Yesterday’s G20 Trade Minister’s Communiqué hits all the right notes, but fails to meet the moment, offering precious little by way of tangible commitments or coordinated action.
The week began with the marking — not celebration — of the 75th anniversary of the United Nations. A celebration would sit at odds with the parlous state of international cooperation today, with major powers pursuing nativist, beggar-thy-neighbour policies in worrying disregard for institutions and allies.
Perhaps, given such strains, we should be content with the mere fact that G20 Trade Ministers met virtually today for the third time this year. This would be a mistake. Now more than ever, we need G20 governments to look beyond their differences and unite in pursuit of trade policies that will speed efforts to bring the acute phase of the pandemic to an end, offer a lifeline to hard-pressed small businesses and set the foundations for a rapid and resilient global recovery in 2021. Lamentably, today’s Communiqué fails on all three fronts.
We are at a critical juncture in our global response to the COVID-19 pandemic, with over 30 million cases recorded and nearly one million deaths. A wave of tit-for-tat export restrictions and policy flipflops earlier in the year saw massive uncertainty in PPE availability, leading to shortages in supply for health workers worldwide. Now that the emergency phase has passed, G20 countries must remove these temporary restrictions and make sure that they do not transition to longer term distortions.
Despite worrying signs of vaccine nationalism from several key manufacturing countries, 156 economies are committed to or eligible to receive vaccines through the multilateral COVAX facility. Yet, similar cooperation is yet to be seen on the trade dimensions of global vaccine access — leaving open the risk that the trading system will become the battleground on which countries rush to secure early doses of proven vaccines.
Given lessons learned from hastily imposed trade restrictions earlier in the year, one would hope the G20 would find common ground on the need to devise trade policies that ensure rational and equitable access to forthcoming COVID-19 vaccines for all countries. Yet today’s Communiqué is largely silent on this most vital of issues, emphasising only that trade policies are essential in achieving this, and that the G20 — the premier forum for international economic cooperation — “will continue to explore COVID-19 related WTO initiatives in this respect”.
With potentially millions of lives at stake — not to mention the livelihoods of billions — the absence of a clear plan to take trade barriers out of the equation in the supply of COVID-19 vaccines feels like sheer recklessness. Perhaps the trade chiefs of the world’s largest economies need reminding that the maxim that “no one is safe unless everyone is safe” is not a liberal platitude, but a dictum of sound economic management. In our interdependent global economy, businesses will only be able to thrive once mortality is controlled and positive economic conditions return in all countries.
If COVID-19 has proven one thing, it is that the digital economy is indispensable to global prosperity. Given this, business regards a swift conclusion of the plurilateral Joint Statement Initiative on E-Commerce as an essential building block for a rapid and resilient post-pandemic recovery. Seen in this light, the call in the Communiqué for “significant progress” in the lead up to the MC12 rings hollow. For global business, the goal should be agreement of a high standard outcome next year, with strong commitments on market access and connectivity, liberalised cross-border data flow with trust (informed by the G20’s Osaka Track), trade facilitation and capacity building.
And then there is the issue of WTO reform. Noting repeated calls from G20 Leaders to reform the WTO, the Saudi Presidency launched the Riyadh Initiative on the Future of the WTO in March. Unfortunately, progress to date appears to amount to little more than a recapitulation of the foundational principles in the Marrakesh Agreement that underpin the WTO, and a stated determination to ‘tackle the necessary reform of the functions of the WTO and to discuss all proposals in this regard’. Despite the urgency, there is a worrying lack of specificity, reflective of both a dearth of imagination and a lack of political will. But we have no time to waste. For business, we see an urgent need for strengthened governance and accountability, a rulebook fit for a digitally transformed post-COVID economy, and a global trading regime that coheres with climate and sustainability imperatives.
The Communiqué is not all doom and gloom. It is encouraging, for instance, that G20 countries affirmed the need to conclude the selection process of the next WTO Director General by November 7. I have written about the considerations that are front of mind for business in the selection process here — and enjoyed positive discussions with the candidates, all of whom would bring fresh energy to this most vital of global institutions.
It is also encouraging to see the G20 generate policy guidelines on boosting MSMEs’ international competitiveness. The focus, in particular, on digital connectivity to enable cross-border trade for MSMEs is a welcome one. Throughout the crisis, ICC has shone on a spotlight on the policies needed to Save Our SMEs, including by enabling paperless trade and keeping trade finance flowing.
On this latter agenda, recent market turbulence highlights the looming risk that the supply of trade finance will retrench significantly just as demand returns to the economy. For MSMEs banking on trade as a means to stave off foreclosures, warm words from the G20 just aren’t enough — they need real-world action to backstop the supply of credit essential to their continued operations. Perhaps G20 Finance Ministers can rise to this challenge when they meet next month.
Whatever the forum, the real economy can only hope for greater resolve from the world’s leading economies in charting a response to the crisis — and, specifically, a response that truly reflects the interconnectedness of the global economy and addresses the downside risks to lives and livelihoods in the critical months ahead.
John W.H. Denton AO is the Secretary-General at the International Chamber of Commerce.
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