Govt regulations shouldn't become permanent after Covid-19 ends: B20

A report by the B20, which represents private industry across member nations also pushed for less restrictions on exports, migration

As countries impose restrictions on travel and trade to contain the spread of coronavirus, the G20’s official business voice has warned against such regulations becoming permanent in the post-Covid world.

In a special report on the Covid-19 crisis, the Business Twenty (B20), which acts as the official G20 dialogue with the business community, also urged governments to reduce export restrictions on pharmaceutical products, ramp up export credit and end selective biases towards movement of people across borders.

The report said the move to adopt strict policies, keeping in mind national needs, may backfire if not coordinated properly. The B20 pushed for greater international cooperation, warning that “any primacy of ‘nation first’ policies instead of globally coordinated approaches will almost certainly lead to greater economic costs for all”.

It also pointed out that governments are increasingly encroaching onto the turf of private business through regulations. “There might be room for a broader consideration regarding the role and the weight of the state in national economies and, most of all, in corporate governance. However, such support and emergency regulation should not turn to interfering in or disorienting market-place forces,” it said.

As the voice of the private sector to the G20, it represents the global business community across all G20 member states and all economic sectors. Currently it is chaired by Saudi Arabia. The Fifteenth G20 Summit is still set to be held in Riyadh on November 21-22, 2020.

Calling for increasing multilateral lending to developing countries (both to middle- and low-income economies), the B20 said this was needed to ensure risk mitigation and improve debt sustainability in the medium term. It suggested that coordinated intervention may be needed if there is further appreciation of the US dollar, which is impacting developing and low-income countries.

With regards to global trade, the body pushed for reducing the capital treatment for MSME exposures for lending to a risk weight between 75 and 85 per cent in line with the Basel III regulations.

Removing procedural delays at the points of loading and impediments to cargo transportation and addressing tariff and non-tariff barriers to facilitate agricultural trade also ranks high on its agenda. Calls have again been made for expediting the implementation of the World Trade Organization (WTO) Trade Facilitation agreements.

The body also suggested the Financial Stability Board monitor the risks to financial stability among those lending institutions that bear the burden of rolling over temporarily the global economy’s debts. “As credit standards are relaxed in response to the crisis, the build-up of positions must be tracked and communicated to regulators,” it said.

The B20 also batted for nations renewing the current moratorium on Customs duties on electronic transmissions enforced by the WTO, something India is opposed to.

Collectively, the G20 economies account for around 90 per cent of the gross world product, 80 per cent of world trade, two-thirds of the world population, and approximately half of the world’s land area.