Communicating trade and investment responsibly

biacBernhard Welschke, Secretary General, Business and Industry Advisory Committee to the OECD (BIAC)

The OECD offers a wealth of data and analysis illustrating that investment and trade can strongly support the competitiveness of our economies, the efficiency of markets for consumers, the potential for innovation, and—yes—the quality of employment. Of course, open markets raise the stakes for companies and their workers in a competitive environment. But policies that enforce rules for multilateral trade and that encourage governments and social partners to invest in education, training, and skills will ultimately enable our economies to trade up, and not down. In fact, OECD research shows that companies that are involved in international trade offer better working conditions, better salaries, and can reduce informality.

We also know that trade and investment are questioned by some, and unfortunately the arguments are increasingly emotional, if not irrational. And in spite of some modest improvements, barriers to market for trade and “foreign” direct investment exist in abundance, with significant adverse effects on growth and productivity. We often forget that trade and investment have pulled hundreds of millions of people out of poverty and are responsible for much of the convergence we see between living standards globally across countries.

Protectionism remains a real threat, and not many understand the severe consequences for productivity if global value chains are or compromised or even interrupted. In fact, the OECD can exactly show this for individual countries and even sectors.

We are all challenged to communicate responsibly on the opportunities that come with open markets. Clearly, it is counterproductive to vilify trade and to use it for campaigns of all sorts. We need both, a strong and reliable multilateral trade regime, and a drive to reap the benefits of regional integration—including TPP and TTIP. If done right, these goals should be compatible and enforce themselves mutually. And the great potential of trade in services is still to be developed, with important tools such as the OECD Trade in Services Restrictiveness Index pointing to the cost of the many barriers in this sector.

One more word on investment: there is a rambling debate on investor protection, and some question if International Investment Agreements—along with Investor State Dispute Settlement schemes—compromise “the right to regulate”. This is another example how an important debate can be hijacked for populism. Of course, states should have the right to regulate, but not expropriate. It should surprise nobody that high-standards for the protection of investors against measures that contradict earlier agreements are essential for a pro-growth policy environment—and in particular for long term investment in infrastructure. It is important that that these discussions are put back on a factual basis and that misinterpretations are effectively addressed. The OECD is in a unique place to explain why international investment agreements matter, and how they contribute to economic prosperity worldwide. Governments and business, with support and evidence from the OECD, must step up in their efforts to explain the virtues of trade and investment more convincingly to the public.

Useful links

BIAC Policy Group on Trade and Investment

OECD work on trade

OECD Conference on investment treaties: The quest for balance between investor protection and governments’ right to regulate 14 March, 2016, OECD Paris

International trade: Free, fair and open? OECD Insights

BIAC stands for business

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  1. Patricia Almeida Ashley - 07/07/2016 Reply

    Dear Mr Bernhard Welschke,

    As from my point of view of background training, ranging from Economics (BSc), Information Science (Dip), Public Sector Management (MSc), Business Administration (PhD) and Development and Equity (Prince Claus Chair at ISS/EUR), I would be able to understand your thoughts and narrative from the Economics discipline, mainly monetary, international trade and development economics.

    When I concluded my BSc in Economics (1985) I was simply frustrated for contents on inequality, social and human development and environmental protection and quality not even being part of the curriculum. Thus, I kept moving my training background through other knowledge areas. However, I also considered them incomplete to fully explain why inequality and poverty was still unsolved in a country like Brazil, rich in assets based in a diversity of ethnic and cultural backgrounds, with plenty of environmental biodiversity, beautiful scenaries, a warm cosy passionate and affectionante community and strong bonds in family culture (sometimes even rather invasive in private lives preventing freedom of thoughts and autonomy of choices => I chose and could spend one year and a half in Britain, a splendid time for my cultural openness).

    Now, in my 50´s I am in much better working and academic field, which is Environmental Science, from a transdisciplinary perspective in curriculum, enchanted with the sort and quality of results in graduating students for their cognition of environmental, political, economic, social, cultural, technological aspects of development towards transformational sustainability.

    May I suggest BIAC to exchange and immerse in the contemporany complexity times for design of policy coherence, both at the organizational level of business, market level of business players (including supply chains), institutional level of global, regional, multilateral, national and subnational arrangements of legislation and standards, and last but not the least the cultural, training and working conditions of all stakeholders and society.

    From the above, the OECD Policy Coherence for Development (PCD) unit, the OECD Environmental Policy Committee (EPOC) unit, the Business and Industry Advisory Committe (BIAC) and many others could promote this update in exchanging knowledges for facing the risks society is facing from the traditional silos of disciplines.

    I understand that complexity becomes a must in background training nowadays, especially with a digital economy dismantling beliefs on direct correlation on productivity-growth-development when not considering cultural, social, environmental and institutional dimensions towards sustainable development goals and targets.

    May I suggest some readings from the German Leuphana Universität Lüneburg, Faculty of Sustainability, especially from the Institute of Ethics and Transdisciplinary Sustainability. I recently read the first paper published by the project Leverage Points for Sustainability Transformation: Institutions, People and Knowledge, entitled Leverage points for sustainability
    transformation, authored by David J. Abson, Joern Fischer, Julia Leventon, Jens Newig, Thomas Schomerus, Ulli Vilsmaier, Henrik von Wehrden, Paivi Abernethy, et al., published in the AMBIO journal.

    I look forward to receive innovative aproaches from BIAC in advices for trade and investment guidelines towards global, regional, multilateral and national policy coherence in trade, investment, climate and sustainable development policies.

    Best wishes

    Patricia Almeida Ashley
    Universidade Federal Fluminense
    Niterói- Rio de Janeiro State – Brazil

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