By Shiro Armstrong *

The world’s major economies came together to put aside differences and coordinate policies to avoid the worst economic downturn since the Great Depression of the 1930s. That was in 2008, in the midst of the global financial crisis, there is half-life. Yet the G20 and global economic cooperation have been drastically absent during the much larger health and economic crisis of the coronavirus pandemic.

With global cooperation and coordination, the health crisis and economic downturn would have been much less severe. There has been technical cooperation among health experts, starting with the rapid genomic sequencing of what has come to be known as COVID-19, but countries have restricted exports of personal protective equipment, d ‘food and medicine. The World Health Organization was crippled by geopolitics instead of being backed by the support it needed. The COVID-19 Vaccine Global Access (COVAX) program has does little to improve equitable vaccine distribution.

Economic cooperation has been piecemeal, and economic support largely provided bilaterally or regionally on the basis of narrow personal interests or for geopolitical reasons. Countries that could afford fiscal stimulus failed to realize that without global macroeconomic coordination, the rest of the world could not afford to put a floor on the economic slowdown and support the lockdowns.

Global cooperation has been one of the victims of strategic competition between China and the United States.

The priorities of the global community are to immunize the world and to reshape global governance to ensure the recovery is sustainable.

Leaders of the Group of 7 advanced economies gathered in the UK over the weekend to push for comprehensive WTO reform, stronger action on climate change mitigation and better distribution of vaccines. World trade rules are outdated and cover a smaller proportion of world trade each year. Rules are needed for trade in services, investment and the digital economy, and disciplines are needed for subsidies in fisheries, agriculture and industry. Existing rules are currently not applicable as the United States has vetoed the appointment of new judges to the dispute settlement system.

G7 finance ministers agreed earlier to move forward with green finance which can help reshape financial markets to facilitate decarbonization and the transition to cleaner energy. Under President Biden, the world’s largest economy is no longer a barrier to global economic cooperation. We can see the Cornwall summit as a turning point.

The G7 alone will not solve the global governance deficit, however. They are by definition the established powers and even with Australia, India and South Korea as guest observers, the group represents about half of the world economy. India has more in common with emerging economies and the rest of the world than the group in Cornwall, and Prime Minister Modi cannot attend due to the virus situation at home anyway. The key will be for G7 members to lead by example, deliver global public goods and shape results at the G20 and multilaterally. The British G7 hosts coordinated closely with the Italian G20 hosts.

Less noticed but potentially more substantial, the coordination takes place halfway around the world in New Zealand, where APEC trade ministers met virtually last week.

The APEC group represents 61 percent of the global economy and includes advanced and emerging economies. Its diversity of membership, including established and rising powers, and its consensus-building approach is a strength with strong leadership from its host and members.

The practical and strategic aspect joint statement by APEC trade ministers lays the groundwork for an interim leaders’ meeting in July ahead of the summit later in the year. They proposed specific trade measures to respond to COVID-19 with an agreement to reduce trade barriers – of which there are many – in vaccines and their inputs along the supply chain, and work on protocols to resume cross-border travel. They also called for comprehensive reform of the WTO, including protecting the existing system and updating the rules. The focus differs from the G7 approach and includes the interests of developing countries.

One of these developing countries – Indonesia, not China – could be the key to reforming global trade rules. Indonesia will host the G20 in 2022 at a time when the global recovery from COVID will remain uncertain. As a democratic and dynamic developing country with a Muslim majority, Indonesia has a moral authority in global governance that it has not yet fully exercised. He represents about half of the ten members of the Association of Southeast Asian Nations, which are strategically and economically important in terms of economic size and population, and chairs the Group of 33 developing countries of the WTO.

Indonesia presented an initiative for WTO reform at the G20 summit in Osaka in 2019, but it was overshadowed by the Sino-U.S. Rivalry and the hosts trying to stop US President Trump from blowing up the Mountain peak. He will have another chance next year.

Britain was instrumental in creating global rules and institutions at Bretton Woods. These rules served to protect the interests of Great Britain in the face of the then rising power, the United States, after World War II. And they remain vital to protecting the interests of many smaller powers – now including Britain – in the face of China’s rise to power. We are seeing Britain’s first efforts, post-Brexit, to act as ‘Global Britain’ and lead the G7 reform of global rules.

But global rules need global buy-in. As we move towards a multipolar world, groups like APEC can help build consensus, but ultimately the G20 has the best chance of having new rules for a post-COVID-19 world order. .

* About the Author: Shiro Armstrong is Director of the Australia-Japan Research Center and Editor-in-Chief of the East Asia Forum at the Crawford School of Public Policy at ANU College of Asia and the Pacific.

Source: This article was published by East Asia Forum