Trade-related reforms will be at the center of the agenda as G20 Trade Ministers gather for a critical meeting July 19 in Sydney. These reforms are vital – not only to the G20’s ambitious target to boost global growth by 2% over the next five years, but to the development prospects of those outside the G20, and to the future of the global trading system. These reforms will require cooperation between countries within and outside of the G20 and the political commitment to follow through. No one has said these reforms will be simple.

We at the World Bank Group know well the complexity of the tasks at hand. We have been working with many G20 members to help map out what measures will have the greatest impact on their competitiveness and trade performance. Improving trade-related infrastructure and streamlining border management are obvious priorities, but for many economies, improving the efficiency of the services sector, increasing competition in the domestic economy, and addressing non-tariff measures that unnecessarily raise the price of imported inputs are equally important. We already have strong partnerships with countries like Turkey and Indonesia to further enhance their competitiveness, and will continue working on these issues with the G20 in the future.

But beyond these efforts by G20 members, many reforms that are essential to raising global welfare will need to take place in some of the world’s poorest countries. The G20 Ministers’ discussions provide an excellent opportunity to consider how trade-related reforms can stimulate growth in economies outside the G20. The links between trade and economic growth are central to the World Bank Group’s long-standing commitment to the “Aid for Trade” agenda – providing assistance to developing countries to boost their competitiveness and trade performance. The World Bank Group, the largest multilateral provider of Aid for Trade, has provided support in this area to the developing world of over $10 billion with clear returns and increasing client demand. But while trade costs in developing countries have fallen steadily, this has happened more slowly than in advanced economies, and the challenges ahead are considerable. The G20 has the chance to increase Aid for Trade and boost assistance to developing countries as they institute global best-practices to reap the benefits of connecting to the global market.

Ministers will also take stock of progress made in the multilateral trade negotiations since the historic outcome at the Bali Ministerial Conference in December 2013. WTO Members face important deadlines this year, including a July 31 deadline for finalizing the legal process for implementation of the Trade Facilitation Agreement, and a December deadline for a work program to negotiate the remaining elements of the Doha Round. There is also a need to consider progress in the other decisions taken at Bali, including those promoted by Least Developed Countries before the Ministerial.

The Bali outcomes generated new confidence in multilateral negotiations that had stalled for many years; the December conference delivered the first major, hard-won victories so far. Among these is the ground-breaking framework in the Trade Facilitation Agreement that allows WTO Members to customize implementation of the Agreement according to their capacities and technical assistance needs, along with a better support structure to help target, monitor and coordinate implementation.

The benefits of the Trade Facilitation Agreement itself have been widely communicated, but they bear repeating. In Africa, for example, the measures would help support greater integration into manufacturing value chains, as WTO Director-General Azevêdo reminded an African Union meeting earlier this month. Trade facilitation would also boost African agricultural producers, with the continent standing to gain an extra $20 billion in annual earnings if the barriers to regional agricultural trade are addressed. Indeed, trade facilitation has become central to the economic agenda of every region. Of course, trade facilitation alone cannot meet a country's economic and development needs – it can be only one element in a wider strategy – but it is clear that it helps countries participate in higher-value-added trade and attract investment. The Trade Facilitation Agreement provides an important new tool in support of these efforts, and helps countries attract greater assistance for achieving their goals.

The Sydney meeting needs to give a clear message that the Trade Facilitation Agreement and post-Bali agenda for the multilateral negotiations remain on track. A strong message of support for implementation of the Bali outcomes was delivered by BRICS Trade Ministers earlier this week when they met in Fortaleza, Brazil. Ministers in Sydney also need to send a clear signal that the international community is addressing concerns about technical assistance to implement the Agreement. For our part, the World Bank Group is formally launching a new Trade Facilitation Support Program at the Sydney meeting that will make immediately available $30 million in technical assistance. It will complement the more than $5 billion we provide annually for trade facilitation-related activities.

Since Bali, the World Bank Group has been working directly with our clients in national capitals and with their representatives in Geneva to identify what assistance they will need to implement the Trade Facilitation Agreement. Every Member’s situation is unique, and the challenges for some are considerable. But we have heard strong commitment from officials on the ground to moving forward with the task ahead. Not once have we heard that implementing the Agreement is an insurmountable challenge – with the benefits associated with reducing trade costs and facilitating connections to global markets enticing many Members.

We welcome the momentum that is gathering for the WTO Secretariat to play a greater role in sharing information on trade facilitation assistance and ensuring any gaps are addressed. The World Bank Group would support an effort like this, designed to complement the comprehensive reform and support programs underway at the national and regional levels. It would also help us, as members of the development community, to coordinate more effectively in delivering our trade facilitation assistance.

The Sydney meeting provides an excellent opportunity to engage on these issues. It should send a clear signal that the Trade Facilitation Agreement will be implemented, with support from the international community, and it should also show that the will remains to deliver on the other important elements of the Doha Round. The World Bank Group stands ready to step up its support for these efforts.

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New joint report from the Organisation for Economic Cooperation and Development (OECD), World Trade Organisation (WTO) and World Bank Group (WBG)

Global Value Chains (GVCs) are a dominant feature of the world economy that impact growth, jobs and development, but numerous challenges remain to ensure that all countries and all firms have the opportunity to participate and benefit.

Global Value Chains: Challenges, Opportunities and Implications for Policy, presented on the eve of the G20 Trade Ministers Meeting in Sydney, argues that success in international markets depends as much on the capacity to import high-quality inputs as the capacity to export: in an increasingly inter-connected global economy where more than 70% of trade is in intermediate goods and services, integration into GVCs today will determine future trade and FDI patterns as well as growth opportunities.

The report outlines how the rise of GVCs has produced a new “trade-investment-services-know-how nexus” encompassing trade in intermediate inputs, the movement of capital and ideas and the growing demand for services to coordinate dispersed production locations. It highlights how interconnected economies are today, while pointing out the risk of policies which inhibit participation in GVCs, such as various forms of trade and investment restrictions. It also underscores the need for complementary policies, such as those that boost education and skills, to improve the ability of firms, and in particular those in less developed economies, to participate in and benefit from GVCs.

“Trade, investment and the development of GVCs are constrained by barriers in the manufacturing and agriculture sectors, a lack of progress in opening service markets, a range of behind-the-border restrictions and the still-unfinished work on trade facilitation,” OECD Secretary-General Angel Gurría said during the launch of the report with Australian Trade and Investment Minister Andrew Robb.

The report identifies a number of priority actions for G20 governments:

• Implement and ratify the WTO Trade Facilitation Agreement, reached during the late-2013 ministerial meeting in Bali, Indonesia, as quickly as possible. OECD work on Trade Facilitation shows that simpler, speedier and more reliable border processes making it easier for goods and services to cross international borders will drastically reduce trading costs. Every 1% reduction in trade costs would generate benefits of 40 billion USD, with 65% of these gains accruing to developing countries.

• Improve services sector efficiencies, in recognition that services are essential elements in competitive manufacturing sectors, and thus vital links that forge GVCs. The new OECD Services Trade Restrictiveness Index allows the world’s major services suppliers to benchmark their performance and to identify opportunities to improve it.

• Reinforce the standstill commitment against protectionism and wind back any restrictive measures implemented since the crisis, with a particular focus on non-tariff barriers. The OECD-WTO Trade in Value Added database clearly illustrates how much firms rely on access to world-class inputs to improve productivity growth and competitiveness.

• Continue structural reforms and well-designed complementary policies to accompany trade and investment opening. Participation in GVCs is not automatic: some less-developed countries and smaller firms worldwide are at risk of being left behind. Effective flanking policies will vary by country, by stage of development, by resource endowment and other factors. In all cases, however, countries should focus on investments in people, in education and skills, in active labour market policies that match labour supply and demand, and in adequate social safety nets for those facing difficulties adjusting.

• “Getting the policies right on GVCs is an essential step toward building a strong, balanced and sustainable framework for more inclusive growth, jobs and development,” Mr Gurría said.

Download the report below.