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AFRICA: G20 Summit’s Trade-Related Commitments Disappoint

Annelise Sander

GENEVA, Apr 6 2009 (IPS) - The Group of 20’s pledges of trade finance and aid for trade are too vague, according to the editors of the e-book ‘‘Rebuilding Global Trade’’, published last week. And the London summit of this group of developed and developing economies last week failed to make a strong commitment to the multilateral trade regime.

‘‘Several important trade-related commitments – to developing countries, to sustainable development and to multilateralism – either disappointed or were missing from the G20 decisions,’’ Dr. Carolyn Deere Birkbeck, director of the global trade governance project of Oxford University College, told IPS.

On the question of whether the G20 is the right place to discuss global trade, Deere Birkbeck said, ‘‘That is precisely its biggest failure. There wasn’t any reflection on how to make the G20 process more inclusive. South Africa and Ethiopia – the latter having been invited at the last moment – were the only African countries present.’’

Deere Birkbeck and Ricardo Meléndez-Ortiz, chief executive of the International Centre for Trade and Sustainable Development (ICTSD), in Geneva are the editors of the e-book. The ICTSD seeks to bride the divide between proponents of trade and sustainable development.

Meléndez-Ortiz remarked that, ‘‘fifty billion dollars are needed in 2009 to take Africa back to where it was before the crisis but from the G20 communiqué it is hard to see where that money will be coming from.’’

‘‘Rebuilding Global Trade’’ is a compilation of essays written by scholars and other experts on issues such as the immediate trade priorities in light of the global economic crisis and a forward-looking agenda for global trade governance.

It pays ‘‘special attention to the needs of developing countries and sustainable development considerations such as poverty reduction, environmental sustainability and social justice’’.

The e-book makes concrete proposals to the G20, including reforms of the international trading system over the long term, and argues that global economic governance should be put into the hands of a more inclusive forum.

It backs the recommendation made last week by the United Nations’ Commission of Experts on Reforms of International Finance and Economic Structures, headed by Prof Joseph Stiglitz, to create a global economic council under the auspices of the United Nations that would meet once a year as a democratic alternative to the G20.

The G20 communiqué calls for the conclusion of an ambitious and balanced trade round. Yet the current negotiations at the World Trade Organisation (WTO) are not just any round but one that has to fulfil a mandate known as the Doha Development Agenda.

It explicitly prioritises the needs of developing countries and addresses the imbalances already present in the rules of the global trading regime.

Nothing new came from the G20 with respect to the Doha Round, argued Meléndez-Ortiz. ‘‘There is a commitment to its conclusion but no date; neither a call to a ministerial conference this year.’’

The G20 did commit 250 billion dollars to boosting trade finance. This is a sort of credit guarantee to allow traders access to credit in their daily transactions as this has dried up because of the financial crisis.

‘‘Such a high figure is great news and much more than I was expecting,’’ admitted Meléndez-Ortiz. ‘‘But the point is how to get it to the countries that need the money the most, an issue on which the G20 was silent.

‘‘Africa’s exports are going to fall by 40 percent this year. The external demand for African products has dropped and so have commodity prices, tourism, remittances and the economic growth of the big driving countries – South Africa, Nigeria and Kenya. Africa badly needs trade financing.’’

Deere Birkbeck agreed: ‘‘Africa needs a specific, clear plan for rapid trade-related support, particularly as sharp drops in trade revenues have caused hefty losses for many government budgets and thus threaten a range of social and health services to the poorest.’’

On aid for trade, the G20 was also non-specific. ‘‘They could have done more,’’ argued Deere Birkbeck. ‘‘Existing commitments are maintained, but nothing is said on how to reach them.

‘‘While the communiqué details a series of financial measures to boost resources for developing countries through the International Monetary Fund and World Bank, there was no express commitment to ensuring that aid for trade represents new resources rather than a diversion of existing official development assistance.’’

Aid for trade is a kind of structural assistance that was decided on at the 2005 WTO ministerial conference in Hong Kong. It is aimed at helping developing countries to adjust to trade liberalisation and to participate in the multilateral trading system and global market.

Measures range from building infrastructure for trade and the necessary institutions to export development and boosting exporters’ productivity.

‘‘The problem is that nobody really knows how to assess aid for trade and the G20 didn’t add anything in this respect,’’ Meléndez-Ortiz explained to IPS.

‘‘The Organisation for Economic Cooperation and Development (OECD) has come up with a matrix, but who will monitor it? Is it the WTO or the OECD? There is an emerging consensus that it should be the WTO but the whole issue is still fuzzy – a typical Doha Round story,’’ he added.

Deere Birkbeck further argued that, ‘‘the G20 did not make a broad political commitment to the multilateral trading system. Yet, the WTO is the safest place for developing countries to negotiate.

‘‘Fortunately, the G20 summit acknowledged that the WTO should monitor compliance with trade rules. But the problem is that its trade policy review body doesn’t have extensive powers.’’

Meléndez-Ortiz is of the opinion that ‘‘the G20 should create a task force to review the WTO governance system and rationalise the international trade regime to make sure bilateral and regional agreements are brought in line with the WTO.

‘‘The more complex the international trade regime becomes, the more asymmetric it is. The G20 did not say a word about it, yet it is one of the biggest problems we face – a crisis of confidence and trust.’’

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