The final meeting of the AICGS Geoeconomics Strategy Group centered on the concept of “economic security” defined as the ability of a country to pursue national prosperity according to the values and principles it chooses. In an ideal world, publics in the United States, Germany, and other G20 countries would understand that achieving this goal requires a balance of national policy tools and international cooperation. But as the global economy becomes both more diverse in terms of competing economic models (market capitalism, state capitalism, and points in between) and more integrated through the forces of globalization (trade, investment, technology, and immigration), many citizens have become attracted to economic nationalism as a way to preserve familiar patterns of economic life.
The members of the strategy group agreed that liberal, market-oriented economies should continue to assert the importance of the rule of law and high standards globally, and be vigilant about the role of state-owned enterprises in the international economy. There was a concern, however, that the term “economic security” has too often been misused to justify protectionist actions—for example, limits on agricultural imports in the name of “food security.” Not only that, but as one participant emphasized, it would be impossible and indeed counterproductive for politicians to promise economic security if that were interpreted by voters to mean freezing the status quo, which would doom an economy to permanent stagnation.
If the notion of economic security is too historically weighed down to make a useful contribution to a narrative promoting transatlantic economic interests, there remains a need to respond to the public’s anxieties and capture their political interest. A consensus emerged among members of the group that the idea of “economic resilience” would communicate many of the same concerns and policy objectives as economic security but in a more positive and dynamic way.
In the G20 context, resilience should provide enough room for the member countries to craft policies that respond to their individual political and economic conditions, while agreeing to cooperate internationally where domestic responses alone are not sufficient. The U.S. economy would become more resilient to globalization challenges by investing in workforce education and training, rebuilding its infrastructure, and raising its savings rate. A number of European countries would create more resilience by making their labor or service markets more flexible, while China would do so by rationalizing a number of its uncompetitive industries.
The G20 communiqué at the Hamburg summit in July should endorse this domestic policy pluralism, as well as something similar on the international front. It has not gone unnoticed that for the first time in the history of the G20, the March communiqué of the finance ministers meeting in Baden Baden did not include a commitment to “avoid all forms of protectionism,” agreeing instead on “working to strengthen the contribution of trade to our economies.” While it is unclear whether the traditional language can be resurrected, members of the AICGS strategy group suggested that one way forward would be for the G20 to endorse free trade as an objective, while at the same time acknowledging that countries can choose different means to this end. Although ideologically distinct to a greater or lesser degree, the four largest G20 economies—the United States, the European Union, China, and Japan—all proclaim themselves to be in favor of free (if fair) trade and should be able to agree on such an approach.
The G20 summit could also usefully endorse the role of the World Trade Organization, and call for its members to launch a review of its role and functioning at the WTO Ministerial meeting in December in Buenos Aires. Among other questions, the WTO should consider what the concept of “rules-based” trade means more than twenty years after its founding, and how to build a consensus among its members on a (new) common definition.
Finally, the G20 summit communiqué should specifically address the importance of a skilled and adaptable workforce as an essential contribution to creating resilient economies. People notice that the pace of change is accelerating, whether from trade and investment, immigration, climate events, or from technologies like robots and artificial intelligence, and are worried about their future employability. Reasserting national sovereignty offers few if any lasting solutions to these inherently global phenomena. But it remains the case, perhaps unfairly, that the onus is on public and private leadership in the U.S., Germany, and like-minded countries across Europe, Latin America, and Asia to demonstrate that policies inspired by their values and principles can still offer solutions seventy years after the creation of the current liberal economic order. The G20 summit can make clear that while economic openness has not been, and is unlikely to be, at the root of most labor market dislocation, the future of work in both emerging and advanced economies will remain its top-line concern.
Made possible by the support of Commerzbank