The G20's Battle against Trade Barriers

Leaders gather in London this week to seek salves for global financial woes. The G20 summit will offer a forum for debate over ways to stimulate the world’s economy and reform the international financial system. In the lead-up to the summit, calls against trade barriers have come from within and outside G20 members, which brings together heads of state from the G7 plus another 13 countries that together represent 85 percent of the world’s economy.

At a March 14 summit of G20 finance ministers, BRIC (Brazil, Russia, India, and China) members released a communiqué calling protectionism a “real threat to the global economy.” In a statement to the G20, the G24—made up of developing nations from Africa, Latin America, and Asia—warned against “the increased recourse to subsidies.” Latin American member countries (Argentina, Brazil, and Mexico) as well as Canada will deliver anti-protectionist messages in London. Here’s a look at what each of their leaders may bring to the G20 table.

Argentina: President Cristina Fernández de Kirchner will support calls for reforms to the International Monetary Fund (IMF) and the World Bank that would result in eased lending conditions. She will also advocate for the elimination of tax havens. La Nación reports that, during a weekend summit in Chile attended by U.S. Vice President Joseph Biden, Fernández de Kirchner aligned with U.S. and British leaders in terms of G20 propsals.

Brazil: A Guardian overview of the G20 says that all eyes may be on U.S. President Barack Obama in London. Yet the article lists Brazil first as “who REALLY matters” and calls the country “The future.” Brazilian President Luiz Inácio Lula da Silva has become an anti-protectionist spokesman, arguing in the Financial Times that trade should be “free of the protectionism that shows dangerous signs of intensifying.” In recent days, he called protectionism a “drug.” In addition to sharing this message in London, Lula will likely call for an increase in multilateral lending and for emergin economies to command greater weight in governing structures of global financial institutions.

Canada: The Canadian Press argues that, at a summit where many leaders will urge greater financial regulation, Canada’s banking stability will earn it an important position; four of North America’s top 10 banks are now Canadian. “A few years ago Canada was being criticized, we didn't deregulate as much as some others but right now the government is not running all or part of the financial sector as is the case with some many system,” Canada's Prime Minister Stephen Harper said in a March 30 CNN interview. He also appears to have anti-free-trade fears: “The thing that keeps me up at nights the most are the risks of protectionism.”

Mexico: While in London for an official visit in advance of the G20 meeting, Mexican President Felipe Calderón announced that his country plans to access as much as $40 billion of its credit line from the IMF. The move boosted to the Mexican peso, which has declined over the past six months. Calderón will join his Latin American counterparts in calling for stronger support from international financial organizations for emerging economies, as Finance Minister Agustin Carstens announced at an Inter-American Development Bank meeting last week.

Despite the concert of voices against protectionism, G20 attendees face an uphill battle in preventing trade barriers at a time of global financial woes. A recent World Bank report looks at the uptick in protectionist legislation approved worldwide and found that 17 of the 20 countries that make up the G20 have passed such measures since the members pledged not to at a November 2008 summit. In a new post for the AQ blog, AS/COA's Director of Public Policy Programs Mateo Samper argues that, while most G20 leaders may support free trade, "[t]he economic crisis has exacerbated economic nationalism."