The Group of Twenty

The 2019 G20 logo is displayed at the G20 Finance and Central Bank Deputies Meeting in Tokyo. Issei Kato/Reuters

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 faces challenges from U.S. protectionism and the growth of emerging powers.

June 10, 2019

The 2019 G20 logo is displayed at the G20 Finance and Central Bank Deputies Meeting in Tokyo. Issei Kato/Reuters
Backgrounder
Current political and economic issues succinctly explained.

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. One of the group’s most impressive achievements was its robust response to the 2008 financial crisis, but some analysts say its cohesion has since frayed.

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U.S. President Donald J. Trump has clashed with many of the group’s members over trade, climate, and migration policy. Yet G20 countries continue to support cooperation on several other fronts, ranging from fighting terrorism to bringing more women into the workforce. In 2019, the G20 summit takes place in Osaka, Japan, and the agenda includes discussions on reform of the World Trade Organization (WTO), global health, and climate change. Bilateral meetings on the summit’s sidelines have occasionally led to major international agreements and underscored existing hostilities.

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. 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, and the United States.

G20 Members Map

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. The 2019 summit in Osaka is expected to draw dozens of heads of state and government.

Why does the G20 matter?

Together, the nations of the G20 account for around 80 percent of global economic output, nearly 75 percent of all global trade, and about two-thirds 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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G20 and G7 Shares of GDP

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 that, in the words of CFR’s Stewart Patrick, “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.

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While some are skeptical about the G20’s utility, many observers point out that the G20 membership is still more representative of the current international balance of power than other blocs of countries formed long ago, such as the G7.

Several emerging-market powers, including Brazil, China, India, and Indonesia, belong to the G20, as do other important countries such as Russia and Saudi Arabia, which are excluded from blocs that include only democracies. For this reason, Patrick describes the elevation of the G20 in 2008 as a watershed moment in global governance. “For the first time, the most important established and emerging nations met as ostensibly equal partners at the apex of multilateral summitry,” he writes.

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 have 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.

What are the main points of contention?

Under the Trump administration, the United States is at odds with much of the rest of the G20, especially regarding trade, climate, and migration policies.

  • Trade. The Trump administration has forced the group to drop its usual commitment to “resist all kinds of protectionism” in recent communiqués. Instead, the G20 has merely noted that the global trade “system is currently falling short of its objectives and there is room for improvement.”
  • Climate. Trump’s decision to withdraw the United States from the Paris Agreement caused the group to issue a statement at the 2017 summit that the rest of G20 members considered the climate accord “irreversible.” The following year, the United States separately reiterated its position to withdraw from the agreement.
  • Migration and refugees. The Trump administration pressed to remove all but one reference to the G20’s annual migration report in 2018. On refugees in particular, the group continued to emphasize a need to address the root causes of displacement and respond to the current crisis. However, it only mentioned refugees one time, down from six mentions in the 2016 communiqué.

More than any other issue, the U.S. attitude toward trade has placed stress on the forum, conflicting with the group’s traditional commitment to an international trading order underpinned by low tariffs and the WTO. Since 2018, President Trump has 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.

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, President 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. There, the two leaders agreed to delay threatened tariff hikes by at least ninety days. White House advisors have since suggested that Trump and Xi will repeat their bilateral trade talks at the 2019 summit in Japan.

At the 2018 summit, observers took careful note of a warm greeting between Putin and Saudi Crown Prince Mohammed bin Salman. Experts speculated about whether the two leaders’ embrace might portend an expanding Saudi-Russian energy collaboration.

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.

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