G20 Statement: Tangible progress, but work to do

Statement by Angel Gurría, OECD Secretary-General

18/11/2011 - The worst economic crisis in half a century still holds us in its grip. In fact, with a bleak short-term outlook, global public opinion could be forgiven for questioning the ability of political leaders and policymakers to find a way out.

Did the G20 make a difference in Cannes? To be sure, the unfolding debt crisis in the euro area stole much of the limelight. But looking beyond the glare of headlines, unequivocal progress was made to address short-term challenges and consolidate the role of the G20 as a coordinating and convergence mechanism for the world economy.

The economy is one area where tangible results were achieved in Cannes, particularly the adoption of the G20 Action Plan on Growth and Jobs. The commitments made by each country in the Action Plan are important steps towards more ambitious targets in the months ahead. On jobs specifically, the G20’s decision to set up a Task Force on Employment focusing on youths is a significant development. Creating jobs is necessary not just for the economy, but for reducing inequality and fulfilling the G20’s shared aim spelt out at Cannes to “strengthen the social dimension of globalisation”.

Also, consider taxation, where good news emerged in the form of a vital new convention aimed at strengthening international tax co-operation and combating global tax evasion. All G20 countries signed up in Cannes to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which helps ensure that no country is deprived of its rightful revenues due to evasion and “aggressive” tax planning. President Nicolas Sarkozy must be applauded for his lead on this agenda.

The OECD is proud to have played a lead role in preparing this new convention. We estimate that almost €14 billion in tax revenues have been collected in some 20 countries from wealthy taxpayers who now see the futility of keeping undeclared assets offshore. We expect more to follow as information exchange agreements come into force. The era of bank secrecy is over, and we look forward to working with as many countries as possible to maximise the benefits from this new powerful convention.

For many people, confidence will not return until financial markets are thoroughly reformed. Here again, G20 leaders showed their determination to ensure that no financial institution becomes “too big to fail” and to implement the standards and recommendations issued by the Financial Stability Board, by strengthening supervisory powers and better managing failing institutions without exposing taxpayers. They also committed to pursuing the full application of FSB and OECD principles on financial consumer protection, designed to help ordinary people benefit from financial markets, and not be hurt by them.

The G20 also issued further calls to reduce fossil-fuel subsidies and mobilise finance to help mitigate climate change, bolster food security, resist protectionism and intensify the international fight against corruption. These are policy areas whose potential impacts can be realised if action is taken collectively, rather than by individual countries.

We know that much more needs to be done to put the world economy back on its feet, by fixing financial markets, improving public governance and restoring confidence and welfare. But we also know that the G20 process will not succeed by trying to resurrect failed models. We have said it before and it bears repeating: progress will not be made unless a more sustainable balance between governments, markets, citizens and the environment has been struck.

Political leaders must show that the seeds of that new balance have been sown in the crisis. They must demonstrate vision and use the G20 process to break the grip of the crisis and lay the groundwork for a fairer, more inclusive, world. Implementing and building on the achievements of Cannes 2011 can help them succeed.

The OECD has worked with the G20 on several initiatives, not least through the Mutual Assessment Process. We look forward to continue supporting the G20 to build on this year’s achievements and to making further progress under Mexico’s presidency in 2012. By continuing to work alongside other major international organisations, notably the FSB, ILO, IMF, UN, World Bank and WTO, we will do our utmost to ensure the G20 draws maximum benefit from our collective expertise and policy insights as it contemplates the tasks ahead.

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