Incoterms_® and Commercial Contracts

G20 summits, like all high-level diplomatic events, are the culmination of a process. They are preceded by months of preparatory work and negotiations under the direction of G20 leaders’ personal representatives, known as “sherpas”. Several times a year, G20 finance ministers meet to lay the groundwork for the next G20 summit and to follow up on the decisions announced at previous summits. Throughout this process, the G20 cooperates closely with intergovernmental organizations which have a stake in G20 decisions. The business community is also increasingly associated with G20 deliberations, including in a formal way through the holding of G20 business summits.

Many of the ground rules governing G20 summits and the broader G20 process are a legacy of the procedures and practices of the original G20 grouping of finance ministers and central bank governors. Since the G20 has no official operating rules, its decision-making process is largely shaped by experience and subject to continuous change, especially as host countries of successive G20 summits tend to introduce innovative practices every year. A number of agreed rules and customs have emerged over time, however, contributing to make the G20 process more structured and intelligible.

G20 SUMMITS

In 2010, G20 leaders decided that they would meet once a year, beginning in 2011. This decision followed a two-year transition period during which G20 summits were held every six months to give new momentum to the G20 process and address the most pressing aspects of the global financial and economic crisis of 2008-2010.

G20 summits usually last over two days and close with the issuance of a public communiqué which records the decisions and agreements reached at the meeting. While G20 communiqués are not legally binding documents, they constitute a public engagement by G20 leaders to individually and collectively undertake a number of policy actions and measures in line with the group’s objectives.

Every year, one country is designated to chair the G20 process. Korea and France were designated to chair the G20 in 2010 and 2011 respectively. On 1 December 2011, Mexico will start chairing the G20 for a period of one year. Russia has been designated to chair the G20 in 2013, Australia in 2014 and Turkey in 2015. After
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2015, the annual G20 chair will be selected from among five rotating regional groups, starting with the grouping of Asian countries (see table 1).

The chairing country’s main responsibility is to organize and host the annual G20 summit. It establishes a temporary secretariat which oversees the group’s work and preparatory meetings. The chairing country is responsible for communicating on G20 activities to the public. It does so by holding regular press conferences and setting up a summit website which provides information on the summit agenda and broader G20 priorities. To facilitate internal discussion within the G20, the chairing country also hosts the confidential “members-only” section of the permanent G20 website²³.

In 2011, France held the rotating chairmanship of both the G8 and the G20. However, the G8 annual summit of May 2011 and the G20 annual summit of November 2011 were two independent events, with distinct agendas and preparatory processes (see table 2). With the rise of the G20, an informal division of labour has emerged between the G20, which addresses economic and financial issues, and the G8, which focuses on peace, security and development²⁴. Many observers believe that the two groups will continue to co-exist, at least for some years, although their agendas may occasionally overlap.
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Countries chairing the G20 generally have a considerable say over the year’s agenda and use this opportunity to promote their global policy priorities. Korea, for example, ensured that development issues were given priority treatment at the 2010 G20 summit in Seoul. France, for its part, insisted that reform of the international monetary system and tighter regulation of commodity trading be placed on the agenda of the 2011 G20 summit in Cannes

Soon after its creation in 1999, the G20 established a management “troika” consisting of the previous, current, and immediately upcoming G20 chairs. The purpose of the troika - an arrangement still in place today and which the G20 intends to formalize further at its 2012 summit - is to strengthen the continuity of the group and facilitate the transition from one chair to another. Among its duties, the troika oversees the development of the G20 agenda and steers the work of the G20 in consultation with its members. Korea, France and Mexico formed the G20 troika for 2011. The troika for 2012 is composed of France, Mexico and Russia. Leaders and officials from the three countries maintain close contact throughout the year.

“Sherpas” are the personal representatives of G20 heads of state and government. They may be career civil servant or diplomats, special advisers to their president or prime minister, and in some cases government ministers. Their major responsibility is to manage the process of drafting - and agreeing on the terms of - the summit communiqué, which is usually prepared months in advance. Negotiations among sherpas focus not only on the substance of the communiqué but sometimes on the summit agenda itself, since G20 countries may disagree on the list of topics that they want to see addressed at summits.

The sherpa process is usually associated with G8 summits. The smaller size of the G8 means that sherpas can regularly visit and consult each other ahead of G8 summits. With the G20, it has become more challenging for sherpas to maintain close personal relations with one another. However, bilateral exchanges take place throughout the year and four meetings of all G20 sherpas have been scheduled in the run-up to the Cannes summit.

As the G20 agenda expands, sherpas will be called upon to play an increasingly pivotal role in ensuring the consistency of their country’s positions across issues and in creating linkages between the work of the various ministerial meetings and working groups involved in the G20 process. For instance, G20 efforts to
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improve the regulation of agricultural financial markets will require strong and continuous coordination between G20 finance and agriculture ministers.

At the Cannes Summit, G20 leaders tasked their sherpas with streamlining working practices for the G20 over the next year and developing proposals for engaging more consistently and effectively with external stakeholders, including non-G20 countries, regional and international organizations, and civil society.

The UK and Korea, in their role as G20 chairs for 2009 and 2010, produced detailed progress reports on the economic and financial actions undertaken by G20 leaders, ministers and intergovernmental organizations in response to the decisions and commitments endorsed at previous summits. These progress reports are available on the “Publications” section of the permanent G20 website²⁵.

MINISTERIAL MEETINGS

The G20 finance ministerial meetings are the backbone of the G20 process. Until 2008 and the elevation of the G20 to meet at the level of heads of state and/or government, G20 finance ministers and central bank governors used to meet once a year. They now meet between three and four times a year: twice independently and twice in conjunction with the spring and autumn meetings of the boards of governors of the World Bank and IMF.

The agenda of G20 finance ministers’ meetings is largely determined by the orientations and work programme defined at G20 summits. In many ways, G20 finance ministers act like the operating arm of the G20. For example, at the inaugural G20 summit in Washington in November 2008, G20 leaders asked their finance ministers to supervise the development and implementation of their action plan to reform financial markets. At the G20 summit in Seoul in November 2010, G20 leaders tasked them with elaborating guidelines for identifying persistently large imbalances among G20 countries.

Meetings of G20 finance ministers and central bank governors are usually preceded by meetings at deputy minister level and extensive technical work in the form of workshops and expert reports on specific subjects. In March 2011,
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for instance, the French chairmanship of the G20 organized a high-level seminar on the reform of the international monetary system in Nanking, China.

Labour and employment ministers from the G20 met for the first time in April 2010 at the invitation of the United States. At the 2009 Pittsburgh Summit, G20 leaders pledged to implement recovery plans that “support decent work, help preserve employment, and prioritize job growth” and agreed to give their labour ministers a stronger voice in the G20 process.

The meeting provided an opportunity for G20 labour and employment ministers to showcase the measures they had implemented and to assess what has worked and what has not. Ministers took stock of latest research by the ILO and OECD on the evolving employment situation and discussed what additional steps should be taken to create more quality jobs and to prepare the workforce for the jobs of the future. They agreed on a series of recommendations which were eventually endorsed by G20 leaders at the 2010 Toronto summit.

A second meeting of G20 labour and employment ministers took place on 26- 27 September 2011 in Paris, at the invitation of the French chairmanship. As part of their recommendations to G20 leaders, the ministers proposed the creation of an intergovernmental task force on employment. The task force, which was formally launched at the 2011 Cannes Summit, is composed of G20 representatives and will work closely with relevant international organizations and social partners. Its main task will be to develop proposals to increase youth employment and to provide input into the next G20 labour and employment ministerial meeting to be held under the Mexican chairmanship in 2012.

The ministers of agriculture of G20 countries met for the first time in June 2011 in Paris. Reflecting the desire of the French chairmanship to give special emphasis to agricultural issues at the Cannes summit, G20 agriculture ministers launched an Action Plan on Food Price Volatility and Agriculture with specific recommendations which G20 leaders formally endorsed in Cannes. The French chairmanship also organized a number of workshops and seminars to examine specific aspects of the action plan. A G20 workshop on commodities was held in Buenos Aires in May 2011; and a G20 conference on agricultural research and a G20 seminar on agricultural productivity were organized in Montpellier and Brussels ahead of the Cannes Summit.

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G20 WORKING GROUPS

In parallel to G20 ministerial meetings, the G20 has established working groups tasked with advancing G20 work in specific areas. These working groups are generally co-chaired by high-level civil servants from one advanced and one emerging economy.

Examples of currently active G20 working groups are:

• The Working Group on Development, co-chaired by France, Korea and South Africa.
• The Working Group on Anti-Corruption, co-chaired by France and Indonesia.
• The Working Group on Strong, Sustainable and Balanced Growth, cochaired by Canada and India.
• The Working Group on the Reform of the International Monetary System, co-chaired by Germany and Mexico.

All G20 countries and relevant intergovernmental organizations are represented on the working groups. Individual experts from business and academia are sometimes invited by co-chairs to contribute to the work of the groups.

As part of its development agenda, the G20 established a High Level Panel for Infrastructure Development, led by Tidjane Thiam, Group Chief Executive of Prudential. The Panel, which was presented as an innovation in terms of involving the private sector in G20 work, delivered its recommendations to G20 leaders in advance of the Cannes Summit. In Cannes, Bill Gates, co-founder of Microsoft and philanthropist, also presented a special report on financing for development entitled “Innovation With Impact: Financing 21st Century Development”, which he had prepared at the invitation of the French chairmanship of the G20.

INTERACTION WITH INTERGOVERNMENTAL ORGANIZATIONS

The G20 constantly interacts with intergovernmental organizations. These interactions take place at two levels. First, the majority of G20 decisions are directly associated with a specific task assigned to one or more intergovernmental bodies. For instance, the G20’s pledge to desist from protectionist measures was coupled with a request for the WTO, the UNCTAD and the OECD to monitor and report back on G20 trade and investment measures. When the G20 launched its Framework for Strong, Sustainable and Balanced Growth, it asked the IMF to assist with running the Mutual Assessment Process, through which G20 countries jointly evaluate their respective domestic policies. In the area of financial sector
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reform, G20 leaders charged the Financial Stability Board with implementing and monitoring G20 decisions, in close coordination with G20 finance ministers and national financial authorities.

Second, the G20 regularly solicits intergovernmental organizations for expertise, input and technical advice in their areas of responsibility. For example, the G20 mandated the OECD, the ILO, the World Bank and the WTO to publish a study on the benefits of trade liberalization for employment and growth. G20 policies on banking bonuses were initially fleshed out by the Financial Stability Board. The G20’s work on agriculture mainly draws on a series of joint recommendations prepared by the FAO and the OECD with inputs from four intergovernmental agricultural institutions²⁶.

The G20’s close cooperation with intergovernmental organizations is fundamental to give the G20 process a global reach. Strictly speaking, however, the G20 is not empowered to “mandate” any specific measure or course of action to intergovernmental organizations since their membership generally goes way beyond that of the G20. In the case of the IMF, where G20 countries collectively account for over 60% of voting rights, and that of the Financial Stability Forum, whose 24 member institutions are predominantly from G20 countries, G20 governments have an undisputable weight and influence to drive the agenda forward and instruct specific actions. In the case of the WTO and UN bodies, where voting power is more diffused, the G20 has a more limited authority to assign new mandates and request expertise.

G20 BUSINESS SUMMITS

One of the latest additions to the G20 process is the organization of G20 business summits immediately ahead of G20 summits. The purpose of G20 business summits, also called B20, is to provide a platform for interaction between business leaders from G20 countries and the heads of state and/or government participating in G20 summits.

The Korean chairmanship of the G20 was the first to organize a B20 as an integral part of the G20 process. The Seoul B20 took place on 10-11 November 2010 only a few hours before the main G20 summit to facilitate attendance by heads of state and government. The French chairmanship of the G20 organized the second B20 on 2-3 November 2011, back-to-back with the main G20 summit in Cannes.
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The business summit in Seoul attracted over 100 chairmen and chief executive officers (CEOs) of global companies from 34 countries. The heads of several national business federations from G20 countries were also invited to participate. The event required months of preparation on the part of participants, with 12 working groups set up to produce and achieve consensus on a set of critical issues for the global economy. Each working group produced a report with detailed analysis and business proposals. The recommendations were delivered to G20 finance ministers and G20 sherpas and finally to G20 leaders on the day of the event.

Discussions at the Seoul business summit focused around four broad themes:

• Revitalizing trade and foreign direct investment
• Enhancing financial stability and supporting economic activity
• Harnessing green growth, and
• Delivering on the promise of corporate social responsibility.

Eleven G20 leaders personally took part in the business summit, nine of them presiding over roundtable sessions. At the end of the event, participating companies issued a joint statement in which they presented their key priorities and proposals for the G20 summit in Seoul.

The Cannes business summit, which took place on 2-3 November 2011, began with a briefing for participating CEOs hosted by French President Nicolas Sarkozy at the Elysée Palace in Paris, and continued with a series of roundtable meetings between business and government leaders gathered in Cannes.

At the business summit, participating CEOs and heads of national business federations presented their policy recommendations on some of the most pressing issues facing G20 leaders. Summarized in the “Cannes B20 Final Report”²⁷, these recommendations were the product of several months of deliberations and collaboration among the B20 working groups assembled by the Mouvement des entreprises de France (MEDEF) and those of the World Economic Forum and ICC. The priorities shared with G20 leaders covered 12 areas:
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• Economic policies
• Financial regulation
• International monetary system
• Commodities and raw materials
• Development and food security
• Employment and social dimension
• Anti-corruption
• Trade and investment
• ICT and innovation
• Global governance
• Energy
• Green growth

Among the G20 leaders participating in the B20 summit were Australian Prime Minister Julia Gillard, South Korean President Myung-Bak Lee, Japanese Prime Minister Yoshihiko Noda, South African President Jacob Zuma, Argentine President Cristina Fernández de Kirchner, Turkish Prime Minister Recep Tayyip Erdoğan, and Russian Federation President Dimitri Medvedev.

The B20 featured a keynote address from Mexican President Felipe Calderón, who emphasized the importance of B20 summits for the G20’s work. The Mexican chairmanship of the G20 committed itself to continue the process next year, with a B20 summit back-to-back with the next G20 summit in Los Cabos.
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