"Policies promoting growth and employment generation continue to produce weak results in Europe and Japan, while a number of emerging economies are showing signs of weakness.

There has neither been progress on IMF quota reforms nor in IMF governance."

"The past year has seen some appalling developments. Most notably, in the areas of sovereign debt crisis resolution and IMF governance. The most dispiriting episode is the U.S. Supreme Court’s refusal to set aside a lower-court judgment in the dispute over Argentina’s debt restructuring. As a result, countries burdened with excessive debt will find it much more difficult in the future to negotiate the relief they need to pay their obligations.

Without diving into the legal complexities of the case, the court ruling favoured a hedge fund that bought Argentine bonds at a steep discount just prior to the country’s default in 2001. In 2005, when Argentina offered to settle with its creditors by giving them partial payment on their claims, this hedge fund--which has been appropriately labeled a “vulture investor”--refused to go along. Instead, the hedge fund filed a lawsuit demanding full satisfaction of its claims, including principal and interest. The court has given the investor enormous leverage over Argentina, by making it illegal for Buenos Aires to send payment to investors who had accepted the restructuring unless the vulture investor receives full payment.

It is not clear yet how the situation will be resolved. At present, Argentina has gone again into default, though it may reach a settlement with the investor. As a result of these new legal considerations in the world of sovereign debt, the scales have been tilted massively and excessively against debtor countries. It is hard to see how a satisfactory outcome will be achieved the next time a country with unsustainable debt is stricken by crisis.

On a positive note, the IMF has proposed improved rules that would restrain its ability to lend to countries with unsustainable debts to avoid repeating the mistake it made with Argentina. The Fund circumvented its rules in the case of Greece, and clearly needed to establish new ones. But it is far from clear whether the Fund will truly be more resolute and stick to its new rules the next time a case like this arises, or whether it will again find a loophole.

Separately, efforts to reform IMF governance remain hamstrung because the U.S. Congress has refused to approve the necessary legislation."

"Global macroeconomic performance continues to improve slightly overall, but medium-term prospects do not look favourable. The problem is not a lack of monetary cooperation. The problem is a continuing “fear of fiscal.” Despite a sharp drop in government borrowing in many countries as the recovery has gradually taken hold and “consolidation” has continued. Few, if any governments are willing to use the room to maneuver. Consequently, too much of the policy burden still falls on monetary policy.

These imbalances cause two problems. First, the effectiveness of monetary policy actions is constrained by the zero lower bound on interest rates. Quantitative easing and other unorthodox actions can mitigate the constraints to some extent, but the limited effectiveness is still evident. Second, the longer interest rates remain close to zero, the more incentives will be distorted (away from saving and with limited stimulus to investment).

In addition to this general problem, one must be concerned that the Euro area does not appear to be closer to a sustainable path than it was five years ago. Unemployment in the southern regions remains unsustainably high, and the contrast in the requirements for equilibrium between north and south becomes more of an obstacle the longer it persists. Also, in North America, no one is seriously addressing the sluggishness of the recovery. Even if the U.S. Administration were to put forth a credible plan, founded on a return to fiscal stimulus, the dysfunctional Congress would surely refuse to take it up.

These concerns make a deflation-driven financial crisis ever more likely. In such a scenario, the ongoing failure of the U.S. Congress to approve the 2010 IMF reform package--action that would help ensure that the IMF would have the resources and the credibility to manage the crisis—is especially worrisome."

"The global economy is on a lower growth track than generally predicted over the last year, and projections for European and Japanese growth prospects are disappointing. On the plus side, the worry that the BRICS Bank would be the beginning of a fragmented system was misplaced. A close reading of the Articles of Agreement indicate that the BRICS Bank will not be an influential player for years, if ever.

In May, Bill White contended that “It’s déja vu, all over again”; referring to 2007 when the global economy was an accident waiting to happen and policy makers failed to see it coming. He argued that the situation we face today is more fraught with danger than in 2007.

The BIS annual report, issued in late June, argued that that the world could not continue to rely on debt as the main engine of growth. That with extraordinary accommodative monetary policy, “countries could at some point find themselves in a debt trap: seeking to stimulate the economy through low interest rates encourages even more debt, ultimately adding to the problem it is meant to solve”. There does not appear to be a Plan B should American inflation increase to the point where it would trigger markets to panic."

"In June this year, the IMF published a review of its lending framework, which included the staff’s proposal to unwind the systemic waiver on exceptional access. This review was accompanied by a proposal on reprofiling future debt treatments where sustainability is uncertain. The IMF’s release of a paper on improvements to collective action clauses (CACs) and aggregation at this year’s Fall Meetings were a useful step forward and complementary to other proposals, such as the Sovereign Debt Forum, sovereign CoCos [contingent convertible bonds], and possible arbitration frameworks.

These developments are offset, however, by the lack of movement on sovereign debt issues at the G20, the continued delay by the US Congress in ratifying the IMF’s quota reforms, and the possible fragmentation of the international system occasioned by the still nascent BRICS New Development Bank (NDB) and Contingent Reserve Arrangement (CRA)."

"Countries continue to be inward looking in addressing their domestic concerns. Europe remains in a fragile state with no substantive progress either in terms of a sustained recovery or in terms of structural reforms requiring sovereigns to give up some of their authority. Lastly, emerging countries continue to go their own way with no progress on IMF reform."

"Significant problems of coordinating macroeconomic adjustment in response to Europe’s persistent economic crisis exist in the European Union (EU) including the following: Germany's reluctance to use macroeconomic policies to stimulate domestic spending, France's weak fiscal expenditure management and the resulting excessive fiscal deficit, and major fiscal problems of peripheral countries in the EU. These developments are signs of weakening cooperation in macroeconomic policy within the EU. These problems would be seriously exacerbated if political tensions between Russia and Ukraine induced Russia to implement policies such as disruptions in supplies of natural gas to Western Europe, which would create additional macroeconomic policy coordination problems in the EU member countries over the coming winter.

Macroeconomic policies in key emerging market countries, while now tending to be overly expansionary, do not appear to be a major source of serious macroeconomic disruptions over the next few years.

In the United States, in the context of a slow but noticeable strengthening of output growth, employment is improving, inflation remains low, and the federal government's fiscal position has strengthened more rapidly than most analysts had expected.

With regard to international financial institutions, the IMF is engaged in a major strengthening of bilateral and multilateral surveillance of its member countries’ economic and financial policies in the context of its 2014 Triennial Surveillance Review, which will be completed by its executive board later this month. With the bolstered procedures that are likely to result from this review, the Fund could be positioned to play a stronger role in the governance of international macroeconomic policy coordination. It is also noteworthy that the Fund has explicitly recognized that major financial system crises such as that of 2007 – 2008 lead to severe and prolonged macroeconomic recessions. Therefore, deeper analysis of emerging financial system vulnerabilities by the Fund staff are crucial to its ability to predict and address major financial crises that could lead to severe and prolonged periods of weak macroeconomic performance.

In terms of monetary policy, the situation in the key reserve-currency countries and regions remains uncertain. The US appears to be giving some signals that it will begin to withdraw the excessive stimulus that it has pumped into the global economy since November 2008. However, there is a significant risk that the withdrawal of this monetary stimulus will be implemented too slowly to maintain price stability in the US, as well as in other economies that link their currencies closely to the dollar over the medium term. In these circumstances, the degree of maneuverability for both the Bank of Japan and the European Central Bank will remain narrow. Thus, the ability of US policymakers to 'get it right' in their timing of the withdrawal of monetary stimulus and the return to an orthodox stance of monetary policies over the medium term will be crucial to the progress of macroeconomic policy cooperation.

For the above reasons I have given a guardedly positive assessment of 45 %, which basically anticipates that there will be some modest progress in fiscal and macroeconomic policy cooperation over the longer term, though not necessarily over the next two or three years."

"There are a number of concerning issue areas in the international macroeconomic system that illustrate the lack of meaningful progress in macroeconomic policy coordination.

The absence of evolution and the lack of commitment to improving the governance of sovereign debt restructuring is a glaring gap in international economic governance. Additionally, the legal uncertainty created by the U.S. court decision on Argentina, the numerous challenges faced by Europe in handling Greece’s sovereign debt restructuring, and the rising levels of public debt in developed and developing economies have highlighted the importance of reform.

The Eurozone’s continuing struggles is also a cause for concern. As the world’s largest economy by nominal GDP, the Eurozone’s lagging recovery is impeding global economic growth. Europe’s failure to restore growth highlights a number of important vulnerabilities in the European political and economic system. Europe’s unwillingness to commit to a cooperative approach to fiscal consolidation and its inability to endorse pro-growth fiscal and structural reform policies for the beleaguered southern European economies is the core driver of Europe’s failure to jump start economic growth. The failure to pursue expansionary fiscal policies has placed an immense burden on the ECB’s monetary policy. The ECB’s monetary policy is also beleaguered by Europe’s unwillingness to pursue aggressive, cooperative, and expansionary monetary policy. Despite the new expansionary monetary policy package that was recently by the ECB, monetary policy has not done enough to address Europe’s current state of low economic growth.

Finally, the failure to pass IMF quota reform as a consequence of the U.S. Congress’ continued reticence on this issue is disappointing. The failure of the IMF to reform its quota and inability to keep up with the changing power dynamics of the international economic system will have spillover effects into other important issue areas."

"There have been major areas of regression over the past year. Macroeconomic coordination has been poor in dealing with the implications of the exit from accommodative monetary policies. The financial market turmoil in several emerging market countries following the Fed’s taper announcement is the obvious case in point. In this context, calls for greater central banks’ coordination have fallen on deaf ears and there are no clear signals that we will see more in the coming months.

Likewise, the momentum behind addressing global macroeconomic imbalances has lost most of its steam. This is also the case within the European Union where imbalances have been at heart of the Eurozone crisis. Indeed, in Europe, addressing imbalances is conceived not as a matter of international coordination but as an exercise of unilateral adjustment by deficit countries.

Furthermore, the failure to move on with IMF governance reform due to continued Congressional opposition further attests to the deteriorated climate of international economic cooperation. The newly created BRICs bank and contingency reserve arrangement hardly improve the picture. These outcomes reflect the resentment of emerging markets and injects elements of fragmentation in to the international financial architecture. However, at this stage, the jury is still out as to whether these new facilities will provide a healthy competition for the Bretton Woods institutions."

"In the Eurozone, expansionary monetary policy has not been coordinated with (domestic) fiscal policies. This has meant that the anticipated gains have not been fully realized. The end of the surveillance program implemented by the International Monetary Fund (IMF), the European Union (EU) and the European Central Bank (ECB) for some countries (e.g. Ireland) represents a step forward toward growth and recovery. At the same time, the failure to lower public spending and reduce public debt within highly indebted European countries (Italy, Greece, Spain and France) in the presence of poor economic performance for 2014 and 2015 should push for a revised approach to effectively achieve growth (i.e. austerity should be reconsidered).

In the last year, international institutions have not addressed the sovereign debt crisis resolution framework- a necessary pillar for stabilizing expectations in the global financial system."

"Some progress on improving the governance of sovereign debt restructuring has been made. In June, the IMF staff presented a paper to the Executive Board with a very sensible proposal for institutionalizing a quasi-automatic extension of maturities in crises where the IMF does not conclude that public debt is sustainable with a high probability. The proposal was discussed and referred for further study. The very fact that the proposal made it to the Executive Board is a great sign that the current vacuum in avenues to pursue in severe debt crises is recognized as an issue—even if not a problem. The absence of any apparent follow up, however, does not bode well for actual action.

IMF quota reform is remains stuck in the US Congress with no clear signs that it could budget out of limbo. The Ukraine crisis stoked a faint glimmer of hope that Congress would act, but that hope fizzled. We will have to see after the mid-term elections."

"International policy cooperation was relatively straightforward at the height of the Global Financial Crisis when stimulative domestic macroeconomic policies were necessary for stabilizing both domestic and global demand and financial markets. But, international cooperation has become more complicated because economies now require different levels of stimulus. Every time a step forward is taken (e.g., a recognition of the potential harm from spillover effects of monetary policy), one or two steps back are also taken (e.g., lack of progress on IMF voting rules, weakening of the role of macro surveillance).

A major threat to the global economy is monetary policy uncertainty in advanced economies, most notably in the United States, where the Federal Reserve seems unable to find an easy exit out of the current combination of ultra-low interest rates and quantitative easing. Even though US data is far from being dire, each time the stock market wiggles the Fed appears to hedge the timing of the exit. At the same time, forward guidance appears to have lost its appeal and actually risks becoming a source of financial volatility. Emerging market economies, India and Brazil in particular, have expressed dissent regarding the effects of accommodative monetary policies on world growth. As the recovery prolongs, disagreement about the way forward is intensifying and the progress in policy cooperation achieved in the early phases of the crisis is slowly being undone, most notably within the G20.

As discussions among central bankers concerning secular stagnation and low wage growth become more frequent, their role in fostering global growth and cooperation is being obscured. This type of outlook seems far from central bankers’ usual remit, making it unclear whether monetary policy can do much more than it has so far.

Despite the importance of international policy coherence in fostering a stronger and more stable global recovery, it is likely that substantial progress in macroeconomic and international monetary cooperation will stall until the next large crisis strikes.."

"The IMF quota increase remains stuck in Congress since 2010, the IMF’s proposals for a new lending framework and creditor “bail-in” has not yet been accepted by IMF members, and ICMA proposals on “pari passu” and aggregation clauses are still under discussion, while Argentina’s 2005 and 2010 debt restructuring is in limbo."

"While some small progress has been registered, inadequate progress has been made with respect to SIFIs and shadow banking in particular."

"Not a great deal has happened on the regulatory front over the past year, and some important initiatives are making very slow progress.

One development worth highlighting, though, is a Federal Reserve decision in February requiring foreign banks’ U.S. operations to meet the same standards for capital and liquidity as American banks.

This move was decried by foreign regulators as a unilateral step, and it could also be fairly described as reinforcing other trends toward the “balkanization” of international finance. But overall, the Fed’s judgment was correct. The global financial crisis showed the dangers of allowing bank units operating internationally to depend on their parents’ capital and liquidity buffers. In this case, throwing a little sand in the gears of global finance was warranted. Hopefully, once foreign regulators get over their resentment, the Fed’s action will motivate them to work harder on establishing a common approach to restructuring giant international banks that fall into trouble."

"Decent progress continues under Basel III and the FSB, although with delays. The G20 remains reasonably focused on these issues and is supportive of this work. This is one of the brighter spots in global economic governance.

Greater concerns persist in implementation at the regional and national levels, where US banks failed their “living will” test, and cleaning of European bank balance sheets remains significantly delayed."

"There is a trend – still ongoing – toward national regulation of financial systems in ways that are not really compatible with an international regulatory regime."

"While implementation risks persist, the contours of a new global regulatory structure at both the microprudential and macroprudential levels are taking shape."

"It is important to not overlook areas of progress in the post-crisis regulatory reform process. Basel III has improved the quality and quantity of capital held by banks. Other improvements such as the lesser-known creation of a net-stable funding ratio have built on capital adequacy standards to strengthen the resiliency of the financial system.

Despite this, critical vulnerabilities remain. First, despite improvements at the international level there is evidence of back peddling at the domestic level. The EU was condemned by international regulators for softening financial standards for small business loans and weakening the quality of capital under the EU's Capital Requirement's Directive IV.

Elsewhere, East Asia continues to be reticent in adopting financial standards for OTC derivatives. Playing a wait and see strategy, East Asia does not appear to be committed to meaningful OTC derivative reforms and aims to carve out a competitive advantage from relatively weaker regulation in order to strengthen its position in the international financial system. This trend highlights a worrying trend.

Domestic politics is contributing to the divergence of national financial regulation, making the supervision of global financial markets more difficult and ineffective. This trend is a far cry from the vision of the G20 at the beginning of the crisis in 2008.

The absence of progress in shadow banking and cross-border resolution are of particular concern. Financial regulators and policymakers seem perplexed by how to design an effective regulatory regime for the shadow banking system due to the legal and financial complexities that this system of banking poses. Proposed interventions into tri-party repo markets by the U.S. Federal Reserve and the FSB's release of a regulatory framework for Haircuts on Non-Centrally Cleared Securities Financing Transactions are both promising developments. Reforms to mortgage underwriting standards and other areas of reform aimed at improving consumer protection and the quality of borrowers within securitized debt products will support the strengthened resilience of shadow banking markets in the U.S. and Europe. However, vulnerabilities in China’s financial system and the lack of transparency within its large shadow banking system could have far-reaching and significant consequences for the global financial system."

"In order to reduce the risk of another international financial crisis, it is crucial to implement reforms that strengthen the solvency and liquidity of key financial institutions, limit the scope of shadow banking institutions and increase their robustness , greatly strengthen market infrastructures, and institute a bail-in type intervention and resolution regime for large cross-border financial institutions. It will be essential that these rules are harmonized internationally. These have been the fundamental objectives of the G20 program to reform the global architecture of financial regulation that was launched in November 2008.

However, the past two years have seen growing fragmentation of the G20 regulatory reform program, as supervisors and regulators in the key financial jurisdictions have proved themselves to be less than fully willing to cooperate with each other on issues such as: information and data sharing, implementation of an internationally consistent bail-in intervention and resolution regime, risk-weighted capital and leverage rules, liquidity rules, and the oversight of shadow banking.

Additionally, a serious problem in the European Union is the vicious circle of sovereign debt and weak bank solvency. Hopefully, the upcoming Asset Quality Review and stress test, together with the European Central Bank's assumption of its new responsibilities to oversee the Single Supervisory Mechanism, will help to address and alleviate these problems.

Nevertheless, many obstacles stand in the way of achieving a true globally harmonized financial regulatory system, particularly the development of an internationally-harmonized ‘bail-in’ restructuring and resolution regime for systemically-important financial institutions that become illiquid or insolvent. The extraterritorial extension of US legal penalties and regulatory sanctions to other countries is also detracting from international cooperation in this area.

All in all, progress to achieve the comprehensive reform of financial regulation seems to have ground to a halt at the present time. Without renewed momentum, the G20’s initiative to achieve a globally harmonized financial regulatory regime may not succeed, creating the prospect of future financial crises."

"There have been important areas of improvement as a consequence of the post-crisis reform process. Basel III has improved the capital adequacy requirements for banks in a manner that will improve the resiliency and the robustness of the financial system.

Nevertheless, important vulnerabilities still remain. The concentration of ownership in the US and elsewhere as a consequence of the financial crisis has meant that leverage in the financial system remains high. Continued leverage within the financial system means that it is still vulnerable to the impact of large external economic shocks. At a time when the global economic recovery is fragile, managing the deleveraging of the financial system is difficult, and political commitment to reducing leverage continues to wane as time passes.

Within the post-crisis reform process, the continued absence of meaningful reform of the shadow banking system and the failure to achieve greater progress in the area of cross-border resolution of financial firms highlights that there are still glaring gaps in the reform process six years later. This brings attention to the fact that important vulnerabilities remain."

"Cooperation on financial regulation has performed better than macroeconomic cooperation over the past year. Although significant time has elapsed since the onset of the crisis, the ‘window of opportunity’ for reforming financial rules has not been closed as yet. This attests to widespread political willingness to continue to work on making the financial sector more resilient.

However, there have also been episodes that cast doubt on policymakers’ and regulators’ ability (and willingness) to keep the reform agenda on track. For instance, there have been rumours that regulators have begun bowing to mounting pressure from bankers for a retreat on previously set or announced rules (as happened with the Basel Committee on securitization rules and leverage ratio). This is not to suggest that more stringent rules are necessarily the most effective most of the time. However, the perception that regulators may heed bankers’ complaints does not bode well for their political legitimacy and independence, and consequently, for the effectiveness of their actions.

Furthermore, although several international and transnational bodies are involved in the reform of the global financial system, regulatory harmonization has often proved wanting over the past year. For instance, Asian regulators have complained about European rules on clearing houses and the adoption of the Volcker rule has raised several concerns outside the USA. It is thus an open question of whether (and to what extent) domestic financial regulatory measures can be made compatible with those in place in other jurisdictions."

"The EU and the USA are well advanced in adopting the new regulatory systems relative to other G-20 countries. However, this comes at the detriment of consistency and coherence between the two jurisdictions. The largest financial markets have not yet fully coordinated their regulatory systems to avoid arbitrage and effectively reduce moral hazard; this limits the global recovery, negatively influences expectations and reduces the speed of growth.

The complex European regulatory and supervision framework that follows the De Larosiere High-Level Working Group (2009) recommendations produces a relevant increase in the structural costs of the banking and financial system, but, at present, the associated benefits have not yet shown up."

"A positive assessment of progress in financial regulation is based on progress in response to the Libor scandal, planned improvements to the CDS market, and initial evidence that Dodd-Frank is working, at least partially. However, there is plenty more to do."

"The Euro Area deserves credit for the banking union, however incomplete. However, Dodd-Frank remains problematic due to the extraordinary compliance requirements."

"Failure to implement the Bali Agreement has thrust the WTO back into crisis. Progress on plurilateral trade agreements remains slow and there has been a worrying increase in protectionist measures."

"The World Trade Organization’s agreement at its December 2013 meeting in Bali marked the first time a ministerial conference struck a final deal on substantive issues in the Doha Round, the global trade negotiations launched in 2001. So trade ministers and WTO officials hailed the news as a major step forward.

The triumphant claims were ridiculous. All the deal does is streamline customs and other bureaucratic procedures for goods being traded internationally. It is a far cry from the ambition that infused the Doha Round at the outset--that is, the goal of transforming the global trading system so that it would work better for developing countries. In reality, the Bali package was a rescue exercise, an effort to keep the WTO from collapsing into total ignominy as it struggles to salvage a minimal result from the Doha talks.

Moreover, India has recently dealt a huge setback to the Bali accord, effectively scuppering the deal until it gets some of its desired concessions on food-trade issues. India may eventually accept a face-saving compromise, but even if it does, the importance of the Bali achievement should be kept in proper perspective.

The WTO is the central pillar of the system established after World War II to prevent a reversion to 1930s-style protectionism and trade wars. Its slide toward irrelevancy may be very slow and gradual, but it is happening, and little is being done to stop it."

"The June 2014 WTO report on the G-20’s standstill pledges to avoid protectionist trade measures, grumbled that “G-20 members put in place 112 new trade restrictive measures during the period mid November 2013 to mid-May 2014.”

On 7 December 2013, at the end of the WTO’s Ninth Ministerial Conference in Bali, Director-General Roberto Azevêdo crowed “the WTO has truly delivered…. The Bali package may have frequently seemed impossible, but now it is done”. But on 31 July 2014, he reported to WTO ambassadors that despite intensive consultations, “we have not been able to find a solution that would allow us to bridge the gap” on the adoption of the protocol on the Trade Facilitation Agreement [the centrepiece of the Bali package]….We have not been able to find a solution that would allow us to bridge that gap. We tried everything we could. But it has not proved possible.”

One glimmer of good news was the July announcement that 14 countries formally launched international negotiations to remove tariffs on the APEC list of environmental goods."

"Trade is difficult to assess on this scale because we are seeing currents in many directions. At the WTO, for example, we see a delay in passage of the Trade Facilitation package. Some people read this as a setback and as yet more evidence that the WTO is dysfunctional. At the same time, some very important disputes, with far-ranging consequences, are being adjudicated at the WTO, confirming its contribution to the resolution of conflict between major traders.

Similarly, the many ongoing negotiations (from TPP to TTIP to TiSA etc.) all suggest that serious efforts of further liberalization are under way. Many would read this as progress after a period when such efforts were stalled. Others lament that these negotiations are taking place in regional and plurilateral contexts, as opposed to multilateral. Still others acknowledge the fact that active negotiations suggest forward movement, however in what direction? The lack of transparency in these negotiations makes it very difficult to assess if real progress will, in the end, be made. We can only judge that based on outcomes, not process."

"The Bali 9th WTO Ministerial and the resulting “Bali Package” provided a good sign that the multilateral trade negotiation system can still produce agreement on further liberalization of international trade. The WTO’s dispute settlement mechanism also still represents the gold standard for resolving disagreements on trade.

That said, creative ways must be pursued to integrate mega regional, plurilateral, and bilateral negotiations into WTO processes, which is entirely possibly under existing WTO provisions. Moreover, the Doha Round needs to be streamlined and focused on a few issues: at present it is too sprawling to anticipate that it can be completed as is. Finally, the WTO should be reformed to provide for majoritarian decision making on some issues."

"It is not clear whether TTIP is a complement or an alternative to a global trading regime."

"A lot of talk, but little action. This is an area where if no progress is being made then slippage comes naturally."

"The path towards progress in free trade is increasingly being found within plurilateral and regional mega free trade agreements such as TTIP, TPP, and plurilateral free trade agreements that set the foundation for further developments elsewhere, such as Canada’s recently concluded trade agreement with Europe.

These free trade agreements have been useful in maintaining momentum towards free trade, but the limitations to the WTO’s Bali Agreement and the cracks that are appearing in the multilateral WTO trade process show the underlying vulnerabilities in the international trade system."

"In general the status quo prevailed. The WTO Bali decision was a relief from repeated frustrations at past meetings. It agreed on a small deal that would be positive if implemented; then India blocked the trade facilitation part in 2014. No agreements on any institutional changes to multilateralize regionalism or reform WTO processes. The TPP process ground forward, and I regard this as basically a minus for multilateralism."

"There has been no visible progress with respect to either the UNFCCC, or on financing. Little progress has been registered on the G20 commitment to remove carbon subsidies. Some progress has been made through unilateral actions, but progress on global governance reform remains elusive."

"Atmospheric CO2 reached 399 ppm in July. While China's carbon intensity fell by 5 percent in the first half of 2014, the higher rate of economic growth resulted in an overall increase in annual carbon emissions. The shale revolution is drawing investment away from renewables. Expressions of concern are growing. Even former U.S. Treasury Henry M Paulson argued this June that the time for weighing evidence is past and now it is time for acting – before the problem becomes too big to manage.

There has been no progress in five years since the Durban agreement to negotiate a new treaty in Paris in 2015, to be in force by 2020. The UNFCCC Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP) is to prepare a draft treaty text for the Conference of the Parties in December 2014 in Peru. In July, the ADP issued their report, noting that “a substantial [euphemism for unattainable] amount of work remains ahead of us in order to arrive, within more or less the next nine months, at a draft legal text of the proposed agreement”. The co-chairs also posted a “Non-paper” collating the Parties’ views and proposals on the elements of a draft negotiating text. The non-paper notes there is little prospect of agreement on mitigation goals and national commitments; accounting rules and the time frame or on how to reflect finance in the 2015 agreement, including issues referring to scope, nature and sources. Parties are far apart on removing barriers on technology transfer, on institutional arrangements for the provision of finance and on transparency arrangements to meet the needs of the new agreement.

In Paris next year, the UNFCCC will just move the goalposts to 2018 and maintain their process detached from reality."

"Climate change negotiations need to be moved out of the UN’s fully comprehensive processes and moved to a venue with fewer participants such as the G20. G20 countries account for over 80 percent of global economic output and similar proportions of greenhouse emissions. The UNFCCC process is not working: it’s time to try an alternative, more streamlined approach with the key countries at the table."

"The carbon emissions trading scheme looks more fragile than ever."

"This is a tough call. My sense is that there is a growing awareness of the issues—given the number of countries that have experienced some form of catastrophic climate event in the past year—and that at the national level, signs of action are taking hold. In terms of governance, it is hard to point to something specific, but the growing recognition at the domestic level strikes me as evidence of some progress."

"Further pollution and increasing alarm about the harms was offset by some national moves to slow the rate of destruction. Global GHG emissions grew again in 2013; China continued to try to reduce its energy intensity, expand renewables capacity and explore domestic carbon trading. The US took an important step forward to reduce its use of coal to generate electricity, continued R&D on alternative energy and vehicles. Australia went backward. UN talks continued toward a minimal pledge and review deal in 2015, which, even if agreed upon, will be far less than what is needed."

"North south collection action problems continue to stall progress on effective climate change governance at the international level. This is in part due to a deficit in domestic political support required to advance a binding emissions treaty at the international level in both developed and developing countries. The international climate change regime has effectively regressed with many countries ignoring the urgency needed to advance progress.

The density of policy actions on climate change grows as you move away from the inter-state realm. National and sub-state jurisdictions are inherently more exposed to climate change risk, which is a more significant motivator for action. Examples include California’s emission trading system or B.C.’s carbon tax.

There has also been a proliferation of “experimentation” on climate change policy orchestrated by transnational and non-state actors. Business-NGO alliances are increasingly active in developing their own regulations for climate change due to shareholder and stakeholder pressure. Unlike most climate change research, which tracks UNFCCC negotiations, there is much more opportunity to assess whether private and transnational efforts are proving effective at advancing climate policy. Most research to date has mapped the growing density of private policy, but we know little about its effectiveness."