One More Chance

A lot is riding on the London summit of G20 heads of state scheduled for next week. International regimes can develop reputations for not mattering in a short span of time. Multilateral bodies that that seem feckless or hypocritical quickly devolve into meaningless talking shops. Right now, the G20 is on the precipice of irrelevance.

To understand why, let's review the past year's exciting developments in global governance—and by "exciting" I mean "fraught with peril."

For years, many commentators, myself included, pointed out the myriad ways in which the G8 was an outdated steering group for the global political economy. China and India were not included, except in "outreach dinners" that reeked of condescension. The idea that Italy belonged at the grown-up table but Brazil had to sit with the kids bordered on the absurd. The financial crisis finally forced the powers that be to remedy matters. Last fall, when the crisis became acute, the key meeting was the G20 rather than the G8. This was a good thing, in theory. International regimes that reflect the current global distribution of power will possess the legitimacy and authority to affect real change. The G20 included the major governments of the West, plus the BRIC economies (Brazil, Russia, India and China), plus the principal oil exporters.

In practice, however, the first G20 summit was disappointing. The final communiqué produced little of substance beyond a pledge to meet again in six months. The countries acknowledged that "inconsistent and insufficiently coordinated macroeconomic policies" were an underlying cause of the crisis, and promised to coordinate their fiscal expansions. Since that communiqué, however, the responses of the important actors have varied wildly. The United States and China have stepped up; the European Union claimed that their "automatic stabilizers" were sufficient, a position that has just enough credibility to keep the snickering to a minimum.

The response on trade has been even worse. In the fall communiqué, the G20 made one of its few concrete pledges: "within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services." Sounds great, except that two days after the summit, Moscow announced that increased tariffs on imported cars. A day after that, India slapped a 5 percent duty on several iron and steel products. A month later, Brazil approved the idea of raising common external tariffs among the countries under the Mercosur agreement on a number of goods, including textiles and wine. China increased export tax rebates on more than 3,700 goods. The U.S. Congress approved "Buy American" provisions in the February stimulus package that blocked government procurement from most developing countries, including the BRIC economies. The World Bank recently reported that 17 of the 20 countries had imposed a total of 47 trade-restrictive measures. Simply put, the first G20 summit produced little action but copious amounts of hypocrisy.