Recognising the risk of economic slowdown and weakening trade posed by protectionism, the G-20 has decided to extend until the end of 2016 its standstill commitment to further progress in removing the barriers and impediments to global trade and investment.
In a 27-page declaration adopted at the end of the two-day summit here last night, the group of 20 industrialised and major emerging economies also reaffirmed its commitment to rollback new protectionist measures.
“With these commitments, we stress the importance of further curbing protectionism through the WTO,” the G-20 Leaders’ Declaration said.
The G-20 called on all WTO members to show the necessary flexibilities to bridge the existing gaps and deliver positive and balanced results at the ninth WTO ministerial conference at Bali in December on trade facilitation and some elements of agriculture and development issues.
“This would be a stepping stone to further multilateral trade liberalisation and progress in Doha Development Agenda negotiations, providing new confidence in successful post-Bali negotiations,” the declaration said.
The declaration committed itself to cooperate to ensure that the policies implemented to support domestic growth also support global growth and financial stability and to manage their spillovers other countries.
Orderly exit from monetary stimulus
The summit also shared Prime Minister Manmohan Singh’s views on the need for orderly exit from the monetary stimulus undertaken in the context of 2008 economic crisis.
“In the five years since we first met, coordinated action by the G-20 has been critical to tackling the financial crisis and putting the world economy on a path to recovery.
“But our work is not yet complete and we agreed that it remains critical for G-20 countries to focus all our joint efforts on engineering a durable exit from the longest and most protracted crisis in modern history,” the declaration said.
It noted that the most urgent need is to increase the momentum of the global recovery, generate higher growth and better jobs, while strengthening the foundations for long-term growth and avoiding policies that could cause the recovery to falter or promote growth at other countries’ expense.
Price stability, economic recovery
Talking about the problems arising out of the exit from stimulus package, the G-20 leaders said monetary policy will continue to be directed towards domestic price stability and support the economic recovery according to the respective mandates of central banks.
“We recognise the support that has been provided to the global economy in recent years from accommodative monetary policies, including unconventional monetary policies. We remain mindful of the risks and unintended negative side-effects of extended periods of monetary easing,” it said.
The summit recognised that strengthened and sustained growth will be accompanied by an eventual transition towards the normalisation of monetary policies. The central banks are committed that future changes to monetary policy settings will continue to be carefully calibrated and clearly communicated.
The declaration said: “We reiterate that excess volatility of financial flows and disorderly movements in exchange rates can have adverse implications for economic and financial stability as observed recently in some emerging markets.
“Generally, stronger policy frameworks in these countries allow them to better deal with these challenges. Sound macro-economic policies, structural reforms and strong prudential framework will help address an increase in volatility. We will continue to monitor financial market conditions carefully.”