World Economy

Global Summits, Global Hopes

Global Summits,  Global HopesGlobal Summits,  Global Hopes

For global governance watchers, this was the big week of the year. Between  November 7 and  November 16, the world witnessed an APEC meeting in Yanqi Lake near Beijing, complete with a bilateral China-Japan ‘breakthrough’ and a major US-China climate deal; an historic ASEAN and East Asia Summit held in Naypidaw, Myanmar; and a G20 meeting in Brisbane, Australia.

Notwithstanding the chorus of those announcing growing disorder, global order seems better off after these summits, Economy Watch reported.

The IMF, in its recent World Economic Outlook, points out that the world economy is in a difficult stage: global growth is slowing, trade protectionism remains a problem, inequality is rising and eroding support for globalization, and environmental challenges appear to be rising faster than the global system appears to have the capacity to cope.

Many pundits predicted a weak post-midterm election period for US President Barack Obama, tense relations between the West and Russia, uncertainties about a possible handshake between Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe, and weak institutional outcomes.

Zero-Sum Games

The summits allowed leaders of key countries to arrest the slide toward conflict and zero-sum games, giving them a platform for mutually beneficial cooperation. The surprisingly positive US-China summit in Beijing presented as evidence, which may have given impetus for the modest US-India WTO breakthrough in Naypidaw, in turn setting the stage for a stronger final G20 declaration than expected.

Moreover, despite competition between the US and China on various fronts (such as trade, development, and global institutions), there were healthy signs on global economic architecture. There was reaffirmation of support for a pan-Pacific free trade effort (FTAAP at APEC and RCEP at EAS) and progress on global tax cooperation. More surprisingly, there was progress on anti-corruption efforts. Overall, this means progress in strengthening global institutional architecture and a modest increase in trust for the global economy.

Global Game

In addition to the climate deal with potential catalytic impact, the two countries (China and US) reached agreements on IT trade going back to the WTO’s Information Technology Agreement, the strengthening of military-to-military contacts, and a reciprocal visa deal with 10-year visas for businesspeople and students.

By contrast, the voices from Europe, Japan, Russia, and India sounded weaker. It is fascinating to contrast the more multipolar situation in the London G20 in 2009 to the more ‘G2-like’ world of 2014. Likewise, the voice of middle powers such as Australia, Canada, and South Korea also seemed weaker at this summit. Australia as Chair fought against the US (and EU interests) on climate change and lost. It fought against the BRICS on Russia’s participation and lost.

Tricky Points?

Although word had been that Chinese opposition would preclude agreement on an anti-corruption strategy, in fact the Chinese opposition faded. As a result, the G20 has ratified a 2015–16 G20 Anti-Corruption Action Plan. Importantly in the Plan, there is a call for countries to share information about trusts and shell companies used in tax evasion and money laundering.

In addition, the G20 took further steps to deal with tax avoidance.

The US-China summit and the final G20 declaration with associated pledges for the Climate Green Fund (especially by the US and Japan) generated surprisingly positive momentum on the climate front. This was a strong statement — especially given Australian opposition — urging announcements on G20 countries’ nationally determined contributions to CO2 reductions in advance of the UN Climate Change Conference in Paris next year.