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Fighting growing trade protection is a key agenda item for over 120 CEOs attending the G20 Business Summit that is scheduled to start its two-day run today, Korean organizers said Tuesday.
The business summit to be held at the Sheraton Walkerhill Hotel will allow private-sector input to the G20 Seoul Summit of leaders from 20 leading and emerging economies.
The four areas of their focus cover trade and investment, financial stability, “green” growth, and corporate social responsibility (CSR). Reports from their discussions will be forwarded to the heads of state.
Their 49 recommendations for governments will include calls for introducing consistent global regulatory standards for the finance industry; suppressing protectionism; and renewing commitment toward completing the Doha Development Round in 2011.
“The 120 companies have worked diligently to produce a report that well reflects their commitment and sense of responsibility. This is an important start toward a renewed partnership between businesses and governments to overcome the critical economic challenges that the world is facing today,” Oh Young-ho, vice chairman of the Korea International Trade Association (KITA) and the commissioner of the Seoul G20 Business Summit’s organizing committee, said in a news conference.
“Obviously, the relevance of the business summit will depend on how the recommendations are accepted by the G20 leaders. We believe that the discussions will be further elaborated on by exchanges with political leaders and finance chiefs, and the progress will be reflected in a joint announcement at the end of the G20 summit.
“Monitoring the employment of the recommendations by governments and businesses is obviously crucial, and this will depend in large part on the efforts to make the business summit a permanent part of the G20 process, which is something that is already backed by future chair countries France and Mexico.”
There are growing concerns that the slower-than-expected pace of economic recovery could persuade politicians to renew trade barriers and channel investments only into their own economies.
Some observers believe that the growing international friction over the valuation of currencies, such as the conflict between the United States and China, could represent the last-ditch efforts by the countries before they turn more blatantly toward protectionism.
Li & Fung Group Chairman Victor Fung and other CEOs participating in the roundtable discussions for trade and investment urged the G20 leaders to recommit to completing the Doha Development Round, which is aimed at liberalizing trade rules and making them more fair. This will be crucial for jolting trade activities, especially by helping developing economies to grab a larger slice of the global pie.
The executives also called for countries to roll back protectionism to at least where it was at the start of the global financial crisis, according to the report, and give trade finance favorable treatment under the new Basel III rules, which govern the capital requirements of banks.
In the discussions related to financial sector policy and regulations, Standard Chartered Bank CEO Peter Sands and his fellow financial bigwigs called for the governments to reaffirm their commitment to improving global capital flows and employing consistent global regulatory standards.
The governments should also work with financial service firms to develop a policy environment that better supports the financing of small businesses and move to establish credit bureaus in emerging markets to improve financing.
Deutsche Bank CEO Josef Ackermann and other executives involved in the talks for monetary and fiscal stimulus claimed that the governments should gradually return their monetary policies to a neutral stance to prevent inefficient capital allocation and new asset bubbles. They also urged the governments to find a way to employ new standards for banking regulations without stifling growth momentum.
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