Council president Donald Tusk and Commission president Jean-Claude Juncker have set out the European Union’s priorities for the coming G20 summit in Hangzhou, China (4&5 September). The summit will deal with a wide array of economic topics, from tax to finance to climate issues, but also trade policy. The G20 summit gathers against a backdrop of rising investment risks, not least in the US and Europe, according to a new Global Trade Alert report.
“The G20 must make the case for open trade and investment”, Tusk and Juncker write ahead of the summit. “The G20 has a particular responsibility to buttress the multilateral trading system. It should therefore provide genuine guidance for the future global trade and investment agenda”, the two believe.
The statement calls for a swift ratification of the 2013 Trade Facilitation Agreement in the WTO, a process that has taken longer than expected. They also call for a commitment to new negotiations in the WTO such as digital issues, and for the conclusion of current ‘plurilateral’ trade negotiations. “We expect the G20 to give a strong push for concluding the Environmental Goods Agreement in 2016”, one of those plurilateral trade agreements, talks towards which were launched in 2014. “This will be good not only for global economic growth but also for the environment”, the two EU heads reckon.
The G20 will be a delicate moment for China and Western economies grappling with steel overcapacity in a year in which the latter are expected to stop treating China as a non market economy in their antidumping regulations. So far the latter have been the major conduit to slow down imports of Chinese steel amidst dramatic price drops. “Urgent and effective action is needed to cut overcapacity in the steel and other sectors, including by tackling subsidies and other market-distorting measures that have contributed to it”, the EU leaders write. An EU decision on whether and under what conditions to grant China market economy treatment is expected this autumn. The matter will be discussed by the member states at a forthcoming informal Council meeting in Bratislava (22 & 23 September 2016).
The EU is also planning to endorse G20 Guiding Principles for Global Investment Policymaking. These are non binding principles reaffirming the need for open, non discriminatory and transparent investment regimes at home, as well dispute settlement systems for investors. The guidelines, drawn up in July, fall short of mentioning the EU’s plans for the establisment of an international investment court.
Changing nature of G20 protectionism – focus on investment and localisation
A new report by the scholars running the Global Trade Alert website ahead of the G20 summit highlights that protectionism worries have shifted since the onset of the financial crisis of 2008, year at which their own measurements start. So far, trade protectionist measures have predominenttly been about trade defence, but the onus is shifting to localisation requirements. “Since the beginning of 2015 just under 15% of G20 protectionist measures involve some kind of requirement that foreign firms source or produce locally”, Simon Evenett and his colleagues write.
And who in the WTO are the bad guys? Well, mainly the Westerners: “Relative to their average annual performance since the onset of the crisis, there has been a pronounced worsening of commercial policy in Australia, France, Germany, Italy, Saudi Arabia, the UK, and the US during 2015 and 2016”, the Global Trade Alert report reckons.
