The world is grappling to resolve a host of existing problems.
Compounding the issues are new problems created by disruptive
technologies. Though technological advancement is certain, its impact,
particularly on job creation and employment, is yet to be assessed.
Disruptive technologies like crypto-currencies, blockchains, e-commerce,
Internet of Things (IoT), machine2machine learning, 3D printing, artificial
intelligence and robotics and the use of these disruptive technologies in
drone surveillance hold out great scope for economic development. But
here one should strike a note of caution: the use of technologies like
crypto-currencies, block-chains and e-commerce needs to be regulated
through appropriate global and national laws so that tax evasions do not
take place and no black money is created.
G20 had earlier resolved to tackle the menace of black money, tax
havens, imaginative accounting, transfer pricing and the like. Though a
humble beginning was made, there are miles to go.
Reforming global financial system
The much-touted reforms in global financial and monetary system is yet
to reach its ultimate shape. In Germany last year, G20 members
resolved that efforts will be made to complete quota reforms at the IMF
by 2019. Can the world drive a grand bargain between emerging and
developed economies on fashioning more representative, effective and
legitimate global institutions? After the global financial crisis in 2008,
consensus emerged on the need for a better regulatory structure to deal
with risks stemming from financial fragility. The Financial Stability Board
under the auspices of G20 was set up and it has made a number of
recommendations to member countries to combat systemic risks and to
strengthen the global financial system. Though a number of regulatory
reforms like Basel III, over-the-counter (OTC) derivatives market,
changes affecting the regulatory and accounting framework for
institutional investors, policy measures for globally systemically
important financial institutions (G-SIFIs) are being implemented, the
progress has been largely tardy.
US Federal Reserve Policy causes currency fluctuations across the
globe. Its spill-over affects the US economy too. In this situation, can we
have an independent global reserve currency in lieu of US dollars? Can
we make SDRs tradable in this situation? There is also the problem of
currency manipulation by central banks of some countries. Can we have
at least two zones for financial architecture – Asian Financial
Architecture and European Financial Architecture? Fluctuation in global
crude oil market is another issue. In view of US sanctions against Iran,
how can payment be made to Iran? These are some of the nagging
issues before the world leaders at the G20 summit in Buenos Aires.
WTO & Protectionism
The multilateral trading system is at stake with no forward movement in
WTO negotiations, with developed countries resorting to protectionist
measures. The US has imposed high tariffs on steel and aluminium
imports and is planning to do the same for auto-parts imports. It has
sorted out the issue with South Korea, Canada and Mexico, but its trade
war with China still continues with the latter retaliating with similar
measures. The Trump Administration has vetoed appointments to the
Dispute Settlement Body of the WTO and DSB is thus facing an
existential threat. The multilateral trading body is yet to resolve issues of
data security, IPRs and e-commerce.
Keeping in view the challenges before the world leaders, the 13th G20
Summit in Buenos Aires on November 30-December 1 in has stressed
upon building consensus for fair and sustainable development. In June
2018, the national ministers of G20 countries released a ‘consensus
statement’ on energy transitions that seek greater transparency and fair
and sustainable development.
The Argentina presidency believes that the world has changed very fast
this year, and we need to address these changes through consensus. It
has stressed on the importance of coordinated work between the two
tracks – sherpas and finance ministers who were present at all run-up
meeting to the Summit. Argentina has forged its vision for the future on
the basis of agreement reached between leaders of G20 in Hamburg in
2017 to promote greater inclusiveness, fairness and equality in pursuit of
economic growth and job creation.