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Removing Obstacles to Trade

In 2014, G20 members are focussing on how trade contributes to economic growth and on ways to boost global trade. G20 members represent around three-quarters of global trade so the forum is well-placed to improve the growth of global trade.

Trade, a key source of growth and jobs, remains below its pre-2009 rate of expansion. The World Trade Organization (WTO) expects global trade will grow at 3.1 per cent per cent in 2014 - an improvement on the 2.1 per cent growth seen in 2013 but still below its pre-crisis average of 6 per cent per annum from 1980 to 2007.

G20 members are discussing ways to remove obstacles to trade in their G20 growth strategies, including measures that will ease the cost of trading across borders and facilitate participation by businesses in regional and global value chains. The actions chosen will vary according to each member economy and could include reduced tariffs, deregulatory measures, enhanced logistics, faster customs procedures and upgrades to trade-related infrastructure. Freer trade in all directions means lower costs for both producers and consumers.

G20 members are looking at what they can do to resist protectionism. Protectionist measures are on the increase – last year, 407 measures were introduced worldwide, up from 308 the previous year. These new restrictive measures affect world merchandise imports valued at US$240 billion. This trend needs to be reversed, and the G20 collectively can lead by example. The OECD estimates that actions to reduce global trade costs by 1 per cent could result in a worldwide income increase of US$40 billion, with 65 per cent of the benefits accruing to developing countries.

The G20 also has a central role in promoting better global governance, including of world trade. In 2014, G20 members are looking at what can be done to contribute to a stronger global trading system and a stronger WTO. This includes seeking a G20 commitment to timely implementation of the WTO Trade Facilitation Agreement concluded in Bali, Indonesia, in December 2013. Full implementation of this agreement could potentially foster US$1 trillion in economic activity and create 21 million new jobs, 18 million of which will be in developing economies.

The global trading system includes more than 250 free trade agreements (FTAs) in force, while FTAs currently under negotiation (as tracked by the WTO) could liberalise goods and services trade between an additional 23 pairs of G20 countries. There is a role for the G20 in ensuring that these agreements are 'building blocks' and not 'stumbling blocks' to further global trade liberalisation.

Trade was discussed at a joint meeting of Sherpas and Finance Deputies in Melbourne in June, following a meeting of trade officials from G20 economies in May.

In July, G20 Trade Ministers met to assess commitments on trade made by G20 members in their draft growth strategies and discuss how members can strengthen the global trading system.

Download the Policy Note Boosting trade for growth and jobs.


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