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FACTBOX-What G20 financial leaders will discuss on March 17-18
March 15, 2017 / 5:59 PM / 5 months ago

FACTBOX-What G20 financial leaders will discuss on March 17-18

BRUSSELS, March 15 (Reuters) - Finance ministers and central bank governors from the world's top 20 economies will meet in the German spa town of Baden-Baden on March 17-18 to discuss the global economy.

The G20 includes Argentina, Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States.

It also comprises a total of 12 institutions, including the International Monetary Fund (IMF), World Bank and the Organisation for Economic Cooperation and Development (OECD).

Germany, which holds the rotating chair of the G20 this year, has also invited to Baden-Baden as guests Ivory Coast, Morocco, the Netherlands, Norway, Poland, Rwanda, Senegal, Singapore, Spain, Switzerland and Tunisia.

Below are some the issues on the agenda:

1. The main theme of the meeting is likely to be the degree of consensus against protectionism that all G20 countries will be able to agree on, given protectionist views of the new U.S. administration of Donald Trump such as the border tax on imports.

Last September, G20 leaders declared "opposition to protectionism on trade and investment in all its forms" in a pledge that has appeared in most G20 communiques for a decade.

2. While discussions on exchange rate policies are usually conducted among the G7 countries - United States, Canada, Japan, Germany, France, Italy and Britain - the G20 also tends to include some reference to currencies in its statement.

The phrase that has appeared with some variations in many G20 statements in the past is similar to the one adopted during last year's Chinese presidency of the group:

"We reiterate that excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. Our relevant authorities will consult closely on exchange markets. We reaffirm our previous exchange rate commitments, including that we will refrain from competitive devaluations and we will not target our exchange rates for competitive purposes."

The early draft of the Baden-Baden meeting does not contain these phrases, but officials from several G20 members have told Reuters they would push for the words to be included in the end so as not to alarm markets that the G20 approach has changed.

3. G20 leaders agreed in 2014 in Australia to launch reforms that would help boost global economic growth by an additional 2 percent of gross domestic product over five years until the end of 2018, adding an extra $2 trillion to the global economy.

Each G20 country was to propose reforms, called a growth strategy, that would boost GDP. Their effectiveness and implementation is checked by peers, the IMF and the OECD.

Last September, G20 leaders said: "We are making further progress towards the implementation of our growth strategies, but much more needs to be done", emphasising implementation.

To help focus minds on the growth strategies and make it easier to reject protectionism, Germany wants the G20 to sign up to a list of principles to make economies more resilient to shocks. These would include sound public finances, reducing vulnerabilities in the private sector, a favourable business environment, a flexible labour market and efficient social security systems.

The early draft G20 communique seen by Reuters says: "We agree on a set of principles to foster economic resilience which provides an indicative menu that will guide us in choosing country-specific commitments to strengthen economic resilience."

4. The G20 are also likely to agree to act together to stop hackers from infiltrating and damaging networks of banks and other financial institutions.

5. Finally the ministers will push for the implementation of a scheme that is to deter large international companies such as Google, Starbucks, Amazon, Facebook or EBay from aggressive tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.

The scheme is called Base Erosion and Profit Shifting (BEPS) and encompasses over 100 countries and jurisdictions. G20 ministers expect the OECD to prepare by July, when G20 leaders are to meet in the German city of Hamburg, a list of countries that do not want to cooperate in this scheme.

"Defensive measures will be considered against listed jurisdictions," the G20 draft communique said. (Reporting by Jan Strupczewski; Editing by Tom Heneghan)

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