The global exchange of goods and services and cross-border investment has been a pillar of growth and development. Landmark agreements on rules safeguarded by the Word Trade Organization have been the reason for decades of innovation and economic growth.
The WTO’s Director General, Roberto Azevedo, recently pointed out in March 2017 how increasingly interconnected trade and investment are. Global / multi-domestic companies view trade and investment as two sides of the same coin.
Concerns about fairness, sustainability and reciprocity have arisen in the field of trade, resulting in an increased number of lawful trade defence measures but also in non-tariff barriers and other worrisome protectionist measures.
In 2016, G20 countries adopted the Guiding Principles for Global Investment Policymaking. G20 Principles represent the first time that a multilateral consensus on investment matters has been reached among a varied group of developed, developing and transition economies, accounting for over two thirds of the global outward FDI.
Still, investment flows are lagging behind the 2007 peak. According to the UNCTAD’s investment report, investment policymaking in 2017 is growing more complex, more divergent and more uncertain. At the same time, State-owned MNEs have a growing role in the global economy. In 2016, Greenfield investments from SO-MNEs accounted for 11 per cent of the global total. The economic neutrality of state-owned or state-related enterprises’ T&I is also a growing concern.
G7 Taormina’s 2017 communiqué pushed for the removal of all trade-distorting practices, including dumping, discriminatory non-tariff barriers, forced technology transfers, subsidies and other market-distorting support by governments and related institutions. G7 also urged for a follow-up on the government support measures that have led to overcapacity in certain industries and in this same sense expressed its concern regarding market-distorting measures targeted at promoting key technologies.
Investment needs to regain momentum. We need rules for 21st century trade and investment that strengthen the WTO and the rules-based multilateral system, and with transparent and efficient monitoring and compliance mechanisms, at the same time, we need to adapt and face the challenges and new themes of the digital age. We need to address the concerns and challenges of SMEs with measures that support innovation and growth.
B20 Argentina will serve as an opportunity for the Business community to reach consensuses on these important matters which directly impact the UN’s Sustainable Development Goals and provide G20 leaders with concrete recommendations and action plans.