G20 Buenos Aires Summit, November/December 2018

Can the G20 save our Multilateral Trading System?

VIPRAN SRIVASTAVA The University of Sheffield

Executive Summary expect consensus to be more natural in a The global economy is in perhaps its most group of the more traditionally like- volatile state since the 2008 financial minded countries of Canada, France, crisis. There are many factors behind this Germany, Italy, Japan, UK and the US, but instability but growing concern regarding also because it undermines the group’s global trade is undoubtedly a major one. existence. If the self-described most Naturally, there is a lot of focus on developed and industrialised nations mounting US-China trade tensions and cannot agree on the future direction of given the rise in protectionism, it will be the global economy, it is questionable for fora such as the G20 to act as avenues how much they can lead the rest of the for countries to uphold the multilateral world. This is not helped by the fact that trading system that has driven the post- the major economies of China and India war global economy. The question is are not included in the first place. The whether the 2018 G20 can deliver in this scale of this failure is also highlighted by way. the fact that this was the first time in the G7’s history a communique was not agreed upon and it was vitally important A turbulent year the G20 did not follow for the sake of its own existence. Given the outcomes of the G7 Summit in Charlevoix, Canada and the more recent Asia Pacific Economic Cooperation (APEC) With regards to trade, the 2018 G7 meeting in Papua New Guinea, it is communique that was published (and that evident that multilateral fora are currently the US withdrew from) included failing to deliver in upholding and acknowledgement that “free, fair and enhancing the global trading system. The mutually beneficial trade and investment, failure of the G7, which saw the US while creating reciprocal benefits, are key withdraw from the agreed communique, engines for growth and job creation”. is concerning not only because one would Wording along these lines have been G20 Buenos Aires Summit, November/December 2018

consistent within past communiques and Given the G20 has eight APEC members the fact that this was rejected by the US and took place just a few weeks before strikes the G7 at its very core. Without the G20, it is difficult to see how the G20 resorting to milder and blander language could have had any meaningful or positive that lacks substance, it is difficult to see impact on US-China trade tensions. how the now not-so-like-minded G7 can However, attempting to achieve this is resolve its newfound differences. exactly the role of the G20.

Given the G20 includes a much broader Global trade in the G20 range of views and positions, this difficulty The 2016 G20 Hangzhou Summit is rather more pertinent - particularly Communique included a very when you consider both the US and China comprehensive section on ‘robust are members. Consequently, reaching any international trade and investment’ in form of consensus and language in a which members committed to ‘enhance communique that can start to de-escalate an open world economy by working global trade tensions is traditionally more towards trade and investment facilitation difficult. and liberalisation’ - the sort of language to be expected from the G20. The similar Similarly, APEC, which both the US and objectives of the G20 and APEC are China are also members of, was also evident in this communique in which unable to agree on a communique for the members also committed to ratify the first time in its history due to the US-China WTO TFA by the end of 2016. Indeed, trade dispute. This outcome is in stark APEC’s mission statement is to support contrast to the 2017 APEC Leaders' sustainable economic growth and Declaration which included ‘advancing prosperity in the Asia-Pacific region, while free and open trade and investment’, the G20 focuses on promoting global commitment to the realisation of the Free economic cooperation in its capacity as Trade Area of the Asia-Pacific (FTAAP) and the premier forum for international support for the ‘multilateral trading economic cooperation. This has usually system’ through the World Trade been pursued by focusing on the Organisation (WTO) Trade Facilitation multilateral trading system, which in the Agreement (TFA). Comparing the 2017 past was not a contentious issue. and 2018 summit outcomes highlights the new threat to multilateralism and In 2017, for example, the Hamburg G20 questions the role of multilateral fora in Communique committed members to de-escalating tensions. G20 Buenos Aires Summit, November/December 2018

‘keeping markets open noting the This is clearly evident in the six-word importance of reciprocal and mutually sentence about the US-China trade advantageous trade’ and ‘fighting dispute out of the 3,590-word document: protectionism’. Analysing the “we also note current trade issues”. This communiques and leaders’ declarations defeats the objective of multilateral fora, since 2008 when leaders began attending particularly the G20 as the primary forum the G20, it is noticeable that enhanced for international economic cooperation. trade, openness and fighting This is an opportunity to tackle an issue protectionism are common themes every involving the world’s two largest year. However, these themes do not economies, not hide from it. Indeed, appear as pronounced in this year’s progress between the US and China was Leaders’ Declaration. made bilaterally. This should’ve happened during the summit. Buenos Aires 2018 The two documents of most relevance to While there appears to be a general global trade are the Trade Ministerial consensus in the Trade ministerial and the Declaration, the reality is that little of statement and the final Leaders’ Declaration. The Trade Ministerial substance was included in the statements. statement is rather lacking in ambition This is also true of the discussion with barely any recognition of the current surrounding the multilateral trading trade tensions between the US and China. system. While it is an achievement to get While there was agreement to the term “multilateral trading system” in ‘reinvigorate the international trading the Declaration in the first place, the system’, there was no specific mention of sentence merely notes the G20’s achieving this through openness and the recognition of the contribution of the multilateral system; or indeed how they multilateral trading system to past intend to achieve this at all. This highlights growth. a broader issue - that instead of addressing and solving issues, there is a Although there is little forward-looking desire to overlook them entirely. This ambition, much more progress has been seems to be an overarching theme of made here than on the specific trade Argentina’s G20 presidency with the hosts dispute between the US and China. The wanting to focus on discussion about statement is a step in the right direction issues of agreement rather than with the US acknowledging the benefits of formulating policy to tackle issues of multilateralism and the importance of it in disagreement. the growth of the post-war economy. G20 Buenos Aires Summit, November/December 2018

While there is generally little of substance and highlight the importance of the that can be taken forward from the 2018 system in the post-war economy to date. Summit on this issue, this statement does offer a path to potentially getting US support for multilateralism in the future. Looking back on the 2018 G20 and considering trade, it appears to have been a relatively amicable and calm summit but Looking ahead to 2019 it must not be forgotten that the largest Japan hosts the next G20 Summit and threat to the global economy was not during its Presidency, it is almost certain it even discussed, and the issue will not will promote the multilateral trading resolve itself. This was an opportunity for system and closely monitor the US-China the G20 to showcase itself but instead it trade dispute. Japan is not only a heavily has ignored the issue and this therefore reliant exporting economy and therefore does bring into question the role and reliant on the multilateral trading system, purpose of the G20. Each host country is but the US and China are also its two so driven on delivering a ‘successful’ largest trading partners. summit that they are afraid of confronting the difficult issues. While Japan will also want a successful summit, it is hard to see Japan is a well-known defender of free how they can avoid this issue. trade and the rules-based system. Given the US has acknowledged the benefits of Vipran Srivastava is a third-year BA the multilateral trading system, it could Economics and Politics student at the serve the next G20 Summit well if the University of Sheffield. Japanese presidency is able to really push