The current media discourse around the G20 summit can broadly be divided into two camps: There are those who are critical of the agenda because it neglects issues such as climate change and international development; and there are those who doubt whether any substantive agreement can be reached amongst such a diverse set of nations with diverse interests. A worrying trend lamented by both camps is the 47 major measures to restrict trade which have been implemented by several countries since the last G20 leaders’ summit in Washington.

What is missing from the discourse and what underpins all of these concerns is the endogenous nature of the global financial crisis.

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Guest blogger Sylvia Ostry reflects on the challenges for the trade system amidst the financial crisis

If there was ever any doubt about the close, even intimate, relationship between trade and finance in the global economy, the statement issued by the G20 leaders on 15 November 2008 put that doubt to rest. In that document – wide ranging and complex – the G20 tasked several national and international organisations with implementing enunciated principles for reform of financial markets and an initial set of specific measures, including high-priority actions to be completed by the end of March 2009.

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Roberto Bouzas

The challenges faced by developing countries and sustainable development regarding global economic governance are not substantially different from those faced by the developed world. In fact, both groups of countries share common challenges.

The first and most urgent challenge is to revive the multilateral trade regime. In the last half century, trade has been the policy area in which the international community has made the most strident progress towards cooperation. In the last decade, however, the effectiveness of the international trade regime has eroded under the weight of a changing international and domestic landscape (a new balance of power, an expanded membership, the emergence of new constituencies, and the development of uncharted regulatory areas). These structural transformations were underway well in advance of the financial crisis, but a creeping recession and mounting protectionist pressures have sharply deepened existing tensions.

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Guest blogger Shuaihua Cheng provides a Chinese perspective on global trade governance and the economic crisis, focusing on the upside of a downturn.

The most critical problem facing global trade governance at this moment is that we have focused too much on problems at the World Trade Organization (WTO). It is dangerous to disregard the fact that the WTO has functioned well as a stabilizer of basic global economic order amidst economic turmoil.

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Guest blogger Yash Tandon sets out a forward-looking agenda for global trade governance and sustainable development from a Southern perspective.

The world’s multilateral negotiations on trade and on sustainable development over the last decade yield two important lessons for the multilateral system.

The first lesson concerns the interconnectedness of things: trade, security, employment, human rights, development, terrorism, migration, poverty, climate change are all interconnected. For the developing countries of the South, trade and climate change are a dual facet of their continuing sustainable development challenges.

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Guest blogger Richard Higgott sets out the challenges and priorities for G-20 leaders to contain the spread of the financial crisis to the trade sector.

The governance of global trade and the international trade regime will clearly be affected by the fallout from the current wider economic and financial turmoil. Enhanced global economic policy coordination is needed. Existing institutions do not currently offer enough – in either sufficient quantity or quality. Amidst efforts to stabilise the global economy, the multilateral trade system is threatened by the perception that globalization has been tarnished by speculative investment and other excesses in financial markets seeking ever larger profits at the expense of sound business practice.

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In good times or bad, there is one commodity which Africa always enjoys in abundance: namely, advice on fiscal responsibility. The real scarcity today is the flow of finance needed to prevent the economic downturn from turning into a human development reversal.

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The most important trade advice one can give to leaders participating in the G-20 London Summit is, Do no harm. The risk of harm is real, since the group’s composition and preparatory process, both oriented to financial issues, are ill-suited to trade or the World Trade Organization (WTO). Some countries important in the WTO are not invited to London, but many members of the G20 have little or no role in WTO negotiations in Geneva. Officials responsible for trade policy have not been involved in developing the texts for leaders. Nevertheless many analysts want the G20 to take an activist role on trade. Leaders should resist that temptation in favour of playing a catalytic role.

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Development should be the centerpiece of reforming the global economic architecture. Pressing to conclude a World Trade Organization (WTO) deal to close the Doha Round based on the current proposals circulating in Geneva would be counter productive. Instead, we offer five policies for reforming global trade that will enable economic development and stimulate the global demand needed for a global recovery.

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The establishment of the Bretton Woods institutions in 1948 was intended to forestall the sort of crisis that had afflicted global economic and political governance structures in the preceding periods, and which have a striking semblance to the current world economic recession. The weaknesses of the skewed governance configurations built into the institutions charged with coordinating and managing the aftermath of the pre-1948 catastrophe have spurred copious criticisms, particularly from the developing countries whose interests have frequently been threatened by the ways in which these institutions have implemented their respective mandates. For the rest of the twentieth century and in the advent of the new millennium, the developing world has been preoccupied with resisting the current and potential impacts of global economic power relations biased against their sustainable development interests. If not immediately restructured, the status quo could have pervasive, damaging consequences for both the developed countries that now exercise economic and technological supremacy, and the weak, almost totally helpless, developing countries. Only a few developing countries have managed to escape the harsh effects of such distorted power relations.

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