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G20 Has a Chance to Boost Growth and the Post-Bali Trade Agenda

Anabel Gonzalez's picture
Traders wait with loaded trucks in El Geneina, West Darfur, a few kilometers from the Sudan-Chad border. Photo by Albert González Farran, UNAMID.

Trade-related reforms will be at the center of the agenda as G20 Trade Ministers gather for a critical meeting July 19 in Sydney. These reforms are vital – not only to the G20’s ambitious target to boost global growth by 2% over the next five years, but to the development prospects of those outside the G20, and to the future of the global trading system. These reforms will require cooperation between countries within and outside of the G20 and the political commitment to follow through. No one has said these reforms will be simple.

We at the World Bank Group know well the complexity of the tasks at hand. We have been working with many G20 members to help map out what measures will have the greatest impact on their competitiveness and trade performance. Improving trade-related infrastructure and streamlining border management are obvious priorities, but for many economies, improving the efficiency of the services sector, increasing competition in the domestic economy, and addressing non-tariff measures that unnecessarily raise the price of imported inputs are equally important. We already have strong partnerships with countries like Turkey and Indonesia to further enhance their competitiveness, and will continue working on these issues with the G20 in the future.
 
But beyond these efforts by G20 members, many reforms that are essential to raising global welfare will need to take place in some of the world’s poorest countries. The G20 Ministers’ discussions provide an excellent opportunity to consider how trade-related reforms can stimulate growth in economies outside the G20. The links between trade and economic growth are central to the World Bank Group’s long-standing commitment to the “Aid for Trade” agenda – providing assistance to developing countries to boost their competitiveness and trade performance. The World Bank Group, the largest multilateral provider of Aid for Trade, has provided support in this area to the developing world of over $10 billion, with clear returns and increasing client demand. But while trade costs in developing countries have fallen steadily, this has happened more slowly than in advanced economies, and the challenges ahead are considerable. The G20 has the chance to increase Aid for Trade and boost assistance to developing countries as they institute global best-practices to reap the benefits of connecting to the global market.
 
Ministers will also take stock of progress made in the multilateral trade negotiations since the historic outcome at the Bali Ministerial Conference in December 2013. WTO Members face important deadlines this year, including a July 31 deadline for finalizing the legal process for implementation of the Trade Facilitation Agreement, and a December deadline for a work program to negotiate the remaining elements of the Doha Round. There is also a need to consider progress in the other decisions taken at Bali, including those promoted by Least Developed Countries before the Ministerial.
 
The Bali outcomes generated new confidence in multilateral negotiations that had stalled for many years; the December conference delivered the first major, hard-won victories so far. Among these is the ground-breaking framework in the Trade Facilitation Agreement that allows WTO Members to customize implementation of the Agreement according to their capacities and technical assistance needs, along with a better support structure to help target, monitor and coordinate implementation.
 
The benefits of the Trade Facilitation Agreement itself have been widely communicated, but they bear repeating. In Africa, for example, the measures would help support greater integration into manufacturing value chains, as WTO Director-General Azevêdo reminded an African Union meeting earlier this month. Trade facilitation would also boost African agricultural producers, with the continent standing to gain an extra $20 billion in annual earnings if the barriers to regional agricultural trade are addressed. Indeed, trade facilitation has become central to the economic agenda of every region. Of course, trade facilitation alone cannot meet a country's economic and development needs - it can be only one element in a wider strategy - but it is clear that it helps countries participate in higher-value-added trade and attract investment. The Trade Facilitation Agreement provides an important new tool in support of these efforts, and helps countries attract greater assistance for achieving their goals.
 
The Sydney meeting needs to give a clear message that the Trade Facilitation Agreement and post-Bali agenda for the multilateral negotiations remain on track. A strong message of support for implementation of the Bali outcomes was delivered by BRICS Trade Ministers earlier this week when they met in Fortaleza, Brazil. Ministers in Sydney also need to send a clear signal that the international community is addressing concerns about technical assistance to implement the Agreement. For our part, the World Bank Group is formally launching a new Trade Facilitation Support Program at the Sydney meeting that will make immediately available $30 million in technical assistance. It will complement the more than $5 billion we provide for trade facilitation-related activities.
 
Since Bali, the World Bank Group has been working directly with our clients in national capitals and with their representatives in Geneva to identify what assistance they will need to implement the Trade Facilitation Agreement. Every Member’s situation is unique, and the challenges for some are considerable. But we have heard strong commitment from officials on the ground to moving forward with the task ahead. Not once have we heard that implementing the Agreement is an insurmountable challenge – with the benefits associated with reducing trade costs and facilitating connections to global markets enticing many Members.
 
We welcome the momentum that is gathering for the WTO Secretariat to play a greater role in sharing information on trade facilitation assistance and ensuring any gaps are addressed. The World Bank Group would support an effort like this, designed to complement the comprehensive reform and support programs underway at the national and regional levels. It would also help us, as members of the development community, to coordinate more effectively in delivering our trade facilitation assistance.
 
The Sydney meeting provides an excellent opportunity to engage on these issues. It should send a clear signal that the Trade Facilitation Agreement will be implemented, with support from the international community, and it should also show that the will remains to deliver on the other important elements of the Doha Round. The World Bank Group stands ready to step up its support for these efforts.

Comments

Submitted by Susan Wood on

Thanks so much for this informative bog post. It has been disseminated widely throughout the African Development Bank.

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