Precious little was achieved on trade policy cooperation during Indonesia’s G20 presidency. Given the broader international context in which the G20 is currently operating, this does not come as a surprise.
Even when compared to the low standards set by previous G20 presidencies, precious little was accomplished to foster trade and investment policy cooperation this year. Trade ministers did not issue a communiqué — not that this is the ultimate arbiter of a successful year. A Chair’s Summary was issued weeks after ministers met. This document included a section on “Non-Binding Guiding Principles To Support the Multilateral Trading System For the Achievement of the Sustainable Development Goals” which the presidency could have—but evidently did not—secure the agreement of other G20 members.
What to make of this? Is it a case of bad luck? After all, the invasion of Ukraine has divided G20 members, with one group taking extensive sanctions against another member, while others demurred. A different tack is to argue that, with so much trade policy “bandwidth” taken up with preparations for the 12th Ministerial Conference of the World Trade Organization (WTO) over the summer, much of the trade policy oxygen was sucked out of the room. Under these circumstances, it could be argued, little could realistically be expected of the Indonesian G20 Presidency in the area of trade.
However, these arguments do not let Indonesia off the hook. After all, the G20 was created to tackle crisis situations and, by definition, crises throw up all sorts of competing demands on ministerial time. As the Americans might put it, being able to simultaneously walk and chew gum is part of the job in high-stakes diplomacy. Rather than focus on the alleviating the commercial policy fallout from growing geopolitical tensions, addressing the threats to food security brought about by Ukraine’s inability to ship crops through the Black Sea, and doubling down on protectionism, the Indonesian presidency stuck to its theme of linking trade policy to the Sustainable Development Goals (SDGs). Not that there is anything wrong with this, rather that more pressing matters deserved prioritisation.
What was the outcome of this year’s G20 Trade Ministerial? To get a sense of how few serious commitments were made by G20 members, the word “shall” cannot be found in the Chair’s Summary. Even the word “will”—diplomatically weaker than shall—appears only four times in the Chair’s Summary and was never used to signal new action on the part of G20 members. No mention can be found of the trade and investment measures that threaten food security and the normal operation of supply chains. In short, it is as if the fallout from the invasion of Ukraine never happened.
The last observation takes us closer to the matter at hand. This year the G20 members have imposed a total of 43 export curbs on food that remain in force, as of 16 October 2022. That breaks down into 22 G20 bans on exporting food and fertilisers, six new rulings requiring licenses to export food, the imposition of three new export quotas (limits) on food by G20 members, as well as 12 export tax increases. For sure, some export curbs on food and fertilisers by G20 members have been withdrawn—perhaps, most spectacularly, Indonesia’s ill-fated attempt to impose an export ban on palm oil in May. Having witnessed the threats to political stability that such export bans can create, Indonesia would have been well placed to make the case for collective restraint by the G20. This did not come to pass.
Worse, from 1 January to 16 October 2022, according to the policy intervention documented by the Global Trade Alert team, G20 members imposed a total of 1161 trade, investment, and other measures that either reduced or distorted cross-border commerce. That means, on average, every six hours this year a G20 member has taken action that harmed trade. Over the same timeframe, the G20 has implemented 260 trade and investment reforms. The direction of travel, as far as trade policy is concerned, is clear. Indeed, it begs the question as to whether the Indonesian G20 presidency saw any link between these adverse commercial policy dynamics and the attainment of the SDGs, which it championed.
What are the lessons going forward? The first is that, despite the track record above, perhaps remarkably, Indonesia can still redeem itself. The Black Sea Grain Initiative, which facilitates the export of Ukrainian crops, is due to lapse very close to the G20 Leaders Summit. Indonesia could apply its diplomatic talents to encourage all the parties to extend that deal for as long as possible.
The second lesson relates to future G20 presidencies. Serious thought needs to be given to the very purpose of the work programme on trade policy. What is the comparative advantage of the G20 as a forum for deliberation on commercial policy? What can this forum achieve that smaller fora, such as the G7, or larger fora, such as the Organisation for Economic Co-operation and Development (OECD) and the WTO, cannot? It is telling that that there are not settled answers to these questions after 14 years of G20 meetings.
Simon J. Evenett is Professor of International Trade & Economic Development at the University of St. Gallen, Switzerland, and Founder of the St. Gallen Endowment for Prosperity Through Trade, the institutional home of two leading independent monitors of government policy choice, the Global Trade Alert and the Digital Policy Alert.
This article is published under a Creative Commons License and may be republished with attribution.
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