COVER STORY • Role of Business in New Global Governance • 6

OInterview with Phillip O’Reilly, Chairman of BIAC

ECD’s Business & Industry Advisory
Committee Could Contribute to
Achieving Rules-Based Global Economy

By Japan SPOTLIGHT
Multinational companies, which are great beneficiaries of globalization, must have a strong incentive tostop any moves toward deglobalization and restore global governance for rules-based trade and security
to prevent the US-China tech cold war from causing damage to the global economy. How can businesslead this process in public policy decision-making? The Business and Industry Advisory Committee(BIAC) has long experience of playing an advisory role to the OECD in public policy and international rulemaking discussions. We interviewed BIAC Chairman Phillip O’Reilly to discuss this issue.
(Interviewed on Jan. 10, 2020)

Introduction
JS: Could you give us a brief self-

JS: Could you outline your recent
activities at BIAC?

introduction and tell us a bit about
your company?

O’Reilly: BIAC is a formal part of the OECDframework. The core of the organization isabout 33 committees that are made up of andO’Reilly: My name is Phillip O’Reilly, I am achaired by members and align with the
New Zealand national. My role is chairing
various committees within the OECD, such as
BIAC, which is based in Paris. I have a staff oftrade, investment, and tax. There are
10-12 people, and I have chaired it for the last
hundreds of members engaged in advising
six and a half years now, and have been on
the OECD process, and we also assist thethe board for a bit longer. BIAC is the formal
OECD in terms of its outreach. We assist thebusiness partner of the OECD, set up a year
outreach process in ASEAN, and also throughafter a trade union advisory committee was
the G20 and G7 processes, including the B20
set up, so it’s a tripartite structure. While weand B7 processes. It’s a busy job, and myare technically part of the OECD, we are veryrole is really to make sure that theindependent and offer an independent
organization itself works. The policy work is
Phillip O’Reilly
advisory source. We have a number ofdone elsewhere, and my role is to make sureobservers from countries that maybe will join the OECD on thethat the organization is being run effectively. It is quite a complex
accession pathway, and have a number of other technical/
organization but what it brings to the table is high-quality advice
international organizations – for example, on chemicals and banking
because it has these very big and well-resourced business– that also join BIAC because of the particular work that the OECD
organizations behind it. When we give advice to the OECD we candoes. The core members are the business confederations, and inreach back to those federations and ask their opinion, so we canJapan of course that is the Japan Business Federation (Keidanren).
offer powerful and insightful advice. I will be travelling to ParisMy company in New Zealand is called Iron Duke, based in
tomorrow for the Liaison Committee Meeting which happens every
Wellington. I used to run Business New Zealand, which is theJanuary and is our big set-piece meeting with the OECD to express
equivalent of Keidanren in New Zealand. After 11 years of being CEO
what business wants, and how we respond to the OECD’s work
there, I left and formed this organization which is a public policy
program. This meeting will be held by the most ambassadors andadvisory firm. It’s a commercial firm, and we have clients in central
business people we have ever had. I am the chair of the process andgovernment, local government and in the private sector both in New
have a board that I work with.
Zealand and overseas. We are attempting to get to good public policy
outcomes, and we do this by giving strategic advice to clients both in
BIAC & Trade Policies
the public and private sectors.
JS: You mentioned that BIAC is trying to influence
https://www.jef.or.jp/journal/

Japan SPOTLIGHT • March / April 202027

COVER STORY 6

OECD programs. I am curious about programs on
trade policies as today the international trade regime
is facing a crisis.
O’Reilly: We work very closely with the Trade and Agriculture
Directorate at the OECD. The head of that is a Canadian national, Ken
Ash. We think that the OECD’s trade work is second to none; I would
rank it as the best trade work in the world. The reason it is importantin the current times is that it brings evidence to the debate. The tradedebate right now is often not one based on evidence but on slogans,on both sides. One of the reasons that the WTO is under such threat
at the moment is that the trade debate has become rather isolated
from the public. I make the joke that far too often in the past, tradenegotiators said to the business end of the public, “This is our job,
we will tell you when we are done,” and they excluded people fromtheir work because of secrecy and so on in the negotiations. That has
got to stop. The work that Ken Ash and his team at OECD do is very
important because it makes the benefits of trade much more real tothe public and to the business community and that is a very
important part of what the OECD does. We support that process; forexample, the Services Trade Restrictiveness Index is a product that
the OECD has put out, which measures trade restrictiveness andservices. They have done a lot of work on trade and digital, aroundthe costs of protectionism, and also about how to build advice
around trade policy that makes it more inclusive. This is missioncritical work that they are doing.

The other challenge is that oftentimes when politicians are facedwith tough decisions internally – for example, reform of pension laws
or taxation laws – they will often blame trade. How do we resolve
that? I think that we need to make clearer to more people the valueof trade. It is actually the job of our leaders and politicians to do that,and Prime Minister Shinzo Abe is doing an outstanding job of that inJapan, with the third arrow reforms and the Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP). It is
actually the job of politicians to communicate to the public the valueof trade; it is the job of businesses to explain to their stakeholders
the value of trade, including their employees. It is also their job toengage in trade in a responsible fashion, making sure that they truly
are competitive.
There is no one simple answer to this, but we certainly need toengage more people in the clear and evident benefits of trade, andthen hold politicians to account for what they need to do to makesure that trade is good for all. We all knew when free trade deals andthe Doha Round happened that one of the things that was going tohappen was micro-economic, internal economic reform in countries
to make them more efficient and more open, as it has implications
for social welfare, education and infrastructure. Far too few countries
have taken that process and done it well; they have not done some of
the things that needed to be done internally very well, and I think thatthey need to be held to account to do that.

“Decoupling” of the Global Economy

JS: It seems to be very difficult for the trade policy

JS: Technology has an impact on jobs, but also on

O’Reilly: First of all, it is important to say that not everybody thinks
in that way. We were recently in China, and they understand. In
Japan, I don’t think that people misunderstand the benefits of trade –I think they are generally on board with that. Indeed in the UnitedStates, citizens are more pro-trade than anti-trade. Two things have
happened to the trade debate over the years.
One is that is has become isolated. It has become people of the
WTO sitting behind their iron gates in Geneva and deciding things
and then telling the world, rather than engaging with the world. That
is not just the WTO, but other organizations too. Second, trade has
become the thing to blame when people lose their jobs. If a country
is struggling with welfare, trade is blamed. Yet it is often not to dowith trade – for example, the US manufacturing job loss is largely the
result of digitalization and is not much to do with China, but trade isblamed.

O’Reilly: I am personally quite optimistic. (This is my personal viewand not from BIAC.) My sense is that both the Chinese and theAmericans will have to react to that because the Chinese
undoubtedly have some technological leadership, and the US has agreat deal more technological leadership than the Chinese do. Whenit comes down to it, they both need each other which is why we areseeing a softening of the trade tensions of the last couple of years.
My sense is that this will resolve itself without some kind oftechnological cold war, but we need it to resolve itself because theworld will be a poorer place if we do not. If the rest of the world isforced to choose between US and Chinese technology just becauseof the flag on the box, it will make us a very poor world and increaseother tensions as well. So it is incumbent on all of us to make surethat we don’t go down that track.

people to convince the masses of the benefits oftrade liberalization, in particular against the risingtide of populism.

28 Japan SPOTLIGHT • March / April 2020

national security as evident in the latest argument
between the US and China. Journalists are sayingthat this could lead to the “decoupling” of the global
economy. How would you assess this?

COVER STORY 6

Japan is right on the edge of this. You have a long-standing
relationship with the US and you also have an increasingly close
relationship with China, neither of which is without its tensions, ofcourse. Japan will need the best technology it can get from whereverit can get it, so we need to make sure we resolve this and I do think it
will be resolvable over time, but it will require a change in behavior
from both the US and China.

impeding that, then it needs to be resolved. I don’t think it meansthat we don’t buy each other’s stuff. We need to resolve issues
around security knowing that actually trade will be the biggest driverof security in the long run, as it has been since World War II.
Multilateral trade is the biggest driver of national security and peace
and prosperity that we have ever seen in the world’s history. We need
to be clear about that, and not to stop trade.

JS: Decoupling of the world economy would

JS: There seem to be lots of issues intertwined. In theO’Reilly: Exactly right. Businesses will make their own decisions –businesses in Japan, businesses in New Zealand, businesses in the
United Kingdom. They will decide which technology to use
independent of governments and we will be safer because
businesses will use the best technology for their needs. It’s fair tosay that in the OECD we don’t get engaged in that debate, but what isclear is that the OECD is for trade and for globalization. There are
obviously some implications to that in the way that we think about
US-China relations more generally, and technology wars generally as
well. We don’t get engaged in the Huawei versus US thing as muchas others; we are much more about trade.

O’Reilly: Precisely. There are times when other things trump trade –security will occasionally beat trade. In the trade debate, we haveseparated these two issues and the OECD has worked hard to put
these two things together. You can’t have a conversation about
welfare reform or about national security without thinking about
trade and vice versa. It does not surprise me that trade has become avictim of debate when that has not been occuring, and it has notbeen occuring.

potentially be disastrous for it. Should we assume
that business circles, such as BIAC or multinational
companies, would have an incentive to intervene?

JS: On the question of national security, there aresome sensitive technologies. Without businessknowledge it would be very difficult to make rules on
sensitive technologies as government people do notknow exactly what sensitive technologies are withregard to national security. So business involvement
is inevitable to achieve rules-based governance.

O’Reilly: You are seeing those debates playing out in the B20 and
G20 process, of course, as well as the B7 and G7 process. They arealso playing out at the OECD but not so much because it has neverbeen an organization about, for example, military security. I would
make the point that there has always been a situation whereparticular technologies have been held secret for the national
interest: technologies around canons, and around maps back in the
18th century were kept secret. The same applies today. Some of thechallenges are where telecom companies are private but have amassive role to play in the national situation, such as broadband
technology.
I think we must be driven primarily by the need for efficient,competitive markets and if there is fear or a logical view or a view
upheld by evidence that something the US or China is doing iscase of trade policy and structural policy, thoseissues should be discussed together, otherwise wecannot reap the benefits of trade liberalization. Also,
security and trade should be discussed
simultaneously as otherwise we cannot achieve arule-making process for them.

Some Good Venues to Restore Global
Governance
JS: What kind of venues would be appropriate fordiscussing these issues simultaneously? The OECDis an interdisciplinary organization with a wide rangeof experts able to work together on various issues.
But what about other organizations when global
governance is in crisis. How do you see the future of
the WTO for example?

O’Reilly: My ambassador David Walker is trying to achieve someoutcomes with the US and others regarding the re-instigation of
dispute-settlement procedures. I am an optimist and I think we will
get to some kind of outcome in time. One thing I know we need to do
more of is to get the business community to step up moreaggressively and to say that the WTO matters to us. This is anotherone of these institutions that sits between the big steel gates in
Geneva and hasn’t been particularly open to the business community
and to others over the years, and it just needs to change. The WTO
senior people recognize the need to reach out to business. Businesscan bring home the importance of the multilateral rules-based
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COVER STORY 6

system on trade much more powerfully than others, and to give an
example of that, I was told by one of my chief trade negotiators in
New Zealand that before the WTO’s rule-making processes came in,when a ship of lamb meat left New Zealand for Hamburg in Germany
we did not know what the tariff rate would be when the ship arrived.
That’s ridiculous, and now we do because of the rules-based systemof the WTO.
I often tell people these illustrative stories to try and get them tounderstand the importance of a rules-based system – not just forsmall countries, but for big countries as well. So the WTO is
definitely part of global governance, and other parts of the WTO
move along. A piece of it has stopped, but there are lots of massively
important issues that they are trying to resolve such as fishingsubsidies, environmentally harmful subsidies. The point about global
governance is that there is no one place – that is part of thechallenge. Global governance is in the G20 this year in Saudi Arabia,
through the WTO and the OECD, and also through the International
Labour Organization and the UN agencies that are relevant to it. Partsof it aren’t going too badly, but there is a lot of tension and it is not
as powerful as it once was.
This is where the role of Japan in particular becomes important. It
is the third-biggest economy in the world, and Abe is pro-trade,admirably pledging to lead the process through the CPTPP when the
US left. So effective global governance requires leadership fromleaders, and we need more leaders prepared to stand up and declarewhat they stand for. Global governance has some challenges; it is not
all wrong though, and parts of it are going OK. We also need torecognize that global governance happens in lots of places and will
only work effectively where leaders are prepared to step up andsupport it. Business leadership in the WTO is very important andpeople need to understand how important the WTO is so that it
doesn’t wither on the vine.

I would argue that the US has an interest in APEC that waxes andwanes, but it is actually pretty involved in APEC. The US has always
had more of a suspicious view of multilateralism, even before
President Donald Trump. If we get APEC right, then APEC can be apathfinder for much else. If we get some rules around digital right at
APEC through a voluntary approach, we can present them to theworld and say look at those. In much of the work that APEC has
done, there have been examples where because it was voluntary anddone with many of the key countries of the world around the PacificRim, APEC work has become much more common elsewhere.
Likewise with the CPTPP, it is just a trade deal and is nottechnically part of global governance, but the fact that it exists andnow countries like the UK want to join, implies that the UK may be
prepared to comply with the rules and processes within the CPTPP. I
have always been interested in the idea of taking a successfulprocess or forum and running hard with it, making it successful.
Others will want to join it, and by doing that you will reduce tension,
get more economic integration, and get better things happening.
APEC is a great example of that. The fact that the OECD has anumber of countries that want to join suggests that it is successful,and once you join the OECD you have to sign up to all the investment
criteria and anti-bribery legislation, so that is why business wants
the OECD to expand these principles. For global governance, weneed to show what is successful and what forms we can use to pusha message of growth and integration and social success, and hopethat others will join that process as a way of securing goodoutcomes.
JS: How about the Regional Comprehensive

JS: Looking at other venues where issues can be

Economic Partnership (RCEP)? It is a bit generous tosome protectionists and is not so ambitious, which
could be a good thing as countries would find it
easier to join. Structural reform would take time, so
generous free trade agreements might work better.

O’Reilly: We need to be cautious and make sure that organizations
stay within their mandate. I used to be a member of the APEC
Business Advisory Council until very recently, and was asked aquestion in New York about whether or not APEC would be involvedin the tensions in the South China Sea. The answer is no – APEC issuccessful because it sticks to its mandate of economic growth andintegration and it does that well. If you start to give it rules-based or
security roles it will immediately fail because that is not its mandate.

O’Reilly: I would argue that you want the reduction of all tariffs tozero. You want free movement of investment and people over time,
so for me the outcome of trade deals like the CPTPP or RCEP need
to be tight and ambitious. The timeline for countries to get there is
the issue. In New Zealand, we know that dairy subsidies around theworld are massive, including in Japan, and so we want to get rid ofthem. But how long will it take to get rid of them? The point about
RCEP is that if we can get countries like India to sign up eventuallyon the basis that it gets quite a long pathway to reform, then that is
OK with me so long as it reforms and does not sign up to a free tradedeal that is not very free at all. That would be where the business
community would insist on ambitious outcomes. The way in which

deliberated simultaneously, APEC might be a goodvenue, but Americans have very little interest in
APEC. Would the CPTPP be a better venue for
initiating global governance?

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COVER STORY 6

people can link into those and move along at their own pace to someextent is very sensible and is common. The CPTPP does that, andthe Doha Round did too.
JS: How about the idea of trying to have sectoral

agreements, for example on digital products.
Countries can get together on a voluntary basis tohold negotiations or discuss initiatives and perhaps
this could be a good alternative to global
governance?

O’Reilly: Global governance is a lot of things all at once, but as you
know, these sorts of voluntary discussions go on all the time and arequite powerful. New Zealand and a number of other countries havestarted one on digital. P4 – the origins of the TPP – was a voluntary
thing between these countries and done explicitly to say to AsiaPacific and the rest of the world that they can play into it, and it leads
to the CPTPP and more. I agree that if you can get countries todemonstrate to others and be open to others joining, it is a goodthing that should be encouraged.

Role of Business in Rule-Making in the
Global Community
JS: On the subject of discussions for rule-making, can

BIAC play an important role ?

O’Reilly: It does. Through the mandate of the OECD, there are anumber of rules on investment, chemicals, trade, anti-corruption,
Corporate Social Responsibility and so on. There are a number ofrules or quasi-rule processes that the OECD has through its
mandate, and BIAC already plays a crucial role and will continue todo so. If you think about the other roles of the OECD, BIAC effectively
follows the OECD around. So in terms of making those much more
effective and a part of global governance, for example, OECDmembership in ASEAN is poor. If the OECD can be assisted to
improve membership among ASEAN nations, it would be good forbusiness and a level playing field. We would encourage and support
the OECD in doing that, and on a whole raft of issues. As well as
rules on multinational tax, we support more countries becoming
members, we support its role in the G7 and G20, and particularly for
global governance. BIAC is one of the biggest repositories ofbusiness knowledge, information and research in the world, and is amassive engine of knowledge to assist governments in playing thatrole.
JS: In Japan, we are initiating discussions about how

to get businesses involved in policy decision-making,and how to play a key role in global governance in
the international community. To be honest, businessmight be a little shy of doing so, and government
people do not know how to attract business people
to the policy discussions. Do you have anysuggestions to ameliorate this situation?
O’Reilly: You would always start with the business associations. It istheir role to bring business views together and put them in alanguage that policy officials and politicians can use. One of thechallenges is that when you talk to business people about public
policy, they think about it and describe it in a business way. Public
policy officials and politicians are often unfamiliar with business, andso often we are talking in different languages to each other. Thus, it
is a key role of business associations including BIAC and Keidanren
to translate between the two, and to turn it both ways into advice thatboth sides can use. When business thinks something needs tochange, government needs to listen to that and vice versa.
Also, we need to be clear about our respective roles. It is not therole of business to engage in global governance, as this is thedomain of elected officials. It is, however, their role to try and ensurethat the decisions made by public policy officials and politicians will
make citizens better off, and from an economic development
perspective business knows a lot about this. It is their role to advise
the political process and then explain to their stakeholders what they
have said and why, including their employees, the communities they
serve, and their customers. Not the citizens – that is the job ofgovernment to explain to.
JS: The OECD is a global think tank. You mentioned

some kind of mediating role between business andpublic policy. Could think tanks play this key role?

O’Reilly: Indeed they do, and there are many in Japan, the US andthe UK. I always see business organizations as big think tanks too. A
massive amount of thinking takes place within the OECD – theevidence is brought to bear, and the experiences of the companies
around the table are massively important. So I would argue thatbusiness organizations are think tanks too, as they bring together theevidence, they distill it, and they represent it. Think tanks areimportant but it is about getting the right brains around the table.

Written with the cooperation of Joel challender, who is a translator, interpreter,
researcher and writer specializing in Japanese disaster preparedness.

Japan SPOTLIGHT • March / April 202031