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Thursday, October 31, 2013

The G-20 and International Economic Cooperation: Background and Implications for Congress


Rebecca M. Nelson
Analyst in International Trade and Finance

The G-20 is an international forum for discussing and coordinating economic policies among major advanced and emerging economies. Congress may want to exercise oversight over the Administration’s participation in the G-20 process, including the policy commitments that the Administration is making in the G-20 and the policies it is encouraging other G-20 countries to pursue. 

Background 


The G-20 rose to prominence during the global financial crisis of 2008-2009, when it played an arguably influential role in coordinating international responses to the crisis. Leaders agreed that the G-20 would be the “premier” forum for international economic coordination, a position previously held by a smaller group of advanced economies (the Group of 7, or G-7, which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States).

G-20 leaders have annual meetings (“summits”), and meetings among lower-level officials from the G-20 countries occur more frequently. Meetings primarily focus on international economic and financial issues, although related topics are also discussed, including development, food security, and the environment, among others. Previous summits have, for example, focused on financial regulatory reform, global imbalances, funding for the International Monetary Fund (IMF), voting power of emerging economies in international financial institutions, and fossil fuel subsidies. 

The G-20 in 2013 and 2014 


The G-20 has a rotating presidency, which is held by Russia in 2013. The Russian government indicated that it wanted to use its presidency to focus on macroeconomic and financial sector issues. The Russian government hosted the 2013 G-20 summit in St. Petersburg, Russia, on September 5-6, 2013, which focused on a wide range of economic issues, including trade, investment, jobs, financial regulation, and corruption. Foreign policy issues, most notably the situation in Syria, were also discussed. Australia is scheduled to assume the G-20 presidency in 2014 and host the next summit in Brisbane on November 15-16, 2014. In addition to the summits, several meetings among lower level officials, including finance ministers and central bank governors among others, are scheduled throughout the year. 

Effectiveness of the G-20 


Some analysts say that while the G-20 was instrumental in coordinating the response to the global financial crisis of 2008-2009, its effectiveness has diminished as the urgency of the crisis has waned. They argue that the G-20 has failed to provide adequate international leadership in key policy areas, including responses to the Eurozone crisis and forging a conclusion to the World Trade Organization (WTO) Doha Round of multilateral trade negotiations. They also maintain that the G-20 as a group is too heterogeneous to achieve real coordination and its agenda is too ambitious. Others argue that the G-20 serves as an important institution in the international economy. They argue that the G-20 is a critical forum for discussing major policy initiatives across major countries and encouraging greater cooperation, even if agreement on policies is not always reached. They also argue that it serves as a useful institution as a steering committee for other international organizations, such as the IMF, and that having the G-20 policy-making infrastructure in place is important for timely international responses to future crises.

Date of Report: October 23, 2013
Number of Pages: 17
Order Number: R40977
Price: $29.95


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Multilateral Development Banks: U.S. Contributions FY2000-FY2014


Rebecca M. Nelson
Analyst in International Trade and Finance

This report shows in tabular form how much the Administration requested and how much Congress appropriated for U.S. payments to the multilateral development banks (MDBs) since 2000. It also provides a brief description of the MDBs and the ways they fund their operations. It will be updated periodically as annual appropriation figures are known. The title of this report will also change annually, as new yearly appropriation figures are added.

For FY2014, the Administration has requested funds for several of the non-concessional lending facilities at the MDBs. Several of the MDBs are in the process of increasing the size of their nonconcessional lending facilities, a process frequently called a “general capital increase” (GCI).

GCIs are relatively unusual, particularly for so many institutions at the same time. Contributions to the GCIs are expected to be spread out over a five- to eight-year period, depending on the institution. For most of the institutions, the funds appropriated in FY2012 were the first annual payment. In addition to funds for the GCIs, the Administration has requested for FY2014 funds for several MDB concessional lending facilities and more targeted MDB funds, such as those dedicated to environmental issues.

For further information about the MDBs, the GCIs, and relevant U.S. policy process, see:

Date of Report: October 21, 2013
Number of Pages: 11
Order Number: RS20792
Price: $29.95


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Thursday, October 24, 2013

China-U.S. Trade Issues


Wayne M. Morrison
Specialist in Asian Trade and Finance

U.S.-China economic ties have expanded substantially over the past three decades. Total U.S.- China trade rose from $5 billion in 1981 to $536 billion in 2012. China is currently the United States’ second-largest trading partner, its third-largest export market, and its biggest source of imports. According to one estimate, China is currently a $250 billion market for U.S. firms (i.e., U.S. exports to China plus sales by U.S.-invested firms in China). Many U.S. firms view participation in China’s market as critical to staying globally competitive. General Motors (GM), for example, which has invested heavily in China, sold more cars in China than in the United States from 2010 to 2012. In addition, U.S. imports of low-cost goods from China greatly benefit U.S. consumers, and U.S. firms that use China as the final point of assembly for their products, or use Chinese-made inputs for production in the United States, are able to lower costs. China is the largest foreign holder of U.S. Treasury securities ($1.3 trillion as of May 2013). China’s purchases of U.S. government debt help keep U.S. interest rates low.

Despite growing commercial ties, the bilateral economic relationship has become increasingly complex and often fraught with tension. From the U.S. perspective, many trade tensions stem from China’s incomplete transition to a free market economy. While China has significantly liberalized it’s economic and trade regimes over the past three decades, it continues to maintain, (or has recently imposed) a number state-directed policies that appear to distort trade and investment flows. Major areas of concern expressed by U.S. policymakers and stakeholders include China’s relatively poor record of intellectual property rights (IPR) enforcement and alleged widespread cyber espionage against U.S. firms by Chinese government entities; its mixed record on implementing its World Trade Organization (WTO) obligations; its extensive use of industrial policies (such as financial support of state-owned firms, trade and investment barriers, and pressure on foreign-invested firms in China to transfer technology in exchange for market access) in order to promote the development of industries favored by the government and protect them from foreign competition); and its policies to maintain an undervalued currency. Many U.S. policymakers argue that such policies are harm U.S. economic interests and have contributed to U.S job losses. For example, one U.S. government study estimated that IPR infringement in China cost U.S. firms $48 billion in 2009.

Some Members of Congress advocate a more assertive U.S. trade policy towards China, such as increasing the number of dispute settlement cases brought against China in the WTO, where the United States has prevailed on a number of issues. During his State of the Union Address in January 2012, President Obama announced plans to create a new Trade Enforcement Unit “charged with investigating unfair trade practices in countries like China.” Some analysts caution that taking a more aggressive stance against China over its trade policies could induce it to retaliate against U.S. exports to, and investment in, China. They further contend that major economic disputes should be dealt with through established high-level bilateral dialogues, such as the Strategic & Economic Dialogue (S&ED) and the U.S.-China Joint Commission on Commerce and Trade (JCCT). Many trade observers contend that the United States should also continue to press China to rebalance its economic growth model by boosting domestic consumption and decreasing the country’s reliance on exports and fixed investment for its economic growth, which could significantly boost Chinese imports. This report provides an overview of U.S.-China commercial ties and discusses major trade disputes issues and will be updated as events warrant. 


Date of Report: September 30, 2013
Number of Pages: 56
Order Number: RL33536
Price: $29.95

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