The G20 leaders are assembling this weekend in Japan, in utter futility surrounded by trade-war risks and looming economic disorder
While this year marks the 20th anniversary of the founding of the Group of 20, there appear to be no plans for celebrations or to even mark the occasion — and with good reason. The G20 leaders are assembling this weekend in Osaka, Japan, in utter futility surrounded by trade-war risks and looming economic disorder.
Rather than overseeing stable “governance of the global economy” and “building sustainable prosperity” as promised in the G20’s various documents over the past decade, the Osaka summit suggests a global organization that has lost its moorings, assuming it ever had any to start.
Founded in 1999 under the guidance of former Canadian finance minister Paul Martin and others, the original objective behind assembling the world’s top 20 economies was to promote “global multilateralism.” After the 2008 financial crisis, the G20 — accounting for about 90 per cent of global GDP and 80 per cent of world trade — expanded its mission. Former Canadian diplomat Colin Robertson, in a report this week on the Osaka Summit, said the G20 represents “economic multilateralism at work, an insurance policy to prevent globalization going off the rails.”
The precise translation of the diplomatic phrase “going off the rails” isn’t known, but developments over the past year, and the past week, suggest the colloquial definition will suffice. The question is whether the multilateral system will go off the rails and produce what is known in diplomatic circles as a “train wreck.”
Osaka is not expected to produce such a disaster, although the G20 summit is failing to save the world from greater economic instability.
The real power to prevent a deeper global economic crisis is in the hands of China and the United States. Not much will happen within the G20 sessions, where leaders have a record of punting major issues into the long grass while issuing statements on the need for sustainability, general equality, clean energy and inclusive growth.
Some say that even if U.S. President Donald Trump and Chinese President Xi Jinping reach some kind of a saw-off on trade, the G20 vision of glorious progress toward sustainable multilateralism will continue to be threatened.
Assorted big banks are warning that the G20 is unlikely to remove the risk of a trade war. One notable Chinese economist, Yu Yongding, told the Hong Kong-based South China Morning Post that an immediate crisis might be avoided if Trump drops his threat to impose a 25 per cent tariff on Chinese imports, but the future still looks threatening.
Terence Corcoran