The Organization for Economic Cooperation and Development (OECD) held its global trade forum on November 3 in Paris, convening representatives from government, business and the OECD for a discussion on the prospects of future trade flows and the impact of government policy on economic growth.

Rob Mulligan, USCIB’s senior vice president for policy and government affairs, spoke on a panel at the global trade forum about alternative approaches to trade policies. He and other panelists discussed which polices will ensure that trade and investment continue to lead to growth and jobs. Other speakers on Mulligan’s panel included Ambassador Jonathan Fried, Canada’s representative to the World Trade Organization and Joakim Reiter, deputy secretary general of the United Nations Conference on Trade and Development (UNCTAD).

The day-long trade forum sought to take stock of changing global trade patterns and determine what can be done about the recent slowdown in trade growth. At the multilateral level, WTO negotiations remain stalled, while countries focus on regional and plurilateral initiatives to open markets among a smaller number of interested economies. The advent of the major emerging economies, as well as global value chains which have fragmented production around the world, have also contributed to dramatic shifts in trade patterns in recent decades.

Speaking on behalf of the Business and Industry Advisory Committee (BIAC) to the OECD and of USCIB member companies, Mulligan gave a business perspective on the future of trade.

“It is critical for governments to keep in mind the need for businesses to be adjusting, and often very quickly, in order to stay competitive and grow,” Mulligan said. “Government policies can have a significant impact on the moves by business positively or negatively.”

He explained that international companies have built global value chains to establish a framework for accessing foreign markets in a flexible and cost-efficient way. When constructing these global networks, companies consider a range of factors such as the potential market for their products, rule of law, strong infrastructure, skilled workforce and localization rules, and it is important for governments to understand how these factors drive the way companies pursue global markets.

Mulligan suggested that the same principles that the business community has advocated in the past will still apply in the future. Government should avoid unnecessary regulation, and when it is necessary, it should be designed as the least trade-restrictive approach that accomplishes the policy objective. He also stressed that governments should coordinate with each other to ensure that regulations are consistent across countries, as coherent regulatory regimes make it easier for companies to grow and create jobs.

Conscious of the financing challenge facing small- and medium-sized enterprises (SMEs) and the consequences for growth and investment, the Business and Industry Advisory Committee to the OECD (BIAC) and B20 Turkey hosted a special event on Business Access to Global Value Chains and Financing SMEs on June 4, 2015 at the OECD Headquarters in Paris. Participants included senior representatives from SME associations, financial firms, multinational companies, governments, international organizations, and business federations. The event sought to pave the way for actions to support SMEs in global value chains (GVCs), in contribution to the G20 Leaders’ Summit in November 2015.

As national economies endure the slowest post-crisis global investment recovery since the early 1970s, there is a pressing need to unlock growth, investment and jobs. More must be done to enable businesses to serve their clients through GVCs, which form the centerpiece of world trade and investment, and thereby enhance companies’ competitiveness, productivity, and propensity to invest.

However, SMEs – which account for about 60 to 70 percent of employment and over 50 percent of value-added in OECD countries – have struggled to access the financing they require to participate in and across world markets, as banks have deleveraged to meet new regulatory requirements.

Following the event, BIAC and B20 Turkey released a publication to convey key priorities to the G20 agenda in 2015. It presents a compilation of chapters by prominent thinkers on the financing of SMEs in GVCs, and draws upon the discussions held at the special event held on June 4. The final chapter of the publication presents three overarching recommendations to G20 Leaders:

1. Focus on coordination, consultation and impact assessment
2. Raise SME access to finance and skills through an integrated approach
3. Maximize the sharing of information through digital platforms

The publication is intended to serve as a key point of reference in preparing the G20 Leaders’ Summit Communiqué in 2015. The publication is below for your perusal.

BIAC and B20 give appreciation to the following co-sponsors of the event and report: Lloyds Banking Group, Toronto-Dominion Bank Group, the Association of Chartered Certified Accountants (ACCA), the SME Finance Forum, and Willis Ltd.