Brunswick Review The Resilience Issue

“Slowbalization”

Anne-Mari Virolainen, Finland’s Minister for Foreign Trade, talks to Brunswick’s Robert Moran about “the spaghetti bowl” of trade rules.

As recently as 2017, Finland’s economy was described as “sickly” and “shrinking”—stubbornly smaller than before the Great Recession nearly a decade earlier. Today, as the country wrestles with domestic challenges including welfare reform and healthcare, the economy is slowly growing. Anne-Mari Virolainen, the country’s Minister for Foreign Trade and Development since 2018, speaks about the role trade plays, as it accounts for about 76 percent of Finland’s GDP.

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Trade is increasingly non-material—the so-called “three Ds” of data, design and digital entertainment. How will trade policy adjust?
In Finland, we’ve seen the importance of trade in services grow, one reason being the growth of cross-border trade in IT services. From the trade policy perspective, trade rules are flexible and technologically neutral. There is no need for major legal changes due to the emergence of 3D printing. From a practical point of view, however, goods would be replaced by services due to 3D printing.

This means rules concerning trade in services would become even more relevant. There are a few issues concerning the rules of trade in services we should keep in mind, like data flows: 3D printing relies on data. If we expect 3D printing to become increasingly important in cross-border trade, ambitious rules on data flows in trade agreements become crucial. The EU is currently negotiating on digital trade (including data flows) with Australia and New Zealand, for example. This spring, 76 WTO members are preparing to start WTO e-commerce negotiations.

When you look at the rise of economic nationalism and populism, what future scenarios do you see today?
The Economist wrote a while ago about “slowbalization,” that is, globalization advancing slower than before and in a more restrained way. A study commissioned by one of our business associations found that value chains were becoming more regional, and digitalization will accentuate that evolution. This fragmentation will come at a price, though. Creating semi-identical supply chains in different parts of the world will add to cost of production. It will raise barriers, create additional layers of bureaucracy, and add to the spaghetti bowl of trade rules. It will shut countries and people out. And it will not help in resolving problems that we need to address globally, such as climate change or tax avoidance. Globalization has brought immense benefits to the world. It has not been without flaws. These need to be addressed. The right response is not “slowbalization.”

Finland was the first EU country to form an official strategy on artificial intelligence in 2017. How do you think others will approach AI trade policy?
It’s worth remembering that, despite all the hype around AI, from the trade rules perspective it is ultimately just like any other technology. Again, trade rules are, in principle, technologically neutral. Many concerns regarding trade policy and AI are similar to the ones that concern more or less all digital services.

One of the key concerns relates to data—data is, after all, a fundamental ingredient of AI. Therefore, trade agreements should tackle unjustified restrictions on data flows, such as requirements to locate, use or store data in some particular country. But there are other important elements to consider. Trade rules should, for example, ensure that governments do not mandate access to proprietary information (such as source code) or require forced transfers of technology as a condition of market access. Overall, cybersecurity issues should not be regulated in trade agreements.

Population: 5.5 million
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GDP: $251 billion
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At its peak, Nokia represented 4 percent of the country's GDP.
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Its much-lauded education system features no standardized testing, and children start when they are 7 years old.
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Along with New Zealand and Iceland, it has the lowest level of air pollutants of any country.

 

Robert Moran is a Brunswick Partner based in Washington, DC, and leads Brunswick Insight, the firm’s global public opinion, market research and analytics function.

Photograph: Courtesy of the Ministry for Foreign Affairs of Finland

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