Supporting the G20’s economic governance system

Len Edwards, distinguished fellow at the Centre for International Governance Innovation, says continued interplay between the G7 and the G20 will be integral for navigating the global challenges that lie ahead

It is hard to believe that more than ten years have passed since the first G20 summit in Washington.

As the shocking events rolled out that autumn, there were international calls for a leaders’ summit to manage a crisis threatening to bring down the international financial system and inflict a disaster on the global economy.

In reacting positively to these calls, then United States president George W. Bush wisely moved beyond the G8 to a ready-made larger group of countries whose finance ministers – led at the outset by Canada’s Paul Martin and America’s Lawrence Summers – had been meeting formally as the G20 since 1999. The G20 summit was born.

It was evident even then that the Washington Summit was a fundamental turning point. After three decades at the top of the global economic order, the G7/8 no longer had the overwhelming share of economic power to justify continuing as the world’s economic steering group.

The imagery could not have been more striking. I was Canada’s G8 sherpa at the 2008 Hokkaido-Toyako Summit, where the leaders of Brazil, India and China had – as in years past – been invited as guests, waiting impatiently in the wings to be summoned. In Washington, from the start, they were seated as equals at a new and more powerful table.

In the months that followed the Washington Summit, voices within the G8 suggested it should be abandoned. Members, including Canada and Japan, were committed to keeping it while adjusting its role to reflect the G20 Pittsburgh Summit’s declaration in 2009 that the G20 was the world’s ‘premier forum for international economic cooperation’.

In respecting this decision, Canada’s Prime Minister Stephen Harper, host and chair of both the Muskoka G8 and Toronto G20 summits – held back to back in June 2010 – agreed that Muskoka would not issue an economic statement ahead of Toronto that could be interpreted as pre-empting the deliberations of the G20.

Since then, the G7/8 has successfully transitioned into a less powerful but still valuable forum within the global governance system across its entire traditional agenda. In 2014, it became more homogeneous in terms of interests and values, with the departure of Russia.

The G7 has become a principal voice in supporting the reform and continued relevance of the western rules-based liberal order.

Annual G7 summits and ministerial meetings help define issues and prepare positions for discussions in the G20. Contact between the governments hosting annual G7 and G20 summits is a best practice, followed by G7 host Canada and G20 host Argentina in 2018. From the beginning, G7 finance ministers have held a particularly key role on the G20’s core macroeconomic agenda, and in driving the highly technical deliberations on fixing the weaknesses within the global financial system.

Many of us who were present at those early G20 summits worried that once the crisis was under control, the G20 would lose its focus on macroeconomic and financial system issues and broaden its agenda. The growth of the G7 agenda since 1975 was evidence of the tendency of summit hosts to add to, but seldom subtract from, an unwieldy built-in agenda with lagging attention to implementation.

Perhaps that experience (which now includes high attention to accountability and implementation) has been helpful. G20 leaders’ agendas seem to remain better focused, with selectivity on additional priorities such as climate change, health, food and gender. Often, non-governmental players and civil society criticise the G20 for lack of ambition.

G20 commitments also seem to be closely tracked, thanks in part to the work of the G20 Research Group of the Munk School of Global Affairs and Public Policy at the University of Toronto.

The G20 has not followed the G7 experience wherein security issues became a standing agenda item. The G20 has discussed security issues, such as Syria, terrorism and North Korea, when required to do so by the timing of a crisis or major event around a summit. However, there appears to be little collective appetite to take on those security crises that have arisen from the policies of G20 members themselves and that could undermine the very integrity of the G20 and its ability to deliver its economic cooperation mandate.

The interplay between the G7 and the G20 will continue, both on subjects and as separate instruments of global governance. There will be points of collaboration and points of friction. Yet this interplay will become increasingly important for navigating what many see as more turbulent times ahead, including resolving differences over the value and functioning of the open, rules-based system of international economic cooperation.

Meanwhile, as this year’s host of the Osaka Summit, Japan has chosen forward-looking and relevant themes. It gives the G20 another occasion to validate the wisdom of those leaders who launched the G20 as a new instrument of global governance in Washington in 2008.