The Australian Financial Review
By John Denton
BCA Global Engagement Task Force
The meeting of the leaders from the Group of Twenty (G-20) today will be a major test for this institution. It has the potential to play a critical role in recovering from the global economic downturn. But if it is going to truly promote recovery, it must anticipate the responses of the global business community.
The best way to do that is to bring business into the G-20’s deliberations.
This downturn is a business downturn, and recovering from it will require business revival. The G-20 forum will obviously consider regulation to guard against the risks of a repeat of the global financial crisis, and spending to promote economic activity. But we should be cautious about any approaches that might make recovery more difficult, and we should focus on measures that make businesses more willing to invest and grow.
Most major enterprises are well-run businesses that are trying as hard as governments to manage their way through the crisis. Given any recovery will need to be based on business investment and activity, business perspectives would be valuable.
For these reasons, the Business Council of Australia is proposing that the Australian Government support the establishment of a permanent industry reference group as part of the G-20.
Businesses can provide information about how the crisis has affected their organisations, and the causes of those impacts. This addition to a structure has proven to be valuable in other institutions. It has opened up an alternative source of ideas, and allowed proposals to be tested through open dialogue. By way of an example, the APEC Business Advisory Council structure has resulted in a strong focus on practical problems faced by industry. As a result, the Asia–Pacific Economic Co-operation forum’s priorities have consistently been directed to removing and preventing unnecessary barriers to trade and investment identified by business.
In the present climate, it is more important than ever that governments in cooperation with business and industry, maintain and further open their economies to free trade and investment. We think there are potential problems with a structure limited only to government and public sector policymakers.
Naturally, a great deal of the G-20’s time is going to be taken up with addressing the severe problems that have beset global financial systems. There is widespread recognition and support for this being the first priority in the weeks and months ahead.
Another priority, which would help restore much-needed confidence, is to support international trade. The G-20 meeting provides an opportunity to move the Doha Round of global trade negotiations towards a long-awaited conclusion.
This would prevent many governments from legitimately lifting trade barriers on many industrial goods and agricultural products.
There would also be some benefits to trade in services. In a year when global trade is predicted to fall by 9 per cent and protectionist sentiment is rising, this would send a very valuable signal to the business community.
It is also important that the world continue to build an open trading system beyond the Doha Round. Global leaders should give the multilateral system a new mandate. This mandate should elevate trade and investment to a level of importance that is equivalent to strategic and defence considerations. One of the main difficulties with the World Trade Organization has been the inability of 153 member governments to reach agreement. A smaller core of decision makers is required. The Business Council of Australia proposes that G-20 governments, through their trade ministers, take a leading role in driving decision making within the WTO.
The G-20 leaders meeting provides an opportunity to help hasten economic recovery. Acknowledging and understanding business’s role in generating employment, trade and other economic activities will help the G-20 achieve that goal.