unctad.org | UNCTAD to follow up request by G20 Leaders for continued work on trade and investment protectionism, global value chains, and commodity price volatility
UNCTAD to follow up request by G20 Leaders for continued work on trade and investment protectionism, global value chains, and commodity price volatility
25 June 2012
G20
G20 Leaders who gathered in Los Cabos, Mexico on 18-19 June 2012 expressed deep concern over rising instances of protectionism around the world, recognized the need to enhance participation of developing countries in global value chains, and underscored the importance to global economic recovery of maintaining stability in international commodity markets.


In the G20 Leaders Declaration issued at the conclusion of their summit, UNCTAD was requested along with the WTO and OECD to "reinforce and deepen" the work done in the area of protectionism and trade and investment restrictive measures, particularly the inventory and monitoring work that the three institutions have collaborated on.

According to Mr. James Zhan, Director of UNCTAD's Investment Division, "UNCTAD has been periodically monitoring latest developments of investment trends and policies for both G20 countries and worldwide, and publicized its findings in the G20 reports and the World Investment Report".

In noting the relevance of regional and global value chains to world trade, and recognizing their role in fostering economic growth, employment and development, and emphasizing the need to enhance the participation of developing countries in such value chains, the G20 Leaders called on UNCTAD along with the WTO and OECD to "accelerate" their work on global value chains, and to report on progress next year under Russia's Presidency. UNCTAD has been conducting research and policy analysis on the relationship between investment and global value chain over the past two decades, and will intensify its effort in light of the Doha Mandate.

G20 Leaders also reaffirmed their support for the Principles of Responsible Agriculture Investment (PRAI), which have been jointly developed by UNCTAD with FAO, IFAD, and the World Bank recognizing that in some cases investments in agricultural global value chains have left a trail of environmental, social and community problems. PRAI are being piloted for operationalisation with governments, investors and other stakeholders. The operationalisation includes creating guidelines based on seven key principles (from consultation with communities to treatment of the environment) for investors and governments to consider in salient areas. The process of operationalising the PRAI is underpinned by a major field-work based research effort to establish the conditions under which agricultural investments can best support sustainable development.

Recognizing the importance to global economic recovery of maintaining stability in international commodity markets, the G20 Leaders endorsed the conclusions of the G20 report on the macroeconomic impacts of excessive commodity price volatility on growth and its identification of policy options that countries could consider. The Leaders expressed appreciation for the "valuable inputs" provided by UNCTAD, the IMF and World Bank to the report. UNCTAD had proposed, inter alia, that the G20 could investigate the need for base-metals market information system (BAMIS) to encourage information sharing, improve date reliability and enhance data analysis and market transparency.

The Leaders asked G20 Finance Ministers to report in 2013 on the G20's contribution to facilitate better functioning of physical commodities markets and reaffirmed their commitment to enhance transparency and avoid abuse in financial commodity markets.

UNCTAD's continued work on the financialization of commodity markets can help the G20 and other countries to minimize the adverse effects of financial investment on price formation in commodity markets.

G20 Leaders also commended the progress achieved and supported by the G20 Development Working Group, which includes, in the private investment and job creation pillar, work by an Inter-agency Working Group (members include ILO, OECD, UNDP, UNIDO and the World Bank) under coordination from UNCTAD to develop key indicators for measuring and maximizing the economic and employment impact of private sector investment. G20 Leaders invited the Development Working Group to explore putting in place a process for ensuring assessment and accountability for G20 development actions by the next Summit.

UNCTAD will continue to make its inputs and contributions to all the above processes.

 

The relevant paragraphs from the G20 Leaders Los Cabos Declaration:

Report on G20 Trade and Investment Measures

28. We are deeply concerned about rising instances of protectionism around the world. Following up our commitment made in Cannes, we reaffirm our standstill commitment until the end of 2014 with regard to measures affecting trade and investment, and our pledge to roll back any new protectionist measure that may have arisen, including new export restrictions and WTO- inconsistent measures to stimulate exports. We also undertake to notify in a timely manner trade and investment restrictive measures. We uphold the inventory and monitoring work of the WTO, OECD and United Nations Conference on Trade and Development (UNCTAD) on trade and investment measures and encourage them to reinforce and deepen the work in these areas, consistent with their respective mandates.

Global Value Chains

29. We value the discussion held by our Trade Ministers in Puerto Vallarta on the relevance of regional and global value chains to world trade, recognizing their role in fostering economic growth, employment and development and emphasizing the need to enhance the participation of developing countries in such value chains. We encourage a deepening of these discussions in the WTO, UNCTAD and OECD within their respective mandates, and we call on them to accelerate their work on analyzing the functioning of global value chains and their relationship with trade and investment flows, development and jobs, as well as on how to measure trade flows, to better understand how our actions affect our countries and others, and to report on progress under Russia's Presidency.

Principles for Responsible Agricultural Investment (PRAI)

57. To fight hunger, we commit to continue our efforts on our initiatives, including the Tropical Agriculture Platform, the Platform for Agricultural Risk Management, the GEO Global Agriculture Monitoring, research initiatives for wheat, rice and corn, the Rapid Response Forum, regional emergency food reserves, the Global Agriculture and Food Security Program and support for the Principles of Responsible Agriculture Investment. Recognizing the important contribution of greater transparency to reducing food price volatility, we welcome the progress made in the implementation of the Agricultural Market Information System (AMIS). We recognize that a more stable, predictable, distortion-free, open and transparent trading system, including as regards agriculture, has a critical role to play to promote food security.

Commodity Price Volatility

61. We recognize the importance to the global economic recovery of maintaining stability in international commodity markets. We stress the importance of well-functioning and transparent physical and financial commodities’ markets and reduced excessive price volatility to achieve food security and strong growth that is both sustainable and inclusive. We recognize that excessive commodity price volatility has significant implications for all countries, increasing uncertainty for actors in the economy and potentially hampering stability of the budgets, and predictability of economic planning. We recognize that mitigating the negative effects of commodity price volatility on the most vulnerable is an important component of reducing poverty and boosting economic growth. We therefore endorse the conclusions of the G20 report on the macroeconomic impacts of excessive commodity price volatility on growth and its identification of policy options that countries could consider, taking account of national circumstances to mitigate any such effect. We also acknowledge and appreciate the participation and valuable inputs of the IMF, World Bank and UNCTAD. We ask our Finance Ministers to report in 2013 on progress on the G20’s contribution to facilitate better functioning of these physical markets, taking note of possible areas of further work outlined in the report. We reaffirm our commitment to enhance transparency and avoid abuse in financial commodity markets, including OTC, with effective intervention powers for market regulators and authorities and an appropriate regulation and supervisory framework. In this regard we look forward to IOSCO’s report on the implementation of its recommendations on commodity derivatives markets by November 2012.

Development Working Group

64. We welcome the initiative of the Development Working Group to build upon the work of previous G20 presidencies, and its focus on three priorities during the Mexican Presidency - food security, infrastructure and inclusive green growth. We commend the progress achieved against our commitments in the Seoul Multi-Year Action Plan, and support the 2012 Development Working Group progress report annexed to this Declaration. We invite the Development Working Group to explore putting in place a process for ensuring assessment and accountability for G20 development actions by the next Summit.



Loading..

Please wait....