Japan Politics

Trade in spotlight as G-20 discusses economy in Osaka summit

29, Jun. 2019

By Noriyuki Suzuki

OSAKA, Kyodo - Leaders from the Group of 20 major economies weighed the risk of a slowing global economy on Friday amid growing trade and geopolitical tensions as a two-day summit began in Osaka under Japan's presidency.

As an escalating U.S.-China trade war looms large, eyes are on whether the G-20 nations -- accounting for about 80 percent of the world's economy -- can agree on the importance of free trade and the rules-based multilateral trading system that has benefited economic growth.

“Trade and geopolitical tensions are intensifying,” Prime Minister Shinzo Abe told other G-20 leaders at the outset of the day's session, cautioning that the global economy is facing downside risks.

“I want the G-20 to share a determination to realize growth by employing all policy tools,” Abe said. “We should send out a strong message.”

Abe said he is “deeply concerned” about the current global trade situation, saying restrictive measures will not benefit any country, in an apparent reference to tit-for-tat tariff hikes between the United States and China.

Abe faces the tough task of projecting a united G-20 front despite apparent disagreements particularly over contentious issues such as trade and climate change.

At the summit that will also address environmental issues, the G-20 leaders are expected to agree to end the dumping of plastic waste in the world's oceans by 2050, sources familiar with the matter said Friday. The goal will likely be included in a post-meeting joint statement.

Bilateral talks scheduled for Saturday between U.S. President Donald Trump and Chinese President Xi Jinping have already gripped the G-20, as the tariff battle between the world's two largest economies has threatened to darken the economic outlook given the integrated nature of global supply chains.

Rising tensions in the Middle East amid a U.S.-Iran standoff over a 2015 nuclear deal have also become a concern for the world economy and sent oil prices higher.

Major central banks, including the U.S. Federal Reserve and the Bank of Japan, have recently hinted at additional stimulus if needed, even as the G-20 finance chiefs, meeting earlier in the month, said growth is expected to pick up moderately later this year.

As digital data can both be an economic growth driver and a security risk, Japan is making the case for better and proper use of it through what is called the Osaka track, a forum for rule making in ecommerce and other areas.

The G-20 leaders will also take up reform of the World Trade Organization, a symbol of multilateral free trade that has come under attack since U.S. President Trump took office.

“We are working closely with the United States and Japan as well as China and others on reforming the World Trade Organization and creating a level playing field,” European Commission President Jean-Claude Juncker said at a press conference on Friday.

“This can only be done with the G-20 as a core group,” Juncker said, referring to the need to tackle issues such as unfair industrial subsidies.

Under the WTO, launched in 1995, countries negotiate trade rules. It also provides a dispute settlement mechanism.

The United States has taken aim at the WTO's failure to enforce its rules on China, blocking appointments to its appellate body.

The G-20 is seen as fit for policy coordination in times of emergency situations such as the 2008 financial crisis.

More than a decade later, it also needs to discuss ways to foster economic growth by promoting digital trade and making better use of innovations such as artificial intelligence.

The G-20 consists of Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union. (Kyodo)

[Pool photo]

[Getty/Kyodo]

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