"Trade is a powerful force for inclusive growth”

"Trade is a powerful force for inclusive growth”

The benefits of trade need to reach more people in order to have an impact on growth, job creation and better living standards, the WTO has said, free from measures that restrict or distort.

Addressing the summit of G20 leaders in Germany, on Friday (7 July), World Trade Organization (WTO) director general Roberto Azevêdo made the case for keeping markets open to spread the benefits of trade.

He told leaders that, when joined with the right mix of domestic policies, trade is "a powerful force for inclusive growth", and argued that, discussion and cooperation are the best tools for addressing differences that arise on trade issues.

Azevêdo pointed to successes on trade in recent years, including the Trade Facilitation Agreement which entered into force in February this year.

The TFA, the first multilateral trade agreement in the WTO's 20-year history, is designed to reduce trade barriers and eliminate border transaction costs for companies around the world. It was ratified by two-thirds of the WTO's 164 member countries.

WTO Trade Facilitation Agreement enters into force

A report published by the WTO last week showed trade restrictions in G20 economies have continued to rise at a moderate rate. Around 42 trade-restrictive measures were applied by G20 economies from mid-October 2016 to mid-May 2017, including new or increased tariffs, customs regulations and rules of origin restrictions.

Covering the period from mid-October 2016 to mid-May 2017, and based on information provided by G20 members, the World Trade Organization (WTO) rReport on G-20 trade measures says 42 new trade-restrictive measures were applied by G20 economies during the review period. This included new or increased tariffs, customs regulations and rules of origin restrictions.

WTO records moderate rise in G20 trade restrictions

"These successes show that the system is working, but it is not perfect," Azevêdo told leaders. "We need to keep updating it. Trade issues are always sensitive – especially when economic times are tough – and so we are seeing new tensions arising in different areas. The best way to resolve trade differences is through discussion and cooperation. But for this path to work, we also need political commitment and a real sense of urgency to find concrete solutions. Otherwise there will be no confidence in the process."

Last week ahead of the summit, the WTO, along with the International Monetary Fund and World Bank, called on leaders to "reinvigorate" trade to boost global economic growth.

"Reinvigorating trade, packaged with domestic policies to share gains from trade widely, needs to be a key priority," they said in a joint statement. "One part of this is to remove trade barriers and reduce subsidies and other measures that distort trade. Stepping up trade reform is essential to reinvigorate productivity and income growth, both in advanced and in developing countries.

"Approaches such as a greater emphasis on job search assistance, retraining, and vocational training can help those negatively affected by technology or trade to change jobs and industries. Unemployment insurance and other social safety nets give workers the chance to retool."

The G20 two-day summit took place in Hamburg on Friday and Saturday. The G20 economies are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Republic of Korea, Japan, Mexico, the Russian Federation, Saudi Arabia, South Africa, Turkey, the UK and the US, as well as the EU.

The European Commission last week said it would press trading partners to remove unfair obstacles to European Union imports, after a EU report detailed such restrictions – many affecting clothing and textiles.

EU to tackle G20 over barriers to clothing trade