Global Economic Coordination Is Required

© BDI

Germany has assumed the annually rotating Presidency of the G20 for the first time. As one of the central fora for international cooperation on economic issues, it can have a strong impact on trade policy. In times of depressed growth and political crises, target-oriented global cooperation and coordination is more important than ever.

The G20 has considerable influence on international economic policy, despite the G20 being an informal forum that lacks not only a permanent team but also a secretariat. One reason for its success is the way in which it works. The issues addressed by the G20 are determined by the respective Presidency in cooperation with the previous and successor Presidencies. This troika format guarantees the coherence and long-term impact of the G20’s work. In 2016, China held the G20 Presidency. In 2017, it is Germany’s turn, followed by Argentina in 2018.

Set targets will be further pursued

The German government will abide by these work methods and continue to discuss the traditional G20 topics. An integral part of this portfolio is financial market regulation. It is the German government’s intention that the focus here should be on so-called shadow banking and modern technology in the area of financial services (FinTech). Moreover, the German Presidency wants to push ahead with the global implementation of the initiative to clamp down on tax evasion (BEPS) and promote tax transparency as well as certainty about tax treatment.

Another central topic related to global governance is free and rules-based trade, which the G20 will continue to discuss in 2017. The commitments made by the G20 states to refrain from taking new protectionist measures are to be more strictly implemented. Similarly, the regulatory framework for digital trade as well as the development aspects of trade are integral parts of the German agenda.

In addition, the German government wants to continue to pursue the initiatives and action plans of the outgoing Chinese G20 Presidency. These are aimed, more or less, at innovation and a unified approach towards structural reform. Germany’s G20 Presidency will put special emphasis on digitalization, including the harmonization of standards in Industry 4.0, digital literacy, cyber security, and the handling of data.

The work program will reflect global developments

At the same time, the German G20 Presidency will set new priorities. One of these is improving living conditions in Africa. Under the “African Compact”, African states will be invited to work together with G20 countries and private industry to improve the framework conditions for private investment in the region – the amount of investment required to tap into Africa’s enormous growth potential cannot be reached through public development aid alone. The Africa Compact could include agreements on structural reform. Moreover, companies could offer technical and legal assistance and make commitments to invest in the region.

The promotion of the sustainability and inclusiveness of the global economy is a common thread of the new priorities of the G20 work program. It also informs the cross-sectional focus of the implementation of the 2030 Agenda for Sustainable Development (Sustainable Development Goals or SDGs). Regarding labour markets, the German G20 wants to foster participation of women in the labour force and advance the development of skills to adapt structural change. Another focal area will be the implementation of the Paris climate change agreement.

Germany’s G20 Presidency goes far beyond mere economic policy

The German government also wants to address issues that are not directly related to economic policy. Thus, Germany’s G20 Presidency hopes that coordinated joint measures will be taken to combat epidemics and resistance to antibiotics. Similarly, the German presidency wants to place another focus on the causes of the refugee crisis. Finally, another goal is the fight against terrorism within the framework of the G20. For this reason, the G20 foreign ministers will meet for the first time.

As in the case of all previous G20 Presidencies, the German government is dependent on the full support of the 19 other member countries since all decisions of the G20 are consensus-based. For this reason, it is all the more important that Germany is able to win over its G20 partners through professional expertise and sound arguments.

The pillars of Germany’s G20 Presidency agenda

Building
Resilience
Improving
Sustainability
Assuming
Responsibility
  • World economy
  • Trade and investment
  • Employment
  • Financial markets /
    International financial
    architecture
  • International
    tax cooperation
  • Climate and energy
  • 2030 Agenda
  • Digitalisation
  • Global health
  • Empowering women
  • Tackling the causes of
    displacement
  • Partnership with Africa
  • Fighting terrorism
  • Anti-corruption
  • Agriculture /
    Food security

The G20 in the world economy

Combined share of G20 members in global variables (percent of world total, 2015)

Embedded in World Trade: Different manifestations within the G20 countries

Relation between foreign trade (exports plus imports, goods and services, 2015) and GDP per country