The G20 and its Institutional Framework Inter-regional and global governance: lessons from TER

1. The G20 and its Institutional FrameworkInter-regional and global governance: lessons from TER Dr Henning Meyer (LSE) &Dr Stephen Barber (LSBU)

2. The G20 and its Institutional Framework • Talk through initial research on TER • The problems with and importance of TER • Historical Context • Dysfunctionality and proposed solutions • Development of these ideas into current research on G20’s institutional framework • Role of G20 • Context • New dysfunctionality and potential framework solutions

3. Making Transatlantic Economic Relations Work • It is security interests which have characterised the relationship between the USA and Europe • Transatlantic economic relations remains an underexplored area of academic research • Increasingly important since the fall of the Berlin Wall • Global recession has brought it to prominence. Initial research: Meyer & Barber, ‘Making Transatlantic Economic Relations Work’, Global Policy Journal, Vol 2 Issue 1, Jan 2011 Meyer & Barber, ‘Transatlantic Economic Relations as a Bridge’, Economiae Lavoro Journal, April 2011.

4. Making Transatlantic Economic Relations Work • Transatlantic economic partnership is the biggest and most important in the world. • 800 million people • 57 % of world GDP • 33 % of global trade in goods • 42 % of trade of services (2007) • It is so big that rules agreed have the potential to become de facto global standards • No evidence that political frictions in the fields of security and foreign policy have had any significant impact on the volume of transatlantic trade and investment (Pollack and Shaffer 2006). Initial research: Meyer & Barber, ‘Making Transatlantic Economic Relations Work’, Global Policy Journal, Vol 2 Issue 1, Jan 2011 Meyer & Barber, ‘Transatlantic Economic Relations as a Bridge’, Economiae Lavoro Journal, April 2011.

5. Making Transatlantic Economic Relations Work • Historical Context: • JFK’s Declaration of Interdependence (1962) • Transatlantic Declaration (1990) • New Transatlantic Agenda (1995) • Framework for Advancing Transatlantic Economic Integration (2007) Initial research: Meyer & Barber, ‘Making Transatlantic Economic Relations Work’, Global Policy Journal, Vol 2 Issue 1, Jan 2011 Meyer & Barber, ‘Transatlantic Economic Relations as a Bridge’, Economiae Lavoro Journal, April 2011.

6. Post NTA Organisational Structure Intergovernmental Level: • Regular summit meetings between the US President and a delegation of EU officials (mostly the EU Commission President and the rotating Presidency of the Council of Ministers plus the High Representative for the Common Foreign and Security Policy) Transgovernmental Level: • Transatlantic networks of lower-level US and EU officials working on foreign policy and especially economic issues. These networks work largely unaffected by the dynamics of transatlantic high politics Transnational Level: • Transatlantic Business Dialogue (TABD) – consisting of European and American CEOs lobbying for the liberalization of the transatlantic marketplace • Transatlantic Consumer Dialogue (TACD) – network of EU and US consumer organizations • Transatlantic Labor Dialogue (TALD) – Dialogue of trade unions (had only a handful of meetings but has not been formally abolished) • Transatlantic Environmental Dialogue (TAED) – Dialogue of environmental stakeholders – (ceased to exist in 2001) • Transatlantic Legislator’s Dialogue (TLD) – created in 1999 as a formal response of the European Parliament and US Congress to the NTA commitments. Its main aim is to enhance the level of discourse between members of the European Parliament and the US Congress.

7. Making Transatlantic Economic Relations Work • TER characterised by mutual dysfunctionality • Its agenda has focussed on too narrow an agenda of simply reducing tariff barriers with the all too ambitious aim of elimination • This has meant weakness in the process and institutional failings Initial research: Meyer & Barber, ‘Making Transatlantic Economic Relations Work’, Global Policy Journal, Vol 2 Issue 1, Jan 2011 Meyer & Barber, ‘Transatlantic Economic Relations as a Bridge’, Economiae Lavoro Journal, April 2011.

8. Making Transatlantic Economic Relations Work • Proposed Institutional Innovations: • Permanent secretariat • Investigations, findings and recommendations • Setting de facto standards • Broadening the Agenda • Common industrial standards • Engaging stakeholders and incentivising participation Initial research: Meyer & Barber, ‘Making Transatlantic Economic Relations Work’, Global Policy Journal, Vol 2 Issue 1, Jan 2011 Meyer & Barber, ‘Transatlantic Economic Relations as a Bridge’, Economiae Lavoro Journal, April 2011.

9. Broadening this Approach to the G20 • G20 established as a meeting of finance ministers and central bankers in 1999 in response to the financial crisis of that decade • It only became prominent in 2009 in response to the global economic crisis and became leaders meeting • Appears to have usurped the G7/8 as the primary global industrialised economic forum • Has had longer term success in Basel III capital and liquidity accord • Faces similar and more difficult institutional challenges • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

10. Broadening this Approach to the G20 • 2009 meetings characterised by common interests • Positive outcome • Inclusive and collegiate approach (broadly) • Concerted action of fiscal stimulus and bail outs • Pittsburgh ambition “premier forum for international economic co-operation” • Subsequent meetings have seen dysfunctionality • Diverging interests • Big player dominance • New Era of institutional innovation? • Existing institutions fail to reflect new power balance (Bretton Woods...) • One size fits all conditionality left wanting. • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

11. G20 Governance Challenges I • Transition from emergency institution to permanent governance structure (G20 1.0 to G20 2.0) • Problem of ‘input legitimacy’ (G20 + 5 balance question, +5 on unequal terms, +5 based on no objective criteria) • Ability to reform itself Bretton Woods institutions • Create institution that overcomes the legitimacy issues of the Bretton Woods institutions • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

12. G20 Governance Challenges II • Ability to follow through on agreements in G20 Communiqués  ultimate test • Find a structure of overcome ‘prisoner dilemma’ by acting in global and not national interest • G20 dominated by the G2?  Will always be a challenge and integration is better than exclusion • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

13. G20 and the OMC? • EU as laboratory for governance mechanisms • OMC as governance structure between loose cooperation and supranationalisation • Now a decade worth of experience with OMC  Could it be a viable structure for a new G20 governance architecture? • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

14. OMC Origin • Open Method of Coordination (OMC) introduced as part of the Lisbon Agenda in 2000 as a new governance mechanism in policy fields outside the community method • It drew on experiences with the OECD and IMF but is set in a different context (IMF = lender and monitoring institution, OECD = policy forum that promotes bets practise and exchange of experiences) • In the European context it was also meant to bring about policy convergence and spread best practise  slight question of legitimacy • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

15. What is the OMC? I • The OMC is a mechanism that relies on peer-review and peer-pressure • Soft-law  non-binding and no sacntions • Intergovernmental and voluntaristic • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

16. What is the OMC? II • Fixing guidelines for union with short-. Medium- and long-term timetables • Establishing quantitative and qualitative indicators tailored to member state needs • Translating these guidelines into national and regional policies allowing for special circumstances • Regular monitoring, evaluation and peer review processes • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

17. OMC Assessment • Proved to be an adaptable governance structure that can be tailored to the need of different policy fields • Received rather sober reviews in context of EU as it was compared to effectiveness of community method • Difficult to assess in what way it has triggered policy convergence (methodological issues) • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

18. G20 Context • G20 is promising institution that could be extended to other policy fields (what is the alternative?)  Needs to become more effective • French proposal (withdrawn?) of permanent secretariat for G20 (similar to EU rotating presidency) • But if there is a secretariat, what is it supposed to do other than organising meetings? • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

19. An OMC for the G20 I • If the G20 is to grow into an effective governance institution it needs to become more efficient • OMC is a useful governance mechanism between loose cooperation and supranationalisation • OMC EU criticism strength in G20 context  policy convergence not the aim • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

20. An OMC for the G20 II • OMC designed for G20 would allow for breaking communiqué commitments down and monitor and evaluate implementation • Does not address all issues in full (input legitimacy) but could help the evolution of the G20 into a more effective global governance institution • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal

21. The Design Question • What specific elements of an OMC should there be for the G20? • How can the input legitimacy problem be addressed through an OMC? • How would an appreciated G20 link into existing governance processes? • New research: • Meyer & Barber,‘The Institutional Framework G20’ • Report • Journal