The G20 Business engagement for a sustainable and inclusive global economy This year, the annual G20 Leaders Summit took place in Hangzhou, China against a backdrop of sluggish GDP growth and slowing global trade. CEOs from across G20 economies rallied ahead of the meeting calling for a credible action plan to open markets, mobilize private sector capital and make it easier to trade internationally. The G20 has become a powerful force for shaping the rules of engagement for competing in an increasingly integrated global economy remaining the only forum in which leaders representing over 80% of the world economy get together to do two essential things: advocate sound economic policies within G20 member economies, in common pursuit of strong, sustainable, balanced growth and job creation; and seek international cooperation on an array of challenges that no one country can overcome alone. While governments create necessary frameworks and conditions, it is businesses worldwide, large and small, which drive trade and investment and create jobs. The G20 agenda, and decisions taken by leaders at their annual Summit, impact business operations and increasingly shape intergovernmental policies that affect businesses everywhere. In short, business has a clear stake in the success of the G20. And that is why, as they strive for progress towards inclusive and sustainably economic growth, G20 leaders must remain aware and responsive to the constraints that businesses face. Specifically, they must remain responsive to business policy recommendations that point G20 leaders to areas where tangible results can be made towards addressing these issues. Leaders at the 2015 Antalya Summit missed an important opportunity to build momentum on the trade agenda but the G20’s collective agreement on trade issues, including honouring the G20 standstill agreement on protectionism and implementation of the World Trade Organization’s Trade Facilitation Agreement is just the type of leadership business wants to see from the world’s major economies. Comprising business leaders and CEOs from a wide range of companies from across G20 countries, ICC’s G20 Advisory Group targets G20 policy development at the international level and engages in the G20 process to ensure business priorities are considered. Its mission is to press for the inclusion of business views in deliberations by G20 heads of government and to introduce fresh ideas and innovative approaches to support open trade and investment, economic growth and employment. ICC CEO’s held leadership positions in four of five taskforces established under the Chinese Business-20 (B20) process, and also served as a Network Partner for the B20 Trade and Investment Taskforce and the Anti-Corruption Forum held in Beijing in May. Ahead of this year’s Summit, ICC contributed significantly to the development of the 20 principle B20 China 2016 policy recommendations that aim to support G20 leaders with their on-going mission to implement structural reforms and drive sustainable and inclusive growth. Seven steps to sustained economic growth While fully endorsing the B20 recommendations, ICC also published a supplemental set of recommendations covering seven policy areas not covered by the 20 principle 2016 recommendations. Aiming to complement B20 work the proposed measures, ranging from climate change and anti-corruption to taxation and trade, covered salient issues impacting both governments worldwide and the millions of ICC member companies, large and small, that have a clear stake in the success of the G20. The ICC recommendations were: On taxation: Achieve coordinated and consistent implementation of the G20/OECD BEPS Action Plan, ensuring that all countries - not just OECD states - work together towards a consistent international tax landscape. Continue efforts to align investment and tax policies to facilitate greater consistency internationally and incentivize cross-border trade, investment, jobs and economic growth. Ensure effective dispute resolution mechanisms are in place to mitigate double taxation cases and associated tax disputes. Maintain the confidentiality of commercially-sensitive business information in CbC tax reports and ensure that all countries and jurisdictions implement the global standards, including new tax transparency measures related to the automatic exchange of financial account information between national tax offices. On trade finance: Ensure equitable, risk-aligned and consistent regulatory treatment of trade finance to enable the engagement of developing and frontier economies. Advance and multiply the positive impact of trade financing and trade, by actively enabling the deployment of FinTech solutions and propositions in international commerce. On trade: Call on WTO members to continue to refrain from taxing electronic commerce, and create conditions for the further development of the global digital economy. Initiate sectoral negotiations at WTO that can make a significant contribution to economic growth by reducing the cost of trading. Make concrete progress on the liberalization of trade in services through alternative negotiating approaches, including plurilateral approaches such as the Trade in Services Agreement (TiSA), with the ultimate aim of transferring results into the WTO. It is estimated that removing barriers to global exports of tradable services could generate world trade gains of US$1.0 trillion and global employment gains of almost 9 million jobs. Encourage more countries to join the recently announced plurilateral initiative to eliminate tariffs on environmental goods, expand product coverage using the widest possible definition of green goods and eliminate unilaterally-imposed environmental rules that are trade-restrictive or create barriers to trade. A meaningful WTO agreement in liberalizing trade on environmental goods, even on a plurilateral basis, could deliver US$10.3 billion of additional exports and augment employment gains by 256,000 jobs. On investment: Include dispute resolution mechanisms in all investment agreements to ensure investors have direct access to effective and independent dispute settlement. Avoid sectoral discriminations in the negotiation of investment treaties, which have a direct impact on the inflow of FDI. Devote greater attention to state-owned enterprises (SOEs), which can enjoy a range of preferential benefits and compete with the private sector in investment and trade areas. Refrain from abusing ‘national security’ provisions in agreements and treaties for protectionist purposes. Such procedures should be applied in a transparent, fair and non-discriminatory manner if they are to be exceptionally used. Avoid forced localization provisions which have negative repercussions on both the investor and on the host country’s attractiveness as an investment destination. On energy: Encourage the utilization of broad energy mix-including conventional fuels such as coal, gas, gas liquids and oil; nuclear power; and renewables such as bioenergy, geothermal, hydro, solar and wind-to drive sustainable development and help alleviate environmental or other sustainability challenges associated with any one form of energy. Manage the long-term transition to secure and sustainable global energy systems by establishing stable regulatory frameworks that incentivize energy investment, ensure long-term energy security, and promote sustainable energy delivery and consumption. Accelerate energy R&D investment for innovative energy technologies, and strengthen and encourage the expansion of well-trained scientists, engineers and technicians necessary to expand energy-related R&D. Continue to promote and support energy efficiency across industries, including establishing government efficiency standards and promoting energy-efficient behaviours and devices by energy consumers through education, regulation and incentives. Improve the global governance framework for energy policy, starting with establishing formal business representation in the G20 energy-related working groups. G20 Leaders should also: (i) encourage the completion of the International Energy Forum Joint Oil Data Initiative (JODI) work on oil, gas and coal information and (ii) reform current institutions (eg, International Energy Agency, International Energy Forum), including increasing collaboration among countries and international energy-oriented organizations. Increase access to clean, modern forms of energy in accordance with SDG 7, with emphasis on Africa and the Asia-Pacific region, including support for (i) the UN SE4All initiatives and its High-Impact Opportunity (HIO) partners (including energy efficiency in district energy, green building, transportation, lighting and appliances); (ii) efforts by international organizations to improve energy access in developing countries (eg, the African Development Bank’s New Deal on Energy for Africa). On climate change: Support and prioritize the development of common rules of the COP21 Paris Agreement on Climate Change to measure, report, and verify commitments. Credibility and predictability will be essential for the long-term success of the Agreement and are vital considerations for private sector planning and investments. Promote market-based instruments to achieve the least economic cost emission reduction targets and include them in relevant considerations, documents and strategies at UN and national levels including Nationally Determined Contributions (NDCs) and other national climate policies where appropriate. Support global carbon pricing as a policy framework, such as through building upon and extending the G7 Carbon Pricing initiative. Generate funding and financial risk-mitigation mechanisms for necessary R&D, deployment and infrastructure. Implement mechanisms that rationally incentivize emissions reductions and climate adaptation. On anti-corruption: Strengthen anti-corruption capacity-building by (i) promoting usage of self-regulatory codes and standards; (ii) supporting and scaling-up anti-corruption and compliance training; (iii) enhancing efforts to engage SMEs; and (iv) working together with the private sector to build capacity for high-level reporting mechanisms in G20 members. Strengthen enforcement of existing anti-corruption frameworks, with particular focus on enforcing the UNCAC through improved monitoring, peer review processes and partnering with the business community. Led by ICC First Vice-Chairman John Denton, CEO of Corrs Chambers Westgarth, the ICC business delegation travelling to Hangzhou held high hopes for continued G20 responsiveness to business recommendations and tangible G20 action on longstanding business priorities that address SME development, trade and investment, infrastructure, financing, employment and anti-corruption. Business was encouraged by the strong focus that Chinese G20 Presidency placed on trade and investment as well as the formal declaration issued by Trade Ministers for the first time, which was an important step forward in the G20 process on the crucial agenda for the global economy. The G20 Summit was a major opportunity for China to demonstrate its commitment to promoting a strong, sustainable and balanced growth for world economy but business says G20 action must match words to tackle trade crisis. In a statement reacting to the G20 Hangzhou Leaders’ Summit final communiqué, ICC Secretary General John Danilovich said: “We’ve been adamant in recent months that G20 must do more to tackle the worrying slump in world trade. The Hangzhou Summit represents a major step forward in establishing a credible, action-oriented agenda to drive inclusive growth through trade.” Danilovich said that G20 leaders must now put words into action. “There is often a divide between summit commitments and real-world policies when it comes to trade,” he said. “With protectionism rising at an unprecedented rate there is no room for the G20 to fall short of its latest commitments to keep markets open.” ICC also commended the G20’s focus on strengthening the multilateral trading system. “We believe that with the right global policies in place there is an opportunity to unleash a new era of ‘inclusive trade’: one in which all companies—regardless of size, sector or location—can benefit from equal access to international markets. A central focus must be on ensuring small businesses can access cost-effective finance and make full use of e-commerce opportunities,” Danilovich said. In May this year, ICC launched #TradeMatters, a global campaign-to promote a balanced and evidence-based debate on the role of trade in today’s economy. Danilovich concluded his G20 reaction statement on behalf of world business saying: “We agree with the G20’s analysis that the benefits of trade and open markets must be communicated to the wider public more effectively. It’s vital that business and governments work together to explain how and why trade matters for all.”
The Hangzhou Summit represents a major step forward in establishing a credible, action-oriented agenda to drive inclusive growth through trade