Bridges Weekly Trade News Digest • Volume 13 • Number 33 • 30th September 2009

G20 Leaders Call for Ministers to Meet on Doha in Early 2010

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Emerging from a two-day summit in Pittsburgh last week, leaders from the Group of 20 rich and emerging economies repeated calls for the WTO’s Doha Round of trade talks to be concluded before the end of 2010, and instructed their trade ministers to meet early next year to assess progress toward a deal.

“We ask our ministers to take stock of the situation no later than early 2010, taking into account the results of the work program agreed to in Geneva following the Delhi ministerial, and seek progress on agriculture, non-agricultural market access, as well as services, rules, trade facilitation and all other remaining issues,” the leaders wrote in a declaration released after the meeting closed on Friday.

The statement represented a compromise on proposed timelines for the talks. Australia, Brazil and the EU had fought for a commitment for negotiators to secure an agreement on ‘modalities’ - the broad outlines of a global tariff- and subsidy-cutting deal - early next year. Doing so would leave countries ample time to go through the process of ‘scheduling’ - the transformation of the modalities into specific tariff cuts on thousands of product lines - before the end of 2010. For some developing countries, scheduling could take as long as six to nine months, one rich country trade official said.

But the United States resisted the push for a commitment to reach modalities early next year, Reuters reported, on the grounds that politicians in Washington would not accept it.

WTO Director-General Pascal Lamy paid a visit to the summit to brief the leaders on the state-of-play of world trade, and to urge them to throw their political weight behind a new global trade accord.

“I explained that political signals of commitment to resisting protectionism and to concluding the Doha Round in 2010 were needed and, indeed, welcome,” Lamy said in a speech at the WTO on Monday. “But that, as long as they do not translate into concrete engagement, declarations would not in-and-of themselves deliver an outcome.”

Lamy has long argued that a global trade deal is critical to forestalling protectionism and lowering consumer costs amid the ongoing economic downturn. If all WTO members raised their tariffs to the maximum levels currently allowed by the global trade body, then the average world tariff level would double, Lamy said on Monday. Many trade observers doubt that countries would take such drastic measures in response to the crisis, but in the absence of a new global trade agreement, the possibility remains.

“Leaders have agreed that their negotiators now embark on the work programmes that we have established for the next three months, and that they then assess our collective ability to achieve our 2010 target,” Lamy said. “It is now incumbent upon [the leaders] to ‘walk the talk’.”

IMF reform: Real change on the way?

Beyond Doha, G20 leaders had a full agenda for their two-day summit, hitting on questions as varied as potential limits on bankers’ bonuses, reforms to international financial institutions, caps on fossil fuel subsidies, and progress toward a global climate change deal.

Reforms of the International Monetary Fund (IMF), the global lender that has its headquarters in Washington, are a top priority for major emerging economies, which have traditionally been sidelined in IMF decision making. Under the current system, China, which holds 3.7 percent of the vote, has less influence than France, which controls 4.9 percent, even though the Chinese economy is 1.5 times bigger than that of France.

But that could soon change. The G20 leaders agreed to “a fundamental realignment of voting weights” at the IMF, according to a statement released by the White House.

“We are committed to a shift in quota share to dynamic emerging market and developing countries of at least five percent from over-represented to underrepresented countries using the current IMF quota formula as the basis to work from. We are also committed to protecting the voting share of the poorest in the IMF,” the leaders’ statement said.

But Mark Weisbrot of the Washington-based Center for Economic Policy Research says a 5 percent shift in voting weights would only be a superficial change. As long as the combined votes of Europe, the United States and Japan outweigh those of the emerging economies, the rich countries will continue to set the agenda, Weisbrot says.

Also at last week’s meeting, leaders agreed that the G20 will become the ‘premier forum’ for global economic cooperation, replacing the Group of Seven, which has taken centre stage in international economic policymaking since the mid 1970s.

“We believe that the G20 is the body for dealing with the big economic issues,” British Prime Minister Gordon Brown said on Thursday, according to a report in The Financial Times. “Over time the G20 is going to take a bigger role in international policy - I see the G20 becoming the organisation people look to,” he added.

The G20’s influence on the world stage will no doubt be limited by its fundamental lack of an enforcement mechanism. But leaders gave the new grouping some clout by agreeing to ‘peer review’ each others’ economic policies. Australian Prime Minister Kevin Rudd said that countries will begin sharing information before the end of this year, Reuters reported.

The G20 includes the European Union and 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States. Taken together, the G20 economies account for roughly 90 percent of world output.

The leaders agreed to meet again in Canada in June 2010, in Korea in November 2010, and in France the following year.

More information

The G20 leaders’ statement is available here http://ictsd.net/downloads/2009/09/g20-statement.pdf.

ICTSD reporting; “Snap analysis: Another Doha pledge, but will negotiators move?” REUTERS, 25 September 2009; “Brown says G20 will focus on new framework,” THE FINANCIAL TIMES, 24 September 2009; “G20 economic peer review to start by year-end: Rudd,” REUTERS, 25 September 2009.