This past Thursday, the United States and India broke an impasse over a global trade agreement to cut red tape at border crossings.
This development brightens the outlook for global commerce and offers hope that when G20 leaders meet this weekend in Australia, they can take steps to achieve the G20 Finance Ministers' objective of increasing their collective GDP by more than 2 percent above the estimated growth targets of 2013's G20 St. Petersburg Summit. That would result in an additional $2 trillion in GDP over the next five years.
By acting on a short list of policies to boost international trade and investment, the G20 could reach well beyond that growth target -- to add $3.4 trillion in GDP growth and support 50 million jobs.
Indeed, opening markets has proven to create long-term economic benefits. According to a 2013 report by the United Nations, "almost all countries with substantial improvement in human development over the past two decades have also become more integrated with the world economy."
That is why it was so gratifying to see that the United States and India were able to seemingly salvage the multilateral deal known as the Trade Facilitation Agreement (TFA). The nations in the World Trade Organization agreed to TFA in 2013 and then missed a summer deadline for adopting the measure because India raised objections over how the deal could impact its food program.
But this week, India's commerce minister announced that the issue had been resolved, paving the way for TFA to go back to the WTO for final approval.
While welcome progress has been made on this front, challenges loom elsewhere.
Worldwide trade has been sluggish over the last several years. Only modest growth is projected this year.
We are at a crossroads. But the path forward has never been so clear and the potential for greater prosperity for millions around the world never so great. The G20 should seize this moment in Australia and act on a robust trade agenda.
Four recommendations the international business community has put forward through the B20, a policy forum of the private sector, require leaders' attention.
First, the G20 should urge all 160 nations of the WTO to expedite ratification and implementation of TFA. By harmonizing hundreds of administrative procedures and standards that dictate how goods cross borders, TFA has the potential to reduce trade costs by 10 percent to 15 percent across developed and developing economies, according to the OECD.
As a second measure, the G20 should enforce a standstill on protectionism. G20 countries have introduced at least 600 new trade restrictions since 2008. Reversing these barriers could bring $350 billion more in exports among G20 nations.
Third, G20 countries should work to overcome supply chain barriers. Obstacles, ranging from border administration to poor infrastructure and burdensome regulation, drive up costs. G20 leaders should commit to a process for lowering these barriers, including extending assistance and financial support to developing countries.
Finally, policy makers must ensure preferential trade agreements, whether bilateral or plurilateral, reflect high standards, address 21st century trading realities, and support the multilateral trading system under WTO rules. That includes large regional trade deals, such as the ones the United States is negotiating with Pacific Rim nations and with Europe. There is great enthusiasm from many parties for those deals. Now, we need to translate that energy into action.
Despite the compelling evidence that opening markets delivers economic progress, the Pew Research Center recently found that the public has mixed views on trade, a combination of "faith and skepticism." As a result, passing all four of these measures will take time and considerable work.
The G20's relevance to global governance and the resolve of its leaders to achieve these goals will be tested in Brisbane. Guided by a shared belief that open trade supports economic growth and employment, G20 leaders have repeatedly urged progress in multilateral trade negotiations. This week's summit is an opportunity to show the world the G20 can strengthen the global economy by demonstrating just how strong its faith is in trade.
John Danilovich is the Secretary General of the International Chamber of Commerce.
Harold McGraw III is Chairman of McGraw Hill Financial, Chairman of the International Chamber of Commerce and Co-Chair of the B20 Trade Task Force.