The End of the G-20

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From Foreign Affairs,  September 14, 2016

Has the Group Outlived Its Purpose?

By REBECCA LIAO who is the Director of Business Development at Globality, Inc. She is also a writer and China analyst.

Over Labor Day weekend, the leaders of the G-20 countries gathered in Hangzhou, China, for their annual summit. Their goal this year: save the good name of globalization, which has recently taken a beating. In the wake of Brexit, the U.S. Republican presidential candidacy of Donald Trump, the rise of the European far right, and China’s own anti-Westernism, the G-20 leaders were supposed to renew their commitment to collective economic growth and open cross-border trade and investment. —————————-


—————–One area in which international cooperation is crucial, however, is in tax regulations that prevent tax evasion. High-net-worth individuals and corporations are able to move their income to jurisdictions with lower taxes, most of the time through legal means. This ability to hide income stymies tax-and-transfer programs, not to mention that it has meant a significant hit to government revenues in advanced and developing countries alike. In response, the G-20 and OECD have partnered to devise and implement a framework on tax reform that individual countries may implement at a customized pace. The success of this initiative remains to be seen since it internationalizes a tool that is at the heart of a country’s economic sovereignty.

Asking countries to incrementally but broadly give up that sovereignty is not a worthwhile endeavor for the G-20, or for any multilateral organization. It would be better served by focusing on problems that are recognized to be global in nature and by encouraging countries to cooperate on other economic issues without standardizing growth initiatives or imposing growth targets. In the end, after the summits are over, the job of saving globalization is still waiting for the leaders when they arrive home.
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