With the G20 Leaders’ Summit held this weekend, the foremost network of business groups from the Asia Pacific has launched its recommendations for reform of the World Trade Organisation (WTO), to ensure a global rules-based trade system for the coming century.
Today, the Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI), a network of national chambers from 25 economies across Asia and the Western Pacific, will launch an evidence-based plan, Achieving a Successful World Trading System, for reforming the WTO. The plan also proposes reforms to the WTO’s relationships with other major global intergovernmental institutions, stimulating discussion in the lead up the next WTO Ministerial Council.
The current 25 CACCI member countries have a combined population of 2.7 billion, representing some 40 per cent of the world total. Together, member states have a shared GDP of US$15 trillion, accounting for about 25 per cent of the world total; and a combined trade of US$8 trillion, representing about 26 per cent of the total global trade value.
CACCI represents the collective business interests of over 150 million businesses across geographical Asia, accounting for at least 97 per cent of economic activity. These businesses, many family owned, employ an estimated one billion people.
Small and medium business enterprises are the backbone of many economies and there is a dire need for economic recovery to restore jobs and incomes, particularly in low-income states.
“There is an imperative for better economic performance sustained into the future to service the large increase in debt around the globe,” study author, Dr Andrew Stoeckel said.
“The WTO, together with its predecessor GATT, has been in situ since the end of the Second World War, regulating trade, global relations and resolving disputes on the movement of goods and services. However, over the past decade, the global market environment has made trade liberalisation less of a priority among many countries, threatening the sustainability of the WTO.
“The bottom line is that the aim of international trade is to lift living standards. The fewer the barriers to commerce – whether technical or government imposed – the more commerce there will be, lifting living standards directly and indirectly through enabling resources for government to provide public goods and pursue sustainable development goals.
“The current system is not delivering this. Even the purpose of the WTO is not clear. It needs to provide an open, non-discriminatory, rules-based multilateral system.
In this regard, CACCI believes the 15 recommendations need to be considered by WTO members in MC12 to simplify and strengthen the multilateral trading system.
Increasing trade certainty, encouraging investment and enhancing commerce across borders, will result in higher living standards. These changes will not be at the expense of other environmental and social goals if the right policies are in place to address those issues.
While the focus of this study is on trade, CACCI notes that this is but one aspect of the need for better global governance. Other pressing aspects of global governance include the addressing the pandemic and tackling climate change.
The WTO system is not the only institution where the effectiveness of global governance arrangements is called into question. CACCI supports calls for a contemporary ‘Bretton Woods’ conference to revisit how nation-states should work together in the modern age considering how much has changed since WWII. We must examine whether the global institutions we have now, along with the WTO system, are still fit for purpose in the 21st century.
Quotes attributable to CACCI regional business leaders:
CACCI President Samir Modi (India):
“The world trading system has deteriorated to its current state, and we need to remedy the situation.
“Many countries are more concerned with national security and economic self-interests, leading to a rise in nationalism and protectionism regionally and globally. And, given the growing trend to pursue bilateral economic relationships among many countries, the prevailing circumstances are expected to have further adverse impact on multilateral relationships.
“CACCI, with its initiative to ‘Achieve a Successful World Trading System’, hopes to focus efforts to the right questions and reforms to achieve this important objective.
CACCI Advisory Board Chair and CACCI President Emeritus Ken Court (Australia):
“In a time of rapid communications and decision-making, the resolution of international trade disputes needed to be simplified.
“Most CACCI member nations are medium or small players with much at stake in a global multilateral system – they depend on stable and predictable rules governing international trade and investment.
“The current system is broken and doesn’t look like it can be repaired. Our recommendations are to look at an alternate approach using economics rather than legal mechanisms as a way through the impasse.
CACCI Policy Advocacy Working Group Chair and Australian Chamber of Commerce & Industry Trade Director Bryan Clark (Australia):
“The WTO’s importance has been forgotten amidst the pursuit of free trade agreements.
“One of key reasons for establishing the global rules-based trading system was to avoid a repeat of the destructive trade tensions experienced before World War II.
“But rising protectionism, the proliferation of FTAs, trade sanctions and the failure of the dispute settlement body, coupled with rising uncertainty with lower investment spells great trouble for the world.
“We desperately need the WTO members to listen to the calls from business to ensure that the institution is fit for purpose for the modern and evolving world.
CACCI Advisory Board member Jemal Inaishvili (Georgia):
“The promotion of free trade in the region had faced a lot of challenges in the past.
“We have seen tensions in trade relations between world and regional leaders, which were not helpful for economic growth.
“Last year we witnessed enormous disruptions caused by the COVID pandemic, the promotion of international free trade even more relevant and the CACCI recommendations will contribute to global recovery from the pandemic, improving health and economic outcomes for all.
CACCI Vice President Peter McMullin (Australia):
“The CACCI trade recommendations are a vital piece of leadership at this critical stage in our collective history.
“The world trading system is in disarray and needs a reset. The study has diagnosed the problem and suggests possible and practical solutions.
“As trade is foundational to the economic recovery, I think it is in all our interests to see the recommendations from the study are adopted by the WTO and its members.
CACCI Vice President M. Rifat Hisarciklioglu (Turkey):
“Greater cooperation at the WTO can provide greater certainty for international trade and assist with global economic recover. At this time there is nothing more important.
“Trade is the engine of economic growth and catalyser of peace, prosperity and security. The world economy needs less unilateralism and more multilateralism.
CACCI Vice President Dr Pedram Soltani (Iran):
“Asia, the driving force of the global trade growth in the 21st century, has to be more sensitive to the threats of protectionism. CACCI, as a multi-continent-wide organisation for the private sector, has correctly considered the headwinds of the World Trading System.
“The future of the world trade cannot continue to be bogged down in decades long negotiations and disputes.
CACCI Vice President Sheikh Fazle Fahim (Bangladesh):
“Developing economies needed sustainable, equitable rules to achieve development goals and grow new industries with ease of market access.
“Developing economies find it difficult to expand their own emerging industries, as multinational companies have competitive advantage in the current global business environment. So, it is imperative promising economies are able to establish and maintain interconnectivity and collaboration among potential trade partners.
“The CACCI study explores all these challenges, gaps, and inconsistencies and finds an inclusive solution for world trade to become an effective system again that leaves no one behind.
Honorary Professor Andrew Stoeckel is available for interview.
Centre for Applied Macroeconomic Analysis
Australian National University,
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On Tuesday 26 October 2021, the Hon Dan Tehan MP, Australia’s Minister for Trade, Tourism and Investment presented at a CACCI webinar on WTO reform. Watch the webinar here.
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