Global economic recovery and the state of the financial system which is yet to resume its role as provider of credit as well as financial sector regulations would be the major focus at the forthcoming G-20 Summit in Pittsburgh (September 24-25). The heads of governments of these countries accounting for 80 per cent of world output would also review the status of the Doha Round, which had remained stalled for more than a year and was being re-energised in mid-September in Geneva following a conference of trade ministers in New Delhi on September 3.

The New Delhi Conference itself turned out to be largely a reaffirmation of the oft-declared political will to achieve an “ambitious and balanced successful outcome” of the eight-year long Doha Round Trade Negotiations, the development dimension of which has proved elusive so far. All that has been agreed on is somehow to conclude the Round by the end of 2010. The Obama Administration while appearing to be engaged in the Round has its own reservations and looks for countries like India to make bilateral concessions to get the negotiations moving.

The new US Trade Representative Mr Ron Kirk, who attended the New Delhi meeting, did not bring any whiff of change in the hard-line positions, taken by the Bush Administration, in regard to US subsidy to farmers and market access for industrial products of developing countries. All the “tough” decisions he wants are to be made by China, India and Brazil so as to bridge the gaps in the negotiating drafts in Geneva. Whether or not the countries show willingness to cross the remaining hurdles, WTO holds its next Ministerial Meeting in Geneva by the end of November.

For President Barack Obama, embroiled in the domestic resistance to his signature reform initiatives like health care and energy, pushing an agenda of freer trade in the midst of the worst recession USA is undergoing since the end of second world war has become difficult with pressures to protect American jobs. Already, the unemployment rate has risen to 9.7 per cent with over seven million rendered jobless since recession began in December 2007. In all likelihood, the trade round will drag on with few rays of hope by the end of the year.

Similar problems are dogging both the developed and developing countries in arriving at a new Treaty on Climate Change, the former, especially USA, not willing to move aggressively to control its carbon emissions, given their historic responsibility for polluting the atmosphere while the latter rejecting pressures to cap emissions, ignoring the principle of “common but differentiated responsibilities” embodied in the UN Framework Convention on Climate Change (The Bali Action Plan).

Climate change is the most critical challenge of the 21st century, with developing world, especially South Asia, facing grave consequences in the coming decades if global warming is left to deteriorate without an effective worldwide programme of mitigation and adaptation, which would advance both climate and energy security goals and help build a sustainable economic future.

The UN Conference in Copenhagen in December will be a historic opportunity for all the nations to get involved in minimising the impact of global warming through both mitigation and adaptation on terms acceptable to all and within their capacities. India is trying to “catch up” in the development of renewable sources of energy, like wind and solar, though China is well ahead in this regard as well as in the drive to reduce energy intensity in the economy.

Both on trade and climate change, India needs to resist protectionism and pressures to cap carbon emissions for a developing country with low per capita emissions. But, in the context of its globally-oriented economic policies and striving to be reckoned a global power, New Delhi may also have to demonstrate that it is not unwilling to assume responsibilities in facilitating some headway in the long drawn-out multilateral trade negotiations or on combating climate change to help build a sustainable model of development. for the future.

Finance Ministers of G-20 countries, meeting in London ahead of the Pittsburg Summit in the last week of September, were cautious about the outlook for growth and jobs, and resolved to continue implementing “decisively financial support measures and the expansionary monetary and fiscal policy, consistent with price stability and long-term fiscal sustainability” until recovery is assured. The fiscal stimulus of G-20 countries to continue through 2010 is of the order of 5.5 per cent of GDP while central banks would maintain expansionary policies till recovery strengthens and then carefully manage the unwinding process.

Issues relating to regulatory systems for financial institutions designed to avoid recurrence of crises such as the present would take precedence at the Pittsburgh Summit. The G-20 Ministers in London made progress toward agreement on enforcing rigorous standards of supervision of financial firms with stronger restraints on risk taking and also putting curbs on bonuses by financial institutions. USA is also pressing for an accord before the end of 2010 on international standards for capital and liquidity requirements of banks which would be held more accountable than hitherto.

That the global economy would not go back to pre-crisis levels of output for years to come is the strong message coming out of international institutions including IMF and UNCTAD. The G-20 Ministers' communique noted that high, stable and sustainable growth would require “orderly rebalancing” of global demand. This, according to US Treasury Secretary, Timothy Geithner, means countries outside the United States should shift toward stronger domestic demand-led growth. (IPA Service)