The G20 summit in London offers an opportunity for world leaders to prevent a continued slide towards protectionism. Yet the summit is already at risk of ending in failure as expectations run too high. The agenda is already far too wide and cover areas characterized by sharp differences of opinion rather than an emerging consensus. Individual members have also thrown in additional wishes for what the summit should achieve. Furthermore, G20 rhetoric is ingrained in global governance romanticism, but the naïve hopes of building a new Bretton Woods system will meet the hard realities of global economic co-operation.
This Policy Brief is concerned with what should be the relevant trade agenda for the G20. At the summit in Washington, D.C. last autumn, the G20 agreed that no country should impose new barriers to trade. G20 leaders also instructed their trade ministers to agree on a headline deal for Doha Round before the end of 2008. However, nothing has happened in the Doha Round since the last G20 summit, and it took only a few days until a G20 country had imposed new trade barriers. Since November last year, 17 of the G20 members have imposed protectionist measures.
Governments have not responded to the economic crisis with massive protectionist measures. It is rather creeping protectionism that has characterized recent trade policies. However, as the crisis deepens countries are likely to increase protectionism. The chief task now is to prevent such a development, in particular the risk of escalating tit-for-tat protectionism. This Policy Brief sets out a six-point agenda to contain protectionist threats.