Opinion

Buenos Aires summit is a good place to start fighting back against destructive unilateralism

Ten years after the G20 proved its effectiveness in dealing with the global financial crisis, it needs to step up its efforts to overcome a political crisis, fuelled by destructive unilateralism, that threatens international governance on trade, investment and tax.

By: , , , , , , , and Date: November 28, 2018 Topic: Finance & Financial Regulation

This opinion has been originally published by the Financial Times

Zhang Jun, China’s G20 sherpa and assistant foreign minister, makes a strong plea to resist protectionism, safeguard the World Trade Organization and fight inequality (“ Our common prosperity demands co-operation on trade”, November 26).

Ten years after the G20 proved its effectiveness in dealing with the global financial crisis, it needs to step up its efforts to overcome a political crisis, fuelled by destructive unilateralism, that threatens international governance on trade, investment and tax.

Against this background, as members of the T20 Task Force on Trade, Investment and Tax Cooperation, we propose that the G20 take initiatives in three key areas. First, on trade, the G20 should back up its call for modernising the WTO with concrete proposals. Strengthening the WTO’s rulemaking capacity on digital trade taking into account the digital divide would be a good start.

There is dire need for the G20 to reform its monitoring of protectionism, taking into account new trade distortions such as export incentives. As trade liberalisation — and protectionism — can lead to disruptions, the G20 should support a fairer globalisation by speaking out for gradualism, supported by general safety nets and increased workforce mobility.

Second, building on the progress of the Base Erosion and Profit Shifting (BEPS) project, the G20 should curtail harmful tax competition. Increasing transparency on tax incentives granted by G20 countries would be an important first step.

The G20 should also deliver on its long overdue promise to phase out tax incentives for fossil fuels. A joint framework for taxing the digital economy should receive high priority.

Third, the G20 needs to pay attention to the mounting challenges of the international investment regime which is experiencing a legitimacy crisis. The G20 should resume its work on international investment policy reform and investment facilitation during the Japanese G20 presidency in 2019. We realise that these proposals require actions beyond the Buenos Aires summit. Still, it is up to the G20 to take the lead in advancing these reforms. Otherwise, we should stop referring to the G20 as the premier forum for international economic co-operation.

 


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to communication@bruegel.org.

View comments
Read article More by this author

Opinion

The world deserves a more effective G20

As the presidency shifts from Argentina to Japan at Buenos Aires (and then to Saudi Arabia) it is worth asking why the G20 has endured this long and what it needs to remain relevant in a dramatically changed world.

By: Suman Bery Topic: Finance & Financial Regulation, Global Economics & Governance Date: November 29, 2018
Read article More on this topic More by this author

Podcast

Podcast

Deep Focus: The G20 in a changing world order

In this episode of Deep Focus, Bruegel fellow Suman Bery joins Sean Gibson to elaborate on his recent Policy Contribution on the G20's performance over the past decade, and the forum's future prospects.

By: The Sound of Economics Topic: Global Economics & Governance Date: November 20, 2018
Read article Download PDF More on this topic More by this author

Policy Contribution

The G20 turns ten: what’s past is prologue

This Policy Contribution assesses the performance of the G20 since its first summit held in November 2008 to understand what could lie ahead for the institution.

By: Suman Bery Topic: Global Economics & Governance Date: November 15, 2018
Read article More on this topic More by this author

Podcast

Podcast

Director’s Cut: How to reform and fortify the global financial system

Bruegel director Guntram Wolff is joined by Tharman Shanmugaratnam, deputy prime minister of Singapore and chair of the G20 Eminent Persons Group, and Jean Pisani-Ferry, mercator senior fellow at Bruegel, for a conversation about the growth and stability challenges facing the global financial system, and how the system can be better equipped to deal with the significant and novel problems of the future.

By: The Sound of Economics Topic: Global Economics & Governance Date: October 23, 2018
Read article Download PDF More on this topic More by this author

Policy Contribution

Should we give up on global governance?

The pervasive gridlock affecting the traditional global governance approach calls into question the idea of broadening its scope beyond its core remit, and it calls for alternatives, either as substitutes for obsolete arrangements or to address emerging collective action problems in new, inadequately covered fields.

By: Jean Pisani-Ferry Topic: Global Economics & Governance Date: October 23, 2018
Read article More on this topic

Blog Post

The G7 is dead, long live the G7

The summit in Charlevoix left behind a Group of Seven in complete disarray. The authors think that the G-group, in its current formulation, no longer has a reason to exist, and it should be replaced with a more representative group of countries. In this fast-changing world, is the G7 only a relic of the past?

By: Jim O‘Neill and Alessio Terzi Topic: Global Economics & Governance Date: June 13, 2018
Read article More on this topic More by this author

Opinion

G20 climate commitments must be turned into action

The G20 is just about holding together in difficult times, but the world's leading economies need to make good on their climate promises. Major projects such as China's One Belt One Road initiative and the G20 Compact for Africa must incorporate sustainability criteria, or it will be impossible to meet the Paris goals.

By: Guntram B. Wolff Topic: Global Economics & Governance Date: August 17, 2017
Read article More on this topic

Opinion

How the G20 should change its approach to migration and development in Africa

The G20 is redesigning its Africa strategy. Meanwhile, migration from Africa is an increasingly controversial topic in European politics, even though total flows are stable. Many hope that economic development in Africa will reduce migration pressures. But many African countries are so poor that increased wealth will actually accelerate emigration - by giving people the means to leave. The EU should support economic development in Africa, but Europe also needs to realise that migration from Africa is likely to increase in the coming years.

By: Guntram B. Wolff and Maria Demertzis Topic: Global Economics & Governance Date: May 30, 2017
Read article More on this topic

External Publication

Key policy options for the G20 in 2017 to support an open and inclusive trade and investment system

In the face of exceptional challenges, the G20 should step up its efforts in 2017 to preserve the current global trade and investment system, including effective multilateral dispute settlement procedures, while not losing sight of medium-term reforms. The G20 should focus on (1) supporting the World Trade Organization, (2) being upfront about the mixed effects of trade and investment, (3) improving G20 measures to tackle protectionism and (4) promoting investment facilitation.

By: Sait Akman, Axel Berger, Uri Dadush, Simon Evenett, Lise Johnson, Maximiliano Mendez-Parra, Raul Ochoa and Claudia Schmucker Topic: Global Economics & Governance Date: April 3, 2017
Read article Download PDF More by this author

Policy Contribution

Financial regulation: The G20’s missing Chinese dream

The current fairly peripheral role of China in the global financial regulatory system is increasingly problematic. The system needs a guiding vision in which China becomes much more central – a ‘Chinese dream.’ This paper outlines three clusters of initiatives to achieve a global financial regulatory system in which China holds a major position.

By: Nicolas Véron Topic: Finance & Financial Regulation, Global Economics & Governance Date: October 26, 2016
Read article More on this topic More by this author

Blog Post

China's political agenda for the G20 summit

Chairing the G20 offers China a unique opportunity to set the tone in global economic debates, and the Hangzhou summit is the focus of attention. The author predicts that trade, structural reforms and a bigger global role for China will be Beijing’s three priorities. But how realistic are these goals?

By: Alicia García-Herrero Topic: Global Economics & Governance Date: August 22, 2016
Read article More on this topic More by this author

Opinion

The G20 in a post-Brexit world

As Britain enters a period of political and economic instability, following a referendum vote that many now interpret as anti-globalisation, it is worth reflecting on what the consequences of Brexit will be for the world’s ‘economic steering committee’: the G20.

By: Alessio Terzi Topic: Global Economics & Governance Date: August 18, 2016
Load more posts