The G20 trade and investment work programme has delivered so little. A new rationale is required to shift expectations and ensure more is achieved
The G20 under the Indonesian presidency this year represents a historic low thus far for the G20’s work on trade and investment policy. This is quite remarkable, given how little so many other G20 presidencies have accomplished. After G20 trade ministers met on 21–23 September 2022, no ministerial declaration was issued. Two weeks later, a chair’s summary was published (the fallback position when a declaration or communiqué cannot be agreed). It acknowledged that G20 members were divided over whether to discuss geopolitical fissures. The chair’s summary is chock full of statements of intention, but light on specific agreed deliverables.
For sure, expectations were not high. To the extent that Indonesia’s published priorities for its G20 presidency mentioned trade, it was a problem – not as a way of accessing affordable products and tapping into innovation abroad, both of which are critical to supporting the energy and digital transitions. Furthermore, there was always the (unspoken) concern about Indonesia’s trade policymaking expertise, both technical and diplomatic.
The invasion of Ukraine introduced an acute geopolitical dimension that would have stretched the most adept diplomats and hosts. No doubt some will give Indonesia a pass on these grounds alone. But that is not good enough. The whole point of the G20 is to help find common ground (which is not the same thing as finding common solutions) when the world faces moments of extreme stress, whether the cause be economic, financial, military or zoonotic.
Furthermore, there is a deeper point here. Fundamentally, the current G20 trade machinery moves too slowly when compared to unilateral trade policy intervention. Contrast that with this alternative: after the invasion of Ukraine, G20 members could have put pressure on the European Union to rein in some of its wayward member states that had imposed export curbs on food. To balance this, the G20 could also have encouraged China to show solidarity by removing its 2021 export ban on fertiliser. Ways could have been found to encourage India not to ban the export of certain types of rice, as it recently did.
Another red flag was the transformation during this G20 presidency of the trade and investment ministerial meeting into a meeting of trade, investment and industry ministers. Trade was referred to in terms of its effects on private-sector development (and not always in a good way). As one Indonesian news agency put it (probably accurately), “the G20 members emphasized the role of the multilateral trading system to restore industrial productivity as well as agreeing upon the coherence of trade and investment policies with industrial policies to address future challenges”.
This quote highlights another dynamic at work: trade and trade policy are expected to deliver along more and more dimensions. Yet, paradoxically, fewer tangible cooperative steps get agreed at the G20 when expectations of trade’s potential are raised. Somehow the G20’s trade work programme has lost the knack of identifying specific agenda items on which support for cooperative measures can be built.
Will matters improve under the Indian G20 presidency in 2023? Initial signs are not encouraging. The work programme being defined by officials of the Ministry of Commerce and Industry is backward looking and plain vanilla. Unless the prime minister’s office in New Delhi gets a grip on the bureaucracy, we are looking at another wasted year of G20 trade diplomacy. What can be done to avoid this undesirable outcome?
First, G20 sherpas and sous-sherpas should reflect on why the G20 trade and investment track is currently yielding so little. Are they really convinced that more could not be achieved? There are of course growing geopolitical rivalries, but that is all the more reason to nurture a forum where the trading powers can exchange views in a non-negotiating setting. Related questions include: Is the current low-frequency consultative process best suited for tackling first order challenges? Or should different modalities for cooperation be found?
Second, given the nugatory impact that G20 initiatives have had on the propensity of its members to raise trade barriers, then perhaps the focus should move away from discouraging protectionism in the short term. Instead, the focus could be on developing common understandings on emerging areas of trade and investment policy, such as those associated with the energy transition and digital transformation of our societies.
International institutions that retain their relevance inevitably pivot from time to time. The G20 trade track was created to ensure the global financial crisis did not result in 1930s-style protectionism. That rationale has delivered so little. A new rationale is needed.