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 necessary as a central navigating body for global economic issues – a role in which it is supported by the Business 20 as the representative of the G20 business community. In the following interview, Jürgen Heraeus, former chair of the B20, 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. In 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 been indispensable in response to crises – even moreso 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, but only if we work together. The case is the same for the implementation of the Paris climate agreement, as well as for the realization of the gains and tackling of the challenges tied to 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. It furthermore plays an important role in building trust and understanding among the G20 decision-makers – a function which will only become more important in 2018. There are several concrete examples that delineate the influence of the G20 – such as the undoubtedly crucial part it played in the conclusion of the Trade Facilitation Agreement of the World Trade Organization (WTO) and its implementation.

According to a study by the Toronto Institute, the G20 member states have implemented some 71 percent of all decisions adopted at summits since 2008. The EU and Germany have implemented no less than 83 per cent of the agreements. While this is a good track record in general, implementation is lacking behind in some areas. We find the implementation deficit regarding the protectionist standstill particularly disappointing. Despite the agreement, 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. Although it is quite 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 a domino effect, in which 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 are continually opened up, and in which we better provide for those people who are negatively impacted by structural change, through measures like social security and further training. People need to be able to see that they benefit from globalization. Without societal trust, 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 business as a whole. It brings together hundreds of representatives of business associations and companies from the G20 member countries. The first major task is to reach consensus on joint positions. These negotiations bring us closer together and create mutual understanding and trust. In a globalized economy, this is hugely valuable.

Once the B20 joint positions have been agreed upon, 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 was Chair of the B20 2016-2017 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.