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Interview with B20 Chair Juergen Heraeus on globalization skepticism

Picture of Dr. Jürgen Heraeus, Chairman Supervisory Board

Jürgen Heraeus elucidates the motivations of the B20 Statement on Open Markets and Inclusive Growth

The B20 statement shows that - independent from sectorial or geographical affiliation - there are significant concerns about anti-globalization and protectionism in the global business community. Are these caused by recent political events?

The statement is rather a reaction to an increasingly worrisome development over the past years. Even though in 2008 G20 members committed to halt the introduction of new trade barriers and roll back existing ones, the number of G20 members’ protectionist measures has increased continuously ever since. From October 2015 to May 2016 the highest monthly average of newly imposed trade barriers was registered since the monitoring started in 2009. These mercantilist policies have a significant net negative effect on growth and – what is not enough mentioned in the public discourse – welfare. Ultimately, the consumer is the major benefactor of openness and productivity gains that lead to lower costs and higher choice of quality products. Furthermore, we noticed a significant rise in anti-trade rhetoric – and I must say not always well-founded rhetoric. This had an adverse on the conclusion of current trade negotiations. Certainly, also the scapegoating of globalization and open markets in the political discourse made us feel the need for this statement. I want to emphasize, however, that we do not only observe this in one country or region but across the globe.


What needs to and can be done to address the growing anti-globalization sentiment?

First of all we need greater transparency about the real effects of trade and investment. Overall, they have tremendously positive effects on jobs, welfare, and growth. But we must not ignore the disadvantages they have either. To convince the larger public once more of the benefits of an interconnected world and open markets we cannot limit ourselves to saying “people who are anti-trade are wrong”. We also need to strengthen the rules which are the base of global trade and investment to ensure that everyone can benefit from the opportunities of openness and to guarantee that global competition is fair. Therefore, it is imperative that we conclude ambitious agreements on trade and investment at the multilateral and the regional level. The opposition against TTIP, CETA, and TiSA in Europe – or TPP in the US – is especially deplorable because these agreements could contribute to addressing concerns and problems linked to trade: they would integrate rules in the global trading system that foster transparency, sustainability, and accountability, and would, therefore, represent a significant upgrade to the status quo.

Third, we need to strengthen our efforts to improve adjustment assistance to those individuals that might be on the losing side of greater competition and structural production shifts. There has to be a greater focus on life-long learning as well as vocational training and education that allow everyone to adopt relevant skills – and if need be – reskilling. Social safety nets are needed for temporal adjustment. In many G20 countries, a lot remains to be done in this regard.


What is the role of business in addressing scepticism about gains of globalization?

Of course the business community is a fundamental actor in this regard. It is also our role to communicate more tangibly about the effects of trade and investment. Businesses need to do more for apprenticeships, as well as in-service training and development of their employees. They cannot only rely on public education systems for the provision of relevant skills to the workforce. Just as governments have to step up their efforts, we also have the responsibility to make globalization work for all.

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