Making Global Policy Cooperation Happen

1. Making Global Policy Cooperation Happen 2010. 11. 26. Hur, Kyung Wook Korean Ambassador to the OECD 1

2. Contents Introduction I II Lessons III Korea´s Role in Global Public Goods IV Conclusions 2

3. I. Introduction Why Global Public Goods? • 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) 3

4. II. Lessons 1. GlobalCrisis Forces Collective Actions • 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 4

5. 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 (%) • Ideas • New Agenda(Development, FSN) • Exchange Rate to Current Account Balance 5

6. 3. Objective Analysis to show Shared Benefits • International Expertise were brought in • → Altogether 24 International Institutions inthe Seoul Summit Declaration • Technical Expertise with Political Perspective in W/G • Countries(Chair: 1 Advanced, 1 Emerging economy) • Supported by Technical Groups (Experts from International 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 6

7. 4. Fair Representation: Basis for legitimacy and ownership • Conflict between Legitimacy and Efficiency • When driven by the crisis, you need an efficient mechanism 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) 7

8. 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 Reforms • 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 8

9. 5. Balance of Interests • Zero-sum Game vs Positive-sum Game • Comprehensive Agenda to enable quid-pro-quo • Trade Negotiation • - Manufactured Goods, Agricultural Goods, Services • G20’s 10 Major Agenda: Balance between Advanced & Emerging 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) 9

10. 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 Ministers • - 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 10

11. 7. Monitoring of Implementation • Monitoring & Feedback is the KEY • Detailed Time Table, Action Plans, and Deliverables need to be Defined. • G20 • MAP (Mutual Assessment Program) aided by IMF and other Int’l Institutions • Development : 16 Action Programs • CMIM • Asean+3 Macro-economic Research Office (AMRO): Agreed to establish in May, 2011. • Institutionalization • Objective follow-up on Commitments 11

12. 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 EmergingEconomy • 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 12

13. IV. Conclusions • Prerequisite to International Cooperation : Similar to MRH • Why Waste a Crisis  G20 • Why Waste a G20  Institutionalization 13

14. ※ Afterthought • Current Account Balance • Remaining Agenda in FSN • Capital Control when Necessary 14

15. Thank you 15