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Germany’s anti-Trump G20 agenda unveiled

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German Chancellor Angela Merkel attends the weekly cabinet meeting in Berlin, Germany, 21 December 2016. (Photo: REeuters/Hannibal Hanschke).

In Brief

When outlining the agenda for Germany’s 2017 G20 presidency, Angela Merkel spoke of challenges ranging from pandemics to geopolitical conflict. She also had a blunt warning for the global wave of nationalism that produced Donald Trump, Brexit, Marine Le Pen and Geert Wilders

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: ‘These challenges will certainly not be mastered by countries plotting a lone course or by isolationism and protectionism. There can be no return to a pre-globalisation world’.

The problem is that Germany’s G20 agenda reads too much like ‘business as usual’ to counter the isolationist and protectionist movement that has engulfed the world. Yet countering this movement is exactly what we need the G20 to do. The G20 has to develop an agenda that both engages this movement and adheres to the G20’s core aspiration for an open, rules-based international system. It needs to promote inclusive growth, better communicate the benefits of the global system and adopt pragmatic solutions to the problems that plague it.

The agenda does address some of the important issues, including implementing the Paris climate agreement, cooperating on refugee flows and continuing G20 work streams on tax and finance. But these initiatives are unlikely to engage or divert the leaders and supporters of this recent wave of nationalism. And if they don’t carry a convincing majority, they will ultimately fail.

An exception is Germany’s new focus on the spread of digital technology and its impact on the economy. Merkel said ‘the G20 must shape the basic conditions in such a way that all people are able to benefit from the positive effects of [technological progress]’. This is a good start. While trade liberalisation is often blamed for the plight of displaced workers, the primary culprit is automation. Designing long-term solutions to this challenge will help address domestic inequality, a critical driver behind the nationalist movement.

But what about in the short term? An obvious focus is infrastructure. It’s a top priority of Trump, Wilders, Boris Johnson and their supporters. The G20 can support their cause and even help them implement it by crowding in private sector resources through the G20 Global Infrastructure Hub and the Global Infrastructure Connectivity Alliance. Defeating multinational tax avoidance, stamping out corruption among government officials and cracking down on the financing of terrorism are other issues that could spark these leaders’ engagement.

Some of the challenge that faces the G20 comes down to communication. The G20’s agenda is rich with initiatives which, properly communicated, would appeal to even the most disenfranchised.

But the leaders of G20 countries need to better explain the benefits and the rationale behind pursuing an open, rules-based system.

We know that opening up to trade gives low-income families significantly more purchasing power. What’s more, the real benefits of free trade for low-income earners are proportionally greater than for their middle-income counterparts.

We know that immigration means lower taxes, cheaper healthcare and more affordable education through mitigating the effects of ageing populations.

And we know that international cooperation helps us defeat corruption, prevent tax avoidance, fight terrorism and open new markets. The benefits are clear. The communication needs to be clear as well.

But there’s one priority which is alarmingly absent from Germany’s G20 agenda: growth. As former Australian prime minister Tony Abbott once said, a ‘stronger economy won’t solve every problem; but it will make almost every problem easier to tackle’. He was right. A lack of inclusive growth is at the core of the nationalist movement. Yet the G20’s growth agenda and growth target are conspicuously absent from Germany’s G20 agenda for 2017.

The G20 should be redoubling efforts to promote inclusive growth. Infrastructure investment should be a top priority. Trade should be another. While bilateral and plurilateral trade agreements are falling out of fashion, there is another option. The G20’s agenda on competition policy reform provides a practical way of reducing behind-the-border trade barriers while boosting productivity, wages and growth. There’s no better way to ‘drain the swamp’ of entrenched interests than by intensifying competition.

Achieving sustainable inclusive growth requires difficult reforms and open international markets. The growth target set at the G20 Brisbane summit in 2014 aimed to have countries define their reform agendas and share them publicly. Committing to and implementing growth-enhancing reforms is easier to do if others are doing it too.

Promoting female participation in the workforce is another source of growth. Increasing female participation 25 per cent by 2025 would lift G20 GDP by about US$1.6 trillion and add 100 million women to the workforce according to the OECD. Implementation and communication of this commitment will again be critical to its success.

It’s still early days in Germany’s G20 presidency and G20 agendas have a habit of changing throughout the year. But if Germany can develop an agenda that brings the nationalists into the tent, renew the focus on inclusive growth and better communicate the G20’s core values, then Angela Merkel might just make the G20 great again.

Adam Triggs is a doctoral scholar at the Crawford School of Public Policy, The Australian National University and is a former advisor on the G20 at the Department of the Prime Minister and Cabinet.

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