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THE INSTITUTE FOR INTERNATIONAL TRADE
A MESSAGE FROM THE DIRECTOR
This special newsletter from the Institute for International Trade (IIT) is dedicated to sharing our contribution to this year’s Think20 (T20) hosted by Saudi Arabia. The T20 serves as an annual ‘ideas bank’ for the Group of Twenty (G20) intergovernmental body, by affording global civil society groups and international think tanks the opportunity to provide research-based policy recommendations to the leaders of the member nations. This is done through assigning contributing groups to task forces dealing with issues of global importance.
This year, I was co-chair of ‘Task Force 1: Trade, Investment and Growth’. This task force sought to address issues such as how to strengthen the World Trade Organization; how to achieve sustainable, balanced and inclusive development through goods and services trade; and lastly, explore how to establish well-balanced global rules that promote the free flow of data while ensuring personal information is protected in digital trade. IIT staff members contributed to three policy briefs dealing with these themes.
In the Institute’s first contribution, I was among the co-authors of a policy brief addressing how the G20 must play a collective leadership role in counter-acting the serious tensions paralysing the World Trade Organization (WTO). The policy brief provides recommendations for the initial steps that the G20 can take to support WTO reforms.
The second policy brief, led by me, explores the major issues around industrial subsidies, and identifies a plurilateral path forward for reforms. Again, the focus is on what G20 members can do to address the subsidies problem and, thus, provides a set of substantive options to guide the proposed deliberations. IIT’s Dr Naoise McDonagh and Visiting Professor Dr Andreas Freytag were contributors to this briefing.
IIT’s Professor Jane Drake-Brockman with Emeritus Professor Christopher Findlay led our final contribution as co-authors with a number of other global experts in a briefing assessing the ongoing transformations in the digital economy. In focus here is rapidly growing e-service trade, and the urgent need for regulatory frameworks to catch-up with these developments or else risk putting productivity gains at risk.
Each policy brief speaks to the concerns of long-term research projects underway at IIT, including subsidies and industrial policy, WTO reform and trade in investment and services, each of which is listed on our website.
Furthermore, these three briefings showcase IIT’s commitment to supporting and shaping the global dialogue on positive trade-led development, as well as our commitment to meeting global challenges with research-based solutions. IIT hopes these three policy contributions to the T20 can contribute to a more constructive multilateral environment in the months and years ahead.
Professor Peter Draper
POLICY AND ENGAGEMENT
The World Trade Organization (WTO) faces an existential crisis and its main functions are eroding. Its rulemaking function must be revised to govern the current trading environment. Its dispute settlement system, particularly the Appellate Body, has been deadlocked; the impasse must be resolved. Leading stakeholders have presented several reform proposals; however, the main challenge comes from systemic issues embedded in the geopolitical rivalry among major Group of Twenty (G20) members. The reform is not an easy process in a member-driven institution where consensus is strictly required. The G20 represents a critical mass of world trade and must play a collective leadership role with deliberate dialogue in order to provide a coherent approach that identifies divisions and creates solutions. This policy brief provides recommendations for the initial steps that the G20 can take to support WTO reforms.
The World Trade Organization (WTO) is at an impasse regarding the resolution of tensions surrounding the issue of subsidies. The weak implementation and surveillance of WTO disciplines is attributable to the lack of notifications by WTO members. Currently, major members are developing plurilateral initiatives to deal with the perceived unfair application of subsidies, which leads to market distortions, overcapacity, and unfair competition. Are these steps an attempt at broad reform or a self-serving agenda aimed at certain other members? This policy brief explores the major issues around subsidies, and identifies a plurilateral path forward if a broad—than member-targeted—reform agenda is to be followed. It proposes procedural steps that the Group of Twenty (G20) members can follow to address the subsidies problem and, thus, provides a set of substantive options to guide the proposed deliberations.
Digital technologies are cutting trade costs for services, turning more services from non-tradables into tradables, and putting trade in services on a stronger relative growth path than trade in goods. Digital enablement of services depends on inputs of cross-border data flows, which are themselves growing exponentially. The shift to the digital economy has intensified during the COVID-19 pandemic as goods producers connect with customers via online platforms, and services like health, education, and entertainment are delivered online. Purchasing services offshore is not far behind, so e-service trade will likely continue to accelerate. However, regulatory frameworks are lagging, putting productivity gains at risk. We offer eight recommendations to the Group of Twenty (G20) leaders to start shaping a trade policy agenda for a digital future. For every nation to reap the benefits of the Fourth Industrial Revolution, sustained openness to international services trade, investment, and data flows is essential.
A webinar was hosted virtually on 17 September 2020 to mark the beginning of the T20 Summit Season, celebrated the work of T20 Task Force 1: Trade, Investment and Growth. The full proceedings are available online for viewing.
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EVENTS
The COVID-19 pandemic has disrupted international trade, investment, movement and supply chains in unprecedented ways, with significant implications for the Commonwealth’s 54 member countries. Meanwhile, political tensions are escalating trade disputes between the USA and China (and now the USA and the EU). The pandemic is also perpetuating an ongoing economic slowdown in China and India, while the proliferation of trade-restrictive measures is further depressing the outlook for world trade growth. This global trade turmoil presents challenges for Commonwealth countries. Join us from 5pm (ACST) on Thursday, 24 September 2020 for an interactive webinar, which will highlight the main findings from two forthcoming studies by the Commonwealth Secretariat on (1) the Commonwealth’s trade in a post-COVID landscape; and (2) the implications of the slowing Indian economy for Commonwealth trade.
IIT and the EU Jean Monnet Network: Trade and Investment in Services Associates (TIISA) are pleased to be supporting Geneva Trade Week (25 September - 2 October 2020), being held by the Geneva Trade Platform. Join us online from 4.30pm (ACST) on Tuesday, 29 September 2020 for an interactive discussion on Competition and Innovation in the Digital Age: Pro-Innovation Domestic and International Governance for Digitally-enabled Services.
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