Indonesia has just delivered an important milestone of its G20 Presidency – the Think20 Summit in Bali, Sept 4-6, 2022. The Think 20 (T20) is the “ideas bank” for the G20 – a key mechanism through which G20 policy-makers engage the pooled resources of the global academic, research and think tank community to solve global problems. As co-chairs of T20 Taskforce 1 on Open Trade and Sustainable Investment, we hope G20 governments will take notice of the many common sense recommendations in the T20 Communique.
The G20 – the Group of 19 countries plus the EU – is a unique grouping, where developed and developing countries share a common platform to discuss proposals for improving global economic governance. 2022 kicks off a first-ever occurrence, with a series of developing countries taking on the Presidency for four years consecutively: Indonesia, followed by India, then Brazil, finally South Africa. The extended leadership opportunity for the global South is obvious: a chance to a) bring forward G20 promises on economic equity for the developing countries, and b) lead the world out of recession with implementation of policy approaches that are inclusive, accessible and adaptable.
India needs to reflect on its own strengths and weaknesses as it readies for its Presidency year starting December 2022. Hosting the G20 should not be seen merely as a giant tourism and investment promotion opportunity. It requires dedicated and consistent policy engagement at every level, including in the academic and business community. There is an external perception that India has not invested sufficiently in global multilateral engagement, including the G20 and the WTO, preferring to play a strongly defensive position. As the world’s fifth largest economy, exhibiting a relatively rare positive rate of growth, India needs to engage more fully. By 2023, all eyes will be on India – and it will need to be ready.
There are learnings from Indonesia’s experience.
First, Indonesia’s achievements, evident even part-way into 2022, are testimony to the intrinsic importance of not going it alone. Irrespective of its own large, expanding domestic market, Indonesia is a trading nation. It participates actively in most of the regional trade and economic cooperation groupings across East Asia and the Pacific: ASEAN and ASEAN’s own embedded network of FTAs[1] , the ASEAN + 6 East Asian Summit, the 15-member mega-regional Regional Comprehensive Economic Partnership (RCEP) and the 21-member economic cooperation grouping under APEC.
Indonesia is therefore deeply engaged in regional and multilateral cooperative processes which provide trusted back-up and support at every step. ASEAN integration, which always comes first, provides a critical test bed for what works, what won’t, and why. Three decades of familiarity with cooperation and capacity-building means that Indonesian institutions are relatively outward turning with strong people-to-people ties across Asia and the Pacific.
Second, intra-Asia relationships are ASEAN-centred but book-ended by strong education linkages with Australia and long-term investment partnerships with Japan. Australia is the top international destination for Indonesian students. Japan is consistently among Indonesia’s largest investment partners after Singapore, with investment increasingly directed at boosting Indonesia’s role in global supply chains.
With this support, Indonesia has been able to lay the groundwork for India’s presidency. But it also means hard work for New Delhi. India is perceived to have less multilateral or regional economic engagement, relatively little interest in opening the domestic economy to global trade, and limited government, academic or corporate expertise on the subject. It has a big web of trade-related agreements, but many of them are comparatively shallow or with limited sectoral coverage.[2] The chambers of commerce lean toward event management and lobbying for their members, with whom the fear of non-defensive engagement is high. Even in the areas where India excels globally – information technology and pharma – there appears to be a reticence to take a leadership role in case the comfort of continuing profits is disrupted.
These fears must be overcome and moment, seized. Geopolitically, India is on enviable terms with most G20 nations and like Indonesia, can use its exemplary diplomacy to build goodwill and consensus. Strong business support can aid New Delhi in the G-20 effort. Indian tech and pharma companies have proven during the Covid-19 pandemic, to be globally respected, reliable partners. Deepening these ties will help Indian policy-makers and other stakeholders to be in closer, more direct contact with their Asian counterparts. India can beef up engagement with the Indian Ocean Rim Association (IORA), and members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) can be exposed, at India’s invitation, to the G20 processes.
The signals for change are already apparent. First, G20 policies are notoriously repetitive, and driven by the G7. At the Bali T20 Summit and at India’s initiative, the Japan-funded, Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA), has announced a new four-year G20 Research Forum to focus on development issues in support of the G20 chairmanships of India, Brazil and South Africa. This open global approach from a trusted common platform for rigorous economic study, is India’s opening contribution to all developing countries in the G20.
Second, India’s commerce ministry has just set an ambitious agenda for increased trade and multilateral engagement, aiming for $2 trillion in exports by 2047.[3]
Finally, leadership in digital can be India’s lasting legacy for the global South. The rules for digital trade are being written now. As the world’s top IT and business services outsourcing centre, with a vibrant digital ecosystem and open source approach to innovation, India has a special interest in what the digital rules are and how they are written and implemented. For India’s digital growth story is shared with all developing countries which are in varying stages of building a virtual infrastructure where services matter more than goods.
It will help India shed its negotiating reputation as seeking explicit bilateral reciprocity and trade-off, rather than building coalitions and leaning in with emerging consensus. Geopolitics are becoming more complicated, not less. India will have to speed-learn, double its energies to keep the G20 together and achieve an outcome every G20 leader can take home to their own domestic constituencies.
Manjeet Kripalani and Jane Drake-Brockman are co-chairs of the T20 Taskforce 1 on Open Trade and Sustainable Investment, Indonesian G20 Presidency.
A version of this article was published in the Indian Express.
References
[1] With India, Australia, China, Hong Kong, Japan, Korea and New Zealand
[2] For example, the long-standing Asia Pacific Trade Agreement (APTA) agreements, a CEPA with the UAE, economic cooperation with European, Latin and Asian partners, an FTA with ASEAN and South Asia (SAFTA) and has recently concluded a more modern-style interim FTA with Australia. India’s reservation on data is holding it back from joining the new Indo-Pacific Economic Framework.