G20 SUMMIT OFFERS OPPORTUNITY FOR COORDINATION
The current crisis is more diffuse – it involves fuels, fertilisers and foods, especially wheat and vegetable oils. At the same time, the crisis is now more acute. All of these commodities are experiencing low inventories, curtailed production and disrupted supply chains.
It will not be easy to stop this crisis, much less return to more normal trade patterns. Coordination among the world’s leading economies will be needed to make progress.
Fortunately, an opportunity for such coordination is on the horizon, the forthcoming Group of Twenty (G20) summit meeting in Bali in November. With Indonesia in the chair, there is an opportunity for that country and for the Association of Southeast Asian Nations (ASEAN), as a major regional trade organisation, to get a formal commitment from G20 members to focus on food security and roll back trade restrictions.
Russia’s possible participation in the G20 will complicate this agenda, but there is room for active diplomacy, ideally led by Indonesia, to circumvent this problem. If that is possible, the elements of a “G20 Bali Commitment on Trade Normalisation” are fairly straightforward.
It will require a firm pledge to avoid any further export restrictions on critical commodities, especially wheat, vegetable oils and fertilisers. Leaders will also have to agree to reduce, and eventually eliminate, export restrictions on these critical commodities. Individual countries can be given considerable leeway to time their actions in accordance with their local political circumstances.
To ensure commitment, it is important to establish a small secretariat, with Indonesia in the chair, to monitor and publish the details of implementing the commitments. Transparency is the best enforcement mechanism.
Sadly, neither the United Nations nor the World Trade Organization can play a credible role here. But other organisations, such as the Agricultural Market Information System and the International Food Policy Research Institute, could help fill the gap.