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G-20 summit: No safe haven for economic offenders, says Osaka declaration

On terrorism, the Osaka declaration gave primacy to the FATF: “We welcome the United Nations Security Council Resolution 2462, which stresses the essential role of the FATF in setting global standards for preventing and combatting money laundering, terrorist financing and proliferation financing.

Written by Shubhajit Roy | Osaka |
Updated: June 30, 2019 6:05:23 am
g 20 summit, osaka summit, osaka meet, osaka declaration, eocnomic offenders, osaka declaration on economic offenders, indian express In the 43-paragraph joint statement negotiated under the presidency of Japan, the US was able to muscle its way to get its position reflected in the G-20 statement for the first time.

At the end of hectic negotiations between G-20 countries which went on till 5 am on Saturday, the Osaka declaration stressed on economic offenders as part of the anti-corruption theme — portrayed as a priority for the Indian government. While the joint statement gave very low priority to terrorism, the Financial Action Task Force (FATF) got due prominence.

In the 43-paragraph joint statement negotiated under the presidency of Japan, the US — though isolated on climate change for the last two summits since its withdrawal from the Paris climate agreement — was able to muscle its way to get its position reflected in the G-20 statement for the first time.

Read | G-20 Osaka Summit: Leaders for free, fair trade environment

And, as Japan gave due importance to its “Data Free Flow with Trust” concept, a compromise formulation — acceptable to India and China on one side of the divide, and US and other developed countries on the other side — was adopted, in which domestic laws will be respected along with international laws. This gives policy space to India, which is pushing for data localisation and doesn’t want to commit to an international framework right now.

Explained

For India, wins — and a loss

India’s primary concern on terrorism was not given due prominence at G-20 this year. But its concerns on black money, cross-border flow of data, BRI and importance of FATF were given due importance. Delhi will now have to start thinking about its agenda for 2020, especially since it is going to shape the agenda in 2022 as host of G-20.

But, on the issue of “quality infrastructure”, the declaration gave prominence to “sustainability of public finances”, taking into account “environmental and social” factors — all pointing towards China’s Belt and Road Initiative. Quality infrastructure has become a euphemism for a critique of the BRI at the Osaka summit.

Read | When Modi, Trump met: The story of a ‘productive conversation’ at the G-20 Osaka summit

On terrorism, the Osaka declaration gave primacy to the FATF: “We welcome the United Nations Security Council Resolution 2462, which stresses the essential role of the FATF in setting global standards for preventing and combatting money laundering, terrorist financing and proliferation financing. We reiterate our strong commitment to step up efforts to fight these threats, including by strengthening the FATF’s global network of regional bodies. We call for the full, effective and swift implementation of the FATF standards.” India has been quite active at the FATF with Pakistan’s grey-listing, and China will now hold the chair after the US.

In the Buenos Aires declaration in December 2018, the paragraph on terrorism was much stronger: “We reaffirm our strong condemnation of terrorism in all its forms and manifestations. We commit to the full implementation of The Hamburg G20 Leaders Statement on Countering Terrorism. We will step up our efforts in fighting terrorist and proliferation financing, and money laundering. We urge the digital industry to work together to fight exploitation of the internet and social media for terrorist purposes.” It also talked about regulating crypto-assets for anti-money laundering and countering the financing of terrorism in line with “FATF standards”.

Titled “anti-corruption”, Paragraph 20 of the Osaka declaration said they would work on a scoping paper on international cooperation dealing with “serious economic offenders” and recovery of stolen assets — this has been portrayed by the Indian government as a priority objective.

Read | Modi, Erdogan talk S-400 air defence deal, US sanctions

“We will intensify our efforts to combat foreign bribery and to ensure that each G-20 country has a national law in force for criminalising foreign bribery as soon as possible. We will continue practical cooperation to fight corruption and reaffirm our commitment to deny safe haven to persons sought for corruption and their proceeds of corruption consistent with our G-20 and international commitments and our domestic legal systems and will work more closely on asset recovery cooperation,” it said.

The 2018 declaration had just said that they would further explore the links between corruption and other economic crimes and ways to tackle them, including through “cooperation on the return of persons sought for such offences and stolen assets”. But they had called for effective implementation by all G-20 countries of the UN Convention Against Corruption, including criminalisation of the bribery of foreign public officials.

On climate change, Washington was able to get a paragraph to enunciate its position. “The US reiterates its decision to withdraw from the Paris Agreement because it disadvantages American workers and taxpayers. The US reaffirms its strong commitment to promoting economic growth, energy security and access, and environmental protection. The US’s balanced approach to energy and environment allows for the delivery of affordable, reliable, and secure energy to all its citizens while utilising all energy sources and technologies, including clean and advanced fossil fuels and technologies, renewables, and civil nuclear power, while also reducing emissions and promoting economic growth. The US is a world leader in reducing emissions. US energy-related CO2 emissions fell by 14% between 2005 and 2017 even as its economy grew by 19.4%, largely due to the development and deployment of innovative energy technologies. The US remains committed to the development and deployment of advanced technologies to continue to reduce emissions and provide for a cleaner environment,” it said.

Read | G-20 Osaka summit: India refuses to sign declaration on free flow of data across borders

It is quite unprecedented to have a country’s position reflected in a multilateral joint statement, especially at the G-20.

On climate change, the G-20 statement said: “Signatories to the Paris Agreement, who confirmed at Buenos Aires its irreversibility and are determined to implement it, reaffirm their commitment to its full implementation, reflecting common but differentiated responsibilities and respective capabilities, in the light of different national circumstances. We emphasise the importance of providing financial resources to assist developing countries with respect to both mitigation and adaptation in accordance with the Paris Agreement.”

In the Buenos Aires communique, the US had said that it reiterates its decision to withdraw from the Paris Agreement, and affirms its strong commitment to economic growth and energy access and security, utilising all energy sources and technologies, while protecting the environment.

In the Hamburg communique in 2017, the G-20 had said: “We take note of the decision of the United States of America to withdraw from the Paris Agreement. The leaders of the other G-20 members state that the Paris Agreement is irreversible.”

Cross-border data flow became a hot-button issue in Osaka, as India on Friday refused to become a signatory to the declaration on digital economy that was signed by 24 countries and groupings. While a majority of G-20 countries signed off on the launch of “Osaka track”, an overarching framework promoting cross-border data flow with enhanced protections launched by Japan Prime Minister Shinzo Abe, India was joined by South Africa and Indonesia in keeping away.

The issue figured prominently in the Osaka declaration. “As digitalisation is transforming every aspect of our economies and societies, we recognise the critical role played by effective use of data, as an enabler of economic growth, development and social well-being. We aim to promote international policy discussions to harness the full potential of data,” it said.

“Cross-border flow of data, information, ideas and knowledge generates higher productivity, greater innovation, and improved sustainable development, while raising challenges related to privacy, data protection, intellectual property rights, and security. By continuing to address these challenges, we can further facilitate data free flow and strengthen consumer and business trust. In this respect, it is necessary that legal frameworks, both domestic and international, should be respected,” it said.

“Such data free flow with trust will harness the opportunities of the digital economy. We will cooperate to encourage the interoperability of different frameworks, and we affirm the role of data for development. We also reaffirm the importance of interface between trade and digital economy, and note the ongoing discussion under the Joint Statement Initiative on electronic commerce, and reaffirm the importance of the work programme on electronic commerce at the WTO,” it said.

In Buenos Aires, the issue was not top of the mind, and the statement just said that they recognise the importance of the interface between trade and the digital economy.

On quality infrastructure — which was put on the agenda by Japan — the G-20 statement said: “We stress the importance of maximising the positive impact of infrastructure to achieve sustainable growth and development while preserving the sustainability of public finances, raising economic efficiency in view of lifecycle cost, integrating environmental and social considerations, including women’s economic empowerment, building resilience against natural disasters and other risks, and strengthening infrastructure governance.”

The criticism against the Chinese initiative, BRI, includes unsustainable financing and poor environmental considerations.

In 2018, the infrastructure was formulated as “a key driver of economic prosperity, sustainable development and inclusive growth”.

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