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Thursday, January 17, 2013

The G-20 and International Economic Cooperation: Background and Implications for Congress



Rebecca M. Nelson
Analyst in International Trade and Finance

The G-20 is an international forum for discussing and coordinating economic policies among major advanced and emerging economies. Congress may want to exercise oversight over the Administration’s participation in the G-20 process, including the policy commitments that Administration is making in the G-20 and the policies it is encouraging other G-20 countries to pursue. 

Background 


The G-20 rose to prominence during the global financial crisis of 2008-2009, when it played an arguably influential role in coordinating international responses to the crisis. Leaders agreed that the G-20 would be the “premier” forum for international economic coordination, a position previously held by a smaller group of advanced economies (the Group of 7, or G-7, which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States). G-20 leaders have annual meetings (“summits”), and meetings among lower-level officials from the G-20 countries occur more frequently. Meetings primarily focus on international economic and financial issues, although related topics are also discussed, including development, food security, and the environment, among others. Previous summits have, for example, focused on financial regulatory reform, global imbalances, funding for the International Monetary Fund (IMF), voting power of emerging economies in international financial institutions, and fossil fuel subsidies. 

The G-20 in 2013 


The G-20 has a rotating presidency, which is held by Russia in 2013. The Russian government has indicated that it will use its presidency to focus on macroeconomic and financial sector issues. In terms of macroeconomics, the focus is on growth, including: (1) growth through quality jobs and investment; (2) growth through trust and transparency; and (3) growth through effective regulation. In the financial sector, it has indicated that it will focus on the authority of regulatory bodies, as well as investment financing, lending strategies, and debt management. The 2013 G-20 summit is scheduled to be held in St. Petersburg, Russia, on September 5-6, 2013. Several meetings among lower level officials, including finance and labor ministers among others, are scheduled throughout 2013. 

Effectiveness of the G-20 


Some analysts say that while the G-20 was instrumental in coordinating the response to the global financial crisis of 2008-2009, its effectiveness has diminished as the urgency of the crisis has waned. They argue that the G-20 has failed to provide adequate international leadership in key policy areas, including responses to the Eurozone crisis and forging a conclusion to the World Trade Organization (WTO) Doha Round of multilateral trade negotiations. They also maintain that the G-20 as a group is too heterogeneous to achieve real coordination and its agenda is too ambitious. Others argue that the G-20 serves as an important institution in the international economy. They argue that the G-20 is a critical forum for discussing major policy initiatives across major countries and encouraging greater cooperation, even if agreement on policies is not always reached. They also argue that it serves as a useful institution as a steering committee for other international organizations, such as the IMF, and that having the G-20 policy-making infrastructure in place is important for timely international responses to future crises.



Date of Report: January 9, 2013
Number of Pages: 16
Order Number: R40977
Price: $29.95


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