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G-20 may be most remarkable since 2009

Split between US and Europe on various issues clouds summit

The G-20 summit in Hamburg is likely to see key splits between the United States and other Western countries, and could become the most remarkable gathering since the 2009 meeting in London during the international financial crisis.

There is also massive attention on Russian President Vladimir Putin's long-awaited first meeting with US counterpart Donald Trump.

But the biggest spectacle will be the key splits between the US and major EU states over issues such as international trade, migration and climate change.

German Chancellor Angela Merkel sent a coded message to Mr Trump last week that "whoever believes that the world's problems can be solved by isolationism and protectionism is mistaken...".

This appears to underline that she will not shirk controversy at the summit. Given the splits in the Western ranks, Ms Merkel may well find one of her strongest allies on climate and trade issues could be Chinese President Xi Jinping.

He has positioned himself this year as a defender of economic globalisation, and also a big advocate, like Ms Merkel, of the Paris climate change deal.

In part, this is because Mr Xi wants to defend the legacy of last year's G-20 summit in Hangzhou which focused on the need for more innovative, sustainable global growth.

The ambitious German summit agenda has a key theme of the "networked world".

This includes financial regulation and, in particular, addressing "harmful tax competition" between countries.

The latter is typically seen as the widespread use by companies and individuals of low tax countries as tax shelters.

COMMITMENT TO FREE TRADE

Despite potential US opposition, Ms Merkel also wants to re-affirm G-20 commitment to free trade.

One potential flashpoint is the possibility that Mr Trump will use the summit to demand specific action, including against China, to reduce excess capacity and other perceived distortions in the steel market.

It is noteworthy here, given Mr Trump's session with Mr Putin at the summit, that Russia is also a significant steel exporter to the US.

There will be discussion on how best to move forward with the UN's implementation of the "2030 Agenda for Sustainable Development" (a set of ambitious goals for eliminating global poverty), and the German hosts also want as many of the G-20 members as possible to re-commit to the Paris agreement.

This is an ambitious programme that is unlikely to be fully realised. Though the G-20 is widely perceived since the 2008-09 financial crisis to be the premier forum for international economic cooperation and global economic governance, it has limited effectiveness in practice.

A key part of its failure to deliver on previous high expectations is that the G-20 meetings have no formal mechanisms to ensure enforcement of agreements by world leaders.

But it continues to be a forum prized by its members.

The writer is an Associate at LSE IDEAS at the London School of Economics. The article, which ran in The Business Times yesterday, has been edited for length.

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