Chambers Investing in Multilateralism: Local Actors for Global Solutions
We are living in a turbulent world. There’s a cold wind blowing. And it’s not just because of the minus temperatures Geneva will be getting this weekend! The world is under stress.
Tonight, I want to talk to you about four “megatrends” behind this turbulence; in the environment, in technology, in the social sphere and in geopolitics. I hope to show you that a recommitment to multilateralism is the best response to these trends – and that in Switzerland you are ideally placed to lead on this. Finally, I will develop ideas on how Chambers of Commerce, as guardians of local interests, can be vital contributors to global solutions.
People are taking to the streets. The climate is suffering. The economy is teetering on the brink of recession.
Extreme weather events threaten lives and livelihoods. If anger erupts in our societies, much of our political system is ill equipped to address it. If recession hits, it is clear that financial systems will have less room to manoeuvre than they did in 2008.
The signs are chilling:
• Foreign direct investment feel by 13 per cent last year, to the lowest level since the 2008-2009 financial crisis and this year is looking even more troubling with a 20% decrease in investment in the first 6 months of the year compared to the last half of 2018.
• Chinese exports to the US were down 25% in the first half of 2019 while US exports to China dropped of 19% for the same period, and US-China trade tensions are forecast to hit global GDP by nearly a whole percentage point
• Growth in merchandise trade has been downgraded for 2020 to 2.7%; global economic growth is projected to pick up just 0.3%.
• Business and investor confidence is low
• And closer to home, the WTO- the global body of trade rule making risks paralysis in one of its most important functions - its dispute settlement.
How can we make sense of this blizzard? We can look on it as the result of not responding in smart or coordinated way to these four “revolutions” shaking the world.
First, an ecological revolution – yesterday, the World Meteorological Organization said the concentration of climate-heating greenhouse gases has hit a record high. It means the actions we have taken so far is not enough to protect us. We need a new Paris Agreement with increased ambition to avoid climate catastrophe. The clear evidence of climate crisis, extreme weather and threats to biodiversity demands this of us all. This is where the trade and environment communities need to work together, not just side by side, not one above the other but together, to craft a multilateral trading system that better support environmental sustainability.
Second, a digital revolution is transforming the way we produce, consume, trade and work. Automation and 3D printing is transforming manufacturing, labour distribution and global value chains. Artificial intelligence, blockchain and big data are transforming economies. Social media is transforming politics, journalism and entertainment. E-commerce is transforming shopping, dressing and eating. Digitization in many societies is the new normal. But in other societies- especially at the base of the pyramid- it remains a pipe dream. This digital revolution needs rules of the game and we know Geneva is an important part of this.
Third, a social revolution – trust in institutions is falling. Populism is rising. Grievances – economic, political, ecological – can no longer stay contained. Protests are gathering steam – from Hong Kong to Beirut, Santiago to La Paz. Everywhere we turn, we see signs of the social contract weakening, inequalities are sucking oxygen out of our democracies, leading to division and distrust. Populism in itself is not a bad thing when it is about people delivering for the people – but not when it pretends to do so by repeating slogans, mostly blaming others for ones deficiencies and pretending that closing borders and retreating behind national sovereignty will solve the complex challenges facing our societies.
And, fourth, there’s a geopolitical revolution. The current phase of globalization has matured: there’s a fight for supremacy in the next phase centred around technology, talk of a Great Divide between the economic, cultural and technological superpowers of the US and China.
The cold face of these revolutions is a crisis of multilateralism. The nation-states are faltering at offering solutions both at the local and by definition, therefore, also at the global level.
With economic prospects diminished, business is left in a maelstrom of uncertainty, in particular the small and medium-sized enterprises making up 99% of the world’s companies. As you know very well, the very profusion of SMEs and their limited capacity to absorb global shocks leaves them the most exposed to such icy storms.
Where does Switzerland fit? With excellent relationships with the US as well as with China, Switzerland has benefited from globalization. However, at times, today, medium sized economies fell they are being asked to make choices. Yet the choice is not the false one between the US and China – it lies between order and chaos. Switzerland, like so many mid-sized, open economies, cannot thrive in chaos. It needs investment in order which is what multilateralism offers.
What does this mean? Essentially, this means investing in global solutions anchored locally. This is where Geneva has a big role to play at the heart of the modes of governance needed in the 21st century. By knitting together local actions, we can make a blanket against global storms.
For example, International Geneva has become an indispensable place of dialogue for regulating the digital economy; internet protocols; digital currencies or e-commerce negotiations at the WTO are specific examples.
And, as a global financial hub and leader in impact investment, Geneva is in the vanguard of sustainable financing and resource mobilization for the Sustainable Development Goals. The SDGs provide a framework through which to tackle the ecological and social revolutions that I was talking about earlier. I saw this for myself last month at the Building Bridges Summit, which laid the ground for a synthesis of Geneva’s many strengths toward a common global standard, towards “profit with a purpose”.
Geneva is indeed a laboratory where new forms of multilateral responses to global challenges are being developed – some sort of “glocal governance” – yes, led from the top by governments and state actors in the United Nations and WTO, but also from the bottom-up by civil society and NGOs; academia in the form of the University of Geneva, the Graduate Institute, EPFL and EPFZ; incubators, social enterprises and impact hubs; and last, but by no means least, the private sector and Chambers of Commerce.
Your global body, the ICC, recently added to the debate with its recent call for reform of the multilateral rules-based trading system, adding its voice on WTO reform and calling for one that works “for people and planet.”
The role of the Chambers is and always been to be “Merchants for Peace”. I applaud you for adding “people and planet” to this mandate. This is what chambers are about, enacted in three ways:
Raising the voice of SMEs, youth start-ups, women entrepreneurs and small business actors to create a strong voice for the private sector in influencing and accelerating policy changes to keep pace with global issues.
Connecting SMEs to new markets and opportunities – locally as much as internationally, using their international network to help businesses succeed globally.
Animating the business ecosystem by being the “chef d’orchestre” in a national ecosystem of business support, to help entrepreneurs and SMEs thrive.
The International Trade Centre and Chambers can work together to achieve these aims – in a number of proactive ways. For example, ITC has partnered with the CCIG at the last World Chamber Congress in Rio de Janeiro to facilitate a dialogue with Chambers on benchmarking and impact assessment methodologies. Altogether, ITC works with the CCIG to open up new horizons for Geneva businesses in new or emerging markets in a manner that benefits both our stakeholders.
Today, we are going a step further, it is my great pleasure to announce that ITC and CCIG will be collaborating on an innovative “local to global” solution: a Global Trade Helpdesk to provide market intelligence for companies keen to internationalise. It will integrate trade and business information into one, user-friendly, online tool.
The Global Trade Helpdesk will provide accessible and comprehensive information from trade formalities relevant to exporters to the market access information and business contacts in the destination market, and we are delighted to have CCIG on board. The Global Trade Helpdesk is an example of partnership in action. With UNCTAD, the WTO and other international agencies like ICC and with the strong support of the Swiss Government, we are providing a one stop shop for SMEs to internationalise.
This is a concrete example of a much needed bottom-up approach to governance. By putting into practice the concept of “Local to Global”, partnerships like this are essential in building resilience to the storms facing us all.