – the Base Erosion and Profit Shiftings (BEPS) action plan – designed to tackle corporate tax avoidance by multinationals who get away with paying virtually no corporation tax by exploiting legal loopholes, often through international arrangements under which they get preferential deals.Companies such as Google and Starbucks have caused international outrage by avoiding tax payments in host countries through such arrangements.The G20 leaders said they fully supported the BEPS plan drawn up by the group's finance ministers to curb the use of tax havens. "We endorse the package of measures," the leaders stressed in a joint statement that accepted that member states lost an estimated $100–$240 billion a year in tax revenue through profit shifting.Officials at the summit said speedy implementation of the plan by all members was crucial. Cevdet Yilmaz, Turkey's Deputy Prime Minister, explained, "Consisting of 15 specific actions, the BEPS action plan has covered a very comprehensive set of issues, including, among other things, the digital economy, harmful tax practices, interest rate deductions, and transfer pricing."To maintain the success of these actions and ensure their applicability, a very large group of countries and jurisdictions have been involved during the studies. During the process, we have respected the sovereignty of each country and encouraged the participation of non-G20 countries, particularly the developing ones, on an equal footing."

Creating prosperity and opportunity

However, Muhtar Kent, chairman and CEO of the Coca-Cola Company and the new chairman of the International Business Advisory Council to the G20, is advocating a more ambitious agenda for the world leaders to tackle.He pointed out that the Turkey summit was held against a "backdrop of lingering and serious economic, social and geopolitical difficulties" – problems, he said, that were "more widespread but less acute than those causing the heartbreaking migrant crisis", but ones that had placed millions of young people and families around the world at risk and caused them to doubt their own futures."We know business alone cannot create prosperity and opportunity," Mr Kent told CNN. "Instead, we need a new triangle of collaboration between government, business and civil society to kick-start growth. Specifically, through the good work of the five task forces of the B20 (the group of global business leaders advising the G20) over the past ten months, as well as the coordinated effort of members of the International Business Advisory Council of the B20, we have identified four simple but powerful actions to boost near-term economic activity and job creation."Firstly, he said, governments should ratify the World Trade Organisation's Trade Facilitation Agreement (TFA), to remove unnecessary delays and red tape in moving goods across borders – an initiative that, according to the Petersen Institute for International Economics, would create up to 21 million jobs, mainly in developing countries.Secondly, Mr Kent said, governments and businesses needed collectively to improve access to financing for SMEs worldwide. Thirdly, job opportunities must be increased for young people and women, "two groups who suffer disproportionately from unemployment, under-employment and engagement in less secure jobs."He said public and private sectors should coordinate more closely to ensure young people had the knowledge and skills to match the current and future needs of employers. "This improved alignment could involve apprenticeship and internship strategies, talent matchmaking programmes, and improved mechanisms for mobility of workers across employers," Mr Kent added.Finally, he said, governments should publish strategies for the development and repair of economic infrastructures, including transport, power, water and communications.

Implementation a challenge

The problem, though, is that while the G20 leaders might be ready to embrace such policies in principle, they each face difficulties in getting them implemented at a practical level.Andrew Hammond, an associate at the Centre for International Affairs, Diplomacy and Strategy at the London School of Economics, points out that when the G20 was upgraded in 2008 – at the height of the financial crisis – from a finance ministers' gathering to a leaders' summit, Nicolas Sarkozy, then French president, hailed it as a forum that "foreshadows the planetary governance of the 21st century"."However," says Mr Hammond, "the forum has failed so far to realize the full scale of the ambition some thrust upon it almost a decade ago. In part, this is because the G20 meetings have no formal mechanisms to ensure enforcement of agreements by world leaders."While the G20 has not yet lived up to some of the initial expectations, it continues to be a forum prized by its members, and the shocking Paris attacks will bring renewed attention to this latest meeting. Moreover, with China assuming the chair next year, the international prominence given to the organisation is only likely to grow further in 2016."
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