Japan Economic Foundation

Chairman's Article
(excerpts from JEF's Magazine "Japan Spotlight")

40 . A Proposal to Establish G-10


Although member countries of the G-8 are reluctant and hesitant to declare it, the group has been an organization for global governance, at least for economic policies. However, the recent eye-opening economic development of newly emerging countries, including China, India and Brazil, has made it look strange that the G-8 does not include these developing countries, calling into question even the legitimacy of the selection of the G-8 membership. That was why the G-20 evolved to hold its first summit in 2008. However, the selection of the G-20 membership was also discretionary. Although the selection of each member may have justification, there is no objective standard for the selection. In addition, in the case of the G-20 summit, the number of members may be too many if those leaders want to have real discussions.

In the past, until 2006, it had become almost an established rule for the chairman of the G-8 to invite a few leaders in addition to G-8 leaders to have a special meeting between those non-G-8 leaders and G-8 leaders. Who were chosen as invitees was entirely up to the chairman each year, although mainly only top leaders of developing countries were qualified.

In 2007, a G-8 summit meeting was held in Heiligendamm, Germany. It was chaired by Chancellor Angela Merkel. She invited five non-G-8 leaders from developing countries: Brazil, China, India, Mexico and South Africa (the G-5). What distinguished the Heiligendamm summit in terms of inviting non-G-8 leaders was her proposal for G-8 summit meetings for the next two years to invite leaders from the same countries and the proposal was adopted. Therefore the same G-5 national leaders were invited to the G-8 summits in Hokkaido, Japan, in 2008 and in L'Aquila, Italy, in 2009. In addition to the original G-8 meeting, G-8+G-5 meetings were also held.

Last year, working groups and workshops were established to deepen dialogue among incumbent and former officials and experts of the G-8 and G-5. I was invited to one of them held in Shanghai, China, last year. The title of a workshop session I attended was "Reshaping club governance - examining the options between G-8, G-8/G-5 and G-20."

In that session, I made a personal comment as follows. "As of now, there is no objective standard on which we choose member countries for global governance. Unless we have such an objective standard, they may not be able to persuade other countries because they do not have justice or legitimacy in the first place. So I would like to propose establishing an objective standard to select countries joining global governance." Then another participant rebutted, "In the case of international politics such as selection of countries for global governance, there is no justice such as an objective standard!" He whispered to me during a coffee break that therefore the responsibility of selected countries to join global governance is very huge. I was not convinced, however. At the back of my proposal, there are the following points specifically.

1. Those countries joining global governance (hereafter "Members") should be influential countries.

2. Such influence should be measured economically and socially. The size of GDP and population of each country will represent its economic and social influence. What is important here is not to adopt military influence. Of course, if we include military influence as a standard to select Members, we will invite severe competition for military expansion.

3. We should not have more than two organizations serving global governance. As of now, the G-8 and G-20 coexist, making leaders attending both extremely busy. This year, no G-8+G-5 meeting was held because all G-5 members are included in the G-20, which met simultaneously with the G-8 in Canada. This does not mean the G-8+G-5 scheme has been abolished. We need to conduct administrative reforms for world leaders' meetings. We should establish a new G-10 based on an objective standard and abolish the G-8, G-8+G-5 and G-20.

4. Specifically, we should first calculate each country's GDP share in the world total. Secondly, we should calculate each country's population share in the world total. Thirdly, we should add up these two shares for each country. Fourthly, select the top 10 countries to finally decide Members to create a G-10. If we use 2008 data, which is the newest available, those 10 countries are the United States, China, India, Japan, Germany, France, Brazil, Britain, Russia and Italy. In a nutshell, they are the G-8 minus Canada plus three of the BRICs countries (Russia is already included in the G-8). This outcome coincides with our common sense, although we have to miss Canada whose politicians and diplomats have been doing excellent jobs in keeping Canada as a member of the G-8 despite the fact that the objective data do not necessarily support it. These 10 members don't have to be frozen. If the newest data suggest member change, we have to accept it.

Noboru Hatakeyama is chairman/CEO, Japan Economic Foundation. Before then he was chairman/CEO, JETRO. A former senior trade official, he undertook many trade issues, including the Uruguay Round of GATT talks. He is known as a pioneer of debate on FTAs involving Japan.