ANTALYA, Turkey, Nov. 15 (Xinhua) — There have been renewed calls for the world’s 20 major advanced and emerging economies to work for greater openness in the world economy as their leaders start a two-day summit Sunday in this Mediterranean resort.
The task becomes even more imperative within the context of a general economic malaise and perceived slowdown, amid efforts to further open up the world economic system.
MORE COOPERATION NEEDED IN G20 FOR GROWTH
In its latest Economic Outlook, the Organization for Economic Cooperation and Development (OECD) cut its forecasts for global economic growth to 2.9 percent for this year and 3.3 percent for 2016.
Also, the OECD pointed to a “dramatic slowdown in global trade growth,” which is projected to be just 2 percent this year, down from the 3.4 percent posted in 2014.
A World Trade Organization (WTO) report issued on Nov. 2 said the stockpile of trade-restrictive measures by G20 economies continues to grow, despite their “relative restraint” in introducing new trade restrictions.
“The WTO’s system of trade rules helped to prevent a major protectionist response in the wake of the financial crisis — but the number of trade-restrictive measures that have been introduced remains a cause for concern,” said WTO Director-General Roberto Azevedo. “The G20 should show leadership by eliminating existing trade restrictions.”
Experts are also calling for more robust cooperation among G20 economies to speed up world economic growth.
“The G20’s core mandate is about strong, sustainable and balanced growth, and more and better cooperation is needed than what is being signaled ahead of this meeting,” said Tristram Sainsbury, a research fellow in the G20 Studies Center at the Lowy Institute. “The international economic outlook has worsened to the point where the world economy teeters on the edge of global recession.”
Before joining the Lowy Institute, Sainsbury was at the Australian Treasury, where he worked on G20 policy and focused mainly on international financial architecture reform, financial regulation reform and G20 growth strategies.
On the much-reported U.S.-led Trans-Pacific Partnership (TPP) deal, Sainsbury said Washington may eventually find that its commercial interests are better served by opening access to the TPP (and TTIP and TiSA) on equal terms to China and other key emerging markets.
The Transatlantic Trade and Investment Partnership (TTIP) is a proposed free trade agreement between the European Union and the United States, while the Trade in Services Agreement (TiSA) is being negotiated by 23 WTO members.
In the face of a trading system dominated by global value chains and goods that are “made in the world,” Sainsbury said, “a comprehensive agreement that more closely resembles a multilateral trade agreement carries more economic benefits as it lessens the risk of trade diversion.”
Ussal Sahbaz, an analyst at the Economic Policy Research Foundation of Turkey, also called for efforts to strengthen the role of the WTO.
“The global economy faces serious problems that need coordinated action,” Sahbaz said. “One of them is the fall in the growth of trade, which used to grow much faster than the world economy, before the 2008 (global financial) crisis.”
“Now the growth of trade fell below the growth of the world economy. One possible reason is the increasing number of bilateral and regional trade agreements, instead of multilateralism in the global trade regime,” he said.
“Another reason is increasing non-tariff barriers to trade. The WTO approved the trade facilitation agreement, but it has not been ratified by enough number of governments yet. Only five G20 countries have ratified the agreement,” Sahbaz said. “The G20 has to work toward restoring the growth of global trade to its prior capacity.”
“Promoting free trade requires more doing than talking,” he said.
CHINA’S EFFORTS TO BRIDGE INFRASTRUCTURE GAP, INEQUALITY
The other two problems hampering world economic recovery are the growing global infrastructure gap and rising inequalities in the world, Sahbaz said.
“It is estimated that the growing global economy will need 15 trillion U.S. dollars of infrastructure investment in the next 15 years. This is twice the current investment levels — something that the existing public spending is not enough,” Sahbaz said.
“The world will need more international financial institutions that engages in the infrastructure investment — like the Asian Infrastructure Investment Bank (AIIB) — and more private investment,” he said.
Sahbaz attributed the widening gap between the rich and the poor, particularly in the advanced and developing countries, partly to technological transformation, which makes erstwhile routine jobs irrelevant and leads to youth unemployment reaching levels that threaten social stability.
“The world has to provide coordinated solutions to the global skills transformation problem,” he said.
Some G20 leaders, before heading for the Antalya summit, also pledged efforts to work for a stronger, open global economy.
Development is meaningful only when it is inclusive and sustainable, and to achieve such development requires openness, mutual assistance and win-win cooperation, Chinese President Xi Jinping said in September at the United Nations.
At a press briefing about Xi’s attendance at the Antalya summit, Chinese Vice Foreign Minister Li Baodong said that China will work with all member countries to realize the goals of leading a new round of global economic growth, pushing forward the transition of the G20 from a mechanism of emergency response to one of long-term governance, building and maintaining an open economy, and adopting a responsible macroeconomic policy.
The Belt and Road Initiative, which was put forward by Xi and comprises the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and the AIIB, which was also proposed by China, have been hailed as examples of inclusiveness and openness in international economic cooperation.
Sahbaz, the Turkish analyst, highlighted the benefits of the Belt and Road Initiative for world economic cooperation.
“There are now large capital reserves in developing countries like China, India and Turkey. We also have a great amount of know-how and can organize large business ventures. But we have not yet used these resources to integrate large parts of the developing world,” said Sahbaz.
“The Belt and Road Initiative aims to mobilize these resources to modernize the vast region of Eurasia,” he said.
“Think of the distance between the Pacific and the Balkans. Large parts of that region still needs roads, banking systems, fiber optic cables to join the standards of living in the developed world. In that sense, the Belt and Road Initiative is the natural continuation of the equalizing trend we have seen in the post-WWII era,” he added.