The recent focus on what divides world leaders, from Syria to the euro zone, has obscured the significant agreements reached at the Group of 20 meeting in St. Petersburg last month. One of the most important was support for free trade and opposition to protectionism.
We can now build on this momentum, as well as other trade liberalization efforts, to achieve meaningful progress at the World Trade Organization ministerial meeting in Bali in December.
Though critics describe the G20 as ineffective, it has been key in fostering economic cooperation among the world’s largest countries and helping to stave off the worst economic catastrophe since the Great Depression. With the economic stresses of the past five years potentially triggering protectionism, it’s noteworthy that G20 members have steadfastly supported free trade.
In St. Petersburg, for example, G20 members agreed to freeze the introduction of trade protectionist measures until 2016. This was a major achievement that lays the groundwork for much-needed progress on the trade agenda.
A top priority of the WTO ministerial, which will bring together ministers from the group’s 159 members, should be moving forward with the WTO’s trade facilitation agreement. This would harmonize hundreds of administrative procedures and standards that dictate how goods cross borders or are handled in customs. It would reduce the red tape that can divert precious resources, slow supply chains and increase the cost of goods by an estimated 5 percent to 15 percent.
There would be substantial benefits from this agreement. It could boost global gross domestic product by $960 billion, according to a recent International Chamber of Commerce study, increasing developing countries’ exports by $570 billion and developed countries’ by $475 billion. The agreement is also projected to help create 18 million jobs in developing countries and 3 million in developed countries.
Though bilateral and regional trade agreements usually include trade facilitation provisions, they do not provide consistency across the globe. Only a multilateral deal could do that. As the G20 pointed out, progress on the trade facilitation agreement would be a stepping stone to further multilateral trade liberalization.
Though the Doha agenda offers the most sweeping liberalization – and the biggest benefits – the failure to reach an agreement since talks began in 2001 has spurred multiple jurisdictions to pursue regional agreements.
The Transatlantic Trade and Investment Partnership, for example, could create the world’s largest free trade zone, and deliver economic gains exceeding $80 billion for both the United States and the European Union. Similarly, the Trans-Pacific Partnershipis a comprehensive trade liberalization measure being negotiated by 12 countries, including the United States, Australia, Canada, Chile and Mexico.
There have been other encouraging developments. Recent signs that India and the United States are resolving differences on food security; the election of Brazilian Roberto Azevedo, from a key emerging market, as the new WTO director general, and the advancement of multilateral agreements like a WTO agreement on trade in services are all indications that St. Petersburg was not just rhetoric and could pave the way to a global trade facilitation deal this year.
After years of stalemate on the global trade agenda, the G20 meeting and other developments show that there is now a real opportunity to achieve meaningful liberalization. One important next step would be for all WTO members to support the trade facilitation agreement. Progress here can help pave the way for market openings that unleash more opportunity and higher growth throughout the world.
Harold McGraw III is Chairman, President and Chief Executive Officer of McGraw Hill Financial and Chairman of the International Chamber of Commerce.
The op-ed can also be found at the Reuters website