Dear John,

I would like to congratulate you for putting together this impressive gathering of business leaders to discuss drivers of sustainable growth.

This meeting takes place as we seem to be emerging from the most severe economic crisis in decades; a crisis that has shaken many of your businesses and shed millions of jobs.

And as we may be turning the corner of the crisis, strengthening world economic recovery is key to repairing the damage that has been caused by the financial crisis. Today we need fiscal consolidation as much as we need economic growth.

Open trade and international investment are central to the exercise.  They can help drive global growth and support macroeconomic adjustment to bring various imbalances back to economically and politically sustainable levels.

This is why trade — and its role of engine of growth — needs to be an integral part of the framework for sustainable, balanced growth which the G20 has been putting together since the Pittsburgh summit.

Trade was a major casualty of the financial crisis.  It contracted sharply from the last quarter of 2008, and in 2009 fell by an unprecedented 12 percent.  The ratio of global trade to GDP declined by one-third as international supply chains magnified the contraction and distributed it worldwide, reflecting just how deeply integrated the global economy has become. 

The main cause of the contraction in trade was the collapse of aggregate demand.  There is no surprise in that, given how highly leveraged consumption had become in North America and parts of Europe by 2008 and how quickly that was undermined by the choking off of bank credit. 

The credit squeeze hit trade through shortages of short-term trade-financing as well, such as letters of credit which are vital for many developing countries as well as small and medium-scale businesses worldwide.  The G20 support package for trade finance that was agreed in London last year has helped substantially to resolve this problem.  But for business in many low-income developing countries, the availability and affordability of trade finance remains a serious constraint. This is why it is important that there be no rush to exit this package and that more targeted trade finance is provided to address these specific needs.

More surprising, perhaps, is that trade protectionism played a limited part in the contraction of trade last year.  Protectionism is probably the only crisis dog that did not bark so far. Careful monitoring of trade restrictions by the WTO shows some slippage by G20 countries, but overall the impact of new restrictions has been limited — no more than 1 percent of world trade flows has been affected since 2008.  The traditional barometer of protectionist pressure is increased demand from the private sector for trade remedies, yet this has not materialised:  anti-dumping, countervailing and safeguard action remain within pre-crisis ranges. 

Meanwhile, many WTO Members have implemented measures to open up their economies over the past eighteen months.  An example is Canada who eliminated this year a substantial number of import tariffs on manufacturing inputs, machinery and equipment, with the promise of more to come.

The multilateral trade rules have helped governments resist protectionist pressures and kept markets open throughout the crisis, playing the role they were designed for by preventing backsliding on the gains from more open and competitive world markets.  For business, this adds up to a valuable insurance policy that reduces commercial risk and increases the long-term profitability of investment.  For developing countries, this is a major achievement given their higher dependency on international trade.

But we are not out of the woods yet. Continued vigilance against protectionism is called for as long as unemployment levels remain unacceptably high.  And even if the incidence of new trade restrictions has been limited so far, their accumulation constitutes an obstacle to the recovery. The longer trade restricting and distorting measures are left in place, the more entrenched the special economic interests depending on them will become, and the more difficult it will be to remove them.

An important step that G20 governments can take now is to announce exit strategies to unwind the trade restrictions and subsidies that they introduced temporarily and to start implementing those strategies as soon as domestic economic recovery takes hold.  

Governments need to be reminded also that the WTO insurance policy for open trade cannot be taken for granted.  The current contract was drawn up in the mid-1990s at the end of the Uruguay Round, and the crisis has shone the spotlight on areas where it needs updating. 

Paying a new premium on the insurance policy by completing the Doha Development Round can go a long way towards achieving that goal, by setting lower, legally-binding limits on the extent to which trade restrictions and trade-related subsidies can be raised and protectionism can agitate.  It will also deliver a very welcome stimulus package to the world economy. One that does not have to be financed out of national treasuries.

Today the Doha negotiations are in an impasse. Although 80% of the job is done, negotiators are considering the remaining 20%, staring at each other waiting for the other side to move first. Obviously nobody wants to move first by fear that its moves would be pocketed by others without obtaining anything in return.

Technically, finishing the Doha Round is doable. But for that we must break this tactical and political impasse. Negotiators must return to discussing trade offs, to engage in a give and take to build the final package you have been waiting for.

Let us remember that trade negotiations have never been easy. Opening trade means more winners than losers. But the latter often show more determination to defend their turf in parliaments than the former.

This is why we need a strong voice from business. “A strong voice from the frontline of global commerce”, as John Manley put it yesterday night. A strong voice from the “B20.” You know how open trade is essential to efficiency gains that result in growth and development.  But you also know that in an ever interconnected world, in order to keep trade open we have to keep opening trade. That's why we need to run the last lap of the Doha Round. And, in order to do that, we need your engagement with your governments. B20 leaders must send a signal to the G20 leaders that keeping trade open and concluding the Doha Round is a priority for you.

The G20, as the prime forum for global economic cooperation, bears a special the responsibility to inject action in the Doha negotiations. Even if the negotiations will take place in Geneva among the 153 WTO Members, Toronto must send a signal that G20 leaders are ready to spend political capital at home to get the Doha Round to the finish line.  This would be the most powerful signal that the G20 remains committed to an open and sustainable economy.

I hope Toronto will give us the political boost we need to get back to the kitchen in Geneva. I also hope that by the time of the next G20 in Seoul we can sound the bell of the last lap in the Doha negotiations.

Thank you for your attention.