IMF members drop pledge to fight protectionism at spring meeting

At their spring meeting in Washington, the steering committee of the International Monetary Fund (IMF) changed its stance on protectionism. It appeared to be a move towards using the language of the US administration.

Washington IWF und Weltbank Treffen Finanzminister mit Schäuble Mnuchin (R) (Reuters/M. Theiler)

Differences over trade policy within the IMF membership, highlighted by US efforts to develop a strategy to slash trade deficits, led the members to drop a pledge to fight protectionism. Instead they turned their attention to geopolitical risks – especially from the presidential elections in France.

@Lagarde with IMFC members during photo opportunity IMF/Worldbank Spring Meetings

US Treasury Secretary Steven Mnuchin said at the meeting during an on-stage interview with  IMF Managing Director Christine Lagarde that Trump “believes in reciprocal trade deals and reciprocal free trade.” He added: “What that means is that if our markets are open there should be a reciprocal nature to other markets which should be open as well.”

Mnuchin called for the IMF to step up its surveillance of members’ foreign exchange rates. During the presidential campaign Donald Trump called China “the single greatest currency manipulator that’s ever been on this planet.”

The language of the IMF steering committee statement on Saturday was similar to that used by the Group of 20 (G20) nations when they met last month in Baden-Baden.

Speaking at the end of the meeting, Lagarde told a news conference:  “There was a clear recognition in the room that we have probably moved from high financial and economic risks to more geopolitical risks.”

Lagarde added that a policy shift from “growth momentum to more sharing and inclusive growth” was needed.

Washington IWF und Weltbank Treffen Finanzminister mit Schäuble und Mnuchin (R) (picture-alliance/AP Photo/J. L. Magana)Lagarde with German Finance Minister Wolfgang Schauble and Mnuchin

Earlier in the week, the IMF discussions had focused on protectionist policies that could restrict trade and hamper global growth. But on Saturday, chair of the  the International Monetary and Financial Committee (IMFC) Agustin Carstens said members would “work together” to reduce global trade and current account imbalances “through appropriate policies.”

French elections

The IMF managing director’s comments came the day before the French elections in which two of the four leading candidates, far-right leader Marine Le Pen and far-left alliance leader Jean-Luc Melenchon have strongly criticized the European Union.

Le Pen has promised a referendum on France’s EU membership and exiting the euro. Melenchon has said he would work to end the independence of the European Central Bank.

Lagarde had previously warned that a Le Pen presidency could lead to political and economic upheaval. “It would certainly entail major disorder,” Lagarde told a television interviewer.

Spring in the air

The IMF meetings had projected an air of optimism, led by Lagarde who opened the discussions on Thursday saying “Spring is in the air and spring is in the economy as well,” as the fund raised its forecast for global growth for the first time in six years.

“The strengthening of the recovery is for real,” former IMF chief economist Olivier Blanchard said.

jm/bw (Reuters, AP)

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IMF predicts global economy accelerating despite risks

A resilient China, rising commodity prices and sturdy financial markets are offering a brighter outlook for the global economy, says the International Monetary Fund, but warns of a rise in protectionist policies.

IWF Wachstumsprognose Maurice Obstfeld (Getty Images/AFP/M. Riley)

In its World Economic Outlook report released on Tuesday, the International Monetary Fund (IMF) hiked its global growth prediction for 2017 by one-tenth of a percentage point – compared with its January outlook – to 3.5 percent.

It was the crisis lender’s first upward revision in two years, seeing the global expansion for 2018 at a pace of 3.6 percent – also slightly more than in January.

This year, the global recovery is being driven mainly by the US and Chinese economies, which are set to grow 2.3 percent and 6.6 percent respectively. Moreover, the 19-country eurozone is predicted to expand 1.7 percent – the same as last year, while Japan’s GDP is forecast to grow 1.2 percent, up from one percent in 2016.

“The global economy seems to be gaining momentum – we could be at a turning point. But even as things look up, the post-World War II system of international economic relations is under severe strain,” IMF chief economist Maurice Obstfeld said in a statement.

Protectionist clouds

The IMF’s semi-annual report warned of “significant downside risks” to the outlook, which had worsened since January. Obstfeld specifically mentioned “the turn towards protectionism, leading to trade warfare.”

Many of the IMF concerns, including rolling back financial regulation, pulling away from the multilateral trading system and restricting immigration, are centerpieces of US President Donald Trump’s “America first” policies. But the IMF also sees them in the French election campaign, as well as in Britain’s planned exit from the European Union.

IMF chief economist Obstfeld noted that “capitulating to those pressures would result in a self-inflicted wound,” that would harm countries by pushing prices higher and eroding household income, prompt retaliation, and worsen the global economy.

Watch video01:16

Is Trump right about the US economy?

Addressing the social gap

In its report, the Washington-based fund said hundreds of millions of people had been lifted out of poverty through economic integration and technological progress, “helping to reduce global income inequality.”

But the benefits of growth and the burden of economic adjustments had been unequally shared, making it necessary for governments to “address these disparities head-on to ensure the stability of an open, collaborative trading system that benefits all.”

The IMF recommends “well-targeted initiatives” to help workers adversely affected by free trade and other economic changes to “find jobs in expanding sectors” as well as “social safety nets to smooth the loss of income,” and improved education and training in the longer term.

“Similarly, curbing immigration flows would hinder opportunities for skill specialization in advanced economies, limiting a positive force for productivity and income growth over the long term,” the report said.

China issues

The IMF report stressed that risks to the outlook “remain tilted to the downside,” meaning that while growth could turn out to be faster than expected particularly if there is a large US government spending program there are more negative scenarios on the horizon.

China’s “dangerous dependence on rapidly expanding credit” was one area of concern, as was weak demand in Europe, and a series of noneconomic factors, including geopolitical risks and corruption, the IMF found.

Nevertheless, the fund increased China’s growth outlook by 0.1 percent to 6.6 percent this year, and by two tenths of a percentage point to 6.2 percent in 2018.

“Global economic activity is picking up speed, but the potential for disappointments remains high, and momentum is unlikely to be sustained in the absence of efforts by policymakers to implement the right set of policies and avoid missteps,” the IMF concluded.

Watch video00:44

China cuts economic growth target

uhe/kd (AFP, AP, Reuters, dpa)

 

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Creativity will be the source of our next industrial revolution, not machines

April 11, 2017

Growth in the first industrial revolution was driven by engineering, the second through electricity and production lines, and the third by technology and information. The modern economies that will undergo a fourth industrial revolution will not be those that worship machines, but those that support human creativity. When we understand how people think and work best, we will be compelled to put our workers’ well-being first in the name of both health and economic productivity.

For centuries, human health has been systematically traded for economic growth. The word labor originated in medieval Europe during a decline in slavery and widespread adoption of money, and symbolizes the monetization of human skill: “productive work, especially physical toil done for wages.” Its modern definition, and how we perceive productivity, came about through the process of industrialization.

The first, second, and third industrial revolutions

In the mid-17th century, the nature of work changed when rural, agrarian societies shifted to become urban and industrial. Economic growth meant going underground for energy and into factories for manufacturing. The detrimental effects to workers’ health in these industries are well documented: In the name of financial gain, miners and factory workers were subject to hazardous conditions that often resulted in illnesses, physical pain, and early death.

The first industrial revolution presented economic opportunities fraught with dangerous labor. The tradeoff of well-being for economic benefit was clear: Employers knowingly ran businesses that paid workers not just for their time, but also for their health.

 Employers knowingly ran businesses that paid workers not just for their time, but also for their health. Over time, machines took over from humans in dictating the pace of production, and working hours soared. Rising demand outpaced supply, meaning that businesses could maximize profits by manufacturing around the clock. An extensive study by the International Labour Organization (ILO) into working hours explains how the concept of “working time” in early industrialization was based on the perception that hours spent outside work were regarded as “lost time.”

Through these developments, the perceived dichotomy of work and life emerged: Work is the time dedicated to economic gain, while life is the time spent on our mental and physical needs. Four hundred years later, our contemporary culture of “living for the weekend” is a reflection of how this form of exchange became an accepted aspect of our existence.

The fourth industrial revolution

Western countries now firmly in throes of the third industrial revolution successfully shifted from manual to skilled labor. Yet the mentality that time spent outside work is “lost” hasn’t changed. The ILO study points out that even a recorded decrease in working hours is shaky because of the institutionalization of overtime and out-of-office work, such as mindlessly replying to emails on your phone.

One example of how businesses and organizations are trying to create a more effective workforce is not actually based in work, but in the office spaces in which it is conducted. The new wave of “fun” workplaces that are now standard in high-tech companies is a continuation of finding solutions to the wrong problem; the aim of such designs is often to encourage longer work hours and company loyalty. Facebook went as far as offering workers $10,000 to live closer to the office.

However, the link between an employee spending more time in the office and being more productive with their time is rather tenuous. Workers might clock more hours and stay longer at a company if the surroundings are comfortable, but the assumption that this makes them better at what they do is unfounded.

Another design-based example is open-plan offices. In the push to lower overheads—and under the false assumption that it would encourage better working practices—private rooms were traded for non-divided workspaces. This resulted in environments that increase stress, particularly due to noise. Stress has become the dominant cost to human health at work. A 2016 report found that stress accounted for 37% of all work-related ill-health cases in the UK and 45% of all working days lost due to ill health.

Studies carried out as early as the 1970s have shown that stress can be beneficial for performing simple or familiar tasks, but detrimental to ones requiring complex, flexible thinking. The prefrontal cortex is an area of the brain associated with executive function, which contributes to decision making, predictions, and many of our highest cognitive processes related to learning and imagination. Increased levels of catecholamine released during stress harms the performance of the prefrontal cortex, including persistent loss of these functions from chronic stress. Naming just one aspect of how working conditions affect us cognitively, there are many more that stem from our environmental and social context.

As robots increasingly take on manual labor, we will need to foster what differentiates human from machine (at least for now): creativity. Evidence that psychological and physical well-being is paramount to creative thinking will turn the historic exchange of human health for economic growth on its head. As Klaus Schwab, founder of the World Economic Forum writes, “I am convinced of one thing—that in the future, talent, more than capital, will represent the critical factor of production.”

You can follow Itai on Twitter. Learn how to write for Quartz Ideas. We welcome your comments at ideas@qz.com.

Anti-G20 protesters descend on foreign ministers meeting in Bonn

Peaceful protests have been held in Bonn, Germany, close to the venue of the G20 foreign ministers. Demonstrators called for “international solidarity” in the face of warfare and growing right-wing sentiments.

Watch video01:02

Anti-G20 protests in Germany

As G20 foreign ministers met behind closed doors at the World Conference Center on Thursday evening, a small group of protesters from various movements and NGOs marched through nearby streets in the western German city of Bonn, chanting slogans such as “Break the power of the banks and companies!” and “Let’s hear it for international solidarity!”

Among them were members from the Network of the German Peace Movement, German leftist party Die Linke, the German Communist Party (DKP) and the Bonn Kurdistan Solidarity Committee.

“We’re here because we don’t believe that the G20 represents us,” Nils Jansen from the Bonn Youth Movement told DW.

“They represent big banks and companies … war politics and militaristic politics. And we refuse to be silent any longer.”

A main concern among protesters was the ongoing conflict in the Middle East and the involvement of G20 states, particularly in the Syria conflict.

Bonn Youth Movement member Nils Jansen Bonn Youth Movement member Nils Jansen was among those leading the march

“On the one hand you have some G20 member supporting different parties and Islamist, so-called rebels, who are in fact militants like al Qaeda and al Nusra. Then on the other, you have Russia, China and Iran, who are supporting [President Baschar] al Assad’s regime,” Jansen said.

“It’s a war of different superpowers – Russia, USA, Germany and NATO – which has been brought upon the Syrian people. So we demand that the G20 get their hands off of Syria.”

‘Murderous’ G20 policy

In remembrance of the civilians killed as a result of the involvement of some G20 states in Middle Eastern conflicts, some protesters fell to the ground to represent corpses during a minute’s silence.

“Warfare over resources and raw materials is the reason why more and more people are becoming refugees,” one protester told DW, while others shouted that G20 policy was “murderous.”

Deutschland G 20 Außenministertreffen in Bonn ProtestHalf-way through the march, demonstrators fell to the ground to represent deaths in the Middle East conflicts caused by G20 states’ involvement

Following the debut of US Secretary of State Rex Tillerson at the G20 meeting, protest leaders over a sound system also warned against the recent increase in right-wing populism and the “Donald Trumps of Europe.”

“We have to stop a second Trump victory in Germany, and stop the AfD from succeeding,” one protester shouted from the designated vehicle. Germans are set to head to the polls on September 24, which could see the right-wing AfD (Alternative for Germany) enter the Bundestag – Germany’s lower house of parliament – for the first time.

Watch video00:48

G20 foreign ministers meet in Germany

‘Fortress Europe’

Addressing closures of EU borders to refugees, another protester, Jaob, said it was “really hypocritical if people complain about Trump building a wall, while here in Germany we are building ‘Fortress Europe.'”

“Thousands of refugees are being left to die in the Mediterranean,” he said as fellow demonstrators chanted: “Brick by brick, wall by wall. Make the fortress Europe fall!”

Deutschland G 20 Außenministertreffen in Bonn ProtestProtester Jaob told DW that he was “fed up with the system”

Anti-Trump sentiment still strong

Americans were also among the demonstrators at Thursday’s protest, saying it was yet another chance to make their voices heard against the Trump presidency.

A month into Trump’s four-year term in the White House, Leigh Redemer, a 31-year-old teacher from Ohio said she has so far been “completely disappointed, appalled by Trump and his administration.”

“I think it’s a really wonderful opportunity to express my disappointment to global leaders or at least to make a public protest of one particular aspect of the Trump admin, which is its inappropriate links to Russia.”

Deutschland G 20 Außenministertreffen in Bonn ProtestOhio-born Leigh Redemer finds common ground with a fellow anti-Trump supporter

Following his first face-to-face with Russian counterpart Sergey Lavrov, Tillerson told reporters that the United States stands ready to cooperate with Russia when it is in American interests, echoing US President Donald Trump’s “America First” rhetoric.

As the G20 ministers’ meeting continues on Friday, officials of leading industrialized and emerging economies are expected to discuss sustainable development goals, support for Africa, and how best to identify and prevent future crises. The meeting in Bonn is a lead-up to the group’s July summit of heads of state and government in Hamburg.

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Trump’s Trade War May Have Already Begun

Photo

A crane operates next to shipping containers in Chongqing, China. As the Trump administration threatens to impose punitive tariffs on imported goods, American allies are looking to China, which has capitalized on a leadership vacuum in world affairs by offering itself as a champion for global trade and engagement.CreditQilai Shen/Bloomberg

LONDON — America’s traditional allies are on the lookout for new friends.

They have heard the mantra “America First” from the new president, divining a Trump doctrine: global cooperation last. Europeans have taken note of Mr. Trump’s denigration of the European Union and his apparent esteem for the Russian president, Vladimir V. Putin. In Asia and Latin America, leaders have absorbed the deepening possibility that Mr. Trump will deliver on threats to impose punitive tariffs on Mexican and Chinese imports, provoking a trade war that will damage economic growth and eliminate jobs around the world.

Some allies are shifting focus to other potential partners for new sources of trade and investment, relationships that could influence political, diplomatic and military ties. Many are looking to China, which has adroitly capitalized on a leadership vacuum in world affairs by offering itself — ironies notwithstanding — as a champion for global engagement.

“We’ve always said that America is our best friend,” Jeroen Dijsselbloem, president of the Eurogroup — comprising finance ministers from countries sharing the euro currency — said in an interview with The New York Times on the sidelines of the World Economic Forum in Davos, Switzerland, this month. “If that’s no longer the case, if that’s what we need to understand from Donald Trump, then of course Europe will look for new friends.”

“China is a very strong candidate for that,” he added. “The Chinese involvement in Europe in terms of investment is already very high and expanding. If you push away your friends, you mustn’t be surprised if the friends start looking for new friends.”

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On Wednesday, Chancellor Angela Merkel of Germany spoke by telephone with Premier Li Keqiang of China. “The two spoke in favor of free trade and a stable world trade order,” a German government spokesman later said in a written statement.

The swift reassessment of trade relations — a realm in which Mr. Trump is directly threatening the order that has prevailed since the end of World War II — only amplifies the potential for a shake-up of the broader geopolitical framework.

Mr. Trump has already criticized NATO as obsolete while demanding that member states pay more, calling into question the alliance that has maintained security across much of Europe for more than six decades. He has provoked fears of a clash with China beyond issues of commerce by taking a congratulatory call from the president of Taiwan, the self-governing island that Beijing claims as part of its territory. In shutting American borders to people from predominantly Muslim countries, Mr. Trump risks inflaming tensions with Middle Eastern nations while widening a void with democratic allies over basic values.

Through the fractious campaign, weary sophisticates dismissed the extreme talk from the Trump camp as political bluster. Even if he won, he would never follow through on his threats, particularly in trade where his business sensibilities would prevail.

But that conventional wisdom looks to be crumbling. First, Mr. Trump delivered on a promise to withdraw from the Trans-Pacific Partnership, a trade agreement forged by the Obama administration in part as a counter to China’s growing influence.

Then, on Thursday, his administration appeared to embrace a Republican proposal to impose a 20 percent tax on all imported goods while asserting the proceeds would pay for a wall along the Mexican border. Word of the tax emerged as President Enrique Peña Nieto of Mexico canceled a visit to Washington to protest the promised wall — resonating as the potential first salvo in a trade war.

“I’m incredibly concerned that the Trump people mean what they say,” said Chad P. Bown, a trade expert at the Peterson Institute for International Economics. “One would hope that they are using this as a negotiating tactic. But even if you are, that’s an extraordinarily dangerous game to play, because, right now, the communication to the world is not flowing clearly.”

The communication on Thursday came through Mr. Trump’s press secretary, Sean Spicer, who during the administration of George W. Bush, promoted the job-creating magic of free trade as a spokesman for the United States Trade Representative.

Pressed to explain how Mr. Trump would force Mexico to pay for the wall, Mr. Spicer said an import tax would do the trick. He soon clarified the tax was merely one option on a crowded buffet table.

At a news conference on Friday, Mr. Trump reported having had “a very good call” with the Mexican president. But he did not sound conciliatory. Mexico “has outnegotiated us and beat us to a pulp through our past leaders,” he said. “I’m not going to let that happen.”

Within the business world, the prospect of substantial tariffs seems so damaging that many assume it will never happen.

Photo

Chancellor Angela Merkel of Germany with President Xi Jinping of China and his wife, Peng Liyuan, in September. Ms. Merkel on Wednesday spoke with Premier Li Keqiang of China “in favor of free trade and a stable world trade order,” a German government spokesman said. CreditStephen Crowley/The New York Times

Three decades ago, Alan Russell, a former commercial airline pilot, set up the Tecma Group of Companies, which runs factory operations for multinationals in Mexico. Today, the company employs some 7,000 Mexican laborers, most of them in factories clustered around Ciudad Juárez. They make components for the automotive, electronics, aerospace and medical device industries.

Mr. Trump’s words have provoked fear among the members of Mr. Russell’s work force. “They hear the administration is going to shut down Nafta and deport everyone, and it scares them,” he said, referring to the North American Free Trade Agreement.

But in the end, he said, business will carry on.

“In 31 years, I’ve been through rapid inflation, devaluations, three major recessions, the violence period and multiple presidential administrations, and every year trade has increased,” he said. “We’ve been through worse. Trade is like life itself. It will figure a way.”

Most experts have similarly assumed the responsibilities of governance would temper Mr. Trump’s trade posture. Given that nearly one-third of all American trade is conducted with China and Mexico, a rupture risks severe economic damage.

The three countries are intertwined in the global supply chain. China makes components that go into auto parts manufactured in the United States. Those parts are delivered to factories in Mexico that produce finished vehicles sold to Americans. Calling such vehicles Mexican imports misses that much of the value is produced in the United States, employing American labor.

“The idea of trade wars these days, what politicians have in mind is really a 19th-century or early 20th-century conception of trade,” said Gianmarco I.P. Ottaviano, a trade economist at the London School of Economics. “You don’t even know who you’re going to hurt with these kind of things. You’re probably going to destroy American jobs in the end.”

Mr. Trump owes his office in no small measure to factory workers who have come to view global trade as a mortal threat to their livelihoods. But their sentiments are grounded not in ideology, but in a desire for jobs at decent wages. If Mr. Trump impedes imports, he could put some of these voters out of work.

Beyond the economic effects, Mr. Trump’s refashioning of trade has already altered global alignments.

In emphasizing “America First,” Mr. Trump has generated a widespread sense that the country is surrendering its global leadership position. Britain’s abandonment of the European Union has enhanced the view that a period of international integration has devolved to a new era in which nationalist concerns are paramount.

On Friday, as Mr. Trump hosted British Prime Minister Theresa May, he only increased the sense that he disdains Europe.

“Brexit’s going to be a wonderful thing for your country,” he told Ms. May at a news conference, before recounting his frustrations with the union’s bureaucracy. “Getting the approvals from Europe was very, very tough.”

With both countries pursuing nationalist aspirations and multilateral institutions seemingly endangered, the world suddenly seems short of responsible supervision.

China is working to assume the mantle. President Xi Jinping of China last week used an address in Davos, to submit his nation’s bid as a reliable champion of expanded trade.

China does not have free elections. China jails labor organizers, while lavishing credit on state-owned enterprises. All of this makes Mr. Xi an ironic choice as an icon for free trade. Yet Mr. Xi’s speech was so successful that it won the embrace of business people and world leaders alike.

At a lunch in Davos two days after Mr. Xi’s address, a Berlin-based private equity fund manager, André Loesekrug-Pietri, stood in a dining room full of more than 100 people and predicted the dawning of a new era.

“We heard a Chinese president becoming the leader of the free world,” he said.

Continue reading the main story

What now for global trade? 8 things we learned from Davos 2017

Open trade was a recurring theme at Davos 2017
Written by
Kimberley BotwrightPolicy Analyst, Digital Trade, International Trade & Investment, World Economic Forum
Published
Friday 27 January 2017
Share
Key moments from Davos 2017
  • Goodbye from DavosJanuary 20, 2017 17:36
  • Responsive and Responsible LeadershipJanuary 20, 2017 16:12
  • Henry Kissinger on the world in 2017January 20, 2017 15:35
  • The Global Security OutlookJanuary 20, 2017 14:19
  • Policy Options for a New EuropeJanuary 20, 2017 11:53
  • Global Economic OutlookJanuary 20, 2017 10:03
  • Britain and the EU: The Way ForwardJanuary 20, 2017 08:19

It’s been an eventful 12 months for global trade. The UK voted for Brexit, the US elected Donald Trump, and anti-globalization sentiment surged across many regions.

All the while, trade flows remained sluggish, and are expected to post their worst annual innings since the financial crisis. Against this backdrop, trade and investment issues rocketed up the 2017 Davos agenda. Here’s a quick recap of some of the week’s insights:

1. A new leader in town

In a move that captured headlines around the world, Chinese President Xi Jinping delivered a resounding defence of globalization and open trade.

“We must redouble efforts to develop global connectivity to enable all countries to achieve interconnected growth and share prosperity,” he said, while adding that trade and investment rules needed to catch up to today’s realities.

While the premier’s speech received a warm welcome in sub-zero Davos, corridors were abuzz with talk of its possible implications, ranging from China’s contribution to future global prosperity to the country’s influence on regional integration initiatives.

2. Trade wars beware

“I think we should try not to talk ourselves into a trade war,” said Roberto Azevêdo, Director-General of the World Trade Organization (WTO) as he discussed the future of open trade. It was a plea echoed by a number of others throughout the week.

“It is difficult to overstate the extent to which this return to pure power politics in international economic relations would represent a break from the past 70 years of rule-based integration,” over dozen ministers gathered in Davos concluded, borrowing from Hollywood to cast the good, the bad and the ugly scenarios for the future of world trade.

In a bid to settle nerves, Trump ‘s envoy to Davos Anthony Scaramucci vowed that the new US leader wanted trade, not war, through a “strong bilateral relationship” based on “more symmetry” in trade deals.

3. Fixing globalization

Globalization, and by implication the trade and investment frameworks that help to underpin it, needs to be improved. This was the message carried by numerous speakers at Davos last week, as they debated whether and how to better communicate the benefits of globalization – and, more critically, how to make it work effectively for all.

“One of the things we are going to have to come to terms with here is that there have been significant losses [from globalization] and it is not clear to me that we are going to be able to remedy them under the current infrastructure,” said economist Dambisa Moyo in a panel on Governing Globalization.

Also in Davos, the World Economic Forum released the Inclusive Growth and Development Report 2017. It offers a new policy framework and accompanying indices to highlight specific areas governments and business leaders need to address – including around international trade and investment cooperation ­– to ensure wealth gains are more evenly distributed, opportunities boosted and global growth put back on track.

4. A new year, a new deal?

As the US cans its commitment to the Trans-Pacific Partnership (TPP), a new deal stepped into the spotlight in Davos. Can the planned Regional Comprehensive Economic Partnership (RCEP) – which currently includes ASEAN nations and their trade partners – deliver the frameworks needed for future inclusive growth in the region?

ASEAN economic integration has already delivered significant benefits for small and medium-size enterprises, as well as encouraging a fintech revolution, according to Anthony F. Fernandes, Group Chief Executive Officer, AirAsia Bhd.

Elsewhere in Davos, questions around the renegotiation of the North American Free Trade Agreement (NAFTA) also loomed large.

Here is Kishore Mahbubani of Singapore University, saying that Trump is shooting America in the foot by abandoning the TPP.

5. Whither the WTO?

The week closed with the WTO Trade Facilitation Agreement (TFA) on the verge of entry into force, with just two countries now needed to ratify in order to secure the required support. The TFA, once in play, will create binding obligations on countries to undertake customs reforms that should help to reduce trade costs and speed goods through borders. Davos saw ministers and CEOs roll up their sleeves on TFA implementation through the Global Alliance for Trade Facilitation.

Looking ahead, WTO members are preparing for a ministerial conference scheduled for December 2017 in Buenos Aires, Argentina, with a list of talking points that includes domestic agriculture subsidies, food security, harmful fisheries subsidies, and services trade and investment facilitation, as well as issues of interest for least developed countries, e-commerce and small businesses.

Here’s Roberto Azevêdo, WTO director general, on trade under Trump.

6. Goodbye EU, hello world

After months of speculation, UK Prime Minister Theresa May has unveiled – first in London and then in Davos – a plan to extricate Britain from the EU single market, negotiate a free trade deal with the bloc, and build a global Britain.

The UK may have its work cut out, given the time it takes to hammer out trade deals, and may have to wait its turn among the 17 other countries currently negotiating with the EU, according to some experts. London will also have to rectify its arrangements at the WTO and with the 40-plus existing EU trade partners.

It will also have to renegotiate its relationship with Donald Trump in the US. And if anyone thought Brexit has made the future look uncertain, “I think the change of administration in the US has introduced an even bigger piece of uncertainty,” said Philip Hammond, Chancellor of the Exchequer of the UK.

7. Invisible borders

In one day, more data comes off a GE Power gas turbine than a person could put on social media in a year, according to GE President and Chief Executive Officer Steve Bolze, who added that software had dramatically changed the way the company does business.

“The industrial internet will be two times as big as the digital internet,” says Bolze in this session on the future of the digital economy.

The question is how best to manage cross-border data flows – a core feature of the Fourth Industrial Revolution – at the same time as building consumer trust, protecting privacy and tackling cybercrime.

“Focus on knowledge crossing borders as the driver of new globalization, and goods crossing of the old. There’s still some old globalization, but it’s a different mindset, and it has many different implications for policy,” said Richard Baldwin of the Graduate Institute of International and Development Studies in this Facebook Live interview.

Inclusivity is key. There need to be better global rules for e-commerce and small and medium-size enterprises, and these should be shaped by businesses and endorsed by governments, said Chinese businessman Jack Ma in a one-on-one interview.

8. Investment reform

When it came to the global cross-border investment regime, there was a wind of change (or at least reform) blowing through Davos, with discussion afoot between ministers and other stakeholders as to a new investment court proposed by the European Union and Canadian government. It would be a permanent international, multilateral body that would adjudicate disputes under future and existing investment treaties.

Written by

Kimberley Botwright, Policy Analyst, Digital Trade, International Trade & Investment, World Economic Forum

The views expressed in this article are those of the author alone and not the World Economic Forum.

10 achievements from Davos 2017

  • Global Agenda

Impressions during the Session "CEPI: A Global Initiative to Fight Epidemics" at the World Economic Forum in Davos, January 19, 2017. Copyright by World Economic /  Valeriano Di Domenico

The Coalition for Epidemic Preparedness Innovations (CEPI) was officially launched at the Annual Meeting
Image: World Economic Forum / Valeriano Di Domenico.
Written by
Oliver CannHead of Media Content, World Economic Forum Geneva
Published
Friday 20 January 2017
Share
Key moments from Davos 2017
  • Goodbye from DavosJanuary 20, 2017 17:36
  • Responsive and Responsible LeadershipJanuary 20, 2017 16:12
  • Henry Kissinger on the world in 2017January 20, 2017 15:35
  • The Global Security OutlookJanuary 20, 2017 14:19
  • Policy Options for a New EuropeJanuary 20, 2017 11:53
  • Global Economic OutlookJanuary 20, 2017 10:03
  • Britain and the EU: The Way ForwardJanuary 20, 2017 08:19

Our Annual Meeting is often described as a talking shop, but it is also a working meeting for dozens of different communities from all regions of the world, all ages and all sections of society. When Davos ends, our work continues on 50 year-round Forum projects aimed at supporting the United Nations Sustainable Development Goals.

Here are a few of the things that happened at our Annual Meeting in Davos this year:

1) A new fund backed by the Norwegian government has been launched that will raise $400 million and protect 5 million hectares in countries working to reduce deforestation and forest and peat degradation. The fund could lead to $1.6 billion in deforestation-free agriculture investments, also leading to job creation and economic growth.

2) The Coalition for Epidemic Preparedness Innovations (CEPI) was officially launched at the Annual Meeting with the aim of quickly reacting to epidemics by creating vaccines that could be released quickly once an outbreak occurs.

3) Signatories to the Forum’s New Vision for Arab Employment project said they have now helped re-skill 250,000 people since 2013, and are now targeting 1 million current and future workers.

4) The Forum teamed with the University of California Santa Barbara’s Marine Science Institute to build a coalition to protect the world’s oceans and marine resources; a global commons estimated by the World Wildlife Fund to be worth $2.5 trillion.

5) The Forum mobilized a public-private coalition to build a responsible, inclusive and sustainable battery supply chain. The lithium-ion battery market is expected to be worth $70 billion by 2024, yet production is linked to issues such as child labour, health and safety hazards for workers, environmental impacts and life-cycle sustainability.

6) 40 governments and businesses, including some of world’s largest consumer goods, retailers and recycling firms, endorsed a plan to increase global reuse and recycling rates for plastic packaging from its current 14% to 70%.

7) Social Entrepreneur Gary White of water.org, co-founded with Matt Damon, announced a major new $1.2 million partnership with Stella Artois to help provide clean water to 3.5 million people.

8) GoodWeave International, another social enterprise, announced a new international programme, Sourcing Freedom, to stop modern slavery in supply chains. There are estimated to be 21 million people in forced and bonded labour around the globe. The programme is backed by a number of global businesses from across a range of industries.

9) Some of the world’s largest financial service providers, global IT and telecom companies and the international humanitarian community agreed on six principles to better enable digital cash payments in crisis-affected populations. Digital cash has a proven track record of fostering entrepreneurialism and boosting local economies.

10) Last but not least, 100 leading businesses signed the Compact for Responsive and Responsible Leadership. The Compact was developed with the Forum’s International Business Council which will now develop a framework which will allow the measurement of a long-term approach.

Written by

Oliver Cann, Head of Media Content, World Economic Forum Geneva

The views expressed in this article are those of the author alone and not the World Economic Forum.

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