Making Global Policy
Cooperation Happen
2010. 11. 26.
Hur, Kyung Wook
Korean Ambassador to the OECD
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Contents
I
Introduction
II
Lessons
III Korea´s Role in Global Public Goods
IV Conclusions
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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)
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II. Lessons
1. Global Crisis 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
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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
GDP
share
GDPthan
Share
CMIM
Share
Max Drawing(%)
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 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
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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
60.0
GDP based on PPP share of world total(%)
G7
50.0
G20(non G7)
40.0
30.0
1992
1995
2000
2005
2010
2015
- 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)
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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 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
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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, 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)
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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 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
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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
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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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※ Afterthought
 Current Account Balance
 Remaining Agenda in FSN
 Capital Control when Necessary
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Thank you
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