B7 Germany Summit: Shaping Globalization Responsibly

On the occasion of the B7 Germany Summit BDI President Siegfried Russwurm says: "Shaping Globalization Responsibly."

"It is my great pleasure to welcome you all for this B7 Summit today. My big thanks go to Deloitte for their generous sponsorship - which made this summit possible.

We as BDI are honored that the German Federal Government has mandated us with the presidency of the B7, of course in close coordination with our colleagues from the BDA, the German Association of Employers, and DIHK, the German Chambers of Industry and Trade.

With the high level of commitment of our business associations to the B7 process, we are sending two important signals.

Firstly, we want to show the high value that we all attach to the rules-based order, which finds itself under massive pressure.

Our business community is strongly affected by disruptions. We only have a perspective for prosperity, security, and sustainability through international cooperation. We want to assume this global responsibility together.

I would therefore like to thank our international partner associations for their intensive cooperation – we are united by the aspiration to shape the world together.

In six individual working groups, the B7 circle has developed concrete policy recommendations for the G7. We will have the chance today to discuss excerpts of these topics in three different panels.

Secondly, we want to show the G7 governments that we, the B7, want to work closely together to make globalization a success for all in the future.

Ladies and Gentlemen,
„Progress for a fairer world” is the motto of the German G7 Presidency. Yes, progress is necessary, on many levels. It also means getting out of crisis mode, becoming more active framers, making the global order resilient to shocks, ensuring financial solidity – learning from mistakes and playing more effectively to our own economic strengths.

The world’s open market economies are navigating stormy waters. Free, rules-based global trade has not necessarily produced rapid convergence of social and political systems. For their part, autocrats are using the global value networks for geopolitical goals – and their self-governance has grown to utilize economic dependencies as political pressure. The international order has reached a tipping point – it is clear that many autocrats have decided to go their own way – and as such, we, the B7 as a community of values, must finally take up the reins of action decisively and self-confidently.

This global systemic competition harbors enormous potential for tension and even military escalation. Putin has dug a deep hole for his country from which it will be difficult to climb out, and the consequences are fatal. Hard-earned prosperity has been carelessly put at risk in too many places across the world, prosperity that was often only made possible through globalization. At the same time, our own political capacity to act is under attack. Liberal democracies must unite against this and become more resilient.

Together, we must vigorously defend our values: human dignity, freedom of expression and self-determination are the essence of our model of life - and they are non-negotiable.

The turning point, the “Zeitenwende” as it was called by the German chancellor, is an historic date for our economies – as a consequence, our sensitivity has increased, and risks are being reassessed.

There is one mistake we must not make: promoting formations of blocs and disintegration of the global economy by dividing it into ideological camps – this is the greatest threat to our prosperity and the successful transformation to climate neutrality.

Worldwide problems such as climate change and pandemics can only be mastered through cooperation across system boundaries. Global value creation secures our prosperity and enables us to agree on common standards.

Separation of the State and Economic Spheres

The continuous crisis mode of the past few years –which began with the financial market crisis in 2008, was intensified in Europe by the sovereign debt crisis and seemed interminable by the once-in-a-century Covid pandemic – has challenged and changed the relationship between state and economy in an extraordinary way in all G7 countries.

The increasing integration of state, economy and civil society presents the governments of the G7 with a dilemma: The gap between the state's claim to control and the actual ability to control it is widening.

As important as coordinated action between the state and the economy is, we need to watch and observe this trend carefully.

This applies in particular to the right path in international competition. Isolation and protectionism are expressions of political nostalgia. Only those who face up to competition can win it. Only those who are ruthlessly aware of their own actual impact can recognize opportunities and risks.

The G7, which today still accounts for about 45 percent of global GDP, compared to the former share of 2/3 in 2006, must offer the world a model of progress and prosperity that is more attractive than the autocratic order. The states beyond G7 make up almost 90% of the world’s population. What is the consequence?

We must pursue responsible, strategically oriented cooperation – and we should not rule out cooperation with autocratic systems. Global competitiveness and the opening of markets remain crucial in order to expand our ability to make an impact to the world - and make global contributions to global challenges.

The geopolitical turning point with the beginning of the war in Ukraine and the experience with the pandemic nurture the idea of deglobalization. However, economic autarky is an illusion.

Likewise, the assumption that trade automatically changes political orders is not realistic.

If we get this right together and convince more partners in the world to trade and collaborate with us, we can achieve prosperity for all partners involved through globalization.

This requires a coordinated political agenda – coordinated within the G7 and with the business community of the B7.

Five points are key:

1. We have learned that concentrating strategically important supply networks in just one country leads to risks.

  • We need more strategic sovereignty and inviolability in strategic fields in order to avoid being exploitable and dependent. For example – it was not so much the purchase of gas from Russia that was a mistake for Central Europe, but rather the lack of alternatives and partnerships – both technologically and geographically.
  • Instead of mere bilateral relations leading to different camps and silos, what is needed is a firm political commitment to international cooperation and globalization. This must be about diversification, rather than decoupling.
  • The problem was and is not globalization, but rather concentrations of risk. Now it is about managing these risks – which means resilience at least with the same weight as efficiency.
  • Our markets must remain fundamentally open and must be able to attract investors worldwide. Again: A decoupling and disintegration into regional economic blocs would be fatal, and we should not bring this about through our actions.

2. Advancing Key Technologies

  • We can only survive in this global competition if we safeguard our technical sovereignty – that is the key to our ability to shape the world.
  • Key technologies such as Artificial Intelligence and semiconductors are fundamental to create the twin transformation that leads to more global competitiveness.
  • Semiconductor technologies in particular depend on globally functioning value adding networks. In multilateral partnerships with common standards, interdependencies lead to more reliability and risk control. The B7 therefore support the G7 countries in establishing international cooperation for raw materials, semiconductors and industrial cloud technology. Crisis resilience and global networking are two sides of the same coin!

3. Strengthen Knowledge Exchange and Innovation

  • We can only achieve this technological leadership if we maximize our innovative strength as open market economies and revive cross-border entrepreneurial creativity and risk-taking.
  • However, we only create knowledge exchange and incentives for innovation if intellectual property is protected – without this, a globally leading vaccine developed in record time would have hardly been possible. TRIPS waivers for certain technologies and patents therefore lead to a dead end.

4. New Forms of Cooperation – Strengthening Plurilateral Fora

  • It goes without saying that we need a global approach to global problems. The fight against climate change is currently taking a back seat, but every year we spend solely on crisis management is a year wasted on our way to drastically reduce the global CO2 emissions. The transatlantic community cannot do it alone, and Europe certainly cannot do it on its own.
  • It is therefore wise that the G7 countries want to form a climate club. We as the B7 want to make our contribution to shaping this new form of plurilateral cooperation. This requires impetus for a level playing field in climate policy among the G7 countries in order to prevent carbon leakage and promote decarbonization.

5. Coordination of International Infrastructure Initiatives – my final point:

  • Connectivity between economic areas is crucial for successful international cooperation, so that the scenario of bloc formation becomes less likely. Joint infrastructure initiatives can make an important contribution here – also, in order to finally present an alternative to China’s Silk Road initiative.
  • Infrastructure offers and projects must be strategically coordinated - and it is time that the first concrete, realizable projects will be initiated. There is a need for political action here, and it is also a matter of credibility to translate headlines such as Global Gateway or Build Back Better World into concrete projects.
  • Determined policy in these areas in close cooperation with business increases our weight in the systemic competition. We are dealing with heavyweights and must significantly step up our own influence. Through technological leaps, the ramp-up of innovation and digital sovereignty, we will be able to responsibly shape globalization.

Conclusion: Globalization for Progress and Justice

Ladies and Gentlemen,
Only through political reliability can the economy play out its innovative strengths, open up new markets and secure prosperity. There is no alternative to the international division of labor as an economic principle of global trade.

The G7 countries are challenged to set a clear framework for the private sector in the new geopolitical era. Dirigiste approaches must be clearly rejected. As liberal democracies, we must rely entirely on our free-market forces and allow entrepreneurial freedom to flourish as a core component of our societies, of our way of life.

We as B7 are fully aware of our responsibility in this task – we wish to contribute our competence in finding solutions so that our system model of a democratic market economy can endure. A swan song to globalization would be self-destructive – we want and we can make sure that globalization remains the way to progress and justice".

The spoken word applies!