On the eve of the 2015 World Bank and International Monetary Fund (IMF) Spring Meetings, the International Chamber of Commerce (ICC) has called on G20 governments to do more to address the growing impact of protectionism on the global economy.
The fourth instalment of the ICC G20 Business Scorecard -which assesses the response of the G20 to recommendations put forward by the international business community-highlights that G20 governments have done a “poor” job in implementing their commitment to roll back trade restrictive measures introduced since the financial crisis.
Commenting on the launch of the Scorecard, ICC Chairman and Co-chair of the B20 Trade Task Force Terry McGraw said: “There is a paradox right now at the heart of trade policy-making. On the one hand, we’ve got possibly the most robust negotiating agenda in two decades-with a range of deals on the table that, with the right political leadership, could provide a major stimulus to the global economy.
“But at the same time, we are seeing governments subtly employing regulatory measures-or non-tariff barriers-to restrict international trade. While the G20 deserves great credit for holding the worst protectionist excesses in check, action is needed now to curb the steady drip feed of measures which we have seen since the financial crisis.”
The G20 needs to lead by example and take action on its longstanding commitment to roll back protectionist policies.
Research suggests that, despite G20 commitments, the global stock of protectionist measures has continued to increase over the past year. One recent study indicated that since 2008, over 70% of the changes to trade rules around the world have curbed trade, rather than spurring it.
ICC Secretary General, John Danilovich, added: “Protectionism is not just bad for business: it also has a significantly negative effect on job creation and consumer welfare. The G20 now needs to lead by example, as it has done in many other areas, and take action on its longstanding commitment to roll back protectionist policies.”
“The IMF has just lowered its growth forecast for this year to 3.5%. What’s more, 200 million people remain unemployed across the globe. Trade policy needs to be viewed as the next economic stimulus. Implementing the B20’s four trade recommendations from 2014 could add some US$3.4 trillion to global GDP.”
Other G20 Scorecard highlights
The fourth edition Scorecard examines a total of 28 business priorities put forward during the 2014 Australian Presidency and rates the G20’s responsiveness across seven policy areas on a scale of: ‘inadequate’, ‘poor’, ‘fair’ or ‘good’.
The Scorecard gives the G20 an overall score of 2.1 out of 3.0-which translates to an assessment of “Fair” across the seven major policy priorities presented to heads of government at the Australian G20 Summit in Brisbane. The 2.1 grade is equal to the post-St. Petersburg Summit score and an improvement over the score of 1.9 assessed to the 2012 Los Cabos Summit, and the 1.4 grade for the Cannes Summit in 2011.
For the first time, the Scorecard includes a policy review of the G20’s work to address employment challenges, contributed by the International Organization of Employers (IOE) and the Business and Industry Advisory Committee to the OECD (BIAC).
Daniel Funes de Rioja, IOE President said: “The review of the Australian G20 commitments found that good progress was made in the G20 Employment process with regard to increasing accountability and monitoring through the launch of national employment plans.”
“However, much more needs to be done to dismantle the barriers that inhibit entrepreneurs from starting and growing businesses, and towards undertaking structural reforms that increase flexibility, adaptability and mobility within and across labour markets. The G20 must become an engine for reform for growth and jobs. If the G20 does not create measurable impact on the ground, it will lose its credibility and legitimacy.”
The Scorecard’s findings on investment and infrastructure reflect close traction between B20 recommendations and G20 commitments, with three out of the four evaluated business recommendations in this area receiving highest marks. Notably, the G20 prioritized the critical importance of infrastructure and investment, and established the Global Infrastructure Hub – both of which respond directly to core B20 recommendations this year. Only the absence of discussions on supporting cross-border investment activity, including promotion of a model framework for investment, prevented a perfect score in this area.
The G20’s actions on anti-corruption measures yielded the highest score of any policy chapter in the fourth edition of the Scorecard, with a year-on-year improvement in score since ICC’s monitoring began. In particular, the G20 has endorsed a two-year action plan, which recognizes the private sector as an essential partner and promises deliverables on a number of business priorities put forward in 2014.
While the Scorecard notes several positive steps taken by the G20 to address business priorities, it also identifies areas that merit greater attention. Gaps in finalization and implementation of core financial reforms are a continued concern for global business; as is the assessment on energy and environment, which received the lowest score of all the seven policy areas evaluated in the fourth edition Scorecard.
Progress on the G20’s tax reform agenda yielded a “Good” score, however the Scorecard cautions that continued G20 leadership will be critical to ensure a coordinated, balanced and common approach that avoids disparate rules and harmful double taxation.
“Overall, only one of the seven chapters received a ‘poor’ grade,” said ICC G20 CEO Advisory Group Director Jeffrey Hardy. “There is increasing traction for our recommendations but this year’s score reveals that there is still room for improvement for both the B20 and G20 in terms of better communicating priorities and translating these into government actions,” he said.
The aim of the ICC G20 Business Scorecard is to generate a balanced and reliable measurement of the G20’s performance in response to business recommendations that have been put forward to G20 leaders ahead of their annual Leaders’ Summits. It is a policy tool for governments on how the business community interprets G20 actions, thereby helping the G20 establish priorities, honour commitments, gauge its progress over time and identify areas that merit greater attention.
Learn more about the ICC G20 CEO Advisory Group.