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G20 Osaka Progress on International Trade

2. Juli 2019 - 7:45

Dennis J. Snower

According to widespread reports on the G20 Osaka Summit in the media, the G20 achieved little if anything on international trade. What received most media attention was that the G20 Leaders’ Declaration stopped short of denouncing protectionism. The resulting impression was that the G20 had achieved little, that G20 initiatives stand in opposition to national interests, and that the G20’s shared sense of purpose has been lost amidst the resurgent inward-looking politics of many countries today. This impression is seriously misleading and unconstructive. It strengthens the widespread misconception that G20 multilateralism regarding international trade is necessarily in conflict with national goals and that international trade tends to favor the affluent few at the expense of the neglected many. This misconception is the outcome of a zero-sum narrative, whereby one country’s gain from international trade is another country’s loss. It is a dangerous misconception, since it leads voters to support politicians who use international trade as an excuse for pursuing socially divisive policies that make it impossible to spread the gains from globalization among all population groups.  

There is a very different, more productive and hopeful interpretation of the G20 Osaka results on international trade. The G20 Leaders’ Declaration called for “free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open. International trade and investment are important engines of growth, productivity, innovation, job creation and development” (§8). This statement must be understood in terms of the overarching theme of the Japanese G20 Presidency: “… we will strive to create a virtuous cycle of growth by addressing inequalities and realize a society where all individuals can make use of their full potential. We are resolved to build a society capable of seizing opportunities, and tackling economic, social and environmental challenges, presented today and in the future, including those of demographic change.” These aims are consonant with the theme of “recoupling” of the T20 Summit in Tokyo: In the light of the danger that economic prosperity can become decoupled of societal prosperity, the G20 should focus on societal prosperity – the wellbeing of individuals in thriving communities – and seek to recouple economic prosperity with social wellbeing. See, for example, the following T20 Policy Briefs: 

This broad theme is reiterated in the notion of Society 5.0: “We share the notion of a human-centered future society, which is being promoted by Japan as Society 5.0” (§10).

If the recoupling theme is taken seriously, it has far-reaching implications for the global governance on international trade, infrastructure investment and taxation. In particular, the goal of recoupling means that the promotion of international trade is not an end in itself. Rather, trade is an instrument to promote human wellbeing within flourishing societies within our planetary boundaries. In the future, this will require the G20 countries to measure the gains from trade not exclusively in terms of GDP across countries, but also take environmental sustainability, human empowerment and social solidarity into account. For instance, if a readjustment of global value chains raises the value of worldwide goods and services, but destroys natural and social capital, then the resulting gains from trade would be represented as the difference between the increase in manufactured capital and the decrease in natural and social capital. This idea is captured in the statement “We strive to realize a free, fair, non-discriminatory, transparent, predictable and stable trade” (§8). In this context, it is important to emphasize that international trade does not take place in a vacuum. To generate maximal gains from trade, appropriate fiscal, monetary and structural policies are required at the national level. This is an area where multilateral trade agreements must be well coordinated with national macroeconomic policies. 

Relevant T20 Policy Briefs in this area include the following:

The G20 Summit was also the occasion for historic action to reduce protectionist barriers. The EU and the South American economic bloc Mercosur concluded a massive trade agreement, the EU’s largest trade deal to date. The agreement covers a market for goods and services covering nearly 800 million consumers, the greatest number of people covered by a trade agreement thus far. This agreement comes in the aftermath of recent EU trade agreements with Canada, Mexico and Japan, all concluded since President Trump took office. 

This development is to be understood in the light of a new approach to international trade governance that is gradually taking shape among major trading nations. The new approach is summarized in the following statement from the Leaders’ Declaration: “we recognize the complementary roles of bilateral and regional free trade agreements that are WTO-consistent” (§8). Instead of an explicit attempt to bring all trade agreements under the aegis of the World Trade Organization (WTO), the G20 aims to make regional trade agreements consistent with the broad framework of WTO agreements. Acceptance of this principle could have a significant influence on the design of future trade agreements, helping the world economy enter into harmonious rule-based trading system. Within this system, countries that pursue protectionist policies would witness are structuring of global value chains to their detriment. 

Furthermore, the Leaders’ Declaration also recognized the need to reform the WTO in order to broaden gains from international trade. The Declaration reaffirmed “support for the necessary reform of the World Trade Organization (WTO) to improve its functions… We agree that action is necessary regarding the functioning of the dispute settlement system consistent with the rules as negotiated by WTO members” (§8). A major issue to be addressed will include making the WTO capable of providing a level playing field for market economies and state capitalist systems. T20 Policy Briefs dealing with WTO reform include 

WTO rules have thus far focused on produced goods, giving far less attention to services, particularly electronic services. This is a large and ever-growing gap in trade governance, since service trade currently comprises most of the growth in international trade. Furthermore, the new digital age is blurring the boundary between goods trade and services trade, since the export and import of goods is commonly combined with a variety of digital services. On this account, it is unfortunate that services trade is governed by a different body of international rules than goods trade. The G20 Leaders’ Declaration addresses these problems, reaffirming “the importance of interface between trade and digital economy, and note the ongoing discussion under the Joint Statement Initiative on electronic commerce, and reaffirm the importance of the Work Programme on electronic commerce at the WTO” (§12). 

T20 Policy Briefs relevant to trade in digital services include

The rapidly evolving developments in e-commerce require a more flexible and experimental approach to policy than was needed for trade in manufactured goods in the past. Accordingly, the Leaders’ Declaration states, “To further promote innovation in the digital economy, we support the sharing of good practices on effective policy and regulatory approaches and frameworks that are innovative as well as agile, flexible, and adapted to the digital era, including through the use of regulatory sandboxes” (§11). 

Thereby the G20 Leaders’ Declaration provides a useful, urgently needed framework for the continued governance of international trade, specifying the appropriate division of responsibilities on the national and international levels and providing a vision for the required collaboration between national and international trade policies. 

The post G20 Osaka Progress on International Trade appeared first on G20 Insights.

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Digital Governance through the G20 Osaka Leader’s Declaration

1. Juli 2019 - 12:30

The underlying spirit of the G20 Leader’s Declaration can be summarized as follows:  “We share the notion of a human-centered future society, which is being promoted by Japan as Society 5.0” (§10). This vision, along with its implications for the G20, has been articulated in various T20 Policy Briefs (see, for example, Toward global paradigm change by Dennis J. Snower and Repurposing our Economies – and our Businesses by Colm Kelly. The message is that the G20 must focus on social prosperity – the wellbeing of people in thriving societies – and the G20 must seek to recouple economic prosperity with social prosperity. 

The implications of this message for digital governance is contained in the following part of the Declaration: “We will work toward achieving an inclusive, sustainable, safe, trustworthy and innovative society through digitalization and promoting the application of emerging technologies” (§10). “Cross-border flow of data, information, ideas and knowledge generates higher productivity, greater innovation, and improved sustainable development, while raising challenges related to privacy, data protection, intellectual property rights, and security. By continuing to address these challenges, we can further facilitate data free flow and strengthen consumer and business trust. In this respect, it is necessary that legal frameworks, both domestic and international, should be respected. Such data free flow with trust will harness the opportunities of the digital economy” (§11). 

“Data free flow with trust” combines two features that are vital for the stability of the new digital age: free flow of information and trust in that information by the users. This principle requires effective legal and regulatory systems that prevent the use of information without users’ consent and the manipulation of users’ opinions by external parties. The future of the free market system and the future of democracy depends on the implementation of this principle. Accordingly, the Declaration states, “In this respect, it is necessary that legal frameworks, both domestic and international, should be respected. Such data free flow with trust will harness the opportunities of the digital economy. We will cooperate to encourage the interoperability of different frameworks, and we affirm the role of data for development.” Some implications for policy making – particularly with regard the recoupling of economic and social prosperity – are suggested in the following T20 Policy Briefs, among others: 

How to Promote Worker Wellbeing in the Platform Economy in the Global South
by Ramiro Albrieu, Martin Rapetti, Urvashi Aneja, Krish Chetty

Bridging the Gap Between Digital Skills and Employability for Vulnerable Populations 
by Alessia Zucchetti, Cristóbal Cobo, Josephine Kass-Hanna, Angela C. Lyons

Leaving No One Behind: Measuring the Multidimensionality of Digital Literacy in the Age of AI and other Transformative Technologies 
by Alessia Zucchetti, Cristóbal Cobo, Josephine Kass-Hanna, Angela C. Lyons

It is highly significant that the G20 has agreed to accept the OECD Council Recommendation on Artificial Intelligence: “To foster public trust and confidence in AI technologies and fully realize their potential, we commit to a human-centered approach to AI, and welcome the non-binding G20 AI Principles, drawn from the Organization for Economic Cooperation and Development (OECD) Recommendation on AI.” 

The OECD Recommendation is the first set of principles on the international use of AI that explicitly promotes the recoupling of economic and social prosperity. In particular:

  • “AI should benefit people and the planet by driving inclusive growth, sustainable development and well-being.
  • AI systems should be designed in a way that respects the rule of law, human rights, democratic values and diversity, and they should include appropriate safeguards – for example, enabling human intervention where necessary – to ensure a fair and just society.
  • There should be transparency and responsible disclosure around AI systems to ensure that people understand AI-based outcomes and can challenge them.
  • AI systems must function in a robust, secure and safe way throughout their life cycles and potential risks should be continually assessed and managed.
  • Organisations and individuals developing, deploying or operating AI systems should be held accountable for their proper functioning in line with the above principles.”

(OECD AI Principles)

Building on these principles, the OECD makes the following recommendations:

  • “Facilitate public and private investment in research & development to spur innovation in trustworthy AI.
  • Foster accessible AI ecosystems with digital infrastructure and technologies and mechanisms to share data and knowledge.
  • Ensure a policy environment that will open the way to deployment of trustworthy AI systems.
  • Empower people with the skills for AI and support workers for a fair transition.
  • Co-operate across borders and sectors to progress on responsible stewardship of trustworthy AI.”

Relevant T20 Policy Briefs on this subject include the following:

Transformation of Economic and Social Institutions for a New Era of Self-employment in High-income Countries
by Reiko Hayashi 

Fostering Human Dimension of the Digital Education
by Ilya Kiriya 

These principles are an important first step in addressing the major challenges that AI poses for societal wellbeing, including the following.  First, as people become more reliant on AI in their decision making processes, the ethical assumptions built into the AI algorithms will become increasingly important for meaningful human-machine interactions. Our thinking about ethical AI is still in its infancy, exposing us to implicit algorithm biases and unknown concerning our ethical expectations of machines. Second, given the huge bodies of information that machines gather about us, it is difficult to ensure that this information is not used to discriminate against people – for example, in hiring decisions and insurance claims – on the basis of inappropriate information.  Third, social manipulation through AI algorithms is already threatening to undermine the democratic process in many countries, including recent elections in the US, the EU and the Brexit referendum. Fourth, the combination of AI, ubiquitous cameras and facial recognition can permit a massive invasion of privacy by the state and large digital monopolies, setting the stage for large-scale social manipulation and oppression. These are all dangers whereby technological progress may become decoupled from societal wellbeing. The OECD principles serve to guide the development of AI with social cohesion, personal empowerment and environmental sustainability in mind. These principles thereby promote “recoupling” of economies and societies through “digital free flow with trust.” Thereby the G20 Japan 2019 has set the groundwork for a digitally enhanced human-centered society throughout the G20 members and beyond. 

The post Digital Governance through the G20 Osaka Leader’s Declaration appeared first on G20 Insights.

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G20 finance ministers release 14-point communiqué

13. Juni 2019 - 9:24

Group of 20 finance leaders met in Japan where they issued a communiqué at the close of their two-day meeting.

Finance ministers and leaders from the world’s 20 leading industrialized and emerging economies met in Japan to find ways of working toward international economic cooperation.

“Global growth appears to be stabilizing and is generally projected to pick up moderately later this year and into 2020,” wrote G20 finance leaders in a communiqué issued at the close of the meetings in Fukuoka, a city on the northern shore of Japanese island Kyushu.

Ministers from various governments contributed to the 14-point communiqué ahead of Japan’s G20 Summit on June 28-29 in Osaka. 

The communiqué acknowledged that trade and geopolitical tensions have “intensified,” and lists various priorities, such as closing loopholes used by tech giants to reduce their corporate taxes by 2020. 

Other priorities included sustainable infrastructure development, strengthening financial inclusion in aging societies and continued support for the G20 Compact with Africa (CwA), which should “involve closer engagement with private sector investors and enhanced bilateral engagement.”

Further information regarding the G20 Finance Ministers and Central Bank Governors Meeting can be found on the official website.

G20 Finance Ministers and Central Bank Governors Meeting. Photo credit: Japan’s Ministry of Finance

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Official recommendations for G20 Summit published in T20 communiqué

29. Mai 2019 - 12:11

The G20’s research and policy advice network, the Think20 (T20), shares its top policy recommendations ahead of the Osaka Summit next month.

Think20 Japan published its key policy recommendations for the Group of 20 (G20) leaders after the T20 Summit concluded in Tokyo Monday.

The final recommendations cover ten distinct policy areas, providing G20 nations with research-based solutions to help the world’s leaders address humanity’s great challenges, including political discord, the impact of digitalization, trade tensions, gaps in infrastructure, climate change, sustainable development across Africa and aging populations.

The 18-page T20 communiqué presents official recommendations selected from more than 100 policy briefs written by the T20 Japan’s task forces. The task forces are comprised of researchers from think tanks around the world, including members of the Global Solutions Initiative’s Council for Global Problem-Solving (CGP) and GSI President Dennis J. Snower.

The document aims to move the Japan 2019 G20 presidency’s priorities forward but also advance the T20 Japan vision: Seeking a Sustainable, Inclusive and Resilient Society.

All the T20 Japan’s policy briefs and those from previous G20 Presidencies, such as Germany (2017) and Argentina (2018), are available on G20 Insights.

About the T20

T20 Japan is an official engagement group of Japan’s 2019 G20 presidency that provides G20 leaders with research and policy advice from a network of think tanks. T20 Japan is chaired by the Asian Development Bank Institute (ADBI), in coordination with the Japan Institute of International Affairs (JIIA) and Institute for International Monetary Affairs (IIMA).

Please visit the official T20 Japan and G20 Japan websites for more information on the upcoming G20 Summit to be held June 28-29,2019 in Osaka, Japan.

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T20 Japan’s Policy Briefs available to download on G20 Insights

22. Mai 2019 - 15:33

These recommendations were prepared by T20 Japan, the G20’s research and policy advice network, and cover 10 task force areas: sustainable development, infrastructure finance, financial architecture, trade and investment, climate change, future of work and education, social cohesion and the future of politics, SME policy andpolicies for aging populations.

The policy proposals to bediscussed by G20 leaders in Osaka, Japan in June are now available to downloadon the Global Solutions Initiative’s G20 Insights platform. 

Dozens of policy proposals generated by international think tanks involved in Think20 (T20) Japan are now available on the G20 Insights platform. 

“It is a privilege for the Global Solutions Initiative to support the T20 process year after year, helping generate recommendations and promote interactions with G20 policymakers, and thereby contribute toward making the T20 an intellectual backbone for the G20,” said Professor Dennis J. Snower, President of the Global Solutions Initiative.

Ahead of the G20 meeting, these proposals will undergo a final review at the T20 Summit in Tokyo later this month. 

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