CFR’s Civil Society, Markets, and Democracy (CSMD) Program highlights noteworthy events and articles each Friday in “This Week in Markets and Democracy.”
The terror attacks in Paris dominated global headlines and U.S. foreign policy discussions over the past week, though regional and global economic summits went ahead as scheduled. From Turkey to the Philippines, leaders discussed the way forward on economic growth, trade, and reform.
G20 Targets Corruption, Tax Avoidance
At this week’s G20 meeting in Turkey, world leaders considered technical reforms to increase revenue by addressing tax evasion and corruption. Bureaucrats officially endorsed the Base Erosion and Profit Shifting (BEPS) plan to close international tax loopholes and prevent multinationals from moving profits from where they are earned to other jurisdictions. Companies worry about adverse BEPS effects such as double taxation. Others warn of U.S. job losses if companies relocate to countries with lower tax rates. And many outside the G20 argue the BEPS system will favor richer nations that made the rules, even as the UN estimates developing countries lose $100 billion each year to offshoring. Another technical issue on the G20 agenda was beneficial ownership transparency—whether governments enable corruption by not legally requiring companies and trusts to identify their real owners. According to Transparency International, the United States, China, and Brazil are among the biggest transgressors in shielding assets’ owners, despite a G20 commitment to fix the problem.
Trade Dominates APEC Agenda
Trade took center stage at this week’s Asia-Pacific Economic Cooperation (APEC) meeting in Manila, gathering leaders from twenty-one countries accounting for more than half of the global economy. Supporters argued for greater regional integration as a way to counter extremism and described trade as a “human right,” while opponents protested free trade as the cause of poverty and inequality. With the Trans-Pacific Partnership (TPP) agreement awaiting a U.S. vote, President Obama pushed others to ratify the deal, meeting with the heads of each TPP country. China, as Asia’s largest economy outside the TPP, countered by laying out an alternative trade proposal. Chinese President Xi Jinping also responded to concerns about Chinese growth, saying the slowdown shows his country is making the transition from export- to domestic consumption-led growth. This narrative did little to explain China’s record trade surplus on record last month, up 36 percent since 2014.