4) Promoting global trade and investment and reject protectionism, to underpin prosperity
Trade is vital for the health of the global economy: The more open to trade economies are, the greater the benefits. History demonstrates this: since 1945, average tariffs for developed countries, like the UK, Europe and the US, have fallen from nearly 40% to less than 5%; world exports have risen 27-fold; and world income has risen eightfold.
However, world trade is forecast to fall by 9% this year – the largest decline in 60 years – due to lower global demand and reduced exports. This decline is exacerbated by growing protectionist pressures, but also the drying up of trade credit – essentially the insurance exporters pay while their goods are in transit, which roughly 90 per cent of world trade relies on.
The G20 leaders stated that reinvigorating world trade and investment is essential for restoring world growth and leaders agreed on action to stop the slowdown in world trade. Specifically, leaders:
- committed to ensure that countries do not resort to protectionism, by extending their pledge made in Novembernot to raise trade barriers or impose any new trade restrictions to 2010, and rectifying any such measures promptly.
- committed to minimise any negative impact of domestic policy action on world trade and investmentincluding fiscal policy and action in support of the financial sector, and not retreat into financial protectionism.
- committed to notify promptly the WTO of any such measures and called on the WTO, together with other international bodies,to monitor and report publicly on adherence to these undertakings on a quarterly basis
- to take measures to support trade, including a commitment to make available$250bn in trade financeover the next two years, through both national agencies, and the Development Banks, as well as making better use of financing that is already there.
- stated their personalcommitment to the Doha Roundand agreed to prioritise the negotiations.
5) Ensuring a fair and sustainable recovery for all
The global financial crisis affects all countries, rich and poor, and the response will also affect all– both rich and poor countries now, but also future generations. Leaders recognised the human dimension to the crisis and committed to support those affected by creating employment opportunities and through income support measures. And they stated their determination not only to restore growth but also to lay the foundation for a fair and sustainable world economy.
The effects of the current crisis on developing countries could result in an additional 90 million people a year living in extreme poverty, and threaten progress made towards achieving the Millennium Development Goals. A global recovery will not be sustainable unless it benefits the poorest and provides them with the opportunities they need to escape poverty. Leaders:
- reaffirmed theircommitment to meeting the Millennium Development Goalsand toachieving Official Development Assistance pledges, including commitments on Aid for Trade;
- made $50 billion available to low income countries, including through the Rapid Social Response Fund, investing in food security and supporting the World Bank’s Vulnerability Financing Framework;
- agreed the IMF should double concessional lending access limits and capacity to increase its support to low income countries, and requested the IMF to bring forward proposals to use the proceeds of agreed gold sales to do so; and
- called on the UN to establish a mechanism to monitor the impact of the crisis on the poor.
Understanding that a return to business-as-usual growth will leave them vulnerable to rising oil prices and the potentially catastrophic impacts of climate change, several have committed sizeable parts of their economic recovery packages to low carbon investments. Leaders agreed to pursue a path of economic growth that creates green business opportunities. The opportunities will not only provide jobs and contribute to the economic growth; they will also ensure that the recovery is sustainable in the longer term.
(www.londonsummit.gov.uk, April 3, 2009)
