The Group of Twenty (also known as the “G20”) met in Los Cabos, Baja California Sur under the G20 Mexican Presidency from June 18-19, 2012. The G20 is the premier forum for international cooperation on important aspects of the international economic and financial agenda and brings together the world’s major advanced and emerging economies. The 2012 G20 Leaders’ Summit in Los Cabos brought together in Los Cabos 24 heads of state and government and eight leaders of international organizations. It was the seventh meeting of the G20 and the first one held in Latin America.
The G20 includes 19 country members and the European Union, which together represent approximately 90 percent of the global gross domestic product, 80 percent of global trade and two-thirds of the world’s population. The objectives of the G20 are: (1) policy coordination between its members in order to achieve global economic stability and sustainable growth; (2) to promote financial regulations that reduce risks and prevent future financial crises; and (3) to create a new international financial architecture. The Leaders’ Summit was held with these objectives in mind.
At the outset of its presidency, Mexico established several priorities that helped to shape the Leaders’ Summit and lay the foundation for the agreements reached. The priorities were: (1) economic stabilization and structural reforms as foundations for growth and employment; (2) strengthening the financial system and fostering financial inclusion to promote economic growth; (3) improving the international financial architecture in an interconnected world; (4) enhancing food security and addressing commodity price volatility; and (5) promoting sustainable development, green growth and the fight against climate change. Mexico encouraged not only member participation in accomplishing these priorities, but also the participation of non-members, international organizations and the private sector in order to meet its objectives.
Discussions at the Los Cabos summit centered primarily on the issues of European stabilization, financial regulatory reform, International Monetary Fund (IMF) reform and resources, job growth and economic vulnerability. The summit produced four documents, which summarize the agreements reached: (i) The Leaders Declaration; (ii) The Los Cabos Growth and Jobs Action Plan; (iii) Policy Commitments for each G20 country; and (iv) the 2012 Progress Report of the Development Working Group. In addition, the Business 20 (B20) produced a set of Task Force Reports, and the Labour 20 (L20) produced a short report and engineered a joint B20-L20 meeting with G20 leaders.
The following are some of the important agreements reached by the G20 leaders in order to address several of today’s economic challenges:
- The leaders signed the Los Cabos Action Plan for Growth and Employment. The plan established commitments to deal with the Eurozone; strengthen demand, economic growth and financial systems; ensure the fiscal consolidation of advanced economies; reinforce solid, sustainable growth in emerging economies; and maintain trade liberalization.
- The IMF’s financial resources were increased to over $450 billion USD. This is the greatest capitalization in the history of the Fund, which will increase its capacity to provide support and loans for coping with economic crises.
- The leaders adopted trade facilitation measures in order to reject protectionism because it is in the interest of all the Group members to prevent further recession. The main agreement was to extend the Stand Still Clause to 2014, which involves abstaining from implementing protectionist measures and will guarantee certainty for international markets.
- Advancements were achieved in improving the regulatory framework in order to strengthen financial systems. Progress was made in the creation of an institutional framework, as a result of which the Financial Stability Council will be created, with new statutes to enhance its operation and governance.
- In regard to financial inclusion, agreements were reached for the Global Alliance for Financial Inclusion, which will measure the progress of the extension of financial services to the population with the least resources. In addition, greater financial education will be promoted and protective measures increased for the users of financial services for savings, credits and insurance.
- In regard to food security, the G20 agreed to promote greater public and private investment in order to promote agriculture, develop technology and increase the productivity of the sector. The president announced that Mexico will host the G20 Agricultural Chief Scientists in September. An Agricultural Market Information System will be created to prevent worldwide food price speculation.
- For the first time ever, environmental issues were discussed. In particular, Mexico promoted the discussion of topics such as green growth, the elimination of fossil fuel subsidies and measures to increase fuel efficiency, among others. The president declared that this would be one of the legacies of the VII Leaders’ Summit.