This week the third G20 Leaders Summit takes place in Pittsburgh. Expectations are high for the Summit. The positive atmosphere surrounding this meeting arises, I suspect, from the growing agreement among officials and experts that the global economy has walked back from the brink. Though economic growth numbers have varied significantly from country to country – many have taken heart from the ‘charged’ economic numbers from rising powers such as China and India and the significant turn around growth in developed countries like France and Germany.
What is needed from this Summit? What can we expect? One examination of the upcoming Summit is the pre-Summit ‘glossy’ journal from the G8 and G20 Research Groups from the University of Toronto. This magazine, edited by G20 head, John Kirton and sidekick, Madeline Koch, subtitled, “Sustaining Global Recovery,” reviews prospects and challenges for the Summit with articles from some of the G20 Leaders and then from a variety of experts (truth in advertising, Andy Cooper CIGI and the University of Waterloo and I produced the piece on trade entitled, “The Trouble with Trade: The Pittsburgh G20 Leaders’ Review”).
President Obama signaled in his welcoming article, that Pittsburgh would assess progress achieved by the G20 countries. As the US President expressed about the upcoming collective effort at the Summit, he anticipated the Leaders would, “review the progress we have made, assess what more needs to be done, and discuss what we can together to lay the groundwork for balanced and sustainable economic growth.”
Prime Minister Stephen Harper of Canada, in his article, dwells, I suppose not surprisingly, on the stability and health of the Canadian banking system. When he does turn to the G20 Summit, and after reminding readers that Canada will host the G8 Summit in Muskoka in June 2010, he declares that the Summit should continue to take measures that will fix banks globally, continue to coordinate stimulus efforts, avoid trade protectionism and strengthen financial regulation and supervision.
The voice of the rising economies is also present, - this the presence of Brazilian President Luiz Inacio Lula da Silva. Though the article is an adaptation of an earlier speech to Latin American leaders at a World Economic Forum in Brazil in April 2009, he examines the G20 nevertheless. Lula makes it clear that global governance requires the developing countries to be integrated into the leadership institutions including the IMF. Though speaking specifically of the region, Lula declares, “We must find economically consistent solutions to the challenge of promoting growth, integration and development” – a statement with much wider implications.
The leaders and the experts in the G20 Report consistently appear to call for: greater financial regulation and supervision, maintaining coordinated stimulus; and avoiding trade protectionism. John Kirton, Director of the G20 Research Group (with his colleague, Jenilee Guebert) also call for these but suggest that the Pittsburgh Summit may afford the opportunity to go further. Indeed Kirton suggests that the agenda may include the following:
Pittsburgh is likely to feature a full-strength agenda, spanning the finance and economic, global and transnational, and even political-security spheres. Macroeconomic stimulus, responsible bankers’ bonuses, multilateral trade liberalisation, reform of the international financial institutions (IFIs), climate change control and G20 architecture will all share centre stage. Currencies, most domestic financial regulations, an economic charter for ethical finance, anti-protectionism, development – including food and health – and Iran’s nuclear programme will take second stage.
Though few would be quite so bullish as this, a further word of caution is necessary. First, it is apparent from the Alexandroff – Cooper trade article that the G20 countries are breaking their commitment to a ‘standstill provision’ on protectionism. Indeed, a quick look at the Second Global Trade Alert Report, edited by CEPR’s, Simon Evenett, released September 18, 2009, entitled, “Broken Promises: A G-20 Summit Report chronicles the failure of the G20 countries to live up to the rhetoric on avoiding trade protection. As Evenett declares a G20 country violates the standstill provision once every 3 days.
Again on the rhetorical flourish side experts need to be sensitive to the call by the G20 for financial regulation and supervision. While there is a strong prospect that we will see collective standards and practices announced, the key will be if those standards are in fact implemented in the G20 countries. While the G20 can operate collectively to create the appropriate financial regulation at the Leaders Summit, in most cases it requires those states and their leaders to implement the regulations and task the regulators and supervisors to adhere to these requirements.