The Group of Twenty
Backgrounder

The Group of Twenty

The Group of Twenty, an informal gathering of many of the world’s largest economies, is the premier global forum for discussing economic issues. But it has faced divisions over trade and the response to climate change.
The 2019 G20 logo is displayed at the G20 Finance and Central Bank Deputies Meeting in Tokyo.
The 2019 G20 logo is displayed at the G20 Finance and Central Bank Deputies Meeting in Tokyo. Issei Kato/Reuters
Summary
  • The G20, formed in 1999, is a group of twenty of the world’s largest economies that meets regularly to coordinate global policy on trade, health, climate, and other issues. 
  • Previous summits have addressed the 2008 financial crisis, the Iranian nuclear program, and how to respond to the Syrian civil war.
  • President Donald Trump’s America First philosophy created frictions within the group. President Joe Biden has sought to recommit the United States to multilateralism.  

Introduction

The Group of Twenty (G20), a collection of twenty of the world’s largest economies formed in 1999, was conceived as a bloc that would bring together the most important industrialized and developing economies to discuss international economic and financial stability. Its annual summit, a gathering of G20 leaders that debuted in 2008, has evolved into a major forum for discussing economics as well as other pressing global issues. Bilateral meetings on the summit’s sidelines have occasionally led to major international agreements. And while one of the group’s most impressive achievements was its robust response to the 2008 financial crisis, some analysts say its cohesion has since frayed.

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U.S. President Donald Trump clashed with many of the group’s members over trade, climate, and migration policy, though they continued to cooperate with the United States on several other fronts, such as fighting terrorism and empowering women. U.S President Joe Biden has promised a return to multilateral cooperation and attended his first G20 summit in October 2021 in Rome, where the agenda centered on climate change and the COVID-19 pandemic. The group also endorsed a major rewrite of the global rules for taxing corporations. But there is lingering tension over trade and division about how to tackle the climate crisis. 

What is the G20 summit and who takes part in it?

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The G20 comprises nineteen countries with some of the world’s largest economies, as well as the European Union (EU). The countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom (UK), and the United States. Spain is invited as a permanent guest.

Every year, the leaders of G20 members meet to discuss mainly economic and financial matters and coordinate policy on some other matters of mutual interest. Examples include when the G20 discussed how to address a covert Iranian nuclear plant at the 2009 summit and when the forum debated how to administer a partial cease-fire in Syria at the 2017 summit. The G20 is not a permanent institution with a headquarters, offices, or staff. Instead, its leadership rotates on an annual basis among its members, its decisions are made by consensus, and implementation of its agenda depends on the political will of the individual states. 

Why does the G20 matter?

Together, the nations of the G20 account for around 80 percent of global economic output, nearly 75 percent of global exports, and about 60 percent of the world’s population. These figures have remained relatively stable while the corresponding rates for Group of Seven (G7) nations, a smaller group of advanced democracies, have shrunk, as emerging markets take up a relatively greater share of the world’s economy.

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The G20 was formed in 1999, in the wake of the Asian financial crisis, to unite finance ministers and central bankers from twenty of the world’s largest established and emerging economies. A decade later, at the height of the global economic crisis, the G20 was elevated to include heads of state and government. Many experts credit the G20 with quick action; CFR’s Stewart Patrick says the group “rescued a global financial system in free fall.” In 2008 and 2009, G20 nations agreed to spending measures worth $4 trillion to revive their economies, rejected trade barriers, and implemented far-reaching reforms of the financial system.

Since then, Patrick and other observers say, the G20 has struggled to achieve similar success on its goals of coordinating monetary and fiscal policies, achieving higher growth, and rooting out corruption and tax evasion. Geopolitical analysts Ian Bremmer and Nouriel Roubini have argued against the G20’s utility, saying that a “G-Zero” world is emerging instead—one in which countries go it alone or form ad hoc coalitions to pursue their interests. In 2021, CFR’s Richard Haass and Charles A. Kupchan called for a new concert of powers, contending that “fly-in, fly-out” G20 summits are often bogged down by “haggling over detailed, but often anodyne, communiqués.”

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But many observers point out that the G20’s membership is still more representative of the current international balance of power than blocs of countries formed earlier, such as the G7. Several rising powers, including Brazil, China, India, and Indonesia, belong to the G20, as do other important countries such as Russia and Saudi Arabia. (Russia’s G7 membership was suspended indefinitely in 2014 following its annexation of Ukraine’s Crimea region.) For this reason, Patrick describes the elevation of the G20 in 2008 as a watershed moment in global governance. Now, as the world faces pressing issues including the COVID-19 pandemic and climate change, Patrick argues that the G20 “was created for just such a moment and just such challenges.”

What’s been on the agenda?

The G20 initially focused largely on broad macroeconomic policy, but it has expanded its ambit. The 2018 summit in Argentina focused on fair and sustainable development, while the previous summit in Germany drilled down on issues including corruption, money laundering, and international tax havens. Some agendas have had even less to do with macroeconomics: the 2016 summit in Hangzhou, China, was where U.S. President Barack Obama and Chinese President Xi Jinping formally announced their countries’ accession to the Paris Agreement on climate.

Economic and financial coordination remains the centerpiece of each summit’s agenda, but issues such as the future of work, terrorism, and global health are recurring focuses as well. This was increasingly true in the decade following the global financial crisis, when the G20 was able to turn its attention beyond acute economic crisis management. More recent summits struggled to cope with a U.S. shift toward unilateralism under President Trump. These gatherings have avoided using previously standard language about rejecting protectionism and promoting international cooperation.

The COVID-19 pandemic posed a major test for the group, which Patrick has criticized for largely failing to move beyond “uncoordinated national policies.” However, G20 countries did agree to suspend debt payments owed to them by some of the world’s poorest countries, providing billions of dollars in relief. And at President Biden’s first summit in Rome in October 2021, G20 leaders pledged to help vaccinate 70 percent of the world’s population by mid-2022. 

Although climate change was a focus of the Rome summit, the meeting yielded few concrete commitments on the issue. The countries agreed to end public financing for most new coal power plants overseas but said nothing about limiting coal use domestically. They also agreed on the need to curb emissions of methane, a powerful greenhouse gas, and to “pursue efforts” to limit global warming.

At the Rome summit, G20 leaders also endorsed an agreement among nearly 140 countries to overhaul the system of international corporate taxation. The agreement—the culmination of a years-long process led by the G20 and the Organization for Economic Cooperation and Development (OECD)—includes a 15 percent minimum tax as well as new rules to redistribute some tax revenue from big multinational companies.

What have been the main points of contention?

Under the Trump administration, the United States was at odds with much of the rest of the G20, especially regarding trade, climate, and migration policies. More than any other issue, Trump’s position on trade placed stress on the forum, as it conflicted with the group’s long-standing commitment to an international trading order based on World Trade Organization principles of reducing tariffs and other trade barriers. Trump enacted or threatened higher tariffs on Argentina, Australia, Brazil, Canada, China, India, Japan, Mexico, South Korea, Turkey, and the EU—G20 members that together account for over half of the world’s economy. 

On climate, Trump’s decision to withdraw the United States from the Paris Agreement caused the group to issue a statement at the 2017 summit saying that the rest of the G20 members considered the climate accord “irreversible.” Trump also pressed the group to limit action on migration and refugees.

Some of these tensions have since eased. Biden rejoined the Paris Agreement in one of his first official acts as president and has pledged to greatly increase the number of refugees the United States admits. But he has so far kept most of Trump’s tariffs in place, though his administration recently reached an agreement with the EU to replace the tariffs on steel and aluminum products with a quota arrangement. There is also still friction within the group regarding climate change, with China, India, Russia, and Saudi Arabia reportedly blocking an agreement on phasing out coal use and fossil fuel subsidies at a July 2021 meeting of environment ministers. 

What happens on the sidelines of the summits?

CFR’s Patrick has emphasized the G20’s flexibility compared with other multilateral institutions, writing that it transcends “stultifying bloc politics” and could help shake up a sometimes rigid geopolitical order. This flexibility extends to the summits themselves, where bilateral meetings between heads of state and government often focus on issues outside the formal agenda.

These tête-à-têtes, whether planned or impromptu, often grab headlines due to their diplomatic gravity. In Hamburg, Germany, in 2017, Trump met Russian President Vladimir Putin for the first time, holding multiple meetings that lasted several hours each and sparked concerns among U.S. allies within the G20.

The following year, a bilateral meeting again overshadowed the G20 summit, this time between Trump and Chinese President Xi Jinping. The two leaders agreed to delay threatened tariff hikes. At the 2021 Rome summit, Biden met with French President Emmanuel Macron in an effort to repair the relationship that was damaged when Paris was blindsided by the announcement of a U.S.-Australia-UK defense pact and the cancellation of a French submarine contract. Biden also held bilateral meetings with the leaders of the Democratic Republic of Congo, Germany, Singapore, and Turkey. Putin and Xi did not attend the Rome summit.

Many experts stress the substantial effects of personal relationships among leaders on making foreign policy. By gathering so many leaders together, G20 summits offer rare opportunities to develop such relationships and recast bilateral ties.

Recommended Resources

For Foreign Affairs, CFR’s Richard Haass and Charles A. Kupchan make the case for a new concert of powers.

This Backgrounder explains the recent international agreement on a new framework for corporate taxation

This In Brief breaks down the pledges countries made at the ​​twenty-sixth Conference of the Parties (COP26) climate summit.

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Andrew Chatzky contributed to this report.

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