Photo: View of the conference room before the start of the third working meeting of the G20 summit on the Africa Partnership, migration and health. Credit: Bundesregierung | Bergmann. - Photo: 2017

G20 Leaves Three Billion People Out in the Cold

Analysis by Ravi Kanth Deverakonda

GENEVA | HAMBURG (IDN) – The G20 summit in Hamburg on July 7 and 8 delivered a grand declaration of compromises on “major global economic challenges” and “shaping an interconnected world”, but failed to address the grave economic and existential problems of more than three billion people in poor and developing countries, according to those who attended the meeting.

The 15-page declaration issued by the leaders of the 20 major industrialised and developing countries attempted hard to reverse the tide of opposition against globalisation, asserting that “globalisation and technological change have contributed significantly to driving economic growth and rising living standards across the globe.”

However, it admitted that “globalisation has created challenges and its benefits have not been shared widely,” so “by bringing together developed and emerging market economies, the G20 leaders [are] determined to shape globalisation to benefit all people.”

Further, the G20 leaders said they were “resolved to tackle common challenges to the global community, including terrorism, displacement, poverty, hunger and health threats, job creation, climate change, energy security, and inequality including gender inequality, as a basis for sustainable development and stability” and “work together with others, including developing countries, to address these challenges, building on the rules-based international order.”

However, the leaders paid little or no attention to key global macro-economic issues such as debt problems being faced by developing and poorest countries, creating an international mechanism to address the tensions arising from trade surpluses and deficits among countries, governance reforms, rising inequalities and hunger, among others.

The leaders merely hammered out a declaration of compromises to ensure that the United States led by President Donald Trump stayed on board – except in the area of climate change where the differences remain difficult to bridge.

In four broad themes – “shaping the benefits of globalisation”, “building resilience”, “improving sustainable livelihoods” and “assuming responsibility” – the declaration covered issues without providing any clear direction.

The underlying rationale was to ensure that the issues of priority for the Trump administration, particularly in global trade, were adequately taken into account. Consider, for example, the first theme of “sharing the benefits of globalisation” which covers issues such as “prospering global economy”, “trade and investment”, “sustainable global supply chains” and “harnessing digitisation”. On “trade and investment”, the Hamburg declaration contained ambiguous language on how to address “protectionism” and create a “level playing field”.

In the run-up to the Hamburg meeting, the G20 trade sherpas who were tasked with finalising the declaration remained divided because the United States refused to acknowledge the problem of “protectionism”. The Trump administration had also refused to pursue “multilateral” and “developmental” solutions as demanded by developing and poorer countries and insisted that it would only embrace bilateral outcomes in which U.S. industry and workers secured maximum benefits.

However, hours before the meeting came to a close on July 8, the United States agreed to include “protectionism” and the need to “keep markets open” in the final Hamburg declaration. In return, for including its core trade priorities such as “reciprocal and mutually advantageous trade and investment frameworks” and a “level playing field,” the United States agreed to including language on the need to “continue to fight protectionism including all unfair trade practices”.

Because of U.S. opposition to multilateral trade and developmental initiatives, the Hamburg declaration did not clearly suggest the outcomes that members of the World Trade Organisation (WTO) must accomplish at the its eleventh ministerial meeting in Buenos Aires in December. It merely said, “we [the leaders] commit to work together with all WTO members to make the eleventh WTO Ministerial Conference a success.”

In effect, the demands made by the developing and poorest countries for addressing the asymmetries in the global trading system through the ongoing Doha Development Agenda trade negotiations were ignored in the Hamburg declaration.

On the contrary, the industrialised countries managed to include controversial social standards in the declaration. “In order to achieve sustainable and inclusive supply chains, we [the leaders] commit to fostering the implementation of labour, social and environmental standards and human rights in line with internationally recognised frameworks,” the Hamburg declaration maintained.

As regards the Paris Agreement on climate change, there are serious doubts whether the developed countries will adhere to their commitments to provide financial and other resources to the poorest and developing countries for “mitigation and adaptation actions” due to the Trump administration’s decision to walk out of the multilateral agreement.

Although German Chancellor Angela Merkel “deplored” the unilateral U.S. position to abandon the Paris Agreement, she did not suggest or indicate how the remaining developed countries will implement their commitments on finance and sharing of technologies. “I think it’s very clear that we could not reach consensus, but the differences were not papered over, they were clearly stated,” Merkel told reporters at the end of the two-day meeting. “It’s absolutely clear it is not a common position.”

The United States said that it will “immediately cease the implementation of its current nationally-determined contribution” and pursue strategies based on clean fossil-fuels.” In sharp opposition, the 19 leaders said “the Paris Agreement is irreversible” and stressed “the importance of fulfilling the UNFCCC [United Nations Framework Convention on Climate Change] commitment by developed countries in providing means of implementation including financial resources to assist developing countries with respect to both mitigation and adaptation actions in line with Paris outcomes.”

The 19 countries announced the G20 Hamburg Climate and Energy Action Plan for Growth in which they reiterated their “commitment by developed countries to the goal of mobilising jointly USD 100 billion per year by 2020, and their intention to continue this through 2025, in the context of meaningful mitigation actions and transparency on implementation, from public and private sources, for mitigation and adaptation in developing countries, taking into account their needs and priorities.”

However, the industrialised countries did not spell out how they will meet their commitments. “The US pull out of Paris and Trump’s decision to not honour the U.S. pledge towards the Green Climate Fund leaves a highly problematic gap in urgently needed funds to assist the world’s poorest and most vulnerable in adapting to a changing climate,” said Sasanka Thilakasiri, Oxfam’s senior policy advisor. “However Trump’s moves do not alter the obligation the U.S. and other rich countries have to provide such support.”

Under the heading of “building resilience”, the Hamburg declaration included issues such as “resilient global financial system”; “international financial architecture”; “international tax cooperation and financial transparency”; “safeguarding against health crises and strengthening health systems”; and “combating antimicrobial resistance (AMR)”.

It also contained “energy and climate,” “leading the way towards sustainable development,” “women’s empowerment”, “towards food security, water sustainability, and rural youth employment” and “resource efficiency and marine litter”.

It called for “an open and resilient financial system, grounded in international standards,” and mentioned the progress made in transforming “shadow banking into resilient market-based finance since the financial crisis.” It suggested the need for completing the 15th General Review of [IMF] Quotas, including a new quota formula by the annual meetings of 2019.

The declaration also underscored the need for “a globally fair and modern international tax system” and cooperating on “pro-growth tax policies” and a “satisfactory level of implementation of the agreed international standards on tax transparency.”

Surprisingly, it did not suggest how to deal with issues arising from the continued current account and trade surpluses accumulated by China, Germany, the Netherlands, and few other countries while the United States, France, Italy, Greece and Ireland, as well as a large majority of developing countries such as India, are mired in current and trade account deficits year after year.

Trump spoke about the issue of trade surpluses and deficits at the meeting, suggesting that his country has huge trade deficits with China and Germany. On July 8, The Economist said “Germany’s current account surplus [of 300 billion dollars] is bad for the global economy … [German Chancellor Angela Merkel] is absolutely right to proclaim the message of free trade, she and her compatriots need to understand that Germany’s surpluses are themselves a threat to free trade’s legitimacy.”

The Hamburg declaration also contained statements on “Africa partnership”, “stepping up coordination and cooperation on displacement and migration” and “fighting corruption” in which the G20 leaders made grand pronouncements without providing details on how they will translate them into genuine actions.

“When looking at the outcomes of the Hamburg summit, we have to ask: ‘what did the G20 do to help the world’s poorest people?’,” said Steve Price-Thomas, Oxfam’s director of advocacy and campaigns. “The needs of the poorest were an afterthought.”

He went on to say that “despite the anger of many on the streets at the growing divide between the rich and poor, the G20 could only must a tepid set of policies to tackle poverty and inequality.”

Jesse Griffiths, director of the European Network on Debt and Development, said that “shockingly, despite developing country debts reaching record levels, and a significant number of countries being in debt distress, non a single mention was made of the need to tackle current and future debts in the communiqué.”

In short, amid violent protests against globalisation and inequalities on the streets of Hamburg, millions of euro were lavished on a G20 leaders’ meeting without addressing the serious economic and livelihood challenges being faced by the developing and poorest countries. [IDN-InDepthNews – 18 July 2017]

Related IDN article >

Photo: View of the conference room before the start of the third working meeting of the G20 summit on the Africa Partnership, migration and health. Credit: Bundesregierung | Bergmann.

IDN is flagship agency of the International Press Syndicate

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