Australia’s Golden Opportunity
All eyes will be on Australian Prime Minister Tony Abbott this week when he addresses the gathering of business and political leaders at the World Economic Forum in Davos. As this year’s host of the G20, Mr Abbott has both a heavy responsibility and a rare opportunity. The Brisbane summit scheduled for mid-November will bring together the largest gathering of world leaders ever on Australian soil. With energetic leadership from Prime Minister Abbott, Australia has a chance to drive measurable progress on the critical G20 agenda of trade, growth, and jobs. The stakes could not be higher.
While the global economy is in far better shape than when G20 Leaders met for the first time in Washington more than five years ago, challenges remain. Growth in the United States and Japan is stronger – but not yet strong. The financial risks in Europe have eased, but growth in the world’s largest economic area continues to underperform. Unemployment remains stubbornly high across the advanced world. Meanwhile, large developing markets such as China, India, and Brazil are facing significant headwinds of their own and the urgent need for structural reform. Against this uncertain backdrop, protectionist pressures persist around the world.
Clearly, the G20 still has a vital role to play in addressing these challenges. The G20 remains the only forum in which leaders representing more than 80 per cent of the world economy get together to do two essential things: to advocate sound economic policies within G20 member economies, in common pursuit of strong, sustainable, balanced growth and job creation; and to seek international cooperation on an array of challenges that no one country can solve alone. Progress on the global trade agenda serves both of these objectives.
Fortunately, the resolve of G20 Leaders to act collectively and deliver achievements appears to be alive and well – as evidenced in St. Petersburg when they set aside differences on trade and rallied their support for a successful outcome on trade facilitation at the Bali Ministerial Conference of the World Trade Organization (WTO) in December. Those commitments held firm in Bali, and under the adroit leadership of WTO Director-General Roberto Azevedo, yielded the historic WTO Agreement on Trade Facilitation – one that will not only restore confidence in the multilateral trading system but will also generate a much needed stimulus of US$1 trillion and 21 million jobs to the world economy.
Mr Abbott’s ability to set a focused agenda and drive this type of collective action will be essential to demonstrating the G20’s continued relevance to global governance and maintaining the momentum on trade.
With trade so central to the global economic agenda, it is auspicious that Australia leads the G20 this year. The country has a long history of pursuing trade liberalizing policies and other market opening measures. It has always been a strong supporter of the WTO and the multilateral trading system, and in particular a strong advocate of greater agricultural trade liberalization. It also has free trade agreements in place with eight countries (including a new agreement with South Korea) and is currently negotiating a number of others – including the Trans-Pacific Partnership – and bilateral arrangements with China, Japan, India, and Indonesia. Australia’s integration with the global economy means 41 per cent of its GDP is linked to trade.
That track record, plus the leadership and resolve of Mr Abbott, make us optimistic that the G20 can continue to advance the world trade agenda. Business is determined to bring that same energy to helping Australia make meaningful progress on trade in its G20 host year. To do so, G20 leaders should issue a call to action in three areas.
First is an international trade agreement in services. This would remove barriers to global exports of tradable services, adding as much as another US$1 trillion annually to the global economy and creating up to nine million jobs.
Second is the expansion of the International Technology Agreement to increase both the number of countries and number of products covered. In 2010 exports of IT products accounted for nearly 10 per cent of all global exports – more than agriculture or automotive products – and that percentage is growing. Expanded trade in technology promises to bring increased prosperity and job creation in all nations – especially for major developing economies that wish to compete and prosper in the 21st Century.
And finally, G20 leaders should insist on greater compatibility between regional trade agreements and WTO rules, so that no nation or region is left behind in realizing the economic benefits of trade.
The B20 and the International Chamber of Commerce, as representatives of world business, strongly support the objectives Australia has laid out for its host year. Bridging the gap in infrastructure investment, promoting a multinational framework on investment and expanding finance will also be important achievements, and the B20 and ICC look forward to working with Prime Minister Abbott and his team in the run-up to November’s meeting in Brisbane to turn these objectives into concrete action.
Richard Goyder AO is Managing Director of Wesfarmers Limited and the Chair of B20 Australia. Harold McGraw III is Chairman of McGraw Hill Financial, which has offices in Sydney and Melbourne, and is Chairman of the International Chamber of Commerce.