India has scored a significant goal on steering a global move towards a rules-based, open, inclusive, multilateral trading system – holding the World Trade Organization (WTO) at its core —with the G20 Trade and Investment Ministers’ meeting under India’s Presidency arriving at an all encompassing and inclusive consensus on five concrete deliverables which could have far reaching and favourable implications for rejuvenating global trade demand, bringing in targeted investments in quality physical and digital logistics, enhancing supply chain resilience, promote economic growth and foster prosperity. The mutual agreement on these areas assumes greater import amidst a multi-dimensional global crisis that raises challenges of macroeconomic instability, food insecurity and disruptions across GVCs, as acknowledged in the ‘Outcome Document of Trade Ministerial Meeting’ which concluded in Jaipur on Friday. The joint communique flags the uncertainty over near-term prospects of global trade and investment and the prediction that growth in cross-border trade will remain subdued at 1.7 per cent in 2023. These underline the significance of the G20 acting together to ensure that trade, along with domestic production, plays a vital role in improving global food security in all its dimensions, that trade-related investment initiatives foster resilient, diversified and sustainable economic growth and that use of technology for facilitation of cross-border trade promotes integration of MSMEs in global trade. Prime Minister Narendra Modi has emphasized the G20’s responsibility to rebuild confidence in international trade and investment order, setting the future template. Commerce Minister Piyush Goyal had clearly stated that the focus of G20 Trade and Investment Ministerial Meeting (TIMM) will be on easing barriers to international trade and investment, helping boost productivity and output and fostering economic growth and prosperity for all.
A key priority for action agreed upon at the Jaipur Ministerial is building resilient and inclusive global value chains that can withstand future shocks and ensure higher participation of MSMEs in global trade. In a recognition of the important role of free, fair and open markets in maintaining resilient GVCs, the G20 Ministers have agreed to work towards GVC mapping and a mapping framework to help members identify opportunities for building resilience within GVCs. The G20 Generic Mapping Framework for GVCs endorsed by the trade ministers contained key building blocks of data, analysis and representation of GVC data. The framework will move along identifying key dimensions to help evaluate the resilience of GVCs both at the sectoral and product levels.
The voluntary and non-binding nature of the “G20 Generic Framework for Mapping GVCs”, however, leaves room for inaction by countries and thus robbing the intent of effective action but the G20 trade ministers expect to close the significant gap between some developing and developed countries in GVC participation and capacity of members to attract global production, by promoting and fostering linkages between foreign enterprises and domestic companies, particularly MSMEs. Since sustainable and inclusive GVCs require investment, G20 ministers have emphasised on investment facilitation to enhance relevant investment flows in this regard.
Facilitation of trade is of critical importance to MSMEs and India’s consistent advocacy for this cause reflects in an unanimous G20 trade ministers’ Jaipur Call for
Action for enhancing access to information for these businesses. This will help MSMEs, particularly in developing countries, who often lack the requisite resources to collect and analyse all the relevant information for their target markets. For the first time, the International Trade Centre (ITC), Geneva has been mandated to work on a detailed imple mentation plan, in consultation with UNCTAD and WTO, for upgradation of ITC’s global trade helpdesk which would address the informational gaps faced by MSMEs.
Interestingly, the G20 Policy Guidelines on Boosting MSMEs’ International Competitiveness from the Saudi Arabian Presidency and the G20 non-binding MSMEs Policy Toolkit under the Italian Presidency have served as the template for the Jaipur Ministerial to push for digital technology and technology-based tools, along with appropriate policy and institutional measures in enhancing MSMEs’ access to information, finance and markets. To ensure rapid digital enablement of MSMEs, India’s G20 Ministerial has recognised the importance of lowering entry barriers for them on digital platforms. The other point of consensus on trade driven under India’s G20 Presidency is digitalization of trade documents encompassing 10 broad principles that comprehensively cover various dimensions of an effective transition to paperless trade. These principles pave way for paperless trade which will drive productivity gains and economic growth by reducing trade costs and lowering barriers to entry for MSMEs, including women-owned or women-led MSMEs. Recognition of electronic trade documents as equivalent to their paper counterparts will support such a transition. If successfully implemented, they will create a secure interoperable and transparent paperless cross-border trade environment.
Recognising that reliability and predictability of international trade and cargo operations and developing logistics infrastructure through targeted investments are vital for rejuvenating global trade demand and that MSMEs are vulnerable to disruptions and cost increases in logistics services, the G20 Ministerial have agreed on the importance of enhanced domestic monitoring to minimize the effects of such disruptions on world trade and importance of more stable and predictable transport freight rates.
Another breakthrough which will also facilitate trade is the consensus by G20 Ministers on mutual dialogues to reduce regulatory divergences and associated trade costs. The G20 Ministerial has underlined the importance of effective regulatory dialogue to reduce regulatory divergences and associated trade costs. India’s Presidency has successfully moved a consensus on holding a G20 Standards Dialogue in 2023 that will bring together members, policymakers, regulators, standard-setting bodies and other stakeholders to discuss topics of common interest such as good regulatory practices and standards. The G20 intent also involves preventing unnecessary trade frictions, monitoring trade and investment-related measures and solving existing irritants.
The fifth important pillar which will see collective action by G20 trade ministers is voluntary sharing of best practices on mutual recognition agreements (MRAs) for professional services. This has important implications services trade given its importance in global growth and in generating employment. Moving towards sound, predictable and transparent domestic regulatory frameworks for trade in services, the agreement on MRAs will be further supported by the development of a Presidency’s Compendium of best practices on MRAs for professional services. The compilation of such good practices will spur successful entering into MRAs which in turn will enable recognition of technical qualifications of the G20 members’ doctors, nurses, lawyers, architect and other professionals by other countries. It will thus immensely help professionals in providing their technical services across the world. While there is no specific plan of unified action on WTO, the G20 trade Ministers have recognised that the WTO remains indispensable for advancing the shared objectives of inclusive growth, innovation, job creation and sustainable development amidst mounting global challenges that are adversely affecting predictability and resilience of global trade, aggravating poverty and inequality. The Director General of WTO Ngozi Okonjo-Iweala however, wants all the G20 Ministers to narrow down realistic deliverables for agreement at the WTO’s 13th Ministerial Conference (MC13) in early 2024.
As a step towards this call, the G20 Ministerial recognized the importance of WTO’s “Aid-For-Trade Initiative” to enable developing countries, notably LDCs, to effectively participate in global trade, including through enhanced local value creation and will welcome all efforts to mobilize necessary resources in this regard. The G20 Ministers also agreed to continue to work constructively to ensure positive outcomes including on WTO reform at the WTO’s 13th Ministerial Conference. Noting the ongoing discussions on dispute settlement reform, the G20 Ministers have restated commitment to having a fully and well-functioning Dispute Settlement System, accessible to all members by 2024.