Anti-climax at Osaka

Solutions to slowing global growth prove elusive

US President Donald Trump hogged the headlines at the G20 summit in Osaka with, first, his back-down in the trade war with China and then a supposedly unscripted meeting with North Korean dictator Kim Jong Un and a historic step into the northern kingdom. But if Mr Trump’s decision to partially lift the ban on Chinese 5G equipment maker Huawei, the resumption of trade talks with China and unilateral concession to Pyongyang were seen as potent signs of a diminution of US power, a reminder of its clout was embedded in the Osaka communique. Mr Trump’s trade war with China is the single biggest reason for slowing global growth (with the EU, Mexico, Canada and India facing collateral damage).

Instead of voicing a robust denunciation of the practice of retaliatory tariffs, the communique contained no mention of protectionism at all, limiting itself to an indirect anodyne statement of striving to “realise a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment”. This marks the second successive summit — Buenos Aires in 2018 was the first — to avoid all mention of the p-word, principally under pressure from the US delegation. As International Monetary Fund Director Christine Lagarde pointed out in a statement, the resumption of talks between China and the US, though welcome, tariffs already implemented were holding back the world economy. 

The conciliatory language of the Osaka communique was symptomatic of the increasingly diffuse nature of these annual meetings of 20 countries that account for almost 85 per cent of global GDP. Created in 1999 following the Asian and Russian financial crises, the objective was to promote a forum in which finance ministers framed a global agenda for financial stability. This summit was upgraded in 2008, after Lehman Brothers imploded, to a leaders’ meeting, which was inaugurated in Washington in 2008 and till 2011 was held twice a year (London and Pittsburgh in 2009 and Toronto and Seoul in 2010) as the sub-prime crisis morphed into a sovereign debt crisis for EU countries. Now that those issues have abated, the G20 appears to have lost traction. The Financial Action Task Force, the mechanism the G20 promoted to monitor and control terror financing, has been one of its more lasting contributions. But with the breakdown of the mechanisms of multilateralism, the G20 covers all manner of issues from women’s rights to climate change. 

India emerged from Osaka with two takeaways. One is the collateral benefit of the resumption of US-China trade talks that offers some breathing space. The second is joining countries such as South Africa and Indonesia in boycotting the “Osaka Track” on the digital economy (which has implications for India’s controversial data localisation rules). The results of Prime Minister Narendra Modi’s energetic bilaterals — he held nine of them, including one with Mr Trump — are yet to be revealed. With the country scheduled to host the summit in 2022, however, India is in pole position to shape the global agenda at a time when multilateralism, which has benefited the country enormously in the past two decades, is increasingly under threat.