Author: Geethanjali Nataraj, NCAER
Since the last World Trade Organisation (WTO) ministerial meeting in Hong Kong in 2005, the WTO Doha negotiations have remained at an impasse. Negotiations continue to be unbalanced with developing countries still being offered a raw deal.
The stalemate is largely over developed countries’ reluctance to make considerable reductions in their trade distorting agricultural subsidies and unbalanced proposals for further reductions in industrial tariffs. Read more…
Author: Rajiv Kumar
Despite exhortations from successive G-20 summits, the Doha Development Round (DDR) has been in a state of suspended animation since July 2008. It is fortunate that protectionist measures taken by several governments since November 2008, have not resulted in a rash of competitive protectionism. But we are at the top of a very slippery path. It will not take much for governments to succumb to domestic protectionist pressures if unemployment continues to rise or the recovery falters. Therefore, it is quite important that the multilateral trading regime be strengthened and the credibility of the WTO which serves as its global watchman is enhanced. There can be no better means of achieving this than to ensure a successful conclusion of the DDR.
In this context, it is sad to realize that a successful outcome of the DDR is seen as an increasingly remote possibility. There is talk of ‘multilaterlizing regionalism’ which in all honesty is some what of an oxymoron. And some observers, on grounds of realism have suggested that we accept a failed DDR as a fait accompli and start to look for second best options. India and other emerging economies should not accept such a pessimistic prognosis. Instead they need to ensure that the DDR, is successfully concluded even if with a lower ambition level.
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Author: Suman Bery
India’s Commerce Minister and his senior officials have been unusually candid about their motives in hosting this week’s conclave of trade ministers and officials in New Delhi to revive the Doha trade negotiations (the so-called Doha Development Round, or DDR).
Jointly with the U.S., India is commonly held accountable for the failure of the last mini-Ministerial meeting to discuss the Round, in July 2008.
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Author: Suman Bery
Almost six months after their last get-together in London in early April, the heads of government of the G-20 countries will meet again in Pittsburgh in the United States in late September. They will presumably return to the quartet of issues that has progressively engaged them since they first met as a group in Washington in November 2008. These issues are: macroeconomic coordination, global imbalances and resumption of global growth; global financial reform (including reform of the IMF and the multilateral development banks); strengthening the global trading system and avoiding protection; and burden-sharing in fighting global warming, primarily by capping the growth in the stock of green-house gases in the atmosphere.
Looking at the agenda as a whole, one would have to conclude that progress since April has been somewhat underwhelming, largely because of political constraints in the advanced countries. Profound differences of views persist between the major blocs on the appropriate fiscal/monetary mix, reflecting different traditions and capacities. In the absence of such co-ordination, exchange rates are likely to take on the main burden of adjustment, raising risks of protection, primarily directed at the emerging markets.
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Author: Shinji Takagi, Osaka University
The G-20 Summit of April 2009 called for a reform of the International Monetary Fund (IMF). Augmenting the IMF’s resources and making its lending more friendly to potential borrowers hit hard by the global economic crisis has been the easy part. More difficult to reform is the governance of the institution, which among others involves a reallocation of voices among the membership and an overhaul of its governance framework. Nevertheless, the Summit committed ‘to implementing the package of IMF quota and voice reforms agreed in April 2008 and call on the IMF to complete the next review of quotas by January 2011’ and agreed to give ‘consultation to greater involvement of the Fund’s Governors in providing strategic direction to the IMF.’
Increasing the voice and representation of new economic powers is important if the IMF is to maintain or restore relevance and legitimacy. In this context, what has been achieved in the 2006 and 2008 quota reforms is disappointing: the weight of the Asia-Pacific region has risen only by about 1.5 per cent, while that of Europe has hardly changed. The G-20 Summit called for an acceleration of the next round of quota reform but, given the nature of the voice reform as a zero-sum game, the pace of reform can only be incremental.
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Author: Brad Glosserman
According to conventional wisdom, the global economic crisis is accelerating the transfer of power and influence from the West to Asia. The United States has been particularly hard hit by the downturn and America’s loss is China’s gain.
The Group of Eight industrialized nations, the traditional locus of power, has been fatally wounded. In the future, goes the argument, the most important forum will be the Group of 20.
If this analysis is correct, it suggests that another fundamental shift in global economic activity is due. Western demand will no longer serve as the primary engine of growth. Instead, Asian nations will abandon export-oriented economic models and embrace domestic consumption to generate growth. That will put in train another set of ‘knock-on effects,’ the most important being the development of social safety nets that no longer oblige their citizens to save so much of their income and instead encourage them to consume.
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Author: Richard Baldwin, Graduate Institute, Geneva
The G20 agenda seems oddly out of line with the way the global economic crisis is affecting most G20 members. At their November 2008 meeting, leaders thought of this as a financial crisis – and mostly confined to the G7 economies. The crisis was a landmine that the US and European economies had stepped on. As the landmine had been planted by US and European financial markets, the non-G7 members Brazil, India, China, South Africa and other emerging nations seemed only indirectly concerned.
In the past six months, the ‘landmine crisis’ has become a ‘cluster-bomb crisis’ – throwing recession-inducing projectiles in every direction. The Washington declaration matched G7 priorities in what was then mostly a G7 problem. Working with the declaration as a blueprint for the London Summit is no longer good enough. The emerging economies are now directly implicated; their economies are being damaged by a decade of G7 governance failures in financial markets. This changes the type of political guidance that is needed from the G20.
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Author: Andrew Elek
The emergence of the G20 process creates new opportunities for international cooperation. The forum contains a much more diverse and representative group than the G7 and the inclusion of emerging economic giants gives it additional legitimacy.
The G20 is highly influential: if it can agree on matters of substance, other governments are more likely to follow its initiatives.
Its members can reinvigorate existing institutions or create new processes; for example, the G20 has already proved able to reach the high-level political consensus needed to insist on a reform of the governance of the IMF.
The communiqué of the initial meeting indicates that the G20 is expected to be an ongoing process which oversees the implementation of substantive work programs, covering a potentially broad agenda including energy security, climate change, food security, the rule of law, and the fight against terrorism, poverty and disease.
The productive engagement of more economies in the international economy is essential for dealing with several of these matters. Therefore the G20 will need to find ways to promote global economic integration.
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Author: Bill Carmichael
The G20 leaders’ commitment of 16 November 2008 to avoid protectionism is not self-fulfilling, and the Vox eBook, if it was designed to help them achieve their goals, has three major shortcomings.
It treats the threat as short-term, offers fleeting recognition that it originates in the domestic policy environment, and offers no response that deals directly with the ongoing domestic causes of protectionism.
The insights offered, it must be said, are good ones. Yet the suggestions made in the eBook to help G20 leaders act against protectionism do not match these insights.
In short, they ignore the domestic source of protectionism and the domestic transparency discipline required to make any multilateral trade negotiations worthwhile.
As Razeen Sally puts it: ‘it is time to make trade policy less of a foreign-policy plaything in far-away international institutions. Instead trade policy should be hitched to domestic economic policy and its institutional framework. It has to be grounded in bread-and-butter domestic reforms’.
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Author: Hadi Soesastro
G20 countries must exercise leadership to wrap-up the Doha Round, fight unemployment with macroeconomic policies and strengthen safety nets to minimize calls for protection. A fund should also be created to assist emerging and developing countries in undertaking counter- cyclical fiscal measures. Regional surveillance processes, as in the 1997 Asian Crisis, could help support politically difficult policy measures.
Protectionist pressures around the world are on the rise. G20 leaders have made a strong commitment to maintaining an open global economy and to resisting the temptation to resort to protection in these difficult times. Yet one participant at the G20 Summit argued for an extensive increase in the common external tariffs of the regional trade arrangement it is a party to.
This sort of protectionism can be contagious. To halt this, world leaders should take three steps.
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Author: Bill Carmichael, Former Chairman, Industries Assistance Commission
In introducing the recent Australian Financial Review editorial on trade policy, Denis Hussey suggested there is scope for improving the performance of our own economy. This raises important questions about the future of the advisory process that has, to date, underpinned bipartisan support for micro-economic reform in Australia.
Given the broad bipartisan agreement about the need to raise national productivity, there is an obvious need for continuity in the conduct of micro-economic reform. It is the driver of national productivity gains and has long-term ramifications throughout the economy and community.
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Author: Denis Hussey, Chairman, Tasman Transparency Group
With the threat of countries retreating to protectionism in the wake of the global financial crisis, the G20 and APEC leaders’ commitment to support multilateral trade liberalisation is welcome and timely. However, announcing that commitment is the easy part. Rudd returns home now to digest the Mortimer Review and to implement the domestic reforms needed to help us continue to reap the gains from globalisation. He has the additional complementary challenge, and opportunity, to sponsor an approach that would give substance to the G20 commitment to open world markets.
Following the release of the Mortimer Review and the additional analysis on the East Asia Forum, the Australian Financial Review on 25 November 2008 offered the following editorial comment:
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Author: Saul Eslake, Chief Economist, ANZ Banking Group
After committing Australia to support the G20 goal of opening world markets, a commitment re-affirmed by Trade Minister Crean last week in Peru, Prime Minister Rudd has returned home to consider his government’s response to the Mortimer review of our own trade policy.
The G20 objective is just that—an objective. It will only become more if a way to implement it can be introduced into the WTO.
The document prepared with our two New Zealand colleagues explained why the Mortimer review does not help Prime Minister Rudd meet his commitment to support the WTO. It has the same relevance for the G20 objective. Any strategy to restore progress in the multilateral system must provide a basis for reducing the conflict, so evident in the Doha Round, between the two separate processes involved in multilateral trade reform.
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Authors : Bill Carmichael, Saul Eslake, Charles Finny, Roger Kerr
Governments around the world have done little to explore ways of protecting future international trade negotiations against the developments that have stalled progress in the Doha Round. There are, however, two possible exceptions: the Australian government and the incoming New Zealand government.
During the Uruguay Round New Zealand’s trade representative in Geneva ( now spokesperson on trade in New Zealand’s incoming government), Tim Groser, championed an approach to future multilateral trade negotiations that recognised the domestic source of the problems threatening progress in the World Trade Organization. For its part, the Australian government recently commissioned a review of trade policy by David Mortimer, before deciding how it should meet its commitment to support the WTO – its highest trade policy priority. The Mortimer report is now with the Australian government.
The release of the report coincides with an international review by the WTO of the way forward, initiated by Director-General Lamy. Both reviews have occurred at a time when progress in opening world markets through multilateral trade negotiations has stalled.
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Author: Bill Carmichael, Former Chairman, Industries Assistance Commission
In their analysis of the difficulties facing the WTO in opening markets for services, Philippa Dee and Christopher Findlay point to the need for domestic transparency arrangements to focus attention, within participating countries, on the benefits of reducing their own barriers. A recent WTO study has explained why the need for such arrangements is not limited to services, but is the basis for restoring progress in all areas of trade included in multilateral negotiations.
After reviewing the experience of forty-five member countries, the major conclusion of the WTO study is that the outcomes from multilateral trade negotiations depend on decisions taken by individual governments at home, about their own trade barriers, and reflects the interaction between private interest groups and national decision-making:
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