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Making Global Policy Cooperation Happen

2010. 11. 26.

Hur, Kyung WookKorean Ambassador to the OECD

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IntroductionI

LessonsII

Contents

ConclusionsIV

Korea´s Role in Global Public Goods

III

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Problems become Global in Nature

Man of the Millennium (WP ’97) : Genghis Khan - The World has been shrunken

Globalisation and Technological Development - 1989 Fall of the Berlin Wall - China’s Embrace of Market Economy - India’s Reform

Approach

Korea, G20, ASEAN+3 (CMIM)

I. Introduction

Why Global Public Goods?

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Easier Cooperation during Crisis Free Rider

G20(1999), CMIM(2000): Takes two Crises

Without Urgency → Momentum is lost

COP 15(Copenhagen) : Kyoto Deadline 2012

CMIM: ASEAN+3 Multilateralisation + Increase in Capital (2006)

Challenge of G20 → Institutionalisation after Mexico

1. Global Crisis Forces Collective Actions

II. Lessons

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2. Leadership

Often by Hegemonic Countries ⇒ G20: Mutual Cooperation and Ideas

Role of Bridge or “Honest Broker” G20: Korea as a Bridge between Advanced & Emerging Countries CMIM: Korea between China and Japan

 Act of“Bring-in” ASEAN: more voices than GDP share (%)

GDP Share

CMIM Share Max Draw-ing

ASEAN 12.8 20 52.3

China 37.4 32 15.9

Japan 41.8 32 15.9

Korea 8.0 16 15.9 Ideas

New Agenda(Development, FSN) Exchange Rate to Current Account Balance

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3. Objective Analysis to show Shared Benefits

International Expertise were brought in → Altogether 24 International Institutions in the Seoul Summit

Declaration

Technical Expertise with Political Perspective in W/G Countries(Chair: 1 Advanced, 1 Emerging economy) Supported by Technical Groups (Experts from Interna-

tional Organisations) - Example : Framework W/G(Canada, India / IMF, WB, OECD) FSN W/G(UK, Korea / IMF, WB, BIS)

Check and Balance among International Institutions Example - Development Issues: UN, WB, OECD, WTO, UNCTAD, ILO, ADB, AfDB, IDB, IsDB - Anti-Corruption: UN, OECD, IMF, WB, FATF

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4. Fair Representation: Basis for legitimacy and ownership

Conflict between Legitimacy and EfficiencyWhen driven by the crisis, you need an efficient mecha-

nism with supplementary measures

  G20 as Premier forum for int’l Economic Cooperation 85% of World GDP, 2/3 of Population, 80% of Trade Advanced + Emerging Economies with Equal Voice

- IMF’s Constraints• IMF Quota(%) 1998~2006: Belgium(2.16), India(1.95), Brazil(1.42) 2008~ : Belgium(1.93), India(2.44), Brazil(1.78)

1992 1995 2000 2005 2010 201530.0

35.0

40.0

45.0

50.0

55.0 GDP based on PPP share of world total(%)

G7 G20(non G7)

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To Enhance Legitimacy: Bring in Outside Stakeholders

  G20 - Agenda to Capture Interests of 172 Nations ⇒ Development - Outreach to Other Countries ∙ 5 times/month - Private Sector: Business Summit ∙ not a sideshow, but essential part of growth recovery  CMIM (Chiangmai Initiative) - IMF’s Initial Opposition (Moral Hazard) ⇒ 80% to link with IMF Conditionality  FSB (Financial Stability Board) - Established in 1999 (G7 + 5) - Expanded to 24 countries in 2009 (London G20 Summit) ⇒ Basis for adopting BASEL III and other Financial Regulation Re-forms

Built-in Mechanism to ensure Fair Representation

  At least 2 out of 5 invitees from Africa IMF’s Quota renew: every 8 years OECD’s Efforts for EE5 a & AA5

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5. Balance of Interests

Zero-sum Game vs Positive-sum Game

Comprehensive Agenda to enable quid-pro-quo Trade Negotiation - Manufactured Goods, Agricultural Goods, ServicesG20’s 10 Major Agenda: Balance between Advanced & Emerg-

ing Countries - Exchange Rate & Current Account Balance - IMF/IBRD Quota Reform to bring in Emerging

Economies

  Safeguards to swallow Bitter Pills Financial Safety Net (FSN) to help reduce Reserve Build-up Chiangmai “Escape Clause” Korea-US BIT with “Safeguard” for Emergency Capital Control OECD, WTO

G20: Deputies and Sherpas (Technical vs Political)

W/G Chaired by two Countries(Advanced and Emerging)

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6. Trust

Trust Building → Repeated Game with Trusted Partners Delivers Better Results

Trust was built from the bottoms up at all levels

 G20 Seoul Summit G20 related meetings: around 5 times a month! Outreach: around 5 times a month Separate Meeting among Central Banks/Finance Minis-ters - Central Banks (BIS, SENCEN, EMEAP): around 10 times/yr

CMIM After 1997 Crisis, 3 Country Meeting among DGs was set up Annual Soccer Meetings, Mutual Visit

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7. Monitoring of Implementation

Monitoring & Feedback is the KEYDetailed Time Table, Action Plans, and Deliverables need to be

Defined.

G20MAP (Mutual Assessment Program) aided by IMF and

other Int’l Institutions Development : 16 Action Programs

CMIMAsean+3 Macro-economic Research Office (AMRO):

Agreed to establish in May, 2011.

Institutionalization Objective follow-up on Commitments

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III. Korea´s Role in Global Public Goods

Unique Position Bridge between Advanced & Emerging Economy

- From Aid Recipient to Donor Country in One Generation - Overcome two economic crises - First G20 Presidency in Asia and Emerging Economy

Global Public Goods Troika in G20 Summits Green Growth Development

- Recent & Relevant Experience - HLF-4 in 2011

Nuclear Security Summit (2012) Climate Change : COP 18 in Korea (2012) expected

Close Cooperation with the OECD

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IV. Conclusions

Prerequisite to International Cooperation : Similar to MRH

Why Waste a Crisis G20

Why Waste a G20 Institutionalization

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Current Account Balance

Remaining Agenda in FSN

Capital Control when Necessary

※ Afterthought

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Thank you