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Monday, March 19, 2018

G-20 Summit and the commercial war


The first G-20 presided over by a South American country starts this Monday in Buenos Aires with a group of emerging countries that is betting on opening up more as they look with concern at the commercial war that takes place among the great powers of the first world, especially between the USA and the European Union.

Argentine, one of the most closed countries in the world that is now betting on opening up, had designed a G-20 focused on perfecting the imbalances of globalization and the problems arising from the growing influence of the digital world, especially with the regulation of cryptocurrencies, which nobody has been able to control yet and, which is already moving huge fortunes.

The search for solutions to achieve international taxation of the profits of companies that move exclusively on the web and manage to circumvent national legislations is also on the agenda. Progress is expected in the matter of cryptocurrencies, which some economics ministers already have as a priority. The program is full of essential issues, such as the future of employment in the face of increased robotization, or projects to close the global infrastructure gap. But the commercial war is so present in the environment prior to the summit of Buenos Aires, which as usual in the G-20 will take place behind closed doors, that it seems impossible that the battle between the US, the big European countries and China, do not take the two days.

In the previous days several of the participants, including the director of the IMF, Christine Lagarde, who has arrived a few days before in Buenos Aires, have shown their concern about a commercial war that can stop the incipient recovery of the world after the very hard crisis of 2008. "We are seeing a give-and-take process [in the commercial war]. That way you do not get anything. It is a constant fight. This leads to potential conflicts and will reduce trade and growth. This will not improve the lives of those who have low incomes in these countries, "said the former French minister at the Di Tella University in Buenos Aires.

The Argentine government is facing a great international test at a time when inflation does not loosen - it has started the year worse than 2017, something that was not at all expected, and is on track to exceed the 20% per year - but growth has returned and Macri ministers distill optimism. "Argentina went from being in suspension of payments to preside over the G-20, it is an important change. We are still the most closed country in the world but we are turning, only the elimination of taxes on exports that we made cost us 2% of GDP, "says Nicolás Dujovne, Minister of Finance. He does not want to be very worried about the protectionist wave and trusts that the G-20 will focus on the planned agenda. "At the moment we see a lot of noise but not a generalized movement of protectionism. But if it climbed around the world it would have an impact. There would be less growth, "he admits. The organizers will try to focus on issues of substance but less thorny than the commercial war, which no one knows how to deal with. The axis will be those new forms of economy arising from globalization, and especially the search for an international agreement to prevent fin-tech calls, companies that achieve all their benefits in the digital world and on a global scale, manage to escape taxes that traditional companies pay. Let’s see if the country ran by Macri can succeed at being host to so much economic power.