Accelerating Economic Recovery
2020 will be marked by COVID-19 and recession, but will be remembered in history for how we act together to accelerate recovery and shape our future.
Recovery from Covid-19 presents government trade & investment policymakers with unprecedented challenges in three areas:
- Avoiding a depression.
- Energizing trade & commerce
- Unlocking the potential of cross-border digital trade for new economic growth.
The way we address these issues must serve to accelerate recovery. New ways of working and greater global collaboration are vital to advance multilateralism, strengthen global value chains, reduce poverty and increase shared prosperity.
We are impatient to re-globalise in new ways.
Win-Win, Win-Lose or Lose-Lose?
One of the greatest questions today is how to manage multilateral cooperation in the future. Over the past several decades, this has produced tremendous gains in overall prosperity, well-being, and poverty reduction.
Read more: Putting Paid to Extreme Poverty
Is the next phase to be managed collectively for win-win outcomes, or in rivalry, and sub-optimal outcomes for all but a few? Multilateral initiatives on facilitating trade & investment demonstrate a willingness to work collectively on these common challenges. It is to be encouraged.
Healthy Global Value Chains
Our first thoughts are with our customers and all who are suffering in the pandemic. As health measures are taken globally, action is also required to prepare the recovery, to maintain the health of the business environment, trade & investment conditions, and global value chains. These must be in a robust condition to channel the human energy from trade & commerce that will soon resurge as the health crisis eases
G20 & G7 Support for Global Value Chains
Whilst policy responses to COVID-19 are currently in full evolution, it is clear that there is a growing call for multilateral cooperation and support for multilateral trade rules for global governance, health, well-being, and prosperity. The leaders of the G20 and G7 leading economies have taken the lead by urging global support for more investment and stronger global value chains.
Any unilateral disruption to value chains or protectionism should be discouraged in favour of a return to the community of nations of the WTO that promotes open-markets, a level playing field, healthy competition, and non-discrimination, all safeguarded by a multilateral rules-based system enabling the fair sharing of the benefits of globalisation. This is the right path to recovery.
Multilateral Cooperation is Key for Future Global Well-being and Prosperity
Multilateral trade rules have become more important than ever for health, well-being and prosperity. There is now a heightened awareness of shared global interdependence, of how much people’s jobs and prosperity are connected to exports and imports, high-quality digital infrastructure, and global variations in supply & demand. For shared prosperity, global interdependence and the multilateral system have to be managed in collaboration not confrontation.
The ICT Sector is Well Placed to Support Recovery
Sound recovery requires investment conditions to be optimal and returns on telecoms infrastructure investment maximal. The ICT sector is particularly well-placed to support recovery because it is a key enabler of economic activity, trade, and prosperity. There’s no time to waste in preparing for recovery. The solution is to adapt to the new situation and embrace remote working solutions with new applications over fast reliable broadband infrastructure.
Sharing Ideas to Shape the Future
The Huawei Paper “Inward Investment: Priorities for Economic Recovery”, which will be released later this month, is designed to share ideas, experiences and insights. It has three sections:
1. Legal Certainty to Manage Real-World Uncertainties
At Huawei, we believe in multilateral trade and investment rules as they bring legal certainty to real world uncertainties. Implementing common rules to facilitate investment is also one way in which the gains of globalisation can be more equitably distributed.
It is encouraging to see Trade and Economy Ministers around the world making progress towards a “Multilateral Framework on Investment Facilitation for Development”. At Davos this year, ministers from 99 economies re-affirmed their commitment to international cooperation to increase investment flows and develop the digital economy. The framework was on track for presentation at the June WTO Ministerial meeting in Astana. Although the Ministerial is now postponed, deadlines can still be achieved with determination and by using the possibilities of remote working offered by ICT technology.
2. Investment as a Partnership
Huawei views investment as a win-win partnership leading to the creation of local jobs and mutual prosperity through integration in local ecosystems. It is a partnership for inclusive intelligent digital connectivity and this passion for our customers’ success continues as strongly as ever. This year, Huawei marks 20 years of collaboration, investment, and contribution in European economies.
It is a responsibility of business to contribute experience and expertise to shape the business environment and to improve the multilateral rules-based system. Huawei has been proactively contributing to multilateral work on trade & investment since 2016. Huawei was invited by the United Nations Conference on Trade & Development to contribute to a chapter in the “2017 World Investment Report” produced annually by UNCTAD’s “Investment and Enterprise Division”.
Since then, we’ve been a regular contributor to trade & investment related issues for the WTO, the International Chamber of Commerce, the international Trade Dialogues initiative, the UN Conference on Trade & Development (UNCTAD), and at the OECD through the Roundtable on Investment and Sustainable Development.
3. Shaping the Business Environment
The World Association of Investment Promotion Agencies (WAIPA) is the global reference point for FDI and is inspiring greater efforts in 2020. In the words of WAIPA President and Dubai FDI CEO Fahad Al Gergawi, “Let’s be united in supporting businesses that deliver on the promise of a sustainable and prosperous future for all”
WTO’s Work Stream on Investment
In early 2020, Huawei was invited to the newly established International Commentary Group (ICG) on the WTO’s work stream to create a Multilateral Framework on Investment Facilitation for Development. The ICG is a joint project of the International Trade Centre (ITC), the German Development Institute/ Deutsches Institut für Entwicklungspolitik (DIE) and the World Economic Forum. Experts from Huawei participate in these initiatives and contribute willingly as a way to support the multilateral rules-based trading system.
Success in Digital Trade Requires Good Connectivity
In May 2020, China and Korea just announced massive post-COVID investment programmes in ICT infrastructure, 5G, and AI to boost economic recovery and build infrastructure to sustain long-term growth. Other nations are gearing up to follow this shift in investment from emergency spending to investing in the future. These decisions are underpinned by the link between ICT, digitalization, economic growth and exports. According to the OECD:
- A 10% increase in “bilateral digital connectivity” between two economies raises goods trade by around 2% & services trade by more than 3%.
- Digitalization is important for all sectors, and it is most important for exports by more sophisticated manufacturers and digitally deliverable services.
- Digitalization increases benefits from regional trade agreements (RTAs). In an RTA, a 10% increase in digital connectivity increases exports by more than 2.3%.
Investment As the Start of a Relationship
Creating the right framework to deliver growth over the longer term requires viewing inward investment as the start of a relationship and the beginnings of a road to mutual benefit where an investor company becomes an integral part of the national ecosystem, creating local jobs, and new business opportunities for local enterprises. It is not a transaction for short-term gain Investment policy is not about choosing between foreign and domestic investment. The aim is to bring together new investment with local interests and ensure the outcome multiplies opportunities and connections to local, regional and global value chains. This way, all parties linked to the investment project benefit from the opportunities these synergies create.
The best results can be expected when in practice regulatory reform is pursued with a view to aligning domestic policy and regulation with international trade and investment agreements.
Disclaimer: Any views and/or opinions expressed in this post by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Huawei Technologies.