By Dr. Abdul Ruff
G20 nations
World’s top economies known as G20 nations or Group of Twenty, accounting for 85 percent of the world trade, met in Chinese Shanghai on July 9-10 to discuss and find solutions for the global slowdown of economies, causing serious concerns globally. G20 economies decided to remain committed to an open global economy, and will further work towards trade liberalization and facilitation, said a statement released following the two-day G20 Trade Ministers Meeting in Shanghai. At the opening session of the G20 trade ministers meeting, the first of its kind in G20 history, in Shanghai on July 9, 2016. China’s commerce minister said the outlook for the global economy remains grim despite its gradual recovery from the impact of the financial crisis.
The G20’s agenda have been gradually shifting from dealing with the aftermath of financial crisis to long term governance in recent years, with trade and investment emerging as another critical aspect along with financial and fiscal coordination,” said China’s Commerce Minister Gao Hucheng.
The G20 is an international forum for the governments and central bank governors from 20 major economies. The G20 is made up of EU and the finance ministers and central bank governors of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States of America. The European Union is represented by the rotating Council presidency and the European Central Bank. Finance Ministers and Central Bank Governors meet regularly to discuss ways to strengthen the global economy, reform international financial institutions, improve financial regulation, and discuss the key economic reforms that are needed in each of the member countries.
The G20, the premier forum for its members’ international economic cooperation and decision-making, was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability It seeks to address issues that go beyond the responsibilities of any one organization. The G20 heads of government or heads of state have periodically conferred at summits since their initial meeting in 2008, and the group also hosts separate meetings of finance ministers and central bank governors.
The G20 started in 1999 as a meeting of Finance Ministers and Central Bank Governors in the aftermath of the Asian financial crisis. In 2008, the first G20 Leaders’ Summit was held, and its decisive and coordinated actions boosted consumer and business confidence and supported the first stages of economic recovery. G20 leaders have met eight times since 2008.
The G20 works closely with international organizations including the Financial Stability Board, the International Labour Organization, the International Monetary Fund, the Organization for Economic Co- operation and Development, the United Nations, the World Bank and the World Trade Organization. These and a number of other organizations are invited to attend key G20 meetings. Engagement groups such as B20, L20, T20 and W20 also convene to prepare policy recommendations for the G20 Summit during the year.
The G20 Summit continues to focus on measures to support global economic growth, with a strong emphasis on promoting job creation and open trade. The G7 was established in 1976 as an informal forum of seven major industrial economies: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America. It was re-named the G8 after the entry of Russia in 1998. This March, the G7 voted to suspend Russia in response to escalating tensions with Ukraine that led to Russia’s annexation of Crimea. Where the G7 seeks agreement on current economic issues based on the interests of those countries, the G20 reflects the wider interests of both industrial and emerging-market economies.
The World Trade Organization (WTO) statistics showed that global trade growth has slowed significantly since 2008, from an average of over seven per cent per year between 1990 and 2008, to less than three per cent between 2009 and 2015. The WTO unveiled a new trade-related index called the World Trade Outlook Indicator (WTOI) on Friday ahead of the meeting, which is designed to provide real time information on trends in global trade. The current reading suggested that trade growth will remain weak into the third quarter of 2016.
In June the World Bank cut its forecast for the global economy in 2016 from 2.9% to 2.4%. And in April the International Monetary Fund had cut its forecast to 3.2% from 3.4%. The current reading suggested that trade growth will remain weak into the third quarter of 2016. Also, G20 economies vowed to support low-income countries (LICs) to participate more in global value chains (GVCs) to drive global trade growth
Last year marked the fourth consecutive year with global trade growth below 3 percent. The meeting endorsed the G20 Strategy for Global Trade Growth, in which the economies will lead by example to lower trade costs, harness trade and investment policy coherence, boost trade in services, enhance trade finance, promote e-commerce development and address trade and development, state-run Xinhua news agency reported.
The world’s top 20 economies agreed to improve international trade governance in view of the global slowdown of global trade growth due to increasing anti-trade measures that have become more universal since 2009, said a statement released on Sunday after the two-day G20 Trade Ministers’ Meeting in Shanghai.
The Brexit vote by the UK to leave the EU has added to the global financial uncertainty.
Outcomes
The meeting endorsed the G20 Strategy for Global Trade Growth, in which the economies will lead by example to lower trade costs, harness trade and investment policy coherence, boost trade in services, enhance trade finance, promote e-commerce development and address trade and development.
The G20 economies recognised that GVCs, encompassing regional value chains (RVCs), are important feature of the global economy, and are important drivers of world trade. The economies would support policies to allow firms of all sizes, including small-and-medium-sized enterprises (SMEs), in countries with different developing levels to participate in and fully utilize GVCs.
The G20 ministers agreed the world’s major economies to cut trade costs, boost trade and increase policy co-ordination and enhance financing. They also approved a trade growth plan. “We agree that we need to do more to achieve our common objectives for global growth, stability and prosperity,” the G20 ministers said in a statement.
G20 economies vowed to support low-income countries (LICs) to participate more in global value chains (GVCs) to drive global trade growth, it said. The G20 economies recognised that GVCs, encompassing regional value chains (RVCs), are important feature of the global economy, and are important drivers of world trade.
Some countries still practice protectionism policies though the idea of protectionism in a globalizing world is wrong. G20 members would facilitate developing countries and SMEs access to information on trade and investment opportunities, and provide further information to help them participate in GVCs and move up the value chain.
G20 members with capacity to do so would continue to help developing countries ‘and SMEs’ ability to adopt and comply with relevant national and international standards, technical regulations, and conformity assessment procedures.
The economies would support policies to allow firms of all sizes, including small-and-medium-sized enterprises (SMEs), in countries with different developing levels to participate in and fully utilize GVCs. G20 members would continue to enhance capacity building to promote inclusive and coordinated GVCs and seek to develop and implement initiatives to assist developing countries, particularly LICs and SMEs in the areas that matter most to GVCs.
G20 members would continue to enhance capacity building to promote inclusive and coordinated GVCs and seek to develop and implement initiatives to assist developing countries, particularly LICs and SMEs in the areas that matter most to GVCs.
Such initiatives might include appropriate infrastructure, technology support, access to credit, supply chain connectivity, agriculture, innovation and e-commerce, skills training and responsible business conduct. G20 members with capacity to do so would continue to help developing countries ‘and SMEs’ ability to adopt and comply with relevant national and international standards, technical regulations, and conformity assessment procedures.
China warns on global economy and says G20 (and not G7) must lead global economy. China’s commerce minister says the outlook for the global economy remains grim despite it having overcome the impact of the 2008 financial crisis. Gao Hucheng said at a G20 meeting in Shanghai that major economies must lead the way in tackling problems, including slowing trade and sluggish growth.
The international community now expected the G20 to show initiative and leadership in solving economic growth problems.
China’s will host the main G20 summit later this year. “The global economy emerged from its previous low and is developing in a good direction, and the deep effects of the global financial crisis can still be felt. The revival and growth of the global economy is still lacking in strength,” Gao said, “Low levels of global trade and investment has not recovered to their pre-financial crisis levels.”
