T S Vishwanath: St Petersburg's effect on Bali

The summit's statement focussed more on trade facilitation and a better understanding in the rapid expansion of global value chains

G20 leaders met recently at St Petersburg in Russia as part of their "continued commitment to work together to strengthen the global economy". Naturally, therefore, trade formed a part of the deliberations.

Their commitment on trade was manifest in the declaration that was put out at the end of the Summit, which had a reference to the forthcoming Bali Ministerial Conference of the Word Trade Organisation (WTO). The language in the declaration is important since it provides an assurance from the G20 countries towards a successful Ministerial meeting at Bali.

Interestingly, however, the St Petersburg action plan that "sets out strategies to achieve strong, sustainable and balanced growth" does not include their intentions for the Bali Ministerial and is focused on infrastructure development by individual countries of G20 and domestic reforms for building competitiveness. This is probably because the action plan only outlines individual commitments over the coming months to boost global economy and not joint commitments. But a reiteration of a commitment in this document would have strengthened the case for a successful Bali Ministerial.

The joint declaration by the leaders, however, stressed "the crucial importance of strong multilateral trading system" and called on "all the WTO members to show the necessary flexibility and reach a successful outcome in this year's multilateral trade negotiations." The leaders extended their "commitment to refrain from protectionist measures and aim at enhancing transparency in trade, including in regional trade agreements."

The declaration further stated, "free trade and investment, and achieving the open, rules-based, transparent and non-discriminatory WTO-based trading system are crucial for restoring global growth." The declaration also underlined "the importance of trade as a key to economic growth, sustainable development and job creation globally and at national level."

But what is interesting is that the declaration is of the view that "a successful outcome at the WTO Ministerial Conference (MC9) in Bali, in December 2013, on trade facilitation and some elements of agriculture and development issues, would be a stepping stone to further multilateral trade liberalisation and progress in Doha Development Agenda negotiations, providing new confidence in successful post-Bali Doha round negotiations."

What is significant is the language of the statement, which points to the fact that there is a need for a full outcome on trade facilitation, while covering only some elements in agriculture and development is good enough for a successful Bali ministerial meeting. The Bali ministerial is expected to deliver on three pillars, trade facilitation, development and agriculture.

The focus is also on a post-Bali road map, which is important if trade facilitation sails through. Trade facilitation is an important outcome for industry globally. From an Indian industry perspective, a trade facilitation agreement will help if it eases exports to some of our traditional markets and helps in entering new markets.

However, from an Indian government perspective, while trade facilitation can be a significant deliverable, the issue of food security will continue to be an important outcome at Bali. What will be important to watch is whether developed countries such as the US will be willing to keep this on the Bali agenda given their stated position in the G20 on this issue.

The issue of trade facilitation has always been linked to global value chains (GVCs) and the St Petersburg declaration also does that.

The declaration recognised "the importance of better understanding in the rapid expansion of global value chains (GVCs) and impacts of participation in GVCs for growth, industrial structure, development and job creation." Welcoming the "work done by the Organistaion for Economic Co-operation and Development (OECD), the WTO and the United Nations Conference on Trade and Development (UNCTAD)" the G20 leaders asked the multilateral agencies "to seek the views of governments and continue their research on the impact of GVCs, particularly in relation to the influence of GVCs on trade, economic growth, development, job creation and distribution of value-added along GVCs."

The leaders also asked the OECD to deliver a report in collaboration with the WTO and UNCTAD for "identifying the opportunities and challenges of participation in GVCs and making available value-added trade statistics" to "help countries to decide upon appropriate policymaking options to benefit from GVCs."

Indian industry should play an important role in providing data to OECD and other multilateral organisations for this report since that can help identify new opportunity areas for all sectors.

The writer is Principal Adviser at APJ-SLG Law Offices