The CBI hosted this year’s B7(“Business 7”) Summit between 10-12 May. At the summit, the CBI along with the other B7 members held a session on Trade with Secretary of State, Liz Truss, where the B7 formally presented its trade paper. Below are the key takeaways from this session and why it matters to business.
The global economic shock caused by COVID-19 has raised new challenges for both our economies and societies. It has highlighted barriers to global trade and health – such as protectionism – and made us realise that we need to do things differently. Above all, we need to increase our use of digital, accelerate innovation and create new opportunities for jobs and prosperity.
The B7 put trade at the heart of a global recovery and, to achieve it, has called for the G7 leadership to restore the World Trade Organisation’s (WTO) reputation and function as the centre of global trade governance. Business will also need to step up and demonstrate initiative in creating prosperity, driving the transformation the world needs to overcome modern challenges.
The four key takeaways from the B7 Trade session:
1. WTO reform will be key to tackling today's modern challenges
The growing trends of protectionism, acceleration of digital and climate change, all demand an effective WTO. But the WTO has not yet modernised the rules of world trade and an important element in its dispute settlement system is no longer functioning. The B7 has made several recommendations to help resolve the differences between WTO members and address institutional failings.
The WTO has a key role to play in making global trade simpler and fairer, but this cannot happen without a consensus-led, globally coordinated approach, led by the G7 members, on key areas like dispute settlement, subsidies, special and differential treatment, as well as structures for business engagement at the WTO.
2. Global coordination is required to help roll back protectionism, especially in Health
The pandemic has increased protectionist trade measures. We risk these measures becoming permanent if they are not adequately addressed. The results of this are far reaching and can be seen in the uneven distribution of vaccines and medical equipment, with developing nations paying the price for the lack of supply.
Businesses’ efforts in the development and distribution of the vaccines have been remarkable. Governments need to match this effort with concrete and an outward facing trade policy. The B7 has called for a multilateral solution for equitable vaccine access, requiring the G7 to play a central role. This includes;
- Rolling back protectionist measures adopted in the pandemic, including export restrictions, over the next 12 months
- Facilitating the free movement of vaccines and medicines
- Updating the 1995 WTO Pharmaceuticals Tariff Elimination Agreement to reduce the cost of medicine production.
B7 speakers acknowledged the challenge of uniting on the best path forward on the global stage, but they agreed that urgent action was required – not least because when it comes to tackling COVID-19, nobody is safe until everybody is safe.
3. Trade policy can play a crucial role in accelerating the race to net-zero
With COP26 on the horizon, the G7 can set the bar high by incorporating climate into trade policy and contributing to carbon neutrality. As the world recovers from the pandemic and accelerates towards an economic recovery, we need to ensure that trade becomes more sustainable and decreases its CO2 emissions.
The B7 put forward recommendations for the G7 to send a powerful signal after the Twelfth WTO Ministerial Conference (MC12) through:
- Restarting negotiations on the stalled Environmental Goods Agreement (EGA)
- Emphasising the wider economic benefits of environmental trade.
Climate can be integral to WTO modernisation by promoting environmental services and bringing distortive fossil fuel subsidies under control.
4. Business and government can support SMEs to build resilience and create opportunities through digitalisation of trade and transparency of services
Supporting SMEs’ access to trade and investment was a key priority for the B7. Strengthening and modernising the global trading system, digitising trade and driving for greater transparency in services trade can all deliver real benefits to them through better access to data.
The B7 has called upon the G7 to push for further digitisation, to improve accessibility and transparency in trade. For example, an estimated 4bn paper documents are used each year for shipment of goods and trade finance. The resource and cost implications here disproportionately affect SMEs, which have less capacity to navigate this bureaucracy. By digitising the paperwork through Electronic Transferrable Records, this challenge could be addressed.
The B7 called for implementation of the practical principles of the WTO’s Informal Working Group on Micro, Small and Medium-sized Enterprises (MSMEs) and through better access to data which will enable these businesses to navigate barriers more easily to trade in services.
Facilitating the role of SMEs in global trade will be central to a successful economic recovery across the world. That is why the B7 has put a real emphasis on the G7 leading the way in enabling SMEs to trade more.