G20: For International Cooperation, Against Countries Going It Alone

Jürgen Heraeus © Christian Kruppa

We live in an era in which countries are increasingly going it alone. For this reason, the G20 is all the more required as a central steering body for issues related to the global economy – a role in which it is supported by the B20 as the representative of the G20 business community. In the following interview, B20 President Jürgen Heraeus explains how this body contributes through its expertise to answering global challenges.

What is the significance of the G20 – the group of 20 leading industrialized and emerging countries – for companies worldwide?

The G20 is a central steering body for issues related to the global economy. It lays down the strategic principles for the regulatory environment in which companies operate worldwide. We live in an era in which countries are once again increasingly seeking refuge within their own borders. By contrast, the G20 stands for international cooperation, interconnectedness, understanding and exchange – values that have long been promoted by our companies and our domestic economy as a whole.

Moreover, the G20 has become indispensable in crisis response – even more in times of increasing uncertainty. Uncertainty paralyses innovation and the willingness to take risks. The G20 must improve the global framework conditions. Fairer competition, growth and job creation can be promoted only if we work together. The same holds true for the implementation of the Paris climate agreement but also for realizing the gains and tackling the challenges of the digital revolution.

Is the G20 not simply a talking shop?

While the G20 has no secretariat of its own and its agreements are not legally binding, the G20 nonetheless plays an important role in global governance. It is an important forum to set the global governance agenda. And it plays an important role in building trust and understanding between the G20 decision-makers – a role which will gain in importance in 2017 with new leaders in many G20 countries. There are several examples for the influence of the G20. Without doubt, the G20 played an important role in the conclusion of the Trade Facilitation Agreement of the World Trade Organization (WTO) and its implementation.

On the other hand, according to a study, since 2008 the G20 member states have implemented some 71 percent of all decisions adopted at summits. And the EU and Germany have implemented no less than 83 per cent of such agreements. Particularly disappointing is the implementation deficit regarding the protectionist standstill. Despite the agreement, the G20 countries have implemented new protectionist measures each year, while few measures have been terminated.

In many countries, there is growing scepticism about free trade and globalization. Will it become more difficult to advance the multilateral trade agenda?

Yes, many countries are becoming increasingly inward-looking. Even though it is clear that globalization creates prosperity, many societies are increasingly questioning the value of the international division of labor. That is evident from the Alternative for Germany (AfD) here in Germany as well as from the Front National in France and Donald Trump in the United States. There is a risk of domino effects. The increase in protectionist measures could significantly endanger our prosperity.

At the same time, this crisis of confidence could be an opportunity for the G20 to take a more determined approach towards globalization – and to promote a form of globalization in which new markets continue to be opened up but in which those people who are negatively impacted by structural change are better provided for through further training and social security. People must be able to see that they benefit from globalization. Without the trust of society, politicians will be unable to fashion a successful form of globalization, despite the G20.

What contribution can Business 20 (B20) – the official G20 business dialogue – make?

The B20 represents G20 industry as a whole. It brings together hundreds of representatives of business associations and companies from the G20 member countries. The first main task is to agree on joint positions. These negotiations bring us closer together and create mutual understanding and trust. In a globalized economy, this is of huge value.

Once the B20 joint positions have been agreed, the individual representatives of industry can lobby their respective governments to adopt the positions of the G20 business community. In an ideal scenario, this can pave the way for compromises at the G20 level.

Jürgen Heraeus is President of the B20 and Chairman of the Supervisory Board of Heraeus Holding GmbH. Founded in 1851 and headquartered in Hanau, the technology group is a world-leading family-run company. Heraeus is also Chairman of UNICEF Germany.