Participants of the unveiling ceremony for the Summit count-down board (March 2019)
Japan will host the G20 Summit for the first time. A series of related meetings start full bore before the Summit in June, which will take place in Osaka City. Amid the intensifying trade conflict between the U.S. and China, the focal issue will be to identify ways for countries to ensure stable growth of the world economy together. However, that is not the only important topic on the table. The G20 in recent years has also actively discussed issues such as energy, environment, trade, and investment in the context of globalization and digitalization, and must manage issues like digital taxation, where the interests of different countries converge and diverge in intricate ways. How should Japan lead the discussion in this increasingly complex “spaghetti bowl” of interests? Let’s take a look at some points to be focused on at the G20 Summit.
Confirm close coordination
In late April 2019, Prime Minister Abe was in France, his first destination on a round of visits to European countries before the Golden Week holidays. In his meeting with President Macron, he both asked for cooperation in the G20 Summit and confirmed Japan’s close coordination with France regarding the G7 Summit, which it will host in August. Prime Minister Abe expressed the intention to “send out a strong message that we will be united” in addressing economic and other major global issues.
When looking at the historical backgrounds of the two different international fora the G7 and G20 the structural changes the world economy has undergone becomes clear.
The Group of Seven (G7) Summit started in 1975 as a meeting of the leaders of the seven most industrialized economies of the world (Japan, the U.S., the UK, France, Germany, Italy, Canada) to discuss important issues of global concern, including international situation, economic development, and environmental policy. After the Asian Financial Crisis in 1997, it became clear that participation by major emerging economies including China, Russia, and India was necessary for discussions regarding international financial systems. This recognition, in turn, led to an agreement at the Finance Ministers’ meeting in 1999 to establish the Group of Twenty (G20). Thereafter, and facing down the worldwide financial crisis in 2007, the G20 was upgraded to a meeting of national leaders and its first Summit was held in 2008 (officially called the Summit on Financial Markets and the World Economy). It is the “premier forum for international economic cooperation”, accounts for more than 80% of global GDP, and tasked with ensuring sound growth of the world economy.
Aiming for policy coordination
Shortly after its inauguration, awareness of issues were relatively easily shared among different countries, facing the financial crisis, and the G20 was united in coordinating financial and monetary policies. Recently, with the advancement of globalization and digitalization, the topics of discussion go beyond macro-economic and trade policy to also include issues such as development, energy, environment and the digital economy. With regard to resolving multiple international challenges not limited to mere trade issues, for instance the rise of protectionism and digital hegemonism, the role of the G20 is becoming ever more important. At the same time, with the additional of new discussion topics, the complexity of interests has multiplied, meaning that the Summit is both increasingly vital and increasingly complicated in practice.
Marking the beginning of a new growth path
The series of G20 meetings being held in Japan provides a valuable opportunity for the ministers and leaders of different countries to meet under the auspices of cooperation. And there is much of pressing concern that demands cooperation. The formulation of international rules ensuring the safe use of digital trade and information, and appropriate related tax policies, are sorely needed. Cooperation in realizing a virtuous cycle of energy, environment, and economic policy is also of great importance. And, the value of the free-trade principle that has enabled the growth of the world economy is in need of a united defense from likeminded states. As host of the G20, many countries will look to Japan for leadership on these many and complex issues.
Japan aims to build consensus among the countries facing these issues, and to harness the power of the G20 toward creating new growth paths for the world economy.