A few surprises are worth mentioning – and then there were a lot of non-surprises. On the not a surprise side. Well start with headlines from most of the international press. Early headlines focused on the cool reception delivered to President Putin by various Western leaders and then the early exit of Russia’s President. Putin left before the collective lunch and before the release of the communique following the lunch. All-in-all reasonable political theatre but little to do with the G20 agenda.
Again on the not-surprise side of the G20 agenda was the declaration that each G20 country had identified initiatives to lift economic growth an additional 2 percent beyond expectations. As the communique declared:
This year we set an ambitious goal to lift the G20’s GDP by at least an additional two per cent by 2018. Analysis by the IMF-OECD indicates that our commitments, if fully implemented, will deliver 2.1 per cent. This will add more than US$2 trillion to the global economy and create millions of jobs.
But there was something of a surprise here. Notwithstanding early Australian efforts to promote an infrastructure hub, the Global Infrastructure Initiative (GII) was a much toned-down effort. The hub, which will be situated in Sydney, now will have 4 year expiration date. It’s activity is well, to say the least muted:
We have agreed on a set of voluntary leading practices to promote and prioritise quality investment, particularly in infrastructure. To help match investors with projects, we will address data gaps and improve information on project pipelines.
And speaking of surprises, of the slightly more authentic kind, though word had been that Chinese opposition would preclude agreement on an anti-corruption strategy, in fact the Chinese opposition was removed. And as a result the G20 has ratified 2015-16 G20 Anti-Corruption Action Plan. Importantly in the Plan there is a call for countries to:
…. share information between law-enforcement agencies about the true owners of shell companies and trusts that can be used by wealthy individuals to evade taxes, launder money, and hide corruption.
It is estimated that these shell companies are a major vehicle aiding in the illicit movement of funds out of country. And in addition, the G20 took further steps to deal with tax avoidance. Though not a surprise, the efforts to advance BEPS (Base Erosion and Profit Shifting) appears to remain ‘front-and-center’ in G20 action. As G20 leaders affirmed:
Profits should be taxed where economic activities deriving the profits are performed and where value is created. We welcome the significant progress on the G20/OECD Base Erosion and Profit Shifting (BEPS) Action Plan to modernise international tax rules. We are committed to finalising this work in 2015, including transparency of taxpayer-specific rulings found to constitute harmful tax practices.
Something of a surprise, however, was the really flaccid effort of the G20 on the question trade. G20 finance ministers and Australian leaders persistently urged greater trade liberalization. Yet, eschewing the usual and not very meaningful opposition to protectionism in the communique, the G20 committed that:
… we will work to ensure our bilateral, regional and plurilateral agreements complement one another, are transparent and contribute to a stronger multilateral trading system under World Trade Organization (WTO) rules.
Honestly, I am not sure what that statement means. Preferential arrangements are just that. They favor some, and not others. But the communique did tout the US-India ‘breakthrough’ on food subsidy and it may – notice the may – lead to the passage of the Trade Facilitation Agreement at the WTO.
In the category of surprise was the rather pointed statement on the failure to implement the IMF quota reform. If the reform is not passed – read that to mean that the US Congress fails to pass the legislation to provide for a capital increase – the G20 declared:
The implementation of the 2010 reforms remains our highest priority for the IMF and we urge the United States to ratify them. If this does not happen by year-end, we ask the IMF to build on its existing work and stand ready with options for next steps.
And finally what would have been a surprise earlier but possibly no longer one on climate change – following the declarations by the US and China -was the strong statement by the G20 urging announcements on G20 nationally determined contributions to CO2 reductions in advance of COP21 in Paris.
So what’s the bottom line on Australian efforts. Though the government’s rhetoric far too often appeared better suited for an Australian election than a global summit, the Australians can be pleased that a number of initiatives made significant progress. While the Putin controversy ‘stole a march’ on the economic initiatives – at least with respect to headlines – there was consistent effort to advance the macroeconomic and financial reform agendas. The APEC meeting was where the big agreements were announced. But Brisbane kept moving the yardsticks.
Image Credit: www.brisbanemarketing.com.au