18.06.2019 Author: Vladimir Terehov

Latest Preparatory Events for G20 Summit


The author would like to begin yet another article about the upcoming G20 forum (for 20 leading global economies), to be held on 28-29 June in Osaka, by restating a viewpoint that is crucial for him. Today, the Summit is practically the only international platform where global challenges that threaten humanity’s very existence can be discussed, and where attempts could be made to align increasingly divergent interests of the world’s leading players. It is also worth mentioning that the previously mentioned differences in interests in the trade and economic sphere are perceptibly shifting into the political arena, and are, therefore, becoming more systemic in nature.

Based on our knowledge of perpetual historical processes, we are all aware of what means are usually used to resolve gradually evolving systemic crises. There is a distinct possibility that this time around, this “method” will actually put an end to humanity, and these are not just words. Hence, one could but welcome any attempts to diffuse crisis situations as they are only starting to evolve.

Incidentally, the G20 platform was established in the late 1990s in order to take on the role of an efficient expert body of sorts, capable of responding to crisis situations in economies of Southeast Asian countries. In 2008, the member states convened for the first G20 Summit in response to the ongoing global financial crisis. After a while, the Summit became an annual event, while the Group of 20 platform evolved into a permanently functioning body.

Several months before the first day of the Summit (determined in advance), the bulk of the work is performed by experts. The results of their work take the form of a final draft, which subsequently undergoes its last review and approval process by the heads of states. Last year, such preparation work was completed by Ministers of Finance and Central Bank governors in Buenos Aires at the end of July, while the G20 Summit was held on 30 November – 1 December (again in the capital of Argentina).

The general view is that the key (relatively) positive outcomes of last year’s G20 Summit were as follows: 1) “at least some kind of” final communique was issued; 2) the heads of states acknowledged the need (long pointed out by experts) to reform WTO (the World Trade Organization) on an “institutional” as well as an “operational” level, and 3) a respite (which turned out to be temporary) from the Sino-American “tariff” war was “arranged”.

In 2019, the scope of the preparatory work widened. Besides the committee comprised of Ministers of Finance and Central Bank governors, another committee (at a ministerial level) was established. It focuses on the issue of formulating recommendations for creating a legal foundation, which all the global leading IT companies would need to adhere to during the process of digitalization of all the spheres of human life.

The former committee worked on 8-9 June, in one of the largest cities of Japan, Fukuoka, while the former on 9 June in one of Japan’s centers for science and education, i.e. the city of Tsukuba located 50 km away from Tokyo.

It is also worth highlighting that two months earlier, in Washington DC, the members of both committees had already discussed a similar range of issues at one of two annual events organized by the International Monetary Fund (IMF) and the World Bank.

Naturally, the leadership of these two influential international bodies are involved in G20’s work. Hence, once again, i.e. as last year in Buenos Aires, in her speech in Fukuoka on 9 June, Christine Lagarde (the Managing Director of the IMF) called all trade wars and particularly, the one between the United States and the PRC, a threat to global economic growth.

Japan’s Deputy Prime Minister and Minister of Finance, Tarō Asō, gave a similar speech (which also resembled the one that he had made in Buenos Aires).

Seemingly, the price of issuing a joint communique at the end of the meeting in Fukuoka was the removal of any mention of the issue of “protectionism”, and, therefore, its main instigator, the United States, from it. Its main points are fairly general in nature, and serve as a record documenting the participants’ intent on taking action to accomplish common goals.

It is quite noteworthy that the first point in the document concerned a new issue for this Forum, i.e. approval of “the plan to agree on new taxation rules for multinational digital companies in 2020″. This turned out to be a hot topic of discussion for the expert committee members who met in Tsukuba. The results of their work were reflected in the aforementioned statement.

Based on available commentaries, the battle over wording of the communique was between the American representatives and “everyone else”. The latter group accused their American counterparts of the following. U.S. IT companies tend to register in countries with favorable tax rates, and therefore, try to gain competitive advantages in their battle over future earnings (evidently gigantic in value), which they expect to receive as digitalization and artificial intelligence spread to our every walk of life.

In other words, we could say that yet another (aside from disagreements in the sphere of trade) rift in the relationship between the United States and its closest allies has appeared. As a result, some journalists have already started to doubt whether any joint document will be issued at the end of the scheduled G20 Summit in Osaka.

The view held by these sceptics has been strengthened by yet another flare up in tensions between the USA and China, which occurred right before both ministerial committees were due to meet. The author chose the word “flare up” deliberately as the gradual rise in tensions between the two world powers has been readily apparent for quite some time now.

This time around, the reason for the harsh rhetoric exchanged by the two nations was the 30-year anniversary of the infamous events that transpired at Tiananmen Square (on 4 June 1989), and a leak stating that China’s Leader Xi Jinping might choose not to attend the G20 meeting in Osaka.

Finally, it seems that yet another novelty, introduced by the Japanese government to all the G20 preparatory events, in connection with ocean pollution caused by plastic waste, adds notable (and at the same time dark) symbolism to the upcoming event. According to various sources, amounts of such waste increase by 5 to 13 million tons on an annual basis.

The plan is to discuss this unpleasant problem from 15 to 16 of June in the small town of Karuizawa, seemingly far from prying eyes.

However, from the author’s point of view, the real possibility of our planet turning into a giant waste bin for all sorts of trash should be on top of the agenda of various forums today. And perhaps during coffee breaks, the issue of digitalization could be discussed on the sidelines of such events. Or attendees could also argue about where to fly next, the Moon or Mars.

Vladimir Terehov, expert on issues in the Asia-Pacific Region, exclusively for the online magazine “New Eastern Outlook.”

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