Every show needs a headline performance. The same applies to international summits such as the G20 Leaders meeting in November.
When Prime Minister Abbott confronts the media after the Brisbane Summit, he is going to have to outline the big achievement — the outcome that clearly justifies all the expense of hosting of leaders and their vast ensembles. The Brisbane Summit will be soon be forgotten if the Prime Minister simply reports incremental progress across all the work streams on the G20's agenda. This would be a case of 'all supporting acts and no lead performance'.
Andrew Mackenzie, head of BHP Billiton and chair of the B20 trade task force (the B20 is the forum representing the views of business in G20 countries), has provided the Prime Minister with an agenda item that should be the headline act for Brisbane G20 , and that is trade liberalisation.
Following a briefing Mackenzie gave to a business forum on 22 May, the headlines were 'BHP chief urges G20 to end GFC barriers'. He was recommending that G20 leaders commit to roll back protectionist trade barriers imposed after the financial crisis in 2008. In particular he was calling for a roll back in non-tariff barriers, or the 'murky protectionism' that covers such things as governments imposing local content requirements, additional registration procedures, and discriminatory health and safety requirements on imports.
The call for the G20 to roll back non-tariff barriers is important, but Mackenzie was putting this in a wider context: that if the G20 really wants to get serious about lifting growth by an additional 2% over five years , which was the commitment made by G20 finance ministers at their meeting in February 2014, then boosting global trade has to be at the core of the growth initiative. [fold]
The agenda being advanced by Mackenzie is broadly consistent with the Think20's policy recommendations for the Brisbane Summit. These are: put trade at the centre of the G20 growth agenda, strengthen the standstill on protectionist measures; set a strategic direction for the WTO 'post-Doha' based on the implications of global value chains; and deliver on the commitment in the St Petersburg declaration 'to ensure that regional trade agreements support the multilateral trading system'.
The B20 is right to focus on the need to roll back the non-tariff protectionist measures introduced by G20 countries since the crisis. The standstill on protectionism agreed at the 2008 Washington summit, and extended in subsequent summits, is generally regarded as one of the successes of the G20. However the performance of G20 members in honouring the pledge has been patchy. The WTO provides a regular report on compliance, and between mid-May 2013 and mid-November 2013 alone, G20 members introduced 116 new trade-restrictive measures. Moreover, only about 20% of all the protectionist measures introduced since the crisis have been removed.
The WTO report does not cover non-tariff protectionist measures. However the privately funded Global Trade Alert project, headed by Simon Evenett, has issued 14 reports monitoring overall protectionist pressures, including non-tariff measures, since 2009. It claims that G20 countries have put in place at least 400 'beggar-thy-neighbour' policies each year since 2008. In addition, Evenett reports that the performance of the G20 members is no better than the next ten mid-sized trading nations. If the G20 is meant to be the premier forum for international cooperation, then its members are not leading by example when it comes to promoting global trade.
In addition to winding back protectionist measures, Mackenzie has recommended that the G20 should take a lead in the implementation of the trade facilitation agreements reached at the Bali trade ministers meeting in December 2009. This involves removing and streamlining 'behind-the-border' measures that may be impeding and adding to the cost of international trade. This would be a great outcome from Brisbane.
Trade liberalisation should be the headline act at the Brisbane summit because trade goes to the core of the G20's objective of increasing global growth. Trade drives growth and creates jobs, but growth in the global economy has been sub-par since the crisis, and it is no coincidence that trade growth in advanced economies is 5% lower than pre-crisis peaks. Trade is also an area where the G20 can make a direct contribution to advancing the prospects of developing countries, helping them plug into global value chains which are the driving force of global trade. A welcome development is the signal from Trade Minister Andrew Robb that Australia is going to call on G20 countries to increase the 'aid for trade' component of aid budgets.
Mackenzie and the B20 are setting an ambitious agenda. The growth in protectionist measures by G20 countries since the crisis is generally a response to domestic pressures to protect jobs. It will take political courage to resist these pressures and embrace liberalisation. Australia will have to mount a 'full-court press' in the lead-up to the Brisbane Summit if it wants substantive progress on trade liberalisation to be a major achievement from the Summit. It cannot be treated as but one item on a crowded G20 agenda and something that is primarily the responsibility of trade ministers. The Prime Minister will have to drive trade, as will the Treasurer. And they will have to start the campaign now.
Photo by Flickr user Aniruth Koul.