After the GFC, the G20 took action to boost market and consumer confidence, and then implemented reforms to ensure financial stability. With the multilateral system under severe strain today, a similar push is urgently needed

After the GFC, the G20 took action to boost market and consumer confidence, and then implemented reforms to ensure financial stability. With the multilateral system under severe strain today, a similar push is urgently needed

By Josh Frydenberg, Heng Swee Keat, Sri Mulyani Indrawati, and Bill Morneau

Since the creation of the Bretton Woods system 75 years ago, countries have been coming together in pursuit of global public goods, giving rise to both the international trading system and a global financial safety net.

It is to this multilateral approach that we owe our shared success. The free flow of trade, investment, and ideas has helped lift more people out of poverty than ever before. And the world’s growing middle classes are now broadening the opportunities for further exchange of goods, services, and innovation.

By underwriting global economic and political security, the multilateral system allows both big and small countries to fulfill their potential. As beneficiaries of this system, we all have a responsibility to safeguard the institutions that have underpinned our economic prosperity. We must now work together to forge a consensus on pressing global challenges.

Rising trade tensions are one such challenge. While we acknowledge that legitimate issues must be addressed, we worry that the risks of collateral damage are growing. Uncertainty over the global outlook is contributing to a slowdown in trade and manufacturing activity. Financial-market volatility and currency instability are on the rise, amid declining capital flows to emerging economies. Deteriorating global trade conditions are affecting investor confidence, business spending, and productivity. Risks remain tilted to the downside, and the World Bank and the International Monetary Fund continue to revise downward their economic growth forecasts.

We need to reverse course, and that requires acting collectively. The first step is to support the rules-based multilateral system. While respecting each country’s domestic priorities, we need to protect free and open markets, because that is what will ensure stronger growth and greater prosperity for all. We should not resort to unilateralism and protectionism. Pursuing confrontation instead of dialogue will only exacerbate risks, erode confidence, and weaken the prospect of global economic recovery. Compromise is key to achieving win-win outcomes and mutual trust.

Multilateralism relies on the core principles of non-discrimination, predictability, and transparency. We abide by these principles because we know they work. In 2008, policymakers from around the world – especially those from the G20 countries – came together to safeguard the global economy. Leaders took decisive and coordinated action that was widely acknowledged to have boosted consumer and business confidence, thereby driving the first stages of the recovery. The G20 then went on to implement reforms aimed at promoting financial stability, through strengthened regulation and coordinated oversight.

More recently, G20 leaders responded to growing concerns about corporate tax avoidance. In November 2015, member states agreed on a strategy to ensure that multinational profits are taxed in the country where economic activity occurs. This consensus demonstrated a commitment to fairness, transparency, and accountability in addressing a complex cross-border challenge. In the current global environment, we need much more of this type of leadership and cooperation.

The G20 is an important forum for world leaders to forge agreement on solutions to our shared problems, because it is small enough to be efficient yet large enough to be representative. But there are legitimate concerns that the multilateral system is struggling to manage the complexity of today’s global economy. We need to take an honest look at our trading system, reform governance of our multilateral institutions, and develop a cooperative agreement on digital taxation.

These are separate issues, but they must be dealt with in the same way: through multilateral dialogue and consensus-building. The overarching goals must be to reduce incentives for unilateral action and build respect for international norms and laws.

Saudi Arabia, Italy, and India, the countries that will hold the G20 presidency over the next three years, have the opportunity – and the responsibility – to set the group’s strategic direction. The G20 must continue to support an open trading system and a global financial safety net that can withstand crises and address challenges such as insufficient infrastructure investment and disaster resilience. The G20 also offers a unique forum for sharing national perspectives on common challenges, including the future of work, women’s economic empowerment, and competition policy.

To restore lost confidence, our multilateral system needs newfound strength to withstand the complexity of our current circumstances. Harking back to its emergence as a global player during the 2008 global financial crisis, the G20 needs to continue to build mutual understanding and cooperation, so that it can uphold and support multilateral problem solving in the event of another economic crisis.

This is not something that one or two countries can do alone. All of us must play a role in restoring the multilateral system that has contributed so much to our shared growth and prosperity over the past 70 years.

Our collective determination and wisdom can return the global economy to a more positive path. As senior ministers, we speak out to affirm that we will use all our energies to encourage cooperation on the global challenges we face together.


Josh Frydenberg is Treasurer of Australia and Deputy Leader of the Liberal Party. Heng Swee Keat is Deputy Prime Minister and Finance Minister of Singapore. Sri Mulyani Indrawati is Finance Minister of Indonesia. Bill Morneau is Finance Minister of Canada. Copyright: Project Syndicate, 2019, published here with permission.

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These pleadings sound like a masking of the Bank Centred System now in place.
Central banks taking roles never before done, to protect banks. Protect debt providers protect inflated asset prices. (Its only the price, not the asset form & function).
Read private profits, public losses.

Finance and debt appear the multilateral problem being hinted at.
Protecting the banks by unconventional means negative interest rates, disclosed and non-disclosure QE appears to only enrich a small few.

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That's rubbish. You're just trying to protect a reserve currency that's been weaponized by the US against other players who would seek to come out from under the financial oppression of the international bankers. To hell with your platitudes. Economic institutions have decimated the 'potential' of countries around the world. I saw what they did to the Asian economies in the economic crisis. I see what they do to the Mediterranean countries, hell even Germany is in recession. I live with the legacy of taxpayer bailouts to financial institutions who made bad bets and lost but were too big to fail and only had liquidity from drug running. All you care about is debt and debt slaves in your euphemistic "service economies". It's over for you parasites. Someone else will lead the future, you'll suck on the bones of the countries you bled dry.

When neoliberals say how fantastic it is that millions have been lifted out of poverty, I can't help think they point to this not because they care about the people being lifted out of poverty, but rather care more about the continuation of fat profits for themselves.

Profits derived by outsourcing work to poorer countries.

The comment of a comfortable person. If and only if the outsourcing makes the poorer country wealthier and results in millions being lifted out of poverty then it is good. The difference between abject poverty unable to consistently feed your children and a slightly better poverty where the kids are fed is far bigger than say NZ minimum wage to millionaire.
The basis of capitalism is that by looking after yourself you end up enriching others. So you are right businessmen are thinking of their profits and not thinking about any incidental good that may result from an efficient economy.
I don't mind neoliberals boasting about eliminating poverty when it is true; what worries me is when their profits are at the expense of finite resources. Having removed ethics from trade how can it be re-inserted for the benefit of the world my grandchildren will live in.

Lapun, I usually agree with your comments but can't really make head nor tail of this one.

Comment of a comfortable person? What? Are you saying I have no idea about poverty, so shouldn't comment on it?

You understand that whilst millions overseas have gotten a bit wealthier, here in NZ things have gone backwards for our poorest? Like other westernised countries.

And you seem to agree that the businessmen are looking after themselves and the change in the circumstances of those working (directly or indirectly) for them are incidental (to the businessmen - not to the workers). Which was my point. So not sure why you seemed to disagree with it.

Yes. I'm in the UK so wrote that comment of excessive incoherence just after waking up. Reading it now after breakfast I see you are right.

Certainly agree with you about poverty in NZ - specifically for the segment of low paid semi-skilled workers such as bus drivers and truck drivers - they are barely above the poverty of the minimum wage cleaners and the unemployed beneficiaries. I think I was trying to distinguish between poverty in NZ and poverty in the 3rd world - really ought to be two different words. We should rejoice that the UN targets for alleviating poverty are being hit ahead of schedule. There is a distinction between liberalism and neoliberalism with the latter leading us back to feudal wealth distribution..

Yes, indeed. The elite 1% have even gutted their own cultures to secure their profits & power. This doesn't usually end well.

shitting himself...its going tits up and he knows it

Thanks for the article. It highlights just some of the characteristics of the current economic system ignoring what it lacks: environmental sustainability and a focus in productive economy and the common good. Every time we talk about economy ignoring these we incur in a debt to ourselves.

Everyone seems to be getting very excited by Josh Frydenberg's viewpoint. It is just the viewpoint of an accountant. Like any institution, the input from an accountant is valuable, but has to be balanced by the views of engineers, lawyers, marketers, & maybe even academics etc..
In the context of current international trade and finance, it seems that he, and others are arguing that the past benefits of multi-lateral trade and relatively regulated financial systems, shouldn't be lost complete sight of in the current climate whereby large players such as Russia and the USA (who scarcely need to rely on export trade & income) are tempted to pull up the drawbridges.
The G20 might be looking at the past with rose-tinted glasses, but he makes some valid points.
We just need to read him in the context of other voices about multi-national abuses of power, and certainly about issues of the environment.
Taken overall there are some hard issues to be faced, none more so in our own tiny country where our traditional sources of hard currency are insufficient to fund us all in the manner we might like & where our desire to protect our environment will almost certainly make our terms of trade worse.

The system is not working for the average man so we have to double down and have lots more of the same. Yeah right!
The beatings will continue until the moral improves.

What a strange statement - surely the alternate to multilateralism is bilateralism. In other words, the NZCER bilateral agreement with Aus, vs the CCTTPA (or whatever its initials now are) multilateral agreement.

Bilaterals seem far more advantageous to me. They are more government to government - as opposed to governments to multinational corporations.

I agree. when politics and business meet, often the majority lose out and the minority profits

As beneficiaries of this system, we all have a responsibility to safeguard the institutions that have underpinned our economic prosperity.

British imperialism and patriarchy?

..helped lift more people out of poverty than ever before.

I'm not sure we should make some of our own people poorer so that other people in other lands can become richer. None of us signed up for that.

We abide by these principles

Much like political correctness there seems to be a religious aspect to all this. Nationalism is a form of idolatry. To make the world a better place for all we must smash the idols.