The Group of 20 Summit in Hamburg last week was a stark reminder of how things have barely changed since the global financial crisis started almost a decade ago. In the aftermath of the crisis, Ian Bremmer and Nouriel Roubini co-authored a think-piece for Foreign Affairs, published in March 2011, calling deliberations under the G20 as a “cacophony of competing voices”.
They argued that the United States was lacking the resources and the political will to continue as the primary provider of stability. At the same time, the European Union was busy salvaging the Eurozone and the emerging economies were too focused on domestic economic challenges. The Doha Development Round was dying and the World Trade Organisation left powerless in the face of growing protectionist measures that followed the world-wide economic rout.
Even then, it was clear for the two eminent thinkers that none of the major powers had the resources or political capital to drive a truly international agenda. Bremmer and Roubini dubbed this era as a G-Zero world.
The G20 Leaders’ Declaration in Hamburg appears to reaffirm this status quo when it called on countries to fight protectionism and unfair trade practices, while at the same time contradicting it by recognizing “the role of legitimate trade defence instruments”.
Although the latter may seem like a concession tailored specifically for Donald Trump’s “America First” policy, the US was hardly the only one sighing a relief. G20 members are no strangers to protectionism or, more accurately, stealth protectionism, and the trend is worrying.
According to UNCTAD data, Argentina, Australia, Brazil, Canada, the EU, Indonesia, Japan, Mexico, Russia and the US, implemented a total of 600 nontariff barriers to trade in 2015, higher from 531 in 2014 and 363 in 2013. Throughout this period, these countries only withdrew a total of seven.
These nontariff barriers created different standards that made global trade more difficult. While some of the measures are for a good cause, such as to prevent 2 degrees of global warming, many are driven by political calculations at home. It is high time that leaders abandon diplomatic niceties and acknowledge that competition is really what drives all multilateral interactions, with each looking to meet the demand of local industries and workers.
This is why smaller economies tend to prefer traditional multilateral routes under the United Nations and the WTO, where they have a better standing against big powers to reach win-win deals.
At a time when the major powers can’t seem to produce meaningful reform, it is therefore refreshing to hear Singapore’s Prime Minister Lee Hsien Loong, who represented the voice of the Global Governance Group — the informal group of 30 small countries — at the G20, calling his powerful counterparts to revive the multilateral routes.
Attempts to circumvent the creation of a global trade deal under the WTO by setting up alternatives such as the Trans-Pacific Partnership or the Transatlantic Trade and Investment Partnership have generally been put in the back burner. It is time to rekindle the old route.