G20 talks trade in Los Cabos

29 June 2012

LOS CABOS, MEXICO - Members of the G20 have agreed to renew their standstill commitment on protectionist trade measures and to stand by the Doha Development Agenda and the multilateral trading system. However, new language in the Final Declaration emerging from Los Cabos suggests that further work on trade facilitation and global value chains may be in store in coming months.

The G20 Leaders Declaration, signed on 19 June in the Mexican resort, came as no surprise for trade analysts. Leaders from the 20 most-important economies practically repeated their recent pledges on protectionism and the WTO. Still, the final communiqué talks about the commitment with open trade and investment, the role of global value chains in fostering economic growth, and trade facilitation as an area of potential progress in the Doha Round.

"The G20 Leaders declaration has taken an important step forward by recognising the importance of global value chains in job creation, growth and development," said Victor Fung, chairman of the trade and investment taskforce of the B20 group of business leaders. "The WTO, along with other multilateral organisations, have taken steps to understand global value chains in relation to an open trade system and in relation to international investment. We are seeing that these are mutually reinforcing and complementary, and so we have much to gain from a fuller understanding of the linkages."

Trade ministers gathering on the sidelines of the World Economic Forum (WEF) in Puerto Vallarta last April spoke of the relevance of regional and value chains and the integration of developing countries in today's "made in the world" trade. The G20 Declaration makes reference to such steps and calls on the WTO, Organisation for Economic Cooperation and Development (OECD), and UN Conference on Trade and Development (UNCTAD) to "accelerate" their analysis on the relationship between global value chains and trade and investment flows and to report progress under the Russian Presidency, which starts next year.

Trade facilitation gets traction

G20 Leaders in Los Cabos also echoed previous drafting in the Cannes communiqué from November 2011 regarding pursuing "fresh, credible approaches to furthering negotiations." But this time the Declaration points out that it the G20 countries will continue their work to conclude Doha, "including outcomes in specific areas where progress is possible," and identifies trade facilitation and other issues of interest for least developing countries, including accession of world's poorest countries to the WTO, as part of this category.

The potential to soon finalise a multilateral agreement on trade facilitation keeps gaining traction. Trade ministers gathering in Paris last month on the sidelines of the OECD Ministerial meeting discussed the option, which still faces obstacles and reservations by emerging countries, which are not comfortable with idea of de-linking it from other aspects of the Doha Round. The WTO Ministerial Conference last December requested Members to examine those negotiating areas where agreement might be reached.

Los Cabos just tip of the iceberg

The G20 world trade agenda in the near future will likely focus on these two issues, as previous declarations by the group have gone on to set global and national priorities between meetings. But, in reality, the summit is just the beginning of a much larger process.

"Leaders summits actually represent only the tip of a large ‘iceberg' of policy making," argued Alan Alexandroff, Director of the Global Summitry Project at the Munk School of Global Affairs at the University of Toronto.

Alexandroff and Yves Tiberghien, Associate Professor at the Department of Political Science at the University of British Colombia, say the rest of the work happens in layers that ultimately impact the national level due to implementation purposes.

"The leaders' summit, in fact, is seldom where most of the work happens," the experts said. "A very important second layer consists of the ministerial meetings leading up to the summit. The next layer consists of international institutions such as the IMF, the WTO, the OECD, and now developed trans-governmental regulatory organisations. A final layer of work is undertaken with the implementation process at the national level in each of the G20 countries."

Perla Buenrostro
Managing Editor, Puentes

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