The financial ministers and heads of state of the G-20 countries concluded their summit in Toronto on Sunday. The Declaration issued at the end of the summit said the leaders had agreed on the steps they would take to ensure job creation and growth, financial stability, and creation of “strong, sustainable and balanced global growth”, the group’s highest priority.
Recognizing that the global economic crisis has led to the sharpest decline of trade in more than seventy years, the G-20 leaders also made the commitment to fight trade protectionism and to promote trade and investment. The Summit Declaration included the following specific commitments with respect to trade:
- Renew until the end of 2013 of countries’ commitment to refrain from raising barriers or imposing new barriers to investment or trade in goods and services, imposing new export restrictions or implementing World Trade Organization (WTO)-inconsistent measures to stimulate exports, and a commitment to rectify such measures as they arise;
- Minimize any negative impact on trade and investment of domestic policy actions, including fiscal policy and action to support the financial sector;
- Direct trade representatives to use all negotiating avenues to arrive at a “balanced and ambitious” conclusion to the WTO Doha Development Round and to report on progress at the next summit, where they also pledged to discuss the status of the negotiations and the way forward; and
- Maintain momentum for Aid for Trade.
Directly addressing the role of the relevant international agencies, the Summit Declaration requested that these agencies step up their capacity and support trade facilitation. The Declaration further requested that the WTO, OECD, and UNCTAD continue to monitor countries’ commitment to avoid erecting trade barriers and the benefits of open trade for job creation and growth, and to report on these issues publicly and at the next G-20 summit, scheduled for November 11-12, 2010 in Seoul.
A quick review of the Summit Declaration highlights the following two issues:
- The commitment to avoid trade protectionist measures does not address new forms of government action which are protectionist or have protectionist consequences and have been on the rise since the economic crisis: government mandates to “buy local” and currency manipulations, most notably. As these actions are not disallowed under current WTO rules, countries are able to implement such policies without fear of being held accountable. (Although China’s manipulation of its currency to keep it artificially low and thus make its exports cheaper has come under attack it is not the first or only country to use this approach.)
- The commitment to conclude the Doha Round has been made at previous G-20 summits: Washington, D.C. in November, 2008 where they pledged to agree on modalities; London in April, 2009; Pittsburgh Summit in September, 2009 where leaders even pledged to conclude the round in 2010. The Toronto Declaration has, however, backtracked, pledging to conclude the round “as soon as possible”. Although technical committees continue to work on these negotiations in Geneva, there appears to be a lack of political will to make the compromises needed to move the negotiations forward.
The next posting will take a quick review of what’s been happening with the WTO Doha trade negotiations. Meanwhile, I invite your thoughts and comments on this post and on the status of the Doha negotiations.
About the G-20
The Group of 20 (G-20) was established in 1999, in the wake of the 1997 Asian Financial Crisis, to bring together the major advanced and emerging economies to stabilize the global financial market. Co-existing for some time with the G-8 (France, United States, United Kingdom, Germany, Japan, Italy, Canada, and Russia) it was announced at the Pittsburgh Summit, September 25, 2009, that the G-20 will replace the G-8 as the main economic council of wealthy nations. The group operates as a forum for cooperation and consultation on matters pertaining to the international financial system and studies, reviews, and promotes discussion of policy issues pertaining to the promotion of international financial stability, and seeks to address issues that go beyond the responsibilities of any one organization. G-20 members are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, United States, and the European Union.