G20 Information Centre
2011 Cannes Summit Performance Assessment:
Mabruk Kabir, G20 Research Group
November 14, 2011
Prime Minister Manmohan Singh’s first priority involved pushing the G20 to address the global economic instability, and to put open trade, jobs, social protection and economic development at the heart of the recovery. Specifically, he underscored the need to avoid protectionism, and advocated the importance of an open, transparent and rules-based multilateral trading system as a driver of global growth. India, like all other countries, has a stake in European economic stability, as or own economic growth is tied closely to the Eurozone-driven demand. The worsening of Euro zone’s problems and continued weakness of the global economy could mean a two percentage points difference in GDP growth rate for India (Source: KG Narendranath, "Euro Instability Could Hurt India, Says Singh," Indian Express, November 4, 2011).
The communiqué reaffirmed its commitment to ‘reinvigorate economic growth, create jobs, ensure financial stability, and promote social inclusion.’ Furthermore, to improve employment and social inclusion, a G20 task force was established on youth employment, in addition to recognizing the importance of social protection floors adapted to national situations. The communiqué also underscored ‘the merits of the multilateral trading system as a way to avoid protectionism ... reaffirming our standstill commitments until the end of 2013, as agreed in Toronto, commit to roll back any new protectionist measure that may have risen, including new export restrictions and WTO-inconsistent measures to stimulate exports and ask the WTO, OECD and UNCTAD to continue monitoring the situation and to report publicly on a semi-annual basis.’
GRADE: A. Not only were India’s agenda items included in the final communiqué, but the wording also closely clearly reflected India’s initial agenda.
India pushed the G20 towards strong action on the issue of black money stashed in tax havens, advocating for greater transparency and automatic exchange of tax-related information between G20 members. G20 action to clamp down on tax havens began at the London summit in April 2009, but some had argued that the agreement reached was too weak, with evasion remaining rampant. A tougher crackdown on tax evasion by the world's wealthiest individuals could provide cash-strapped G20 governments with up to $100bn in tax revenue, according to the OECD.
The communiqué highlighted the progress made on tax havens, urging all jurisdictions to take the necessary actions to tackle the deficiencies identified by the Global Forum, in particular singling out 11 countries the Global Forum had identified as tax havens. It went on to say ‘We underline the importance of comprehensive tax information exchange and encourage work in the Global Forum to define the means to improve it. We welcome the commitment made by all of us to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and strongly encourage other jurisdictions to join this Convention.’ Prime Minister Singh hailed the communiqué, noting that it endorsed India's call for increased banking transparency and exchange of information to combat tax fraud and evasion and other illicit flows.
GRADE: A. The communiqué raised the importance of comprehensive tax information exchange and encouraged the work in the global forum. It called upon the nations to “adhere to the international standards in the tax, prudential and Anti Money Laundering/ Combating the Financing of Terrorism (AML/CFT) areas”.
The G20 Mutual Assessment Process (MAP) is an effort to coordinate macroeconomic policies among the major countries, aiming to improve coordination critical for sustaining global growth and reassuring markets. Co-chaired by India (and Canada), it is mandated to find agreement on new rules in addition to sharing adjustment burdens. Implemented through the G20 Working Group on Sustainable and Balanced Growth, its members are tasked with finding consensus on early warning measures and procedures for crisis avoidance, as well as adjustment measures for surplus and deficit countries. As a country-led process, the MAP was expected to fill the perceived legitimacy gaps at the IMF.
Indians saw the Cannes Summit facing two major challenges. Firstly, it had to reassure markets that credible steps have been taken to ensure stability in the Euro-zone. Second, having ensured stability, the G20 had to show progress on the MAP. The two were interconnected, as progress on the MAP will allow higher levels of global growth, particularly on debt-stressed countries.
Therefore, Brazil is expected to call for action on food price volatility and food security at the G20 Summit.
Institutional development of the MAP has been slow. While industrial countries view global imbalances through the lens of trade misalignments between surplus and deficit countries, developing countries see it through the lens of development deficits between North and the South. Thus countries like India look towards the MAP as a mechanism to address development challenges (including access to requisite funds through multilateral development banks), while others see it as trade balance mechanism. Thus dichotomy in expectations has held up institutional development of the MAP.
GRADE: C. Given the numerous other issues that took precedence at Cannes, the MAP was not a prominent issue.
Before the Prime Minister left New Delhi for the G20 talks, the media accompanying him was primed to expect a 40-minute tête-à-tête with French president Nicolas Sarkozy. The two men were originally scheduled to meet at 10am on Friday, but Elysée Palace officials rescheduled the meeting to 1pm and then again to 4pm. In the end, Sarkozy did not meet the Prime Minister, which the Indian media saw a clear snub, unintended perhaps in view of the pressing agenda before the President, but a violation of summit courtesy since France was hosting the G20 meeting.
The snub was especially glaring because for Mr. Sarkozy, a meeting with Microsoft’s founder Bill Gates took precedence over his aborted meeting with the Indian PM. The Indian delegation also highlighted the fact that Sarkozy had time for a personal dinner with the Chinese premier, but could not spare any time for Dr. Singh.
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