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The G-20 Underperforms Again

Summary:
The big headline from the Group of Twenty (G-20) meeting in Osaka on June 28–29 concerned a ceasefire in the trade war between President Donald Trump and President Xi Jinping of China.  Less noticed was the notable lack of progress on confronting urgent crises over the future of the World Trade Organization (WTO) and the Paris Agreement on climate change. All the G-20 leaders did on these two issues was repeat their differing national positions.  Hortatory commitments to pursue “necessary reform of the World Trade Organization” and “the urgent need for addressing complex and pressing global issues and challenges, including climate change” were paired with sentences that underscored the deep divide among G-20 members about what needs to be done. On trade, the G-20 punted on the current

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The big headline from the Group of Twenty (G-20) meeting in Osaka on June 28–29 concerned a ceasefire in the trade war between President Donald Trump and President Xi Jinping of China.  Less noticed was the notable lack of progress on confronting urgent crises over the future of the World Trade Organization (WTO) and the Paris Agreement on climate change.

All the G-20 leaders did on these two issues was repeat their differing national positions.  Hortatory commitments to pursue “necessary reform of the World Trade Organization” and “the urgent need for addressing complex and pressing global issues and challenges, including climate change” were paired with sentences that underscored the deep divide among G-20 members about what needs to be done.

On trade, the G-20 punted on the current crisis over WTO dispute settlement, which has crippled the ability to adjudicate disputes and enforce WTO obligations. Advancing WTO negotiations on fisheries subsidies received only glancing comment. And G-20 commitments about cross-border data flows were given lip service with no new ideas on how to bridge the wide differences in national policies regarding privacy, data protection, intellectual property rights, and security.

Take, for example, the WTO dispute settlement impasse, which already has reached a crisis point. US officials complain Appellate Body members engage in “judicial overreach” by interpreting provisions under dispute in a way that expands the scope of WTO obligations; they are blocking the appointment of Appellate Body members until their demands are met. US Trade Representative (USTR) Robert Lighthizer seems determined to continue that strategy until the panel lacks a quorum at the end of the year. After that point, appeals can be brought but not heard.  

The beauty of the US strategy is that without an appellate review, US officials can abide by a lower-level ruling if it favors the United States. If the ruling goes against US interests, USTR simply appeals the case, where it dies because of a lack of quorum. A perfect embodiment of “heads I win, tails you lose!”

Some G-20 members called for incremental action to address dispute settlement problems, echoing sensible proposals put forward by the European Union, China, and others. But they amount to technical fixes that do not address the extent of judicial overreach. President Trump does not seem to care about adjudicating trade disputes or the broader damage being done to the WTO. His trade policies violate WTO obligations at will, so he should be pleased with Lighthizer’s strategy to block WTO rulings against the United States. 

On climate change, the isolation of the Trump administration was on dramatic display, with a declaration that "signatories to the Paris Agreement" reaffirmed their commitment to its implementation. G-20 members split 19 to 1 on actions to reduce greenhouse gas emissions, with the United States the outlier. Meanwhile, the United States repeated its decision to withdraw from the Paris climate accord.  Of course, it hasn’t acted yet: Under the terms of the agreement, countries cannot even notify their intent to withdraw until three years after signature and then there is a one-year waiting period before exit.  The earliest the United States could notify its intent to withdraw would be early November 2019.  Instead of issuing vapid declarations, the G-20 talks should have focused on a concrete result: getting the United States to delay issuing its notification letter.  That would have been far more important than anything they said or did on trade in the entire meeting.

At a time when the world’s top trading nations are violating the spirit and letter of WTO commitments to a rules-based trading system, the world needed more forthright and concrete G-20 commitments to policy reform and action on global warming. Instead, neither cause was advanced, and next year promises more of the same. Or even worse: Saudi Arabia will host and chair the G-20 in 2020.

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