G20 must play key role in restoring growth, Euro debt deal only first step

  • 27 October 2011

The International Chamber of Commerce (ICC) welcomes the agreement reached by leaders to address the challenges of sovereign and bank debt in Europe as a development that should contribute to restoring confidence and stability to the world economy, but believes that a strong multilateral effort by all G20 countries will be needed to lead the world economy into a position of renewed growth and job creation.

Greater coordination and more effective international governance are crucial for ensuring that economic policies are consistent and contribute to global stability. This can best be brought about by continuing to develop a more formal framework between the G20 countries – the leaders of which are meeting for a Summit in Cannes, France on 3-4 November – and key intergovernmental financial institutions like the International Monetary Fund.

“The leaders of the G20 are uniquely placed to build on this example of European unity to adopt a plan that will take the world economy beyond the reach of instability and growing unemployment,” said ICC Chairman Gerard Worms. “As they did in 2009, the G20 can agree on a plan where emerging and developed economies chart a course out of crisis into a new period of growth and job creation.”

All G20 countries need to place growth and job creation at the heart of their economic policies. Growth is essential for reducing debt in developed economies, and for sustaining the momentum in emerging economies. Creating jobs is a priority in all economies, to fight rising unemployment, especially among youth, and to maintain social stability.

To achieve this growth and fuel job creation, the G20 must lead by example and break the current stalemate in multilateral trade negotiations. G20 leaders should work with their counterparts in other World Trade Organization (WTO) member countries to achieve concrete progress, ideally in time for the WTO Ministerial Conference set for December 2011.

“Creating an open world economy and promoting the free flow of trade and investment across borders should be at the core of the G20’s plan for jobs and growth,” said ICC Secretary General Jean-Guy Carrier. “Rules-based multilateral trade and international investment have proven themselves to be strong engines of growth for the world economy over the past 60 years,” Mr Carrier said.

ICC, the world business organization, is proposing that governments and business should work together to get beyond the Doha stalemate to define a more flexible approach that will make it possible to achieve a Doha Agreement. The 10 years of Doha Round negotiations have made progress on a range of subjects – from trade facilitation measures that would reduce costs and delays at borders, to a package of measures particularly advantageous for developing countries. A way must be found to make good on this progress.

At a juncture when governments have declining financial resources at their disposal, the economic and social dividend from expanding trade would provide a welcome debt-free stimulus to the world economy. Instead, the reality is that multilateral trade negotiations are stalled and may be fatally stalemated. That a successful conclusion of the Doha Round would be a tremendous boost for the world economy is not in doubt.

Furthermore, when weak growth and imbalances are testing G20 governments’ resolve against protectionism, it is essential that G20 leaders adhere strictly to their pledge to resist and roll back protectionist measures, both collectively and at the national level.

The G20 should also launch the development of a multilateral framework for investment, building on efforts of past G8 and G20 Summits to create a predictable and stable climate for investment.

Trade and investment are the lifeblood of the world economy. With few options and resources available to cope with renewed crisis today, the G20 leaders gathering in Cannes can still seize the opportunity of an approach that has proved effective over the past 60 years.

By agreeing to break the Doha impasse, leaders of G20 countries can restore stability and confidence to the world economy, to boost growth and create jobs.

About the G20 Advisory Group

The ICC G20 Advisory Group, an initiative of the International Chamber of Commerce (ICC), is a platform for global business to provide input to the work of the G20 on an ongoing basis. The Group mobilizes ICC’s worldwide policy-making expertise and solicits priorities and recommendations from companies and business organizations of all sizes and in all regions of the world. The Group is comprised of approximately 20 CEOs working to ensure that the voice of business is heard by governments, the public and the media before, during and after each Summit.

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