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G20 opportunity for Indonesia to set global trade reform direction
The multilateral trading system and World Trade Organization must be strengthened to support the recovery and answer new challenges in the post-pandemic era.
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Newtownards Road is seen almost empty at rush hour amid the COVID-19 pandemic in Belfast, Northern Ireland, on April 13, 2020. (REUTERS/Jason Cairnduff)
As Indonesia steps into the global spotlight with its Group of 20 presidency this year, there is a unique and important opportunity to set the strategic direction of global economic cooperation.
The challenge is to focus on a small number of strategic outcomes instead of a long and unachievable wish list. As the pandemic comes under relative control, greater attention can be directed toward economic recovery, including revitalizing the multilateral trading system (MTS) and reforming the World Trade Organization (WTO).
The G20 is the only group that can mobilize support from the world’s most powerful economies to reform global institutions such as the WTO.
The WTO, at the heart of the global trading system, is in crisis. For two decades it has largely failed to update global trading rules or open new markets. Bilateral free trade agreements have chipped away at those objectives, although more recently, the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership agreements have made progress for their members. Since the end of 2019, the dispute settlement body at the WTO has had no judges, thanks to a United States veto, so it can no longer enforce the rules to keep markets open.
The MTS and WTO must be strengthened to support the recovery and to answer new challenges in the post-pandemic era. Without them, the recovery will be short-lived, since confident, open international commerce is essential to a prosperous Asian and world economy. Clear progress on the WTO will also be a monumental legacy of Indonesia’s leadership of the G20 process.
Indonesia has a level of moral authority that few other countries have to set a clearer strategic direction for reforming the WTO. Indonesia stepped forward to articulate a comprehensive plan for WTO reform at the Osaka G20 Summit in 2019.
While this initiative has attracted support from other G20 countries, leading to the Riyadh Initiative for the Future of the WTO in 2020, it has been progressing rather slowly. It is on the G20’s agenda but needs well-defined direction.
