G20 Bulletin, October 28, 2003
by Sheri Watson
G8 Research Group

Mexico’s treasury secretary Francisco Gil Diaz chaired the annual G20 ministerial of finance ministers and central bank governors on October 26-27, 2003, in Morelia, Mexico.[1] The two themes of this year’s meeting were global economic recovery and sustainable economic growth. Officials sought to address the imbalances that have recently arisen among developed countries and between the developed and the less developed.

Diaz commented on October 26 that the world has become too dependent on the U.S. economy. Bundesbank president Ernst Welteke questioned whether recent growth in the U.S. economy is, in fact, sustainable. He cited as potential threats the U.S. current account deficit and the public deficit. Alan Greenspan, chair of the U.S. Federal Reserve, admitted that the U.S. economy had experienced a setback due to recent conflicts, such as the war in Iraq.

U.S. treasury secretary John Snow was another strong American presence at the meeting, pushing strongly for initiatives to counteract terrorism as well as for donations toward Iraqi reconstruction. He placed the onus for economic growth on Europe and Asia. He met privately for bilateral discussions on October 26 with officials from Russia, China, Argentina and Germany, in addition to planned talks with Mexico, Turkey, South Africa and France.

The final highlighted several key areas for future concerted action now that “global economic recovery is underway.” It refers to the topics of promoting economic growth toward regional balance — officials pledged to move toward the “implementation of appropriate policies” and structural reforms — and cutting off terrorist financing through improved monitoring and enforcement. It also discussed measures for crisis prevention and resolution. In discussing the development of a framework for implementing the Monterrey commitments. finance officials considered deeper partnerships among developed and less developed states, as a measure fundamental for progress in meeting the Millennium Development Goals, and strongly endorsed trade liberalization. The communiqué stated “the G20 is uniquely placed to deepen the linkages between aid, good governance, financing and trade.”

G20 officials endorsed a multilateral trade approach as a means to reduce poverty, stimulate growth and equalize the distribution of benefits from globalization. Although the subject of the World Trade Organization’s Doha Round was not on the agenda, participants issued a call within the communiqué for a renewal of the round with the support of international financial institutions. They also encouraged greater co-operation with the Organisation for Economic Co-operation and Development in counteracting illicit activities, and stressed the importance of the International Monetary Fund and World Bank as partners in combating terrorist funding. The communiqué concluded with an acknowledgement of the support of bilateral creditors for the Enhanced HIPC Initiative, and called for further action on debt relief.

The next G20 ministerial will be held in Berlin in 2004, with the 2005 meeting chaired by the People’s Republic of China. The group of 20 major industrialized countries and emerging economies was founded in 1999, and collectively represents 80% of the global income and more than 60% of the world population.

Sources: Associated Press, Reuters, Financial Times

Note

[1] The G20 consists of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, Great Britain, and the United States, as well as the European Union and representatives from the International Monetary Fund and the World Bank. (N.B. At the World Trade Organization’s fifth ministerial meeting in Cancun, Mexico, in September, many countries came together in present a proposal on agriculture. They became known as the G20 or the G20+, and consist of developing countries; no member of the G8 is involved.)