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Within the Global Governance Toolbox:

From Policy Coordination to Peer Review

School of International Studies, Beijing, China, 25 September 2010

Fabrizio Pagani*

Special Political Counsellor to the Secretary General, OECD, Paris

* The views here expressed are exclusively those of the author.

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The new global governance architecture

The G20 as “the premier forum for international economic cooperation”

Four G20 Summits

– November 2008, Washington

• Coordination of extraordinary monetary and fiscal policy interventions

• Agreement on launching the financial regulatory overhaul • Engagement against protectionism

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– April 2009, London

• Recapitalisation of the international financial institutions and trade finance

• Progress in the financial reform (from FSF to FSB) • Joint fight against tax havens (OECD Global Forum)

– September 2009, Pittsburgh

• Framework for Strong, Sustainable and Balanced Growth • IFIs quota shift reform• Energy – related issues (fossil fuel subsidy reduction / climate

change financing inconclusive)

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– June 2010, Toronto

• Fiscal plans to halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016

• Launch of the second phase of the Framework• No common view on bank levy• Launch of new initiatives (anti-corruption, development, GMEP)

– Expectations for November 2010, Seoul

• Country by country engagements within the Framework• Capital requirements for the banks• IMF quota shift• Action plans on development and anti-corruption

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Policy dialogue

Policy coordination

Self assessment

Mutual assessment processes

Peer review

The toolbox of the new global cooperation

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The Framework- Framework for Strong, Sustainable and Balanced Growth is a compact that commits G20 countries to assess how their policies fit together, to evaluate whether they are collectively consistent with more sustainable and balanced growth, and to act as necessary to meet common objectives

- It is based on a The Mutual Assessment Process (MAP):

- Definition of the ‘Upside Scenario’ (IMF, WB, OECD inputs)

- National policy initiative templates

- Mutual assessments of the templates

- Monitoring and evaluation of the implementation of the policy commitments ?

- Institutionalization of the MAP ?

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Alternative scenarios in OECD Economic Outlook No. 87

Source: OECD calculations.

Policy simulations, 2016-25 average

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Peer review

Peer Review is a working method which is closely associated with the OECD

Peer review is the systematic examination and assessment of the performance of a country by other countries, with the goal of helping the reviewed country improve its policy making, adopt best practices, and comply with established policies, standards and principles

The examination is typically conducted on a non-adversarial basis, and it relies on mutual trust, as well as the shared confidence in the process

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Peer review in the new global architecture

New OECD peer reviews:

– OECD Global Forum on Transparency and Tax Exchange of Information

– OECD Corporate Governance peer review

New components in existing OECD peer reviews

FSB SCSI peer review:– Thematic review– Country reviews on implementation of financial sector

standards and policies agreed within the FSB

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Conclusions

- G20 commitments implementation must be reviewed and assessed

- Policy coordination and peer review are the tools for implementation and performance enhancement

- International organisations, such as the IMF and the OECD, must play a key role in these tools to ensure the credibility of this process

- The ultimate success of the G20 is at stake

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Within the Global Governance Toolbox:

From Policy Coordination to Peer Review

School of International Studies, Beijing, China, 25 September 2010

Fabrizio Pagani*

Special Political Counsellor to the Secretary General, OECD, Paris

* The views here expressed are exclusively those of the author.