Cooperation to Overcome the Challenges of Multilateralism

The international outlook is complex. Dissatisfaction with globalization is no longer limited to a handful of developing countries but has now spread into more advanced nations. Years of successful international cooperation have given way to disagreements between countries around trade, tax issues, technology, and the environment.

The G20 was successful in handling the global financial crisis of 2008–2009 and containing its aftershocks. The world was facing an urgent global threat and the leaders of the G20 defined, coordinated, and implemented the monetary, fiscal, and regulatory policies needed to tackle this crisis. Since then, the G20 has played a fundamental role in promoting international financial stability.

Unfortunately, despite the importance of today’s global challenges, the world does not seem to perceive on them with the same sense of urgency. Climate change, food security, the distribution of the costs and benefits of trade and technology, inequality (including gender inequality), and needed investment in infrastructure for development
are global challenges that create negative externalities. However, their effects are felt as strongly in the short term as those of a financial crisis. These are collective action problems in which countries have little incentive to implement individual solutions because these are costly and imply conflicts of interest, and those who instigate solutions will not be the only ones to reap the benefits. However, global well-being is an unattainable goal if each country is not prepared to make concessions and strive to promote international cooperation.

Global problems demand cooperative responses and institutions that can generate stable commitments. In the current context, which entails multiple challenges but lacks the sense of urgency that would bring stakeholders together and facilitate cooperation, multilateral institutions are having a hard time reaching global solutions. The G20 is the ideal forum for starting dialogues to seek basic consensus around a form of multilateralism that would allow countries to take on a shared agenda with a focus on trade, climate change, inequality, and  echnological change.

Redesigning the Multilateral Trading System
The G20 should start a dialogue to redesign the World Trade Organization (WTO) and prevent increases in recent trade frictions. The
main aim is helping societies adapt to the productive, technological, and social challenges of the 21st century. A creative agreement between
G20 leaders prioritizing the principle of cooperation would help kickstart the much-needed reform of the WTO and strengthen the international trading system.

This dialogue could take place under the auspices of the G20’s Trade
and Investment Working Group and would focus on three areas. First, facilitating the transition to a new trade regime, one befitting a multipolar world. Second, preserving the essence of the multilateral
system—such as the principle of nondiscrimination—and adapting rules and institutions to the new realities of global trade, which is characterized by the growing digitalization and internationalization
of productive activities and the consolidation of global value chains. The system needs to respond to global needs such as food security by strengthening trade in agricultural goods and developing healthy, sustainable global food systems. Third, finding a way to reconcile the flexibility and predictability that the multilateral trading system requires.

Fulfilling the Paris Agreement
The G20 also needs to play a central part in the fight against climate change. If current trends continue, global warming will exceed the 2°C limit to temperature increase by 2050. Only immediate cooperative action on the part of the international community, led by the G20 countries, can reverse this situation. Measures to mitigate and adapt to climate change need to be clear and categorical and countries’ commitment to implementing them must be lasting and equitable. The Paris Agreement is the most appropriate framework for achieving this objective.

Addressing climate change requires significant investment in infrastructure for development. Emerging economies need to create or
expand their network of public services and developing countries need to modernize theirs. The G20 must promote agreements that ensure that the new infrastructure will contribute to mitigating climate change and provide incentives for developing financial instruments and regulations to mobilize the resources needed to implement these projects. The G20’s influence on multilateral financial institutions, development banks, and the private sector—all key players in this process—is essential to achieving these goals.

Climate change is a global challenge, but it has a clear local side to it. Some 70% of greenhouse gas emissions come from urban areas and this percentage is set to grow in the coming years due to urbanization in developing countries. The G20 needs to strengthen cities’ abilities to lead climate change mitigation, giving them a voice, resources, and responsibilities and encouraging the compliance with with the Nationally Determined Contributions and Sustainable Developments
Goals (SDGs).

Promoting a New Social Contract
Inequality is another major source of global social frustrations. It takes multiple forms, the most visible of which are the gender gap and inequality in income distribution and wealth. Other less noticeable but nonetheless significant forms of inequality include the vulnerability and lack of opportunities that certain groups experience due to their ethnicity, geographic origins, and sexual orientation, among other factors.

Against this backdrop of global inequality, new technologies are bursting onto the scene and spreading fast. Although the Fourth Industrial Revolution promises to be a source of growth in productivity
and material well-being, it may also increase the disparities between different groups. We know that new technologies will benefit some jobs and activities but may put paid to others. We also know that they will affect women more than men and will probably be adopted and used more readily in rich countries than in poor ones, which would also exacerbate inequality. At the same time, new technologies are powerful tools that could help bridge existing gaps provided they are accessible to those with less education and opportunities.

The challenge ahead for the G20 is cooperating to design a new social structure, a new social contract that puts people at the heart of its concerns and converts new technologies into vehicles not just for increased growth and productivity but also for greater equality, transparency, and social cohesion.

The challenge is multidimensional. On the one hand, it implies thinking about how to distribute the digital dividends that will be created as disruptive technologies are adopted and become widespread. This new social contract must also contemplate the design of a high-quality education system that readies people to play a part in productive processes that will demand new skills and abilities, in a way that helps them reach their full potential as citizens of a digital world. This shift would require, among other things, an innovative form of education that enables workers to collaborate and interact with next-generation robots; an up-to-date digital literacy program for handling big data; government measures to discourage the manipulation of public opinion and privacy problems; and increased spending on research and development through virtuous global knowledge and action cycles.

The challenge of institutional innovation calls on us to build an education system that empowers people and gives them a new purpose,
one that goes beyond a social role that revolves around work, as has been the case since the First Industrial Revolution. This new social contract should also include social protection systems to ensure that those who are displaced by these changes do not become marginalized
and to help those who cannot adapt readily to new technologies to make these transitions more smoothly.

Closing gender gaps must be at the heart of this new social contract. Women’s participation in the world of paid work has slowed over the last forty years and it remains far below that of men. This is basically explained by the unequal distribution of domestic and care work, most of which is performed by women.

Gender economic equity is imperative for the global economy. The G20 is responsible for making concrete progress on this and is in a position to do so. In 2014, the organization recognized this duty by committing to reducing the gender gap in labor market participation rates by 25% by 2025. The new social contract needs to include a crosscutting gender perspective that will contribute to greater equality and sustainable growth.

Representativeness, Diversity, and Flexibility
The G20 is the right forum for taking on these pressing global challenges because it is representative, diverse, and flexible by nature. This group of countries is home to 66% of the world’s population, accounts for 85% of global production, and takes part in 75% of international trade. Its representativeness and value also derive from
the diversity of its members. The G20 includes countries from every continent, high-, middle-, and low-income countries, and people with
all manner of religions, histories, experiences, and cultures. This diversity is one of its key assets and it needs to play a more pivotal role.

Flexibility is another valuable G20 asset, one that allows the organization to handle common problems that take different forms in
each country and thus require nuanced solutions. Inequality, for instance, which has generated so much concern in advanced countries
in recent years, has not been such a prominent issue in less developed ones. The developed world is concerned that the growth of recent decades has not been equitable, while in many Asian countries, in contrast, rapid economic growth has led to a notable reduction in poverty. Conversely, in Latin America, one of the most unequal regions in the world, what has stood out over the last three decades is how limited growth has been. Looming fears around job insecurity, flexibilization, and informality—the gig economy—in advanced countries are not seen as a future threat in many developing
countries but have instead been a reality of life for many of their inhabitants for decades. The challenges of migration also take different forms in developing and advanced countries because migratory flows tend to go from the former to the latter.

The representativeness, diversity, and flexibility of the G20 make it the best international forum in which to encourage multilateral cooperation and coordination and to promote actions for a more prosperous, inclusive, sustainable world that respects different countries’ idiosyncrasies and unique qualities. The Think 20 (T20) works to help the G20 find solutions to global challenges by putting forward concrete proposals that eschew sector-specific interests and are rooted in evidence-based research.