Senior Vice President for International Policy
August 22, 2023
On August 24-25, trade ministers from the world’s 20 largest economies will gather in Jaipur, India, to chart a course for global trade. The meeting comes at a key moment, and the business community urges the world’s trade leaders to seize it and recommit to a pro-growth trade agenda.
Today’s economic headwinds are obvious: Global growth has slowed as pandemic-related stimulus is fading. Meanwhile, Russia’s ongoing war in Ukraine — and its impact on international food security and commodity prices — and China’s property bust are weighing heavily on growth.
Business doesn’t expect trade ministers to produce miracles, but they do need to focus on the key issues that are in their control.
And we want to help: Free enterprise is the engine of growth, rising living standards, and the creation of good jobs. In our view, government and business should be able to agree on this straightforward agenda:
First, the G20 trade ministers should commit to a standstill on the creation of new trade barriers. This means no new tariffs, no new digital trade barriers, and no new export restraints.
In the U.S., the Biden administration deserves credit for at least partly untangling trade disputes with a number of key partners. However, some of these were temporary Band-Aids, and disputes over steel and other issues threaten to re-emerge and fuel tit-for-tat tariff exchanges. We can’t let that happen.
Another risk is creeping digital protectionism. The flow of data is the lifeblood of the world economy, and it’s essential to companies of every size and sector. And yet we see the emergence of scores of new digital trade barriers, including forced localization of data. We must push back, notably by extending the moratorium on customs duties on electronic transmissions.
And export restraints have made a comeback, especially for agricultural products. The food price crisis of 2007-2008 was made much worse by export bans and limits. The price surge last year was bad, but it could have been worse if export restrictions had been more widespread. G20 countries must recommit to forgo such limits.
Second, the G20 should recommit to support the World Trade Organization (WTO). The Geneva-based body has scored some notable achievements lately, including a partial fisheries agreement last year. Experts agree that subsidies are a key driver of global overfishing, and addressing illegal, unreported, and unregulated (IUU) fishing is essential to sustainable fisheries. The G20 should lead the way in ratifying and implementing the deal and concluding its second phase.
In addition, the G20 can set an example by implementing the 2017 Trade Facilitation Agreement with a higher level of ambition. WTO members are free to choose from the agreement’s menu of options, but those that implement its terms in a robust way are rewarded with lower trade costs and greater competitiveness.
Addressing the crisis of the WTO’s dispute settlement system is also essential. If agreements can’t be enforced, are they meaningful? G20 countries should support a solution by next February’s WTO ministerial in Abu Dhabi.
Finally, the G20 should promote cooperation on trade and climate change through greater dialogue in multilateral fora. As countries and blocs like the EU move forward with initiatives like its Carbon Border Adjustment Mechanism (CBAM), it is imperative that we avoid spawning new trade wars. Dialogue and cooperation will be essential.
Another worthy project would be an Environmental Goods Agreement to eliminate tariffs and other barriers to trade in environmental goods. Such a pact promises to lower the cost of goods that help keep clean the air we breathe, the water we drink, and the land we farm for future generations. Indeed, tariffs are especially steep on such products as solar hot water heaters, catalytic converters, and products to control air pollution and treat wastewater.
This is an achievable yet meaningful trade agenda for the G20. And business stands ready to help. Let’s get to work.