International trade is, in effect, the circulatory system of the contemporary world economy. Leaders at the upcoming G20 summits, in Toronto this month and in Seoul in November, will want to spend some of their time discussing international trade, both what they should and should not do about it, individually and collectively, as they attempt to provide leadership and improve prospects for the betterment of the world economy.
Commitments that Should be Made in Toronto and Seoul
Given that the world economic recovery is still fragile and tentative at best, leaders should adopt a two-part strategy with respect to trade. In Toronto on June 26-27, they should firmly commit to resisting new, unilateral protectionist measures as part of their economic recovery/stimulus packages or as part of their economic policies generally, and to abolishing as quickly as possible such trade-restrictive measures as increased tariffs, subsidies or “buy local” purchasing requirements that have been imposed over the past two years due to the economic slowdown.
For some G20 countries, it could be difficult to make good on even such a minimal commitment of this sort if the executive branch does not control the legislative branch; for others, such as Canada, this “do no harm” trade commitment would be easy to follow through on. Nevertheless, as a statement of direction and responsibility, G20 leaders would be signalling that: open, global markets are indispensable to sustainable prosperity looking ahead; a robust global trading system is a central component of economic, social and environmental policy in the future; and all countries — rich and poor, emerging or already fully industrialized — have a stake in, and responsibility for, the international trade regime.
By the time of the Seoul summit in November 2010, the pace and course of the economic recovery will be clearer, and policies and regulations regarding the financial sector will have been well discussed and perhaps implemented. The G20 leaders will be able to turn to the more specific, activist parts of their 2010 trade commitments by: ordering their trade ministers and officials to remove as many obstacles as possible standing in the way of an ambitious outcome for the Doha Development Round in 2011, as called for in the September 2009 Pittsburgh Summit Declaration, and report back on progress no later than March 2011; reasserting the importance of development in the trade system and in trade negotiations by taking concrete actions on cotton, agricultural subsidies, aid for trade-related infrastructure and other poverty-reducing measures; and instructing those at home and in international institutions to undertake a concerted, organized program of research and dialogue with all stakeholders (business, environmental, human rights organizations and others) on trade-related issues likely to arise over the coming decade. These latter issues include: trade and climate change; trade and services, including technology- and idea-related services; trade and investment; trade and poverty reduction; and trade and labour mobility.
We know that these and other issues lie ahead and will shape the nature and performance of international trade beyond the economic recovery. We also know that the global economy will return to strong, sustainable, and balanced growth while reducing poverty levels around the world as integrative supply chains are rebuilt in an increasingly open, rules-based market environment. Why not get started now with strong, forward-looking declarations of support from the G20 leaders at the 2010 summits? We will all benefit from these actions if done properly and collectively.
John M. Curtis is a distinguished fellow at The Centre for International Governance Innovation in Wateroo, Ontario, Canada.