Business has a key role to play in shaping the policy agenda and communicating the gains of free trade.

With the G20 Summit underway in Turkey, the IRPP has just pre-released a commentary, written by Perrin Beatty and Cam Vidler of the Canadian Chamber of Commerce. The Canadian Chamber is the founding chair of the B20 — the Business 20 Coalition is comprised of leading independent business associations from the G20 economies, which regularly meets on the sidelines of the G20, G7 and APEC to build relationships and develop common agendas.

In this commentary, the authors argue that shifts in the global balance of power — to the BRICs economies and other emerging markets — have made it harder for countries to cooperate on trade. Relying on governments alone to liberalize trade won’t work; diplomacy, they say, can no longer be left to the diplomats. Business has a key role to play in shaping the trade policy agenda and in effectively communicating the gains that free trade brings to consumers, workers and innovators. For their part, business groups, such as the B20 and World Economic Forum, need to continue to strengthen ties among foreign counterparts and adopt a multipronged approach to target different pressure points in an increasingly-fragmented trade policy regime.

Beatty and Vidler draw three lessons for the business community:

  1. There’s no big bang solution for freer global trade.
    Business shouldn’t give up on the multilateral trade system, but they can’t afford to put all their eggs in the World Trade Organization (WTO) basket. The days when the US, EU, Japan and Canada (“the Quad”) could sit down and agree on what to do, with the rest of the world falling into line, are over. A broader, regional approach to trade negotiations — as seen in the Canada-EU deal (CETA), the recently-announced Trans-Pacific Partnership (TPP) and on-going Regional Comprehensive Economic Partnership (RCEP) talks — is here to stay. At the same time, much can also be done outside of traditional trade negotiations, in forums such as the G20 and in national capitals around the world. Business must work incrementally at all levels.
  1. Inclusiveness matters.
    The rise of new trade powers means that industry groups in OECD countries have to forge partnerships with their counterparts in emerging markets, and work with them to build a common vision.
  1. Trade can’t be addressed in isolation.
    Business has to ensure that policies affecting trade — in the areas such as energy, climate change, product safety and privacy — are effective and better coordinated. Half-measures or fragmented approaches only engender public opposition, put companies at a competitive disadvantage and ultimately sap the will of countries to liberalize trade rules.

Having the private sector play a more prominent role in global governance isn’t a new idea. We saw this dynamic at play in the interwar period when a group of industrialists, financiers and traders formed the International Chamber of Commerce (ICC) to help develop rules that govern private commerce and encourage governments to keep their markets open. Unfortunately, it wasn’t enough to counter mercantilist pressures at the time. Now as we find ourselves in the post-financial-crisis world, the international business community once again needs to step up and offer leadership.

The good news is that the community is now bigger and more tightly knit. The ICC has been joined by groups like the World Economic Forum and the B20 Coalition. Through better communication, coordination and monitoring at the multilateral, regional and national levels, these groups can push trade liberalization in a mutually reinforcing way.

Thanks in part to such efforts, we’re starting to see progress. Within weeks of last year’s G20 meetings in Brisbane, the WTO adopted the trade facilitation agreement — the first multilateral trade deal in over 20 years. Countries are working to “recalibrate” the Doha agenda in the hope of concluding a modest deal to clean the slate for future WTO talks. With the TPP negotiations now finished, the conversation is shifting to how Indonesia, the Philippines, Taiwan, and even China and India might join. It’s too early to say what all this will amount to, but there are good reasons to be optimistic.

Beatty and Vidler stress that maintaining positive momentum in the global trading system is an uphill battle and everyone needs to pull up their sleeves. For Canada especially — a middle economy highly exposed to cracks in the trading system — indifference is not an option. By developing a common vision and practising the art of the possible, industry groups around the world can guide governments through these complex times toward a more open world economy, where companies compete and innovate on a level playing field. The alternative, if history is any guide, is not where we want to end up.

You can read the full commentary, which is part of the IRPP’s forthcoming volume Redesigning Canadian Trade Policy for New Global Realities here in html and here in pdf.