International relations > Economic Groupings > International groupings
- India will host the G-20 summit for the first time in 2023 and will hold the Presidency of the grouping from December 1, 2022. Also, Union Commerce and Industry Minister Piyush Goyal has been appointed India’s Sherpa for the G20.
GROUP OF 20:
- The Group of twenty, or the G20, is the premier forum for international economic cooperation. It is formally known as “Summit on Financial Markets and the World Economy”.
- Collectively, G20 members account for more than 80% of world GDP, 75% of global trade and 60% of the population of the planet.
- Established in 1999 at the level of Finance Ministers and Central Bank Governors, the G20 gathered for high-level discussions on macro-financial issues.
- In the wake of the 2008 global financial crisis, the G20 membership and agenda were expanded beyond macro-financial issues, to include socio-economic and development issues.
- The G20 does not have a permanent secretariat. Its agenda and activities are established by the rotating Presidencies, in cooperation with the membership.
- The G20 hold summits annually. At the Summit, the leaders issue a declaration, or communiqué, based on policy discussions.??? The 2022 meeting will be hosted by India.
- At the government level, the G20 work is organized around the Finance and Sherpa Tracks, while civil society assembles through Engagement Groups. ??
- The Finance Track: meetings of G20 Finance Ministers and Central Bank Governors which focus on fiscal and monetary policy issues such as the global economy, infrastructure, financial regulation and international taxation.
- The Sherpa Track: meetings of Ministers and relevant senior officials, which focus on socioeconomic issues such as agriculture, anti-corruption, climate, digital economy, education, employment, energy, environment, health, tourism, trade and investment.
- Engagement Groups: The group actively engages itself with various groups such as the Business 20, Youth 20, Labour 20, Think 20, Civil 20, Women 20, Science 20, and Urban 20.
- In addition to the Summit, ministerial meetings, Sherpa meetings, working groups and special events are organized throughout the year.
Presidency & Troika
- The presidency of the G20 rotates between member countries every year. The presidency plays a leading role in setting the agenda and organizing the Leaders’ Summit.
- When a new country assumes the presidency, it works hand-in-hand with the previous presidency and the next presidency. This arrangement is known as the troika. This ensures continuity in the group’s agenda.
- In 2020, the first virtual summit was held under the chairmanship of Saudi Arabia to discuss on the COVID-19 pandemic.
INDIA & G20:
- India’s participation in the G20 process stems from the realization that as a major developing economy India has a vital stake in the stability of the international economic and financial system.
- The issues of importance for India at G20 includes energy security, financial stability, disaster resilient infrastructure, reformed multilateralism, WTO reforms, countering terrorism, return of economic fugitives, food security, democratization of technologies and portable social security schemes.
SUCCESSES OF G20:
- Global financial stability:
- G20 has played a major role in preventing the world economy from getting into another recession like the 2008 financial crisis. It helped by collectively implementing macro-prudential policies, increasing the lending capacity of the International Monetary Fund (IMF) and collecting information on shadow banking systems.
- Prevention of tax erosion:
- The G20 has proven successful in combating harmful tax policies between countries and international firms.
- Eg: The OECD G20 Base Erosion and Profit Shifting Project (or BEPS Project) is an OECD/G20 project to set up an international framework to combat tax avoidance using base erosion and profit shifting tools.
- Eg: The proposal for a global minimum corporate tax is under the consideration of the G20:
- Prevention of corruption and money laundering:
- Over the years, the G20 has taken several efforts to curb money laundering and corruption.
- Eg: In the 2020 Riyadh summit, the G20 leaders issued a declaration stating that they supported the Anti-Money Laundering (AML)/Counter-Terrorist Financing (CFT) policy responses of FATF.
- Push for resilient banking system:
- G20 has been taking several measures to ensure the stability and resilience of banking system.
- Eg: The Seoul Summit in 2010 saw the launch of Basel III norms, which sets out rules for a higher level of capital for banks and national bank regulation.
- Support for global concerns:
- G20 resolutions have provided key impetus for the conclusion of binding agreements at the United Nations level.
- Eg: The G20 Climate and Energy Joint Ministerial Session 2021 adopted a joint communiqué to preserve the global climate and ensure a clean and inclusive energy transition.
- Eg: The Access to COVID-19 Tools Accelerator was launched by WHO and partners in April 2020 in response to the G20’s call for a global mechanism to accelerate the development of tests, treatments and vaccines and to ensure their equitable distribution.
- Over the years, the group has provided key investments to sustain economic growth.
- Eg: In 2020, the group pledged to infuse over USD 5 trillion into the global economy to minimize the economic and social impact of the Covid-19 pandemic.
ISSUES SURROUNDING G20:
- Absence of common agenda:
- The G20 grouping lacks cohesion regarding goals and actions on various issues like climate change, counter terrorism and global reforms. Hence a common shared agenda fails to evolve.
- Intra-group conflicts:
- There are fault lines among the members like US-China trade war, differing positions on climate change, growing protectionist tendencies, disregard for rule based international order, Brexit etc.
- Lack of effective leadership:
- Current world order suffers from a genuine leadership crisis. However, the G20 has not been able to fill that space, mostly due to conflicts among its members.
- Conflict over specific issues:
- Roll out of 5G:
- Countries like USA are against Chinese companies like Huawei becoming the lead player in the roll out of 5G because of security concerns. The issues could weaken the group in the coming years.
- Osaka Track on Digital economy:
- The Osaka Track is against the data localization guidelines laid down by RBI. India boycotted the “Osaka Track” because it reportedly undermines consensus-based decision-making and denies policy space regarding digital economy to developing countries.
Osaka Track on Digital economy:
It a framework adopted in the 2019 summit in Osaka, Japan for promoting cross-border data flow with enhanced protections for intellectual property, personal information, and cybersecurity. It promotes plurilateral negotiations among 50 countries. Countries including the EU, France, Germany, Japan, Russia, UK, USA, Singapore, Thailand, and Vietnam signed the “Osaka Track”.
- Develop a common agenda:
- Many global challenges, such as climate change, vaccination and terrorism need coordinated actions for resolution. To attain, the G20 needs to adapt and develop a common agenda.
- Expand agenda:
- The G-20 is an important platform for promoting sustainable growth and financial stability, and these issues have become more relevant following the pandemic-induced hardships. To live up to these expectations, the G20 needs to resolve its conflicts and find common grounds.
- India should mediate:
- India should utilize its chairmanship of 2022 and lead the exercise in making the G-20 more effective by acting as a bridge between different countries.
Q. The G20 needs to evolve if it is to stay relevant in the post-pandemic world. Discuss?