Priorities and challenges for the g20 in australia's Presidency year - Winter 2014
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Priorities and challenges for the G20 in Australia's presidency year Report of Policy Insight organised by Friends of Europe in association with Australian Embassy within the framework of Australia's G20 Presidency with media partner Europe’s World Winter 2014 Brussels
This report reflects the conference rapporteur’s understanding of the views expressed by participants. Moreover, these views are not necessarily those of the organisations that participants represent, nor of Friends of Europe, its Board of Trustees, members or partners. Reproduction in whole or in part is permitted, provided that full credit is given to Friends of Europe and that any such reproduction, whether in whole or in part, is not sold unless incorporated in other works. Rapporteur: John Pollock Publisher: Geert Cami Director: Nathalie Furrer Programme Manager: Patricia Díaz Design: Cristina Frauca © Friends of Europe - January 2014 This report is printed on responsibly produced paper
Table of contents PRiOrities AND chALLENGES for the G20 in Australia's presidency year 6 Growth and jobs 6 Trust and inclusiveness 7 EU’S G20 economic priorities 8 Global governance 9 A mature international actor 11 Discussion 12 ANNEX I - Programme 15 ANNEX II - List of participants 16
6 Friends of Europe | Gobal Europe PRiOrities AND chALLENGES for the G20 in Australia's presidency year “The questions we’ve been asking are how do we raise potential global growth going forward? How do we finance investment in infrastructure? What can we do to increase participation of labour? That’s where the Australian agenda comes in, Heather Smith, Australian G20 Sherpa said at a Friends of Europe Policy Insight discussion on “Priorities and challenges for the G20 in Australia’s presidency year. The meeting was organised in cooperation with the Australian Mission to the EU and chaired by Shada Islam, Director of Policy at Friends of Europe. Having taken over the G20 presidency from Russia on December 1st, 2013, Australia is uniquely positioned as G20 chair between the developed states in Europe and North America and the developing states of Asia-Pacific. An ostensibly ‘Western’ state with a free market economy and Westminster-style democracy, it also resides in the heart of Asia with a trajectory that sees it increasingly more aligned economically, with Beijing, Jakarta and New Delhi than with traditional partners in London, Paris or Washington. Prime Minister Tony Abbott has highlighted a lack of infrastructure, high youth unemployment worldwide and the need for a private sector-led recovery as Australia’s key priorities for the G20 in 2014. Growth and jobs Giving further details of the Australian agenda, Smith, said she saw it as important to keep up the momentum generated at the G20 summit in St. Petersburg. “The Russians did a very good job in creating a multi-year agenda focused on growth, jobs and investment; we’re moving away from the G20 as a crisis management tool and into a ‘peacetime’ role focused on rebuilding confidence in the global economy”. Smith noted the many challenges facing the G20 caused by overall slow growth rates. “We have large output gaps, high unemployment and inflation” she stressed, adding: “We are in a period of ‘shaky calm’.”
Priorities and challenges for the G20 in Australia's presidency year | Winter 2014 7 “Given the interdependence of the global economy, the divide between domestic and the international is now non-existent,” said Smith. Collective action was important but she added: “We’re asking G20 countries what individual and collective actions can member states take to promote trade, infrastructure investment and employment.” Smith noted: “We’re looking at how we can manage the spillover effect from individual states. We have some good momentum in G20 countries, what China is doing following the Third Plenum, what Prime Minister Abe is undertaking in Japan with the ‘Three Arrows’ and energy sector reforms in Mexico also.” This individual action needed to be operationalised at the G20 level. Corporate tax avoidance was a priority, Smith said, adding: “We have a strong commitment to have taxes paid where the economic activity is taking place and working together to exchange information so that we have greater transparency of financial transactions across G20 countries.” She noted that that infrastructure was another Australian priority due to its fundamental role in promoting and aiding growth. “Until now we’ve had monetary policy do the heavy lifting in terms of growth. We’re looking to promote private sector investment in infrastructure and focus on how we’re going to achieve that through competitiveness.” Trust and inclusiveness Smith conceded the process would not be easy: “G20 is a young organisation it’s going to take time to build habits of cooperation and collaboration.” The value of maintaining trust between G20 partners was important, she underlined, adding that it would be vital in implementing the agenda post-Brisbane. From Australia’s perspective, as G20 chair “the key to the future success of G20 lies in outreach and understanding. We need to create a community that understands G20’s relevance,” Smith observed. Australia’s approach was to increase G20’s profile in the wider public by working with the multiple partner groups such as the B2 Business Summit, the Civil Society Dialogue and G20 Youth Summits. As for the anticipated brevity of the final communique issued at the Brisbane summit in November this year, Smith observed, “all presidencies start off with good intentions.”
8 Friends of Europe | Gobal Europe EU’S G20 economic priorities António José Cabral, the EU’s G20 Sherpa argued “the EU and Australian priorities fit very well because one of the values of G20 is that it allows us to reach cooperative solutions. This adds value to the agreements reached. It allows problems to be shared and discussed.” He said the institution was much like the European Union in aiding multilateral diplomacy. Cabral argued that boosting growth was an issue central to the preoccupations of the EU post-crisis. “We have Europe 2020 as a long-term growth strategy, as well as country specific recommendations. Our growth strategy is in three pillars: fiscal policy, structural reforms and target investment; we are particularly focused on structural reforms.” “Europe fully supports the role played by G20 with enthusiasm; we should, however, try to keep climate change a priority in spite of the divided opinions between the member states.” Antonio José Cabral, European Union’s representative to the G20.
Priorities and challenges for the G20 in Australia's presidency year | Winter 2014 9 Concerning infrastructure investment, Cabral citing, Australian Prime Minister Abbott’s speech in Davos, warned that “we have to make the case that physical infrastructure investment must be matched with human capital investment” in view of the IMF estimation that 300 million people were unemployed worldwide. The G20’s approach towards infrastructure investment, he emphasised, should not be one in which it is viewed as a developmental issue. Infrastructure investment, he argued, had far wider effects beyond development, he said, adding: “With infrastructure we all benefit. The G20 should give priority to cross border investments that allow the different parts of the world to be connected.” Cabral observed that trade plays a much more important role than it did in the past. “There are huge trade negotiations taking place between the major world powers, the EU has just concluded negotiations with Canada and has others underway with the United States and Japan”. The G20 had a role in supporting trade relating primarily to services, environmental goods, competition and export credits. The G20, he indicated should however respect the competences of the World Trade Organisation (WTO) which should provide the forum for negotiations, whilst G20 should provide the political impulse for these deals. “The G20 Sherpas met in Sydney and I was impressed with the clarity of the objectives, the determination of the presidency, the pragmatic approach and the commitment to the G20 as a multilateral exercise. We have the ingredients of a successful presidency with which the European Union is more than ready to contribute, said Cabral. He concluded that the G20 can be most proud of the leadership it provided in the area of financial reform. “Financial reform was at the heart of the G20 meeting in Washington in November 2008; in the weeks after Lehman Brothers collapsed we prevented another ‘Great Depression’ from occurring.” Global governance Karel Lannoo, Chief Executive Officer of the Centre for European Policy Studies (CEPS), welcomed the enormous role played by the G20 in recent years, echoing remarks by Cabral that the institution’s achievements in the last
10 Friends of Europe | Gobal Europe five years were impressive, especially in the case of regulation of the financial services sector. This illustrated that global governance via peer pressure amongst member states was working. Lannoo welcomed the specificity of Australia’s G20 priorities. Too often he said in previous summits, the G20 agenda had been subject to revisions by states, becoming metaphorically ‘a Christmas tree’ with each country adding a specific amendment and alternatives to the G20 agenda. “The G20 is a sign that global governance is working, that peer pressure is working and I think that is an unprecedented event in our common history.” Karel Lannoo, Chief Executive Officer of the Centre for European Policy Studies (CEPS) The role played by G20 in European financial reform over the last five years was extensive, he said, owing to the collective peer pressure that provided political cover to member states. “Many people here in Brussels would have heard Commissioners speaking saying ‘we need to do this because of the G20’. It has been used in Europe to drive forward unprecedented financial reform including bank recapitalisation.” On trade, Lannoo argued that the regional trade pacts such as the Transatlantic Trade and Investment Partnership were more problematic. “We have agriculture tariffs of 40 percent and we are going to reduce them with the US but not with other countries.” Lannoo stressed that the proliferation of bilateral trade deals was not compatible with the multilateral trade agenda and expressed concern that the trend away from the WTO to bilateral deals would raise tensions due to their lack of inclusivity. Lannoo also expressed reservations over Australia’s focus on corporate taxation and on tax base erosion. “We have seen how impossible it has been at European level to do something about this issue. We have achieved at EU level only two directives harmonising corporate taxation and both of them date back
Priorities and challenges for the G20 in Australia's presidency year | Winter 2014 11 to the 1990s.” As regards Australia’s focus on investments, Lannoo observed that household pensions do not factor into the long term investments outlined in the G20 agenda. “The channels for households to invest their savings into pensions are limited and are not invested in the long term because of market imperfections, the products do not exist for long term pensions.” This was a problem the G20 would eventually have to face. A mature international actor Australia had a long history of punching above its weight, said Philomena Murray, Professor at the University of Melbourne. Referring to Australia as a “mature international actor”, Murray cited the country’s support for regional architecture in the Asia-Pacific and the contribution made to humanitarian aid and development. Australia’s identity in the Asia-Pacific was of enormous interest to the world as was the 2013 white paper “Australia in the Asian Century” that identified closer ties with East Asian actors as a priority. “This process can be both advantageous and problematic in the Asia-Pacific context; owing to its close ties with the United States”, noted Murray “Australia is too often not fully accepted as an Asian nation.” “The challenge for Australia going forward is to advance and promote discussion processes internationally; this is where the G20 comes into its own as an institution.” Philomena Murray, Professor at the University of Melbourne Australia as a successful G20 chair would need multilateral instincts in approaching member states. “The challenge for Australia in the G20 and more widely is the need to appeal to fundamental norms, interests and values of the partners of the G20,” she said, underlining the diversity of opinions within the institution. Ensuring the initiatives produced within the G20 agenda were
12 Friends of Europe | Gobal Europe attractive for member states to pursue would require a high degree of diplomatic skill from Australia’s diplomats, she said, agreeing that the G20 could provide the political cover and impetus for individual member states to implement the domestic agenda. Murray added: “Australia needs to show a sustained leadership capacity, particularly as it seeks to build up habits of cooperation in the G20 as an institution.” Acknowledging the youth of the institution and emerging practices, she cited the gradual establishment of cooperation within the EU as an example. “Australia has consistently supported giving developing and under developed countries greater say in global institutions like the IMF, it’s important that institutions reflect the global representativeness. It’s also the key to getting inclusive growth.” Heather Smith, Australian G20 Sherpa “Australia needs to be able to facilitate coalition-building and consensus- building within the G20, drawing on its relationships outside the G20,” Murray argued, highlighting that, as with other institutions, there were membership issues and therefore ‘we should keep in mind that there are states that feel that they should be part of the G20.” “The challenge in 2014,”Murray concluded, “is for Australia to show that it is an effective diplomatic player and mature international actor.” Discussion In the discussion that followed, Smith conceded that there was no ‘silver bullet’ for getting people back to work and warned that jobless growth was a real problem in G20 states. “We inherited from the Russian presidency, an employment task force that is focusing on structural, youth and female
Priorities and challenges for the G20 in Australia's presidency year | Winter 2014 13 unemployment,” she said. “On an individual basis we’re asking countries, to change policies best suited to their individual labour markets”. At G20 level, she said collective action was focused on increasing female participation in the labour force in order to increase economic growth. On inclusive growth, the Australian G20 presidency was going to focus on implementation in order to achieve inclusivity in global economic growth. “Inclusive growth is how we think of underpinning economic development,” argued Smith, adding: “I’ve asked the International Labour Organisation to do a paper for the G20 Sherpas on inclusive growth”. The question of digitalisation in the services sector and the structural change that will follow from economic reforms in member states would be discussed, she said, as would global governance, transparency on tax and exchange of information. “The strength of G20,” argued Smith “can be the focus on cross cutting issues like climate change.” The issue was a divisive one, said Smith, adding: “the debate comes down to what set of polices can be used to combat climate change”. Discussions could centre on a voluntary process of discouraging the use of fossil fuels and greater action on financing and focus on renewable energies. Recent currency devaluations in emerging markets such as Turkey and Argentina were being viewed with concern by the G20, she said. The main challenges for emerging markets were the structural underpinnings that fuel future growth, including taxation regimes, infrastructure, education and the development of human capital.
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Priorities and challenges for the G20 in Australia's presidency year | Winter 2014 15 Annex I – Programme SESSION I Policy Insight debate The 9th G20 Summit in Brisbane in November 2014 will see a pivotal gathering of presidents and prime ministers from the world’s leading industrialised and emerging states to discuss global economics, trade and security. Set up in 1999 as a meeting of Finance Ministers and Central Bank Governors, the G20 confirmed its reputation as an increasingly important forum for managing the global economy following the financial crisis in 2008, when the first G20 Leaders Summit was held. With global growth still subdued and many countries struggling to create enough jobs for their people, what will be the key priorities for the G20 this year? Which challenges would benefit most from leaders’ attention at the 9th G20 Summit in Brisbane in November 2014? Can the G20 deliver practical outcomes for the global economy? Will crucial issues like youth unemployment, strengthening development and global financial reform get adequate attention at the Brisbane meeting and other G20 gatherings in Australia? Should the G20 be made more inclusive or would that make it more unwieldy and inefficient? Is the G20 helping or hampering global governance? How should it respond to the ever-expanding list of global challenges? What is the G20’s role in dealing with non-traditional security challenges including climate change, cyber security and human trafficking? Heather Smith Australian G20 Sherpa Antonio José Cabral European Union G20 Sherpa Karel Lannoo Chief Executive Officer of the Centre for European Policy Studies (CEPS) Philomena Murray Professor at the University of Melbourne, Australia Moderated by Shada Islam, Director of Policy at Friends of Europe
16 Friends of Europe | Gobal Europe ANNEX II – List of Participants Georgios Altintzis, Policy Adviser, Economic and François d'Adesky, Special Counsellor for Social Policy Department, International Trade Union Investments and Trade, Mission of Haiti to the EU Confederation (ITUC) Efehan Danisman, Masters Student, College of Martin Alvez, Minister Counsellor, Mission of Uruguay Europe to the EU Baptiste Dardenne, Deputy Antici., Permanent Salvador Andres Figueroa, Assistant, European Representation of Belgium to the EU Parliament, Directorate General for External Policies Sean de Cleene, Vice President, Global Business Richard Andrews, Assistant Secretary, International Initiatives, Yara International Policy and Engagement, Australia's G20 Task Force Laurent De Smedt, Policy Officer, European Private Hermann Aschentrupp, Deputy Chief of Mission, Equity & Venture Capital Association (EVCA), Bastion Mission of Mexico to the EU Tower Mindaugas Ausra, Assistant, Council of the European Peter Debaere, Post-Doctoral Researcher, University Union of Ghent Alejandra Ayuso, Minister & Chargé d'Affaires a.i., Polydoros Demetriades, Principal Administrator, Mission of Argentina to the EU European Commission, Directorate General for Laurent Bardon, Policy Officer, desk officer in charge Education and Culture of international aspects of trade relations with Japan, Dave Deruytter, Head of Expatriates & Non- European Commission, Directorate General for Trade residents, ING Belgium Johan Barnard, Counsellor: ECOFIN Coordination, Geert Deschaepmeester, IT Manager, Mission of Structure Funds, Cohesion Funds, TransEuro Webs, Australia to the EU Econ/Monetary Policy, External Relations, Permanent Miguel D Desnerck, Publisher, Desnerck Media Representation of the Netherlands to the EU David Dewar, First Secretary, Mission of New Zealand Hans-Christian Beaumond, International Relations to the EU Officer, European Commission, Directorate General for Agriculture and Rural Development Carolina Diaz, Counsellor, Mission of Colombia to the EU Dries Belet, Desk Officer for G8/G20 and the global economic agenda, European Commission, Patricia Diaz, Programme Manager, Friends of Directorate General for Economic and Financial Affairs Europe Les Amis de l'Europe Aivars Berners, Policy Adviser, European Susanne Doboczky, Vice President, Allianz Group Conservatives and Reformists Group (ECR) European Affairs Office Aline Brandstatter, Assistant, Council of the Morag Donaldson, Administrator, European European Union Parliament António José Cabral, Senior Advisor, G8/G20, Nicolas Dorgeret, Administrator, European Europe 2020, General Economic policy orientations, Parliament, Committee on International Trade International Financial Institutions, Trade, European Jorge Fabra Portela, Desk Officer for G20 and Commission, Cabinet of EU Commission President G7, European Commission, Directorate General for José Manuel Barroso Economic and Financial Affairs Jason Collins, European Australian Business Council Pernille Falck, Trade Policy Advisor, Permanent Representation of Denmark to the EU
Priorities and challenges for the G20 in Australia's presidency year | Winter 2014 17 James Franey, European Affairs Correspondent, Tim Joris Kaiser, Economic Analyst, Desk Officer Euronews China, European Commission, Directorate General for Tetsuro Fukunaga, Executive Director, Japan Economic and Financial Affairs Machinery Centre for Trade & Investment (JMC) Andrey Kasiyanenko, Counselor, Mission of the Alessandro Gallo, Student, Vrije Universiteit Brussel Russian Federation to the EU (VUB) Juergen Kettner, Head of sector- Transport, Periklis Giannopoulos, Economic and Trade European Commission, Directorate General for Counsellor, Permanent Representation of Greece to Development and Cooperation - EuropeAid (DEVCO) the EU Gauri Khandekar, Researcher, Head of Asia Frazer Goodwin, Senior Advocacy Adviser, Save the Programme, Fundacion para las Relaciones Children EU Advocacy Office Internacionales y el Dialogo Exterior (FRIDE), Brussels Office Nicola Gordon-Smith, Economic Counsellor, Mission of Australia to the EU Florian Kobele, Policy Co-ordinator, Assistant to the G20 Sherpa of the European Union, European Nick Greenstock, Managing Director, Gatehouse Commission, Secretariat General Advisory Partners Aris Kokkinos, Journalist, eurobole.com Dalia Grigonyte, Economic Analyst, European Commission, Directorate General for Economic and Willem Kooi, Desk Officer, European Commission, Financial Affairs Directorate General for Economic and Financial Affairs Christopher Halburd, Head of Office, Environmental Joseph Kraus, Policy Manager, The One Campaign Law Service Maciej Krzysztofowicz, Policy Officer, Agricultural Joop Hazenberg, Founder & Director, The Next Trade Policy Analysis, European Commission, Generation For Europe (NGE) Directorate General for Agriculture and Rural Development Françoise Herbouiller, Policy Officer, WTO, OECD and Dual Use, European Commission, Directorate Hendrike Kuehl, Policy Director, Transatlantic General for Trade Business Council, Transatlantic Business Dialogue (TABD) Susannah Hodson, Second Secretary, Mission of Australia to the EU Athina Kylafi, EU Government Relations, BASF EU Liaison Office Xiaobing Hong, Second Secretary, Mission of the People's Republic of China to the EU Caroline Lambert, Member of Cabinet, Financial IssuesInternational Financial Institutions, Richard Howitt, Member, European Parliament, Development, Trade, Taxation, Humanitarian Aid Delegation to the EU-Turkey Joint Parliamentary & Crisis, European Commission, Cabinet of EU Committee Commissioner for Climate Action Connie Hedegaard Shada Islam, Director of Policy, Friends of Europe Karel Lannoo, Chief Executive Officer, Centre for Les Amis de l'Europe European Policy Studies (CEPS) Tatiana Isticioaia Budura, Counsellor, COASI, Patrick Larkin, Senior Adviser, Energy Charter Permanent Representation of Romania to the EU Secretariat Marta Kadar, Senior Advisor, Permanent Michel Lavollay, Founder, Public Private Partnership Representation of Hungary to the EU Europe
18 Friends of Europe | Gobal Europe Duncan Lewis, Ambassador, Mission of Australia to Valérie Moutal, Business Continuity Coordinator, the EU European Commission, Directorate General Human Andrea Lode, Policy Advisor, Europe and Resources and Security International Affairs, German Insurance Association Katrina Murray, Policy Advisor, Mission of Australia (GDV) to the EU Jonathan Lukas, Program Officer, Global Water Philomena Murray, Professor, University of Institute Melbourne School of Social and Political Sciences Rainer Lütkehus, EU Correspondent, Lubica Nejezchlebova, Counsellor, Trade Policy Energieinformationsdienst Hamburg Committee, Permanent Representation of the Slovak Tamas Maczak, Policy Officer, South and South East Republic to the EU Asia, Australia, New Zealand, European Commission, Christopher Newman, Editorial Assistant, Europe's Directorate General for Trade World Jacques Malache, Senior Director, International Press Catherine Olier, Policy Advisor, EU Essential Services, Agency Oxfam International EU Advocacy Office Isabelle Marchand, Head of European Affairs,, Nienke Palstra, EU Policy Officer, Transparency Belgian Finance Federation (FEBELFIN) International Liaison Office to the EU Wouter Marsoul, Account Manager, Etihad Airways Liliana Pasecinic, Head of Sector International Marina Martinez-Garcia, Programme officer, Centro Relations, European Commission, Joint Research para el Desarrollo Technologico Industrial (CDTI), Centre Brussels Office David Plunkett, Ambassador, Mission of Canada to Lachlan McKenzie, PhD student, University of the EU Melbourne, School of Social and Political Sciences Gordana Popovic, Research Programme and Stewart Mills, G20 Coordinator, European Scientific Officer, European Research Council Commission, Directorate General for Development Executive Agency (ERCEA) and Cooperation - EuropeAid (DEVCO) Ian Radcliffe, Director for Training and Consultancy, Russel Mills, Head of Brussels Office and Global European Savings Banks Group/World Savings Director Energy & Climate Change Policy, Dow Banks Institute (WSBI) Courtenay Mitchell, Assistant, European Parliament Marcel Radunski, Vice President Legal & Government Affairs, Siemens EU Affairs Office Dominique Mitchell, Press and Communications Officer, European Federation of Food, Agriculture and Nickolas Reinhardt, Director, Afore Consulting Tourism Trade Unions (EFFAT) Sebastien Rojon, Intern, European Parliament Leonard Mizzi, Head of Unit, ACP, Africa, Caribbean Julia Rokicka, Assistant, European Parliament and Pacific, South Africa, UN/FAO and G8/G20, Shane Ryan, Policy Adviser, Mission of Australia to European Commission, Directorate General for the EU Agriculture and Rural Development Rainer Schierhorst, International Cooperation Officer, Andrea Mogni, Director, Global Economy, Global European External Action Service (EEAS) Governance Institute John Scowcroft, Executive Adviser, Global CCS Institute
Priorities and challenges for the G20 in Australia's presidency year | Winter 2014 19 Heather Smith, Deputy Secretary and G20 Sherpa, Office of the Prime Minister Elía Sosa, Counsellor, Political Affairs, Mission of Mexico to the EU Guergana Stanoeva, Economist, European Commission, Directorate General for Economic and Financial Affairs Andreas Stein, Head of Unit, Equal Treatment Legislation, European Commission, Directorate General for Justice René Steiner, Administrator, European Commission, Directorate General Human Resources and Security Diane Strauss, Assistant to the Programme Director and Economist, World Wide Fund for Nature (WWF) European Policy Office Alexandre Stutzmann, Diplomatic Adviser to the President, European Parliament, Cabinet of the President Jindrich Trejbal, Officer, Financial Policy Unit, Permanent Representation of the Czech Republic to the EU Simon Twisk, Counsellor, Mission of Australia to the EU Ann Vanhout, Policy Officer, Global Challenges, European External Action Service (EEAS) Eustace Theo Wallace, Second Secretary, Mission of Saint Kitts and Nevis to the EU Alastair Walton, European Australian Business Council Sidonie Wetzig, Policy Officer, Friedrich-Ebert- Stiftung (FES) EU Office Graham Wilkie, Policy Officer, European Commission, Directorate General for Education and Culture
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