Forget Europe, here's what G20 should be talking about
When world leaders gather for the G20 summit in the Mexican beach resort of Los Cabos on Monday, inevitably it will be the euro crisis that dominates their discussions to the exclusion of almost everything else.
That's a shame, because there will be some good ideas on the table - ideas that deserve more attention than they are likely to get.
One of them comes from the host of the meeting, the Mexican government.
To strengthen and stabilise the world economy, the Mexicans want to eliminate the financial imbalances, exchange rate distortions, and fiscal and monetary excesses that many blame for causing the 2008 financial crisis and hampering subsequent recovery.
These are worthwhile aims, and to achieve them Mexico wants the G20 to agree to beef up the supervisory powers of the International Monetary Fund, creating a sort of global economic policeman.
At the moment, the IMF's surveillance role is limited. The fund's staff do perform an annual 'Article IV' health check on member economies. But the resulting statements are put out only with the agreement of the member government in question, and any criticisms of its policies are typically so muted they are inaudible.
Mexico wants to change that. 'The analyses should be made public,' deputy finance minister Alejandro Diaz de Leon Carrillo says.
But Carillo wants to go further. He wants the IMF to be given teeth to punish governments whose policies threaten to destabilise the international economy.
'There needs to be some disciplinary mechanism,' he says. 'It would provide governments with an incentive to move in the right direction.'
There's a lot of merit in this idea, but it's hard to imagine either Beijing or Washington, for example, acceding to such an impingement on their economic sovereignty. As a result, it's likely the governments of the major economies will be only too happy to focus on Europe at Los Cabos, if only to ensure the Mexican plan doesn't get off the ground.
The private sector has some worthwhile suggestions, too. As honorary chairman of the International Chamber of Commerce, Victor Fung, who is also honorary chairman of Hong Kong supply chain manager Li & Fung, will be going to Los Cabos to lobby the G20 for a handful of policy moves he believes would do a lot to boost international trade and investment, creating jobs in the real economy.
Fung argues that global trade would benefit enormously if the World Trade Organisation were to abandon its 'single undertaking', which decrees that nothing in trade negotiations is agreed until everything is agreed.
Scrapping this all-or-nothing approach would allow WTO members to implement already agreed trade facilitation measures - covering customs rules, port procedures and the like - without waiting for more thorny issues to be settled.
Fung estimates this could reduce the average costs of shipping merchandise across borders from 10 per cent to 5 per cent of the goods' value. Considering that global trade last year was worth US$18 trillion, that would imply a cost reduction of US$900 billion - a major shot in the arm for international activity.
Fung also wants the WTO to press ahead with drawing up a transparent, multilateral set of regulations governing cross-border direct investments, which would override arbitrary rules now imposed by individual governments.
'It could give the world economy a real boost,' he claims.
Fung is surely right. But governments like the WTO's single undertaking, because it allows them to hold trade negotiations to ransom in defence of their own perceived national interests.
And with governments around the world eager to protect so-called 'strategic' sectors of their domestic economies from foreign competition, few are in a rush to sign up to investment rules that would open up favoured - and politically influential - industries to international investment.
As a result, it seems likely that some of the best ideas on the table at Los Cabos will go nowhere, while the world's leaders go on wringing their hands over the euro crisis.