G20 TOP PROVIDES OPPORTUNITY FOR CORDINATION
The current crisis is more diffuse † it concerns fuels, fertilizers and food, especially wheat and vegetable oils. At the same time, the crisis is now more acute. All of these commodities face low inventories, production constraints and disrupted supply chains.
It will not be easy to stop this crisis, let alone return to more normal trading patterns. Coordination between the world’s leading economies will be necessary to make progress.
Fortunately, there is an opportunity for such coordination on the horizon, the forthcoming Group of Twenty (G20) summit in Bali in November. With Indonesia as chairman, there is an opportunity for that country and for the Association of Southeast Asian Nations (ASEAN), as a major regional trade organization, 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 get around this problem. If possible, the elements of a “G20 Bali Commitment on Trade Normalisation” are quite simple.
It requires a firm commitment to avoid further export restrictions on critical commodities, especially wheat, vegetable oils and fertilizers. Leaders will also need to agree to reduce and eventually lift export restrictions on these critical goods. Individual countries can be given considerable latitude to time their actions according to their local political circumstances.
To ensure commitment, it is important to establish a small secretariat, chaired by Indonesia, to monitor and publish details of the implementation of the commitments. Transparency is the best enforcement mechanism.
Unfortunately, neither the United Nations nor the World Trade Organization can play a credible role here. But other organizations, such as the Agricultural Market Information System and the International Food Policy Research Institute, could help fill the gap.