G7 Summit Japan 2016

Page 1

G7: Beyond 2016

G

A Business Diplomacy Global Briefing Report INSIDE G7

› WELCOME: Shinzo Abe, Prime Minister of Japan › ECONOMY The Export Crisis › GCEL Digital Ecomomy and Data Security

FROM PARIS TO ISE-SHIMA

The State of Climate Negotiations: What to Expect after COP 21

A Commercial Publication by the CAT Company to commemorate the Ise-Shima Summit

CATCOMPANYInc Publications

The G7 Magazine for VIP’s, Delegates, Diplomats and World Leaders

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The G7 Global Briefing Report

May 2016

Contents

60

Travel

CATCOMPANYInc

16 / Ise-Shima: A Journey into a Spiritual Land By Winona Roylance G7 › Ise-Shima ❙ Japan ❙ May 26–27 ❙ 2016

20 / G7 Japan and Green Resilience from our “World Park” By Atsuya Waya

Regional Politics

The G7 Magazine for VIP’s ,Delegates ,Diplomats and World Leaders

Global Development

66

By Dr. Scott T. Massey

42 / How the Private Sector Leads the Way in Food Security and Proper Nutrition Solutions

By Kozo Ishii

52 / Women and Innovation: How Creativity Empowers Women

38

By Fumbi Chima

Global Finance

Global Policy 60 / LEAD FEATURE: The State of Climate Negotiations: What to Expect after COP21

Publishing Firm: The CAT Company, Inc.

By Dr. Corneliu Bjola

ceo & Founder: Chris Atkins

Global Economy Book Review 57 / Two Tales of the Moon By Jennifer Sun

68 / The Future of Global Talent: The Nexus of Jobs and Education

Interview 86 / The Refugee and Migrant Crisis in Europe By Ambassador Jim Rosapepe

Special Editorial Feature

By Erin Meezan, vice president of sustainability for Interface, Inc.

58 / Austin Air: Indoor Air Quality: A Global Concern 62 / Caterpillar: The Age of Smart Iron 82 / Taiwanese Government: Self Determination and Fairness for Taiwan 88 / Eden Roc at Cap Cana: Ultimate Luxury 94 / MoistureShield: The Next Generation in Decking 04 ❙ g20g7.com

Publisher: Chris Atkins

creative Director: Christian Gilliham christian@cgcreate.co.uk T: (+44) 7951 722265

By Matt Austen & Chris Allchin

34 / Interface: From Negative to Positive: A Triple Win

Welcome Notes:

editor-in-chief: Ana C. Rold

54 / Modular Financial Services: The New Shape of the Industry

Branded Stories

04/05/2016 18:32

Eikei Suzuki Governor of Mie Prefecture

By Johnny Chan

By Captain Samuel Salloum, Co-Chairman Global Coalition for Efficient Logistics (Continues on page 10)

g20g7.com

Page 12 & 14

48 / Urban Planning Crucial to Mitigating Extreme Weather Risk in the Asia-Pacific Region

06 / GCEL: Information is the Currency of the Future

A Commercial Publication by the CAT Company to commemorate the Ise-Shima Summit

CATCOMPANYInc Publications

The G7 Magazine for VIP’s, Delegates, Diplomats and World Leaders

Shinzo Abe Prime Minister of Japan

44 / Sustainable Fishing: A Powerful Tool for Safeguarding Oceans and Livelihoods in Asia

By Julie Kantor and A. Crosser

› GCEL Digital Ecomomy and Data Security

Page 08

By Philip H. de Leon

72 / Masala Chai and Global STEM Diversity

› ECONOMY The Export Crisis

01_G7_Cover 2016.indd 1

38 / Building a Global Action Platform to Create Abundant Food, Health, and Prosperity—While Saving the Planet’s Ecology

By Isabel George, Yaseen Lotfi, Bailey Liddell, and Jennifer Horowitz

INSIDE G7

› WELCOME: Shinzo Abe, Prime Minister of Japan

FROM PARIS TO ISE-SHIMA

By Akshan de Alwis

By Dr. Scott T. Massey

G

A Business Diplomacy Global Briefing Report

The State of Climate Negotiations: What to Expect after COP 21

22 / A New Age of Minilateralism: Potential Solutions for the South China Sea Conundrum

66 / LEAD FEATURE: The Export Crisis

G7: Beyond 2016

Advertisers Index 02 05 09 13 15 19 34 41 47 51 64 71 85 90 96 98 100

Waters Corp Corporacion America Eneco Holdings R2 Entertainment Opic DSX Inc Interface Meridian Diplomatic Courier World Chamber Federation Caterpillar Asia Ettinger ICC G20 Advisory Group Eden Roc at Cap Cana MoisureShield Soneva Fushi WNB Foundation

President-Inernational: Mike Nyborg executive VP-emeA: Tyrone Eastman

sales executives: Ray Baker Phil Cook Guy Furl James Regis

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The G7 Global Briefi ng Report Briefing

GCEL Authored by: Captain Samuel Salloum, Co Chairman, Global Coalition for Effi cient Logistics Co-Chairman, Efficient

Information is the currency of the future We must secure it! The Digital Economy is now at the top of the world leaders’ economic agenda. Recognizing that the nucleus of the Digital Economy is “Information”, it is imperative we keep it secure.

T

he implementation of the Digital Economy is of paramount importance to the G20 global leaders (naturally including the G7) as they navigate the course to bring the global economy out of its current malaise. Recently, in November 2015 at the summit of the B20 (the Business advisory group to the G20 leaders), the implementation of the Digital Economy was a key recommendation to G20 leaders which has been acknowledged by the 2015 G20 leaders in their final communiqué.

calculated by the Visa Commercial Consumption Expenditure (CCE) index to be worth USD 119.8 trillion. However, in this centralized environment legitimate concerns remain regarding the dynamic availability and quality of the data in use as well as the security of information within this vast market. In other words, how can we gain access in real time to quality data while at the same time ensure that we protect the privacy of individuals and organizations?

There is clear evidence that the proposed Digital Economy Platform (DEP), when implemented appropriately on the Business-toBusiness (B2B) market place, has the potential to get the engine of the global economy humming again. In fact, the market of B2B alone in 2013 is

Since the data is the currency of the future, we must ensure that it is not fake. The data qualities are many whereas the two extremes are: first, the Non-Validated Data (NVD) provided by a single source without validation; the second extreme is the Ultimate Data Quality (UDQ) provided to initiate an action in the real world validated through multiple sources of data in the same pipeline. Today the world of Information Technology is mainly reliant on the NVD and less reliant on UDQ. The question remains, where can we find the UDQ? The UDQ exists in the logistics industry that is at the core of

our real economy. To most people, when we mention logistics, the first thing that comes to their minds is a truck; however, the logistics industry has been under-estimated for a long time and still is today. Yet it has enormous potential to empower our global economy. The logistics pipelines are central to our economies. At the same time they represent the main source of the UDQ we desperately need in order to enhance the quality of economic data we use to reach the tipping point towards achieving the required 21st century prosperous economic era in our time and for generations to come. Regarding the data privacy, global bodies such as the UN, WTO, APEC, OECD and World Bank have attempted to address data security where each have released principles or guidelines to cover these concerns. However, these guidelines are generally unenforceable being restricted by countries’ jurisdictions. In order to properly answer the above question related to data security, it is necessary to divide this question into several parts and answer each one separately: I. Where is the B2B data presently and is it shared today? II. Who will decide what data shall be shared and with whom? III. Who will transfer the data and how? IV. What kind of monitoring mechanism is in place to provide a secure environment? V. What kind of technology is being used to secure the trade data?

Captain Samuel Salloum Co-Chairman Global Coalition for Efficient Logistics (GCEL) 12 ❙ ❙b20turkey.org 06 g20g7.com


I. Where is the B2B data presently and is it shared today? Today the B2B data is being shared with trading partners and with proper authorities that are involved in the flow of a shipment. However, the data is being shared passively and in a costly manner with a high level of redundancy and possibility of errors. Presently, multiple methods are being used to share trading data, starting from faxing paper all the way to limited digital exchange. II. Who will decide what data shall be shared and with whom? The data owner will decide what to share and with whom. Instead of sharing the data in a costly and complex manner, the DEP will allow owners of trade data to share their data by simply “checking the box”. This process will provide optimum control in a proactive and efficient manner, reducing privacy exposure as well as minimizing data redundancy and costly errors. III. Who will transfer the data and how? There are two main ways to share the data once the data owner agrees to provide its data proactively rather than passively to its trading partners and to the authorities with whom they are dealing: a) If the data owner is accessing the DEP portal-in (via web portal) once the data owner decides to share its own data, the data will be automatically and securely transferred through the DEP. b) If the data owner is accessing the DEP through its in-house vertical system (plug-in), as soon as the data owner decides to share its own data, that data will be automatically and securely transferred from the in-house vertical system via a pre-qualified data systems integrator to the DEP.

For many years, the technology industry’s clients have been requesting the industry through their trusted solution providers to provide point-toworld integration. This is necessary to replace the present fragmented pointto-point integration, thus improving the efficiency of their in-house vertical systems. IV. What kind of monitoring mechanism is in place to provide a secure environment? Prior to answering this question, it is important to realize a fundamental fact: only a globally integrated platform can boost the efficiency of our B2B market, which is of paramount importance to our present and future economy. Consequently, globally integrated data is an invaluable currency that must be properly maintained, governed and monitored. V. What kind of technology should be used to secure the data? The most advanced physical and technical security systems should be deployed and maintained by the best in class team in the world, with advanced encryption, Multi Factor Authentication (MFA) and Role Based Access Control (RBAC).

SINCE INFORMATION IS THE CURRENCY OF THE FUTURE, IT MUST BE SECURELY EXCHANGED.

Any organization that will be entrusted to deliver the above must have a foundation based on the Axioms of the 5Cs. The 5Cs are the result of 15 years research and development. C.1) Consortium Of Globally Balanced Ownership C.2) Council Of Worldwide Fiduciary Governance Board C.3) Committee Of Technology Governance Board Experts C.4) Controlled Segregated Technology Development C.5) Continuous and Comprehensive Audits

C.1) Consortium Of Globally Balanced Ownership It is necessary to ensure a globally balanced ownership of the DEP in order to offset monopolistic concerns. Furthermore, such ownership must involve semi-government organizations whose mission is to serve the public good. C.2) Council Of Worldwide Fiduciary Governance Board To oversee the proposed Digital Economy Platform it is fundamental that the governance is geo-politically neutral and non-monopolistic, so that no one country or company has undue influence. To ensure an equitable balance, the governance board requires representation from the 4 regions of the world - Europe, Middle-East and Africa, Asia and the Americas. Each region should be represented by semi-government organizations from the 6 major economies in that area with a representative from another country to act as the Chair. In this way 28 countries across the world will represent the DEP governing body. Continued on page 10 Ise-Shima. Japan 2016 ❙ 07


The G7 Global Briefing Report

Welcome

Shinzo Abe Prime Minister of Japan

January 4th 2016 A warm hello to all. I am Shinzo Abe, Prime Minister of Japan. Japan assumed the Presidency of the G7 Summit this year. On May 26 and 27, Japan will convene the G7 Ise-Shima Summit in Mie Prefecture. In Ise-Shima, the stage for the G7 Summit, you can find not only Ise Jingu Shrine with a history dating back to time immemorial, but also marvelous natural beauty including the rich sea spreading out before your eyes, islands large and small, and countless inlets. It is a perfect example of our heartland - a place dear to many, away from the bustling cities. In such an environment, I will make this year’s summit a fruitful one by having candid discussions with the other G7 leaders on various issues confronting the globe. Today, the international community faces numerous challenges. A slowdown in the growth of the global economy, terrorism

threatening people’s lives, a surge of refugees, and unilateral changes to the status quo through the use of coercion are all among the challenges affecting the peace and prosperity we enjoy in our daily lives. The G7 members, which share fundamental values such as freedom, democracy, the rule of law, and human rights, must take a global perspective to provide the most appropriate roadmap for solving these challenges with a clear vision. The G7 Ise-Shima Summit is the first G7 Summit to be convened in Asia since the summit in Toyako eight years ago. I hope to discuss the situation in the Asia-Pacific region with other G7 leaders. In addition to the G7 Summit meeting to be held in Ise-Shima, we will hold the Foreign Ministers’ Meeting in Hiroshima and the Finance Ministers’ Meeting in Sendai, as well as the Agriculture Ministers’ Meeting in Niigata, the ICT Ministers’ Meeting in Takamatsu, the Energy Ministers’ Meeting in Kitakyushu, the Education Ministers’

The G7 members, which share fundamenTal values such as freedom, democracy, The rule of law, and human riGhTs, musT Take a Global perspecTive To provide The mosT appropriaTe roadmap for solvinG These challenGes wiTh a clear vision. 08 ❙ g20g7.com

Meeting in Kurashiki, the Science and Technology Ministers’ Meeting in Tsukuba, the Environment Ministers’ Meeting in Toyama, the Health Ministers’ Meeting in Kobe, and the Transport Ministers’ Meeting in Karuizawa. Scores of journalists from around the world will converge on Japan to cover the G7 Ise-Shima Summit and these ministerial meetings, all of which will be the focus of attention around the world. I hope to take this opportunity to send out to the world our message about Japan’s unique points of appeal, including our culture and traditions, our spirit of hospitality, our world-class washoku cuisine, as well as advanced technologies and our innovation. With your cooperation and assistance, I will work to lead the G7 Ise-Shima Summit to success. Shinzo Abe Prime Minister of Japan


The Official APEC Publication 2012

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The G7 Global Briefing Briefing Report

GCEL

THE DIGITAL ECONOMY IS THE TIPPING POINT TOWARDS A NEW ERA OF PROSPERITY

C.3) Committee Of Technology Governance Board Experts It is not enough that the ownership and governance is geo-politically balanced. There also needs to be a balance at the technical level through a technology board that brings together the best minds of the world to ensure the quality and security of the DEP. Even at the technical level we must ensure a non-monopolistic balance by selecting the most qualified technology firms under an equal opportunity process from the world’s 4 regions, represented by at least 3 companies within each region. It is essential that the technology board be diverse so that all regions of the globe have a seat at the table in terms of responsibility, accountability and decision-making, to ensure the DEP is secure and continuously available for all. C.4) Controlled Segregated Technology Development While all the above is necessary, privacy and security at the data hosting and coding levels are a must. This requires multiple layers of security and segregation of duties. At the data hosting level, multiple data centers with state of the art firewalls and physical access constraints, as well as multiple companies and employees

Continued from page 7 10 ❙ g20g7.com

from diverse countries are required to minimize any monopolistic and geopolitical concerns. Further all software coding should be segregated into a minimum of 5 separate departments. Each will work on isolated modules that will then be integrated by a separate, independent integrator who would not be involved in the coding. This will ensure the highest level of security for the data centers and minimize any backdoor entry to the data. C.5) Continuous and Comprehensive Audits To ensure the utmost transparency, there must be additional checks and balances through a hierarchy of audits. First, continuous audits at every level of the operations will flag exceptions and weaknesses in internal controls thanks to a layered management structure. Second, periodic external audits shall be performed by world class auditors who will provide reports related to security compliance. Third, on-demand audits can be requested by interested parties in order to address specific concerns and verify compliance with data privacy requirements. In summary, this multi-layered audit mechanism will ensure the organization does what they say and says what they do.

All of the aforementioned are essential in ensuring that data security is maintained and that individuals’ and companies’ data privacy is protected. G7 leaders have called at different times for a comprehensive approach to data sharing, data security and that cyberspace is for all mankind and should be in the hands of all nations. The latest call to action came from President Xi of China who in December 2015 at a technology conference in Wuzhen espoused the importance of building a global on line business-tobusiness platform to build global cyber infrastructure and for developed and developing countries to share opportunities brought by the internet and to build a cyber economy for common prosperity. These bold ideas, echoed by other leaders in the G7 and G20, reflects the desire to enable the world economy to perform at optimum levels that 21st century technology can now provide. This vision must be tempered by a robust governance approach that is truly global, geopolitically neutral and nonmonopolistic. The process to achieve this now is clear. Since information is the currency of the future, it must be securely exchanged.

G7 LEADERS HAVE CALLED FOR A COMPREHENSIVE APPROACH TO DATA SHARING


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Ise-Shima. Japan 2016 â?™ 11


The G7 Global Briefing Report

Welcome

鈴木 英敬 三重県知事

この度、伊勢志摩サミット開催を機に、 三重県・伊勢志摩へお越しいただいた皆様 には、三重県民を代表し、三重県知事とし て、心から歓迎申し上げます。今回、伊勢 志摩でサミットが開催され、世界のリーダ ーに来県いただくことは、大変喜ばしく、 光栄に思います。 三重県は、日本列島のほぼ中央、太平洋 側に位置し、南北に長い地形から、スキー のできる山岳や、亜熱帯植物の群生する海 浜等、変化に富んだ自然に恵まれていま す。2つの国立公園と2つの国定公園を有 し、サミットが開催される伊勢志摩国立公 園の沿岸部は、英虞湾をはじめ、リアス式 海岸特有の複雑に入り組んだ美しい海岸線 が広がっています。また、2004年には、 熊野古道が「紀伊山地の霊場と参詣道」と して世界遺産登録されました。 こうした日本の原風景ともいえる美しい 自然を感じていただけるだけでなく、伊勢

神宮や海女文化等に代表される日本の精神 性、豊かな伝統・文化に触れていただける地 域でもあります。伊勢神宮は、日本人の代表 的な心の「ふるさと」であり、宗派、人種等 を超えて、多様な価値観を受け入れ、共に生 きていくという性格を有しています。そし て、約1,300年もの長きにわたり、20年に 1度、「神宮式年遷宮」が行われ、いつまで も若々しい生命の輝きを願う日本人の心「常 若」の精神が脈々と受け継がれています。時 代の変化に合わせながら、平和や経済発展等 を普遍的なものとするためには、守るべきも のは守り、変えるものは変えることが大事で あり、三重県はこうした精神性、世界観を持 つ地域です。一方で、F1が開催される鈴鹿 サーキットやMRJ、NAND型フラッシュ メモリーの生産拠点が集積するといった、も のづくりの最新技術やイノベーションを感じ ることができる場も多く存在しています。「 伝統」と「革新」、「動」と「静」が共存す

三重県は、日本列島のほぼ中央、 太平洋側に位置しています 12 ❙ g20g7.com

る魅力あふれる場所、それが三重県です。 食に関しても、あわび、伊勢えび、牡 蠣、ふぐ等、豊かな自然の中で育まれる日 本有数の魚介類の宝庫としても知られてお り、この他、高級霜降り和牛で有名な松阪 牛の産地でもあります。 サミットの開催を通じて来県された皆様 には、三重県ならではの魅力を体感・実感 いただくことで、三重県のファンになって いただけることを、私は確信しています。 G7首脳による議論においては、世界が 直面する諸課題への処方箋を示していただ くとともに、我が国の平和の象徴の一つで もあるこの伊勢志摩の地から、世界に対し て平和実現のためのメッセージを発信して いただくことを願っております。

鈴木 英敬 三重県知事



The G7 Global Briefing Report

Welcome

Eikei Suzuki Governor of Mie Prefecture

On behalf of all the citizens of Mie Prefecture, I would like to extend my heartfelt welcome to all of you, who have come to Mie Prefecture on this occasion of the G7 IseShima Summit. As the Governor of Mie Prefecture, I am delighted to have the honor of hosting this event and welcoming the world’s leaders here to our region. Mie Prefecture is located on the Pacific coast in the central region of the Japanese Archipelago. Extending from north to south, Mie has diverse climatic and topological features, ranging from snow-capped mountains where you can ski in winter to sea shores where subtropical plants thrive. The prefecture includes two national parks and two quasi-national parks. Ise-Shima National Park, where the Ise-Shima Summit is being held, has a deeply indented shoreline with beautiful inlets, such as Ago Bay. The Kumano region in the western part of Mie Prefecture is home to ancient pilgrimage routes, which were inscribed on the World Heritage list in 2004 as part of the Sacred Sites and Pilgrimage Routes in the Kii Mountain Range.

In addition to its beautiful natural landscapes, this region preserves Japan’s traditions and its spiritual culture, as represented by Ise Jingu Shrine (Ise Jingu) and the tradition of ama (women divers who gather seafood from the bottom of the sea). Ise Jingu, which is revered by Japanese people as their spiritual home, is characterized by the belief that all people in the world should live in harmony by mutually accepting diverse values and overcoming differences in religion or race. Over the past 1,300 years, Ise Jingu has observed the Shikinen Sengu (a ritual rebuilding of shrine buildings and transfer of the deity to new buildings) every 20 years. Through this practice, the shrine has inherited our ancestors’ wishes for rejuvenation and eternal youth. While the shrine buildings change every 20 years, the architectural style of the original structure has been passed down since ancient times. There are times when we need to change some systems and practices in response to changes in society. But at the same time, there are also systems and practices that we must preserve and pass on to future generations. This flexible approach is indispensable to develop our economy and foster world peace. While Mie preserves long traditions, the prefecture also has many advanced facilities of cuttingedge technologies. To name a few, Suzuka

MIE PREFECTURE IS LOCATED ON THE PACIFIC COAST IN THE CENTRAL REGION OF THE JAPANESE ARCHIPELAGO. 14 ❙ g20g7.com

International Racing Course (Suzuka Circuit) is known for its F1 races. We also have industrial clusters, producing Mitsubishi Regional Jet (MRJ) aircraft and NAND type flash memories. In short, Mie Prefecture represents the harmonious coexistence of traditional and innovative aspects, as well as dynamic and static elements. Mie is also known for its abundant natural blessings, particularly seafood, including abalones, lobsters, oysters, and fugu (blowfish). Moreover, Mie is the production center of Matsusaka beef, the world’s highest-grade marbled beef. I truly hope that your visit to Mie Prefecture on this occasion of the Ise-Shima Summit will make you all enthusiastic fans of this region. Moreover, it is my sincere hope that after thorough and in-depth discussions at the summit, the leaders of the G7 countries will be able to suggest best solutions for the various challenges that the world is confronted, and to deliver a message toward realizing permanent world peace from IseShima, a location that is regarded by the Japanese people as a sanctuary of peace.

Eikei Suzuki Governor of Mie Prefecture



The G7 Global Briefing Report

Travel Authored by: Winona Roylance

Ise-Shima: A Journey into a Spiritual Land

The 42nd annual G7 Summit will be held on Kashiko Island, located in the Ise-Shima area of the Mie Prefecture in Japan. The venue was chosen by Prime Minister Shinzo Abe for its rich culture and beautiful scenery.

Ago bay in Shima, Mie, Japan

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T

here exists an island floating on a bay of pearls, surrounded by rolling green mountains and tranquil shores. In the distance, an ancient shrine houses an imperial family of ancestral deities, beckoning millions of pilgrims on a spiritual journey each year. It is a secluded paradise, abundant in seafood, shorelines and tradition. It is also the host of this year’s G7 Summit. The 42nd annual G7 Summit will be held on Kashiko Island, located in the Ise-Shima area of the Mie Prefecture in Japan. Chosen by Prime Minister Shinzo Abe for its rich culture and beautiful scenery, the G7 leaders will be staying at the Shima Kanko Hotel in late May for the annual two-day summit.

During the G7 summit as with any time of the year, visitors will be able to explore the beautiful landscape of the Ise-Shima area, dine on local seafood, and visit aquariums to learn about the sea life surrounding Japan. They can also learn about the pearlcultivating culture of Ago Bay, or make their way to the famous Ise Shrine to experience ancient Japanese culture firsthand. There is even a Spanish-themed amusement park for those wanting a little European flavor during their stay. Whether it’s adventure, culture, luxury, or cuisine, Ise-Shima has something special for everyone. An Abundance of Pearls Surrounding Kashiko Island is Ago Bay, a scenic inlet with a rugged coastline located

SurroundInG KAShIKo ISlAnd IS AGo BAy, A ScenIc InleT wITh A ruGGed coASTlIne locATed In The SouThern hAlf of ShIMA. in the southern half of Shima. Ago Bay first gained recognition in 1893 as the birthplace of assisted pearl cultivation, leading to a local economy based on oyster and pearl production. Since then, the area has become renowned for their exquisite pearls and pearl-collecting techniques. ›

Ise-Shima. Japan 2016 ❙ 17


The G7 Global Briefing Report

Travel

Meoto-iwa rocks

› Visitors can experience the “Bay of Pearls” through a variety of sightseeing cruises. Travelling along the bay’s waters on either large cruise ships or small boats, tourists enjoy a scenic display of secluded islands, wildlife, and oyster rafts where pearlproducing oysters are collected. With the Esparanza Cruise, visitors even have the option of visiting one of the largest pearl factories in Shima. A Journey into a Spiritual Land About 25 kilometers inland from Ago Bay lies one of Japan’s most honored historical sites: the Ise Jingu, or the Ise Grand Shrine. Built Ise Grand Shrine

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nAIKu, The Inner ShrIne, wAS BuIlT for AMATerASu-oMIKAMI, The Sun GoddeSS froM whoM The JAPAneSe IMPerIAl fAMIly IS deScended. GeKu, on The oTher hAnd, wAS BuIlT To worShIP ToyouKeoMIKAMI, The GuArdIAn of food, cloThInG, And InduSTry.

nearly two thousand years ago, the Ise Jingu is home to over 120 shrines honoring the ancestral deities of Japan. Each year, millions of pilgrims flock to this area to honor their ancient ancestors through food offerings and prayer. The two largest shrines, Naiku and Geku, are restricted to members of the Japanese Imperial family, but visitors are often seen worshipping at the fence surrounding the sanctuary. Naiku, the inner shrine, was built for Amaterasu-omikami, the Sun Goddess from whom the Japanese Imperial family is descended. Geku, on the other hand, was built to worship Toyouke-omikami, the

guardian of food, clothing, and industry. Every 20 years or so these shrines are burned down and rebuilt from scratch in a ceremony called Shikinen Sengo, with festivals and ceremonies held to celebrate. On the outskirts of the Ise Grand Shrine lay several traditional villages where visitors can sleep in old-fashioned Japanese inns, dine at wooden-built restaurants, and browse souvenir shops. Towns such as Oharai-machi and Futamigaura are popular options for tourist to visit, with Futamigaura also being home to the famous Meoto-iwa rocks. Through the rich culture and history of Ise Jingu, visitors are able to truly connect with Japanese culture and learn firsthand about its ancient roots. Modern Shima: Amusement Parks, Aquariums, and Food After returning from their expedition through the spiritual lands of Japan, visitors can begin to enjoy the more modern attractions Shima has to offer. One of their biggest tourist attractions is the Shima Spain Village, a Spanish-themed amusement park full of entertainment, roller coasters, and Spanish dining. Built in an effort to recreate the famous places and townscapes of Spain, the Shima Spain Village is a great place to take the family. There, visitors can ride the Fiesta Train, watch the “Running of the Bulls” Street Musical, and enjoy the Parque Espana carnival. Another popular tourist attraction is the Shima Marineland Aquarium, located right on Kashiko Island. Well-known for their sunfish, penguins, and a legendary goldfish that managed to live undetected in a filtration unit for several years, visitors are also able to watch demonstrations by pearl divers and learn more about the fascinating ecosystem that surrounds the island. Finally, visitors can dine at a variety of restaurants and eateries in and around Shima. Specializing in seafood, many restaurants along the coast serve sea urchins, oysters, clams, and Japanese scallions. The famous Japanese Spiny Lobster, known as ise-ebi, derives its name from the surrounding Ise-Shima area and can be found in many food places. And for those not accustomed to seafood, famous dishes such as shabu shabu, sukiyaki and Matsuzaka beef can be found throughout the area as well. Ise-Shima is the ideal getaway for those who want to experience the true essence of Japan. Rich in culture, history, and scenic views, visitors can explore the bay, traverse sacred forests and enjoy parades all in a day’s journey. ■


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The G7 Global Briefing Report

Travel Planned and Produced by: Atsuya Wada

G7 Japan and Green Resilience from our “World Park” 1. Japan, Ise-Shima and Edo Japan assumed the Presidency of the G7 Summit this year. On May 26 and 27, Japan will convene the G7 Ise-Shima Summit in Mie Prefecture. In Ise-Shima, the stage for the G7 Summit, you can find not only Ise Jingu Shrine with a history dating back to time immemorial, but also marvelous natural beauty including the rich sea spreading out before your eyes, islands large and small, and countless inlets. It is a perfect example of our heartland - a place dear to many, away from the bustling cities. Hosting PM Abe started his welcome message. Lastly he said,” I hope to take this opportunity to send out to the world our message about Japan’s unique points of appeal, including our culture and traditions, our spirit of hospitality, our world-class washoku cuisine, as well as advanced technologies and our innovation.” Ise-Shima has been our “Gate to our Happiness”, our heartland as PM pointed out, and experienced a nationwide boom of mass pilgrimages to the Ise Grand Shrine, called the “Okage Mairi (Ise Jingu Pilgrimage) “ during the Edo period in 1603-1868, when in a year 1/5 of the whole population visited here in historical documents. Facing to the East and the Pacific geographically, Ise-Shima has been the gate where the Sun rises, happiness or blessings come and disasters also comes sometime when the God upsets, and is the best place the Sun Goddess (Amaterasu Omikami) existed, geologists or folklorists said.

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Edo, Tokyo nowadays, has been one of the largest and the most eco-sustainable city in the world and as we can see from Tokyo, Edo citizens saw Mt Fuji as their aesthetic symbol of natural and social beauty. The largest sustainably developed city, Edo, is now the symbol of sustainable city full of eco-diversity and green infrastructure, with which Tokyo Metropolitan Government, Ministry of Land, Infrastructure, Transport and Tourism (MLIT), Ministry of the Environment (MOE) and other ministries prepare for the 2020 Tokyo Olympic & Paralympic Game, following 2019 Yokohama Rugby World Cup. In October 2015, for example, the mid-term report was open the Review Group for Urban Parks Polies alongside with New City Managements at the Parks, Green Spaces and Landscape Division, City Bureau, MLIT. 2. G7 Main Agenda and a new Quality Green Infrastructure Investment Main Agenda for the G7 Ise-Shima Summit includes Global Economy and Trade, Foreign Policy, Climate Change and Energy after COP21, Development aiming at SDGs, Quality Infrastructure Investment, Global Health and Women Engagement, etc. Japan as the chair and G7 members are preparing the discussion. The New Quality Green Infrastructure Investments will bring us our own creative solutions for; I Healthy Society and People, II Healthy Earth and Innovative Environment and III Peace, Safe and Innovative Life, in order to enforce our Green Resilience. We Commonearth Park international Community (CePiC) Federation, based on cross-sectoral and international collaborations with civil society, business, government, academia and Our Park Supporters, declare to G7 and other states’ leaders, international society and organization such as the United Nation, how we invest, use or desterilize more parks and other neighboring open spaces as brand new Quality Green Infrastructures, we call “Commonearth Parks”, in order to enforce our Planetary Health & Resilience, we call Green Resilience. The Commonearth Park will bring us our own creative solutions for;

i Healthy Society and People, as “Our House or Healthy Family”, for Global Health and Social Inclusions, ii Healthy Earth and Innovative Environment, as “Special Eco Zone”, for Planetary Health, iii Peace, Safe and Innovative Life, as “Our Community or Global Sight”, for Planetary Resilience or SDGs. Our cross-sectoral and international team is now, for example, proceeding following global projects. i Dr Children Youth Terrace and Neuvola + PLUS Community Card System We extend Finland’s Child & Family Care System, Neuvola, to Youth & Cared elderly people and their family & community with our unique Community Card big-data CCS system, all the risk assessment & resolution system package, we call Neuvola + PLUS. We expand examination from London, Asia, the USA to all the communities in Japan with Ministry of Health, Labour and Welfare, etc. ii Eco-planetary Olympic torch & medals and Citizens FUKU-FUKU bio-ethanol & PLA-PLUS plastic civil recycle project Our project partner entrepreneur JEPLAN, INC., whose CEO Michihiko Iwamoto is 2015 Ashoka Fellow, extend this unique nation-wide recycling social business model to all the corporation, including JOC & IOC, based on Japan toward all over the world. iii Aristotle iv , water, air, solid & warmth, big-data Simulation Systems for planetary resilience Our unique big-data Simulation System can show you all streams of water, air, solid & warmth on or beneath the Land of Japan, Asia (for example whole Sri-rancagua Island) toward all over the world (for example whole Great Britten Islands), in order to enforce our Planetary Green Resilience. We will discuss to declare for developing them with civil societies, communities,


crosssectoral supporters including “Green Park Industry”, we call, and for co-creating “World Parks” like UNESCO’s ”World Heritages”, as best practices to protect or nurse our Lives including our future generation, children, the earth, creatures and all the weakest on earth all over the world, as we call “It’s Our Park! with the Kite & Candle of Life” project. We welcome all participants from business, government, academia and civil society who are interested in parks, community development and international contribution but are not park specialists to this e-International RoundtablE (at https:// www.facebook.com/g7worldpark ). Tweet your innovative idea at #G7WorldPark and we welcome you to put your name on this declaration when your idea is brand new and innovative. 3. G7 Legacy for 2020 Tokyo Olympic & Paralympic Game and for Our Future Since this year 2016 is an Olympic year in summer at Rio de Janeiro, the next Olympic & Paralympic game will be held in 2020 at Tokyo. Japan, as a member of developed G7 old country club, slowed down her GDP below China just as UK experienced around the WWI and dare to wish that 2020 Tokyo Olympic could burst her economy and

society again just as experienced with 1964 Tokyo Olympic Game. The IOC wishes that Japan could create to start a brand new Olympic, just as Athen started Modern Olympics and Los Angeles started Corporate Olympics, and believes that Japan could realize it as Civil or Planetary Olympics, for example, because non European developed Asian unique country Japan has experienced economically, environmentally, socially, culturally and historically different challenges and outcomes which might contribute to tackle with upcoming more planetary challenges in her unique and innovative way. The first politically and economically important step to start it, could be this G7 Summit and related Ministerial Meetings. For us cross-sectoral and international team to realize it with Japanese and other Asian or other regional people concerned or interested, we declare to co-create your Commonearth Parks in your home town or country, one of which might be registered as the World Park by UN World Park Organization like WHO or UNESCO, with G7 and other states’ leaders and G7 readers, you. (See https://www. facebook.com/g7worldpark , http:// twitter/#G7WorldPark) We, Commonearth Park international Community (CePiC) Federation can establish

Hibiya-CePiC at Hibiya Park, Hyde-CePiC at Hyde Park and A-CePiC at our neighboring Park A. This community governance will be assisted with science by academia, with rule, law and policy by governments, with new Common earth Park Industry by business, to expand with a tangible civil democracy with ICT based on history and wisdom of Japanese gardens. All the leaders or presidents of CePiCs, investors and donors get together electrically annually to expand and manage CePiCF and CePiCs’ website, exchange CePiCs’ TY Points and arrange Sister Parks and Park Ambassadors/Hero/ Heroin, via your supporting Park A, her Sister Park B, all 500 Japanese gardens with related traditional but cool culture, your neighboring Healthy Park C, Open space D alongside with your office or school, Natural Park E, World Heritage F, Geopark G, etc. When we would like to support Park A, we bring our used clothing (waste) to the park, which will be recycled to become bio ethanol, that revive to be candles(now resources) and we download CePiC Membership Application. These Candles of Life light all the darkest community and save the weakest family and people on earth. We will also expand “Kite of Life, Health, Peace & Safety at our Parks” project as one of our “It’s Our Park! with the Kite & Candle of Life” project. On some of these kites, children, youth, cross-sectoral and international civil people rote their messages, condolences or dreams to G7, UN and other states’ or organizations’ leaders, and people all over the world and all the passed-away people inter-connected all over the sky or space. The front side of the kite shows us our messages or dreams for us including our leaders and the back side sends all our ancestors our condolences, thanks, messages or dreams for all of us. These Kites must be the symbols of Our Lives at/from/ beyond Our Parks. These projects could push our backs forward to co-create our Commonearth Parks, to invest, use or desterilize more parks and other neighboring open spaces as brand new Quality Green Infrastructures, to tackle with our social, environmental, political, ºeconomical…challenges and to protect or nurse our Lives including our future generation, children, the earth, creatures and all the weakest on earth all over the world. ■ Ise-Shima. Japan 2016 ❙ 21


The G7 Global Briefing Report

Regional Politics Authored by: Akshan de Alwis

A New Age of Minilateralism: Potential Solutions for the South China Sea Conundrum The postwar alliance system that Washington cultivated initially with its Asia-Pacific allies has changed into a more complex structure of security relationships in response to the region’s increasingly complicated security environment.

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O

ver 70 years after its founding, the “San Francisco System” of American bilateral alliances (named after the city where its original components were founded when the Japan peace treaty was signed there in September 1951) remains intact. This outcome departs from prevailing international relations theory about power balancing - which anticipates that once the original threat that initiated an alliance network weakens or changes, alliance dissolution becomes more probable. With the collapse of the Soviet Union and with China’s adoption of liberal market reforms, the Cold War receded into history. Key U.S. regional security allies feared that the expected “peace dividend” that U.S. policymakers coveted through reductions in Cold War defense spending levels would translate into a substantial American disengagement from its regional deterrence and defense commitments, leaving them strategically abandoned in a transformed international security environment. Indeed, visions of a multilateral collective security framework in the Asia-Pacific took hold during the early 1990s as a more promising model for regional order-building. However, both apprehensions about alliance dissolution and hopes for multilateral collective security institutions have proved to be misplaced. ›

The PosTWAr AlliAnce sysTem ThAT WAshingTon culTivATed iniTiAlly WiTh iTs AsiA-PAcific Allies, hoWever, hAs chAnged inTo A more comPlex sTrucTure of securiTy relATionshiPs in resPonse To The region’s increAsingly comPlicATed securiTy environmenT. Ise-Shima. Japan 2016 ❙ 23


The G7 Global Briefing Report

Regional Politics

› The postwar alliance system that Washington cultivated initially with its Asia-Pacific allies, however, has changed into a more complex structure of security relationships in response to the region’s increasingly complicated security environment. U.S. security alliances and evolving security “partnerships” are viewed both by Washington and regional friends as instruments of order-building, not just as defensive arrangements based on threatcentric assessments. Contemporary security challenges mandate ever greater flexibility in U.S. alliance rationalization and management. International terrorism, pandemics, largescale natural disasters (arguably attributable to global warming), and other nontraditional security challenges that routinely transcend sovereign boundaries now co-exist with traditional national security and geopolitical threats. Such multiple contingencies require more enlightened and nimble security policy collaboration. The Barack Obama administration’s “pivot” or “rebalance” to Asia squarely places alliances at what then U.S. Secretary of State Hillary Clinton described as the “fulcrum for our strategic turn to the Asia Pacific.” Accordingly, Washington wants the San Francisco System to remain viable in an increasingly complex regional security environment. Such an objective can be 24 ❙ g20g7.com

realized by adopting what Clinton identified as three core principles for American management of its Asia-Pacific alliance system: (i) maintaining political consensus within an alliance over what it is about and what it wishes to achieve; (ii) ensuring that each alliance is “nimble and adaptive” so that it can successfully address new challenges and seize new opportunities; and (iii) assuring that the defense capabilities and communications infrastructure of each alliance are operationally and materially capable of deterring provocation from the full spectrum of state and nonstate actors. Simultaneously the United States seeks to reassure its Asia-Pacific security partners that they will not be abandoned in the face of rising Chinese power and assertiveness. Further, the United States will sustain its commitments to defend its formal allies and strengthen its collaboration with other key Asian states that are instrumental for maintaining what the United States views as a favorable regional balance of power. However, the United States has posited that it expects that allies and partners will reciprocate by contributing meaningfully to collective defense and extended deterrence as well as support American-led efforts at regional order and institution-building. Ashley Tellis has aptly described this American policy position: “Because the cost

of U.S. contributions toward such collective goods may become more burdensome over time, accepting increased contributions by friends and allies remains an attractive solution … So long as their political aims fundamentally cohere with Washington’s, anything they do to augment the supply of global public goods serves the U.S., their own, and other common interests.” It remains to be determined, however, if the security interests of American allies and potential U.S. security partners “fundamentally cohere” with those of the United States or, even more tellingly with each other’s, in the emerging Asia-Pacific security environment. Recent efforts by Japan’s Prime Minister Shinzo Abe to accelerate his country’s role as a “more normal” national security actor are generally welcomed in the United States, but the handling of Japan’s historical grievances with its neighbors generates concern in Washington. So too do the powerful political nationalistic forces that at times have prompted South Korea to aspire to and pursue avenues for reunification with a still highly bellicose and nuclear-armed North Korea, to explore longer-term economic and geopolitical ties with China, and to rail against Japan over still unresolved historical issues and territorial disputes. At least some policymakers in Seoul may view South


recenT efforTs by JAPAn’s Prime minisTer shinzo Abe To AccelerATe his counTry’s role As A “more normAl” nATionAl securiTy AcTor Are generAlly Welcomed in The uniTed sTATes, buT The hAndling of JAPAn’s hisToricAl grievAnces WiTh iTs neighbors generATes concern in WAshingTon.

Korea’s security alliance with the United States as much as a hedging instrument toward a changing Asian power balance that encompasses Japan’s “normalization” as an instrument of deterrence against a threatening North Korea. The Philippines adheres to a constitution that forbids the permanent stationing or deployment of foreign troops on its soil, even while it negotiates closer military relations with the United States. Thai-American tensions intensified noticeably in the aftermath of Thailand’s military coup and the supplanting of a democratically elected government in May 2014. America’s most interoperable and close regional ally, Australia, confronts the policy nightmare of “choosing” between China—Australia’s major trading partner—and the United States—that country’s traditional “great and powerful friend”—in a future regional conflict that may see the two superpowers clash over Taiwan, Japanese control of the Senkaku/ Diaoyu islands, or even possibly in the South China Sea. While recently developing closer strategic ties with the United States, India still largely clings to its postwar heritage of nonalignment. Indonesia, Malaysia, Singapore, and Vietnam conduct growing and significant military relations with the United States, but likewise adhere to the Association of Southeast Asian Nations’ (ASEAN) pre-eminent norm of strategic balance between great powers.

What remains unclear at this point in time is to what extent the “hub and spokes” of the San Francisco System are undergoing transformation into new and more nuanced forms of alignment required to accommodate or balance the region’s rising powers and how any such transformation will sustain a meaningful U.S. security role in this area of the world. Addressing the characteristics, differences, and relative intensities of formal U.S. bilateral alliances, emerging U.S. security partnerships and the potential for trilateral or minilateral “hybrids” between alliance and

partnership to contribute or detract from regional order-building may enhance our understanding of how such arrangements may either facilitate or impede such regional order-building and stability. Managing Alliances in a More Complicated World There is little controversy over what generally constitutes an alliance: “a formal or informal commitment for security cooperation between two or more states,” claims Stephen M. Walt at the University › Ise-Shima. Japan 2016 ❙ 25


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Regional Politics › of Chicago. The presence of a binding “commitment” implies that an alliance entails durability and incorporates multiple elements of collaboration between those parties allied to one another, as opposed to a security “partnership” that is more issue-specific. During the Cold War, the United States maintained an extensive network of alliances across Eurasia, including the North Atlantic Treaty Organization (NATO) in Europe, the Baghdad Pact which later morphed into the Central Treaty Organization (CENTO) in the Middle East and South Asia, and the San Francisco System in Asia which co-existed with the Southeast Asia Treaty Organization (SEATO). The “credibility of commitment” underpinning the United States’ alliance commitments in Europe and Asia was sustained by formal treaty agreements— a multilateral collective defense treaty in NATO’s case and bilateral mutual defense treaties that Washington honored with each of its formal Asian allies that constituted the San Francisco System. NATO and the U.S. bilateral alliances in the Asia-Pacific have remained operative even as political and strategic developments in the Middle East and Southeast Asia rendered the rationale and operational integrity of CENTO and SEATO moribund long ago. NATO arguably became more of an “alliance of choice” than an “alliance of necessity” following the Soviet Union’s demise in December 1991. Russia’s recent incursions into Ukraine and Russian leader Vladimir Putin’s increasingly strident anti-Western posture has at least revitalized NATO’s purpose and endeavors. But questions still loom over the extent to which NATO member-states share a unifying purpose in the way that the Soviet threat provided a rationale for alliance collaboration during the Cold War. The Asia-Pacific threat environment evolved in even more complex ways than contemporary Europe. China’s politico-strategic identity and growing wealth came to be viewed by successive U.S. administrations as necessitating both cooperative and competitive dimensions in regional order-building. North Korea’s military and nuclear capacity, while formidable, was still viewed as out of proportion to that country’s prolonged economic doldrums, its long-term sociopolitical viability, and its inability to preserve what few friendships it had cultivated since its existence. In such an environment of strategic ambiguity, how and to what extent have the United States’ formal bilateral treaty alliances retained their significance? 26 ❙ g20g7.com

U.S. “grand strategy” in the Asia-Pacific is to prevent dominance by a hostile hegemon, cultivate an open regional trading regime, and promote political liberalization, human rights, and observance of international law, as noted by Michael J. Green of the Center for Strategic and International Studies. The San Francisco System, since its inception, has played a central role in realizing this strategy by extending to the United States’ formal regional allies credible deterrence against external conventional and nuclear attacks, and maintaining a forward U.S. force presence in the region to underwrite such deterrence. It has sustained an acceptable regional balance of power, and given these allies more advanced intelligence and technologies to facilitate their own defense capabilities against potential military threats. Asymmetrical security relationships upheld by Washington with its formal Asia-Pacific allies have traditionally translated into a dominant American “hub” generating defense benefits for its smaller allies or “spokes,” to counter the power of Soviet or Chinese expansion in their region. Even as the Cold War was drawing to a close, U.S. officials perceived little reason for changing a system that had worked well for nearly four decades and rejected early post-Cold War proposals for developing multilateral security mechanisms proposed by Australia, Canada, and Japan. U.S. Assistant Secretary of State for East Asia and the Pacific, Richard Solomon, observed at the time that European-style multilateralism would not work in a region still mired in threat-centric geopolitics given the rise of China, a still volatile Korean peninsula, and lingering tensions over history and contested territory: “The nature of the security challenges we anticipate in the years ahead—do not easily lend themselves to region-wide solutions. When we look at the key determinants of stability in Asia … it is difficult to see how a Helsinki-type institution would be an appropriate forum for enhancing security or promoting conflict resolution.” So far, history has largely vindicated Solomon’s view. As new security challenges have emerged in the Asia-Pacific after the Cold War and in response to the urgings of U.S. regional allies and partners, U.S. policymakers have gradually recognized that the San Francisco System would need to adapt in order to survive. New multilateral forums such as the ASEAN Regional Forum and the East Asia Summit have emerged to become important

NATO ArguAbly becAme mOre Of AN “AlliANce Of chOice” ThAN AN “AlliANce Of NecessiTy” fOllOwiNg The sOvieT uNiON’s demise iN december 1991. russiA’s receNT iNcursiONs iNTO ukrAiNe ANd russiAN leAder vlAdimir PuTiN’s iNcreAsiNgly sTrideNT ANTi-wesTerN POsTure hAs AT leAsT reviTAlized NATO’s PurPOse ANd eNdeAvOrs.

components in the region’s security policy arena. Adjustments in America’s bilateral alliance system were required and the development of, and U.S. participation in, regional multilateralism goes some way in meeting these requirements. These included the United States signing on to multilateralism as a way of reassuring allies that a U.S. security presence would still be continued even as new order-building initiatives were pursued, “institutionalizing” America’s presence in regional orderbuilding, and facilitating new networked partnerships through the usage of regional institutions.Emerging regional security issues have become more diverse. They include the spill-over of domestic instabilities into regional and global security arenas, to the intensification of terrorism, resource politics, environmental crises, pandemics, human security contingencies, and other factors shaping the “global commons.” Such a “regional–global nexus” is not confined to nontraditional security elements. Geopolitical rivalries have also intensified in the region as the Asia-Pacific’s strategic environment transforms into an increasingly multipolar balance of power and as nationalism intensifies throughout much of the region. How can the United States achieve a judicious policy equilibrium between fulfilling its historical but still critical role of maintaining regional stability through military strength and its traditional alliances, while integrating those alliances with newer and dynamic forms of


minilateral and multilateral security politics? Positioning its postwar bilateral alliances to complement the Asia-Pacific’s evolving multilateral security framework, and simultaneously networking its alliances and partnerships, will constitute major challenges to Washington’s policymakers. It was hardly coincidental that President Obama’s 2015 National Security Strategy document reflected on this challenge: “We are modernizing our alliances with Japan, South Korea, Australia, and the Philippines and enhancing the interactions among them to ensure they are fully

capable of responding to regional and global challenges. We are committed to strengthening regional institutions such as ASEAN, the East Asia Summit, and AsiaPacific Economic Cooperation to reinforce shared rules and norms, forge collective responses to shared challenges, and help ensure peaceful resolution of disputes.” It may appear to some that this statement suggests that there is a choice between alliances and partnerships on the one hand and multilateral institutions on the other. Actually, America’s policy approach to Asia-Pacific architecture is an adjunct to

the centrality of the alliance in the development of new partnerships, and the networking of alliances and partnerships. This is evident in a range of trilateral efforts such as the U.S.-Japan-South Korea, the U.S.-Japan-Australia, and the U.S. -JapanIndia, as well as efforts to support closer relations among various groupings of Southeast Asian states. Perhaps the most salient policy challenge for U.S. alliance politics is the need to encourage its allies to collaborate more systematically and effectively beyond the traditional bilateral alliance network. The United States has insisted it will maintain a significant force presence in the region, actually increasing its military capacity there by 2020. It is deploying to the region 60% of its naval fleet (including a majority of its aircraft carriers), 60% of its overseas based forces, larger contingents of U.S. Marine rotational forces in Australia, and a more extensive or upgraded presence in bases in Japan, South Korea, Guam, and the Philippines. It thus proposes to ensure freedom of passage through the region’s critical sea lines of communication (SLOC) and to play a continuing balancing role in the Asia-Pacific. American defense officials are simultaneously encouraging America’s allies to engage in strategic collaboration and military capacity-building measures beyond Washington’s orbit of formal regional alliances but in ways clearly meriting American support. Under the Abe government, Japan appears to be spearheading this “spoke-to-spoke” process. Australian-Japanese bilateral defense ties are perhaps the clearest example of how this trend has developed, with the formalization of intelligence sharing, logistical arrangements, and defense technology exchanges reaching increasingly significant proportions. Japan-Philippines defense ties are likewise maturing in substantial ways with the acceleration of military exercises near the South China Sea, Japan’s transfer of patrol boats and contemplated sales of maritime surveillance systems to the Philippines, and the intensification of Japan-Philippines defense dialogues. Japanese-South Korean defense relations remain impeded by issues of history and territorial sovereignty, and long-standing South Korean feelings that the United States assigns greater priority to the U.S.-Japan alliance than to its alliance with Seoul. Overall, however, U.S. officials can only be pleased that its regional allies are taking the initiative to supplement their historical › Ise-Shima. Japan 2016 ❙ 27


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Regional Politics › security ties with the American “hub” with more intensive “spoke-to spoke” defense ties with each other. Partnerships Outside the formal U.S. alliance framework, other Asia-Pacific states seeking partnership with the United States in niche areas of security cooperation, where their own interests may coincide with Washington’s, will be required to weigh the comparative risks and benefits of associating with the United States against the need to sustain their independent status in their own judgment and in the eyes of those who would otherwise view such collaboration as subordinating their own strategic interests (i.e., China). A fundamental issue is how such modernization of alliances can address the abandonment and entrapment feared by both the United States and its allies and partners, and concerns that modernizing alliances might upset a rising China. This dilemma affects decisions about what degree of alignment regional security actors may wish to pursue with the United States. “Alignment” is a relationship between two or more states that involves mutual expectations of some degree of policy coordination on security issues under certain conditions in the future. “Alliance” is a relatively formal and exacting kind of alignment that involves military interaction between states and is usually directed toward a mutually perceived threat, whereas alignment could involve military, political, economic, diplomatic, or cultural spheres of activity. The use of the term was somewhat broadened (critics would say “diluted”) by the George H. W. Bush, Bill Clinton, and George W. Bush administrations in nominating 16 “major non-NATO allies” (including Taiwan) to help the United States check Iraqi ambitions in the Middle East, facilitate defense and technology systems’ collaborative research and development, and to assist in the United States’ “war on terror” following the 9/11 attacks on New York and Washington. The Obama administration has continued this practice by nominating Afghanistan (2012) and Tunisia (2015) as major non-NATO allies. In December 2014, the U.S. Congress passed and President Obama signed the U.S.-Israel Major Strategic Partnership Act that would establish a new category of formal alignment one level above major non-NATO allies status. Increasingly, “partnership” is the label of choice for describing contemporary defense and security relations between two states. A security “partnership” is a more fluid 28 ❙ g20g7.com

“AlliAnce” is A relAtively formAl And exActing kind of Alignment thAt involves militAry interAction between stAtes And is usuAlly directed towArd A mutuAlly perceived threAt, whereAs Alignment could involve militAry, politicAl, economic, diplomAtic, or culturAl spheres of Activity.

association in which obligations are voluntarily assumed but not contractually defined, binding, or specified. Partnerships can be reviewed and modified on a case by case or temporal basis, whereas alliances commit the parties to treaty-strength obligations that require a major diplomatic rupture for them to be abrogated. Apart from their looser form of alignment compared to alliances, security partnerships have at least two other outstanding characteristics: structures of interaction which are usually embedded in the joint statements which identify areas of cooperation; and underlying motives for cooperation based on “address[ing] common challenges and … seiz[ing] opportunities in several areas” rather than countering a particular country or group in a threat-centric context. In the Asia-Pacific, a third characteristic, in particular, has emerged as a critical precondition of U.S. partnership-building with selected regional states—”identifying common security interests with the countries in question and shared thinking on how to realize those interests,” says William Tow in his article “Rebalancing and order building: Strategy or illusion?” Structures are shaped and motives are sharpened through partner capacitybuilding to generate greater material power for achieving common interests, and through pursuing economic, diplomatic, and military cooperation to promote “rules-based” Asia-Pacific security, democratization, and regional stability U.S. policymakers have moved to infuse some formality into America’s Asia-Pacific bilateral partnerships, carefully ensuring that the language used to underwrite these diverse arrangements remains sufficiently pliable to avoid the levels of commitment found in the more formal treaties that underwrite America’s formal bilateral alliances. This is hardly a coincidence given that the U.S. Congress would most likely veto any

executive effort to impose even a general level of principled commitment relating to extended deterrence found in the United States’ early postwar security treaties that constitute the San Francisco System. The terms “strategic partnership” or “comprehensive partnership” “are sometimes applied to describe the importance or gravitas of a particular alignment,” claims Ellen Laipson in World Politics Review. The obvious relevance of Washington’s bilateral alliances in an era of a rising China, a nuclear North Korea, and still outstanding regional flashpoints reinforce the meaning and relevance of formal U.S. alliance politics in the Asia-Pacific region. Indonesia/Malaysia Washington has worked in an understated but steadfast way to solidify its security ties with the Malay world. The U.S.-Indonesia Comprehensive Partnership was signed in 2010, and a joint commission meeting convenes annually (jointly chaired by the Indonesian Foreign Minister and the U.S. Secretary of State). It sponsors a series of working groups to review a wide range of cooperative ventures in the security, economic, cultural, education, and science sectors. Perhaps most significantly from a strategic perspective, a defense planning dialogue operates under the joint commission’s auspices to address how Indonesia can procure those defense weapons and technologies required for it to be a meaningful participant in the overall regional partner capacity-building. President Obama’s visit to Malaysia in April 2014 resulted in a similar U.S.-Malaysia comprehensive partnership and, by extension, a renewed emphasis on already existing bilateral arrangements such as the senior officials’ dialogue, the Malaysia-U.S. strategic talks, and the Bilateral Training and Consultative Group. Special emphasis was


placed on collaboration in the politics of nuclear nonproliferation with Malaysia joining the Proliferation Security Initiative. U.S. naval support was extended to the search for Malaysia Airlines flight MH370 after that aircraft went missing in March 2014. The increased tempo of such bilateral military exercises as Keris Strike and Cooperation Afloat Readiness and Training reinforced the idea of a partnership “approaching a more equal footing,” said Elina Noor in the Asia Pacific Bulletin. Moreover, there are more visible signs of U.S.-Malaysia military cooperation such as the operation of U.S. surveillance flights from facilities in Malaysia and public notice about U.S.-Malaysia bilateral military exercises that in the past had either not taken place or received little public acknowledgment. Singapore The U.S.-Singapore partnership has been much assessed elsewhere in recent years and for good reason. Some observers might reasonably argue that this security dyad has essentially supplanted the formal U.S.-Thailand alliance and even the U.S.-Philippines alliance as Washington’s “lynchpin” security relationship in Southeast Asia. This, these observers may posit, is the case notwithstanding Singapore’s need to remain sensitive to its Islamic neighbors’ historical preferences for ASEAN members to prefer nonalignment over alliance politics and, as a city-state where the vast majority of its citizens are ethnic Chinese, to avoid alienating Beijing to the extent that it would ever be forced to choose between China and the United States in any future conflict. Outweighing such cautious geopolitical instincts, however, is the fundamental Singaporean interest in keeping U.S. military power present and engaged throughout Southeast Asia and the greater Asia-Pacific littorals. In that vein, it signed a 15-year memorandum of understanding in 1990 to accord the U.S. Navy extensive use of its naval and air logistical facilities and, following the American withdrawal from its bases in the Philippines the following year, to transfer its Commander, Logistics Group, Western Pacific headquarters to Singapore to support U.S. Seventh Fleet activities. Over the ensuing years, U.S. aircraft carriers and submarines regularly transited through the Changi Naval Base, U.S. military equipment has become the weapons systems of choice for Singaporean defense forces, and U.S. Navy Littoral Combat Ships are now operating from Singapore. Even in the face of such momentum, U.S. policy elites understand that

Singapore believes it is most secure entertaining a diversity of security relationships with its ASEAN neighbors and great powers alike. During his July 2013 visit to the Lion City, U.S. Vice President Joseph Biden acknowledged that “Singapore is friends with America, also with India, Japan and China and the other major powers.” To best ensure the type of regional power equilibrium where it can relate to Washington as a partner of choice rather than as an arguably constrained ally, Singapore will

reserve the right to calibrate its defense relations with Washington on the basis of association via a convergence of strategic interests. Thailand The U.S.-Thailand alliance has been complicated by the May 2014 coup, although the 2012 Joint Vision Statement sought to reframe the post-Cold War, post-9/11 U.S.-Thai relationship. The ability of the U.S. and Thai militaries to cooperate more › Ise-Shima. Japan 2016 ❙ 29


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Regional Politics › robustly, when political conditions allow, remains. China has clearly emerged as a much more significant consideration for Bangkok over the years; however, for this very reason, Thai officials continue to see avenues of cooperation with the United States as critical in part to hedge on their possible over-reliance on China in the future. The Philippines The Philippines’ relationship with the United States has undergone significant changes over the past several years as Manila faces China’s assertiveness in the South China Sea. The consideration of an Enhanced Defense Cooperation Agreement (EDCA) including rotational and other access for the U.S. military is ongoing, the initiation of a new 2 + 2 dialogue between the two capitals, and plans for the Armed Forces of the Philippines’ defense modernization including provision of “credible minimum defense” are part of evolving U.S.-Philippine ties. Manila has even expressed interest in eventually joining the Trans-Pacific Partnership (TPP) negotiations. However, much remains uncertain. Recent press reports indicate that there are financial and political challenges to implementing defense modernization, the Philippine Supreme Court has yet to rule on the constitutionality of EDCA and the Philippine Senate has indicated that it also wishes to review the agreement. Upcoming elections in 2016 make the recent progress in bilateral alliance relations uncertain and tentative. However, there is clearly a positive change in trend and direction of the U.S.-Philippine alliance since the early 1990s. India India has emerged as one of the United States’ most significant Asia-Pacific security partners over the past decade. Previously spearheading a nonaligned movement between the West and the Soviet bloc during the Cold War, India has moved closer to the United States as the two countries’ key security interests have converged. Balancing growing Chinese power, countering the rise of jihadist movements in South and Central Asia, collaborating on advanced information technologies, developing bilateral civilian nuclear/space cooperation, and cultivating each other’s markets are all illustrative. A 10-year defense agreement was signed in 2005, followed with the signing of a Defense Technology and Trade Initiative in 2012. U.S. defense sales to India grew from nearly zero in 2009 to around US$9 billion by the time that agreement came into force (including C-17 and C-130 transport aircraft and maritime patrol aircraft). India 30 ❙ g20g7.com


now conducts more military exercises with the United States than with any other country. President Obama’s January 2015 visit to India resulted in the release of a U.S.–India joint strategic vision statement that emphasized the safeguarding of regional maritime security, and the resolution of territorial disputes via the application of international law, counterterrorism, and strengthening multilateralism in the Asia-Pacific. Washington also demonstrated an increased interest in encouraging India’s third-party defense relationships with such countries as Japan and Singapore. It remains to be seen, however, if India will be willing to enter into any form of alignment resembling a “pan-regional axis” with the United States or its other allies. By rejecting formal affiliation in the “quadrilateral,” “minilateral,” or “hybrid” alignment initiatives advanced during the period 2007–2008, India has demonstrated its reluctance to formalize any strategic involvement with the San Francisco System due to its concerns that such a move could be linked to an Asian version of containment (“PM: India,” 2008). It is more likely that trilateral or quadrilateral forums could be used for more “functional” security cooperation in a wide swathe of nontraditional security areas such as humanitarian assistance and disaster relief, energy politics, climate change, forced peoples’ movements, and pandemic control. For similar reasons, it seems unlikely that India would weigh in directly on Washington’s side in any future East Asian contingency involving the defense of such flashpoints as the Senkaku/Diaoyu or Spratly Islands or even South Korea were the Korean peninsula to explode into renewed warfare. Nor would the United States wish to become involved militarily in backing India’s border claims against China. Despite the frequency of their military exercises, Indian and American military services do not even have force interoperability as an objective. At present, developing a positive security partnership appears to be the best option for both Indian defense planners and their American policy counterparts. Vietnam No one observing the intensity of conflict between the United States and Vietnam during the 1960s and 1970s could have anticipated the level of security relations that has recently developed between these two former combatants. Shared concerns about the rise of China and its impact on the Asia-Pacific’s key SLOCs have increasingly

PresidenT obAmA’s JAnuAry 2015 visiT To indiA resulTed in The releAse of A u.s.–indiA JoinT sTrATegic vision sTATemenT ThAT emPhAsized The sAfeguArding of regionAl mAriTime securiTy, And The resoluTion of TerriToriAl disPuTes viA The APPlicATion of inTernATionAl lAW, counTerTerrorism, And sTrengThening mulTilATerAlism in The AsiA-PAcific.

bound Hanoi and Washington together as partners in a quest to neutralize Chinese assertiveness and to seek ways to underwrite the development of a burgeoning Vietnamese economy. Differences over human rights, as well as residual concerns by Vietnamese Communist Party leaders about excessive liberal American influence in Vietnam’s domestic social and political processes, act as a brake on overly rapid Vietnamese-American rapprochement. However, the visit of General Secretary Nguyen Phu Trong of the Vietnam Communist Party to Washington in July 2015, including an Oval Office visit, demonstrated both sides’ efforts to overcome first-order differences over regime types. At present, the value of an independent and economically viable Vietnam balancing Chinese influence and expansionism in the South China Sea trumps Vietnamese-American historical and normative differences. Vietnam’s endorsement of, and vigorous participation in, ASEAN enhances the rationale for Washington to extend qualified but genuine strategic support to Hanoi. Taiwan/New Zealand Two U.S. partnerships in the Asia-Pacific have not been assessed in detail so far; those with Taiwan and New Zealand. Richard Nixon’s administration adhered to the “one China principle” in 1972 as part of the United States’ normalization process with China (Sino-U.S. relations were normalized in 1980). It is highly likely that the United States would, under the auspices of the Taiwan Relations Act (TRA), respond forcefully to an unprovoked and outright Chinese military attack against Taiwan. Given that the TRA is domestic U.S. legislation, the U.S.-Taiwan security “partnership” falls outside the category we chose to assess here. Given China’s implementation of an increasingly

challenging anti-access/area denial strategy, however, Taiwan may represent a new kind of evolving partnership that will require separate and more in-depth analysis. The Obama administration has moved decisively to repair the previous breach in U.S.-New Zealand security relations emanating from the two countries’ dispute over nuclear deterrence in the mid-1980s. The Wellington Declaration (November 2010) and the Washington Declaration (June 2012) went far to restore bilateral ties (including security relations) in the increasingly complex post-Cold War international security environment. It remains unclear, however, to what extent New Zealand’s very limited defense capabilities, and the policy constraints imposed by its natural emphasis on trading relations with its dominant Chinese market, will allow this small Pacific state to engage with the United States as a truly Asia-Pacific, as opposed to a primarily South Pacific, partner. Minilateralism as a Hybrid Form of Alignment Washington’s bilateral alliance politics in Asia has been traditionally characterized by asymmetry. The “junior ally” in U.S. security relationships has often deferred to U.S. policymakers in alliance deliberations dealing with short-term issues in return for extracting relatively greater returns in alliance benefits over time. Examples of the latter include obtaining U.S. extended deterrence commitments and access to U.S. defense intelligence and technologies in return for disproportionately low levels of burdensharing and small risks of becoming entrapped in U.S. regional or international conflicts against their will. Washington has recognized this collective action problem in alliance management for decades. › Ise-Shima. Japan 2016 ❙ 31


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Regional Politics › It has often found itself in the awkward position of demanding alliance loyalty and allied resources as a price for continuing to proffer continued guarantees to allies. Partnerships tend to circumvent the collective action problem by limiting alignment only to those parties with commensurate interests on a given security issue, restricting the instincts of such like-minded parties to command adherence to formal rules or institutions rather than acting together in more informal or “ad hoc” ways and only within a given time frame. This provides opportunities for the relevant parties to develop habits of consultation and greater degrees of trust. But it falls short of commanding the degree of enduring institutional commitment and norm adherence commanded by multilateral institutions such as NATO or even ASEAN. Minilateral alignments have recently developed as a form of partnership designed to overcome the constraints of bilateralism while avoiding the institutional lethargy commonly exhibited by Asia-Pacific multilateral security institutions such as the ASEAN Regional Forum. Minilateralism can be viewed as a “hybrid” form of security alignment, bringing to a given crisis more like-minded players and material resources than those normally generated by a bilateral alliance, but offering more flexibility or spontaneity than less nimble multilateral groupings that must identify continued rationales for their existence once that particular crisis is defused or modified. As Moises Naim has observed, minilateralism can be “a smarter, more targeted approach … bring[ing] to the table the smallest possible number of countries needed to have the largest possible impact on a particular problem.” This approach tempers the alliance burden-sharing problem often impeding or distorting bilateral security cooperation because the parties engaging in a minilateral security action have an equally strong interest in resolving the challenge being addressed. It also overcomes the values-diversity problem often found in large and unwieldy multilateral associations; the actions undertaken in a minilateral context are either predominantly interest-based rather than normatively driven. Alternatively, the parties involved tend to share similar values when addressing both traditional and nontraditional security crises. Minilateral alignments operating in the Asia-Pacific, largely over the past decade, have posted a somewhat mixed track record. Those directed toward resolving nontraditional or human security crises, including humanitarian assistance and 32 ❙ g20g7.com

disaster relief and some forms of maritime security (i.e., counter-piracy) have been relatively effective. The Trilateral Strategic Dialogue between Australia, Japan, and the United States exemplifies a grouping that has deliberately pursued a functionalist agenda focused on assisting developing states in the region to strengthen their security capacities. Those targeting more “traditional” aspects of security politics, such as nuclear nonproliferation (e.g., the Six Party Talks negotiating the Korean peninsula’s denuclearization or its predecessor, the Trilateral Coordination and Oversight Group) have been less successful. Contending geopolitical interests have often overcome collaborative efforts of great powers and their allies to curb regional flashpoints or restrain territorial disputes. As Michael Green has observed, there is growing debate about whether multilaterals contribute to a stable regional order-building process or risk morphing into competing blocs that would

exacerbate regional security dilemmas. Their usage is still such a sufficiently recent trend that judgment about their stabilizing or disruptive features is probably best held in reserve. Their existence, however, provides concrete evidence that Asia-Pacific policymakers are searching for possible alternative models to bilateralism and multilateralism for managing their security interests in an increasingly complex, multipolar, regional security environment. Competition, Cooperation, and the China Factor Shadowing any discussion of the evolving nature of U.S. alliances, partnerships, networks, and regional institutions is the issue of a rising China, U.S.-China relations, and China-Asia relations. This article addressed this issue by considering how China’s rising power in the Asia-Pacific will affect the San Franscisco System’s alliance adaptability. Inevitably, there are a range of


The ouTcome of debATes AbouT ThAAd dePloymenT by souTh koreA, in The fAce of chinA’s oPPosiTion, remAins fAr from cerTAin. While The chinA “shAdoW” is cAsT over u.s. AlliAnces And PArTnershiPs, The neT effecT of closer AlliAnce cooPerATion mAy noT be neArly As cleAr As AlliAnce AdvocATes Would hoPe mighT be The cAse.

assessments about the impact of the “China factor” on U.S. alliances, partnerships, and emerging networks. But several observations about the “state-of-play” seem to emerge at the present juncture. First, over the past few years of the U.S. “rebalance” or “pivot” to the Asia-Pacific, managing U.S.-China relations has become increasingly challenging. Some have characterized this as growing “strategic mistrust.” Indeed, the United States and China do not appear to have as yet arrived at a suitable framework which could help manage their relationship, notwithstanding numerous proposals such as “responsible stakeholder,” “strategic reassurance,” or as proposed by Beijing, a “new model of great power/country relations.” Essentially, these frameworks are limited because the fundamental differences in interests and values that characterize the relationship cannot be reconciled. Just as U.S.-China relations have faced increasing tensions, China’s relations with

Asia, while developing significant economic and political ties, have also faced difficulties not least due to disputes in the East and South China Seas. Indeed, even South Korea reacted strongly to the declaration by China of an air defense identification zone. And India has expressed concern about China’s actions both on its land borders and activities around the Indian Ocean. The net effect of both increasingly difficult United States-China and China-Asia relations has been to create greater complexity in the context of U.S. alliance adjustments and partnership building. These complexities are visible in the articles in this collection. In the case of Japan, worry has been expressed about U.S. commitment to Japan’s security in the context of Chinese provocations in the East China Sea, even as the United States and Japan have managed to issue revised guidelines aimed at moving well beyond a narrow “defense of Japan” posture. The U.S.-South Korea alliance continues to transform even

as Seoul and Washington consider whether or not Terminal High Altitude Area Defense (THAAD) capabilities are necessary given China’s hostile reactions to the possibility of their deployment. India continues to seek closer security and military relations with the United States even as it is cautious about moving too far forward with the United States or in the context of trilateral networks such as the U.S.-Japan-India arrangement. And across Southeast Asia, both allies and partners have (as discussed above) moved steadily to enhance security and defense relations with the United States even as they carefully managed economic and diplomatic relations with China. Hence, nearly every U.S. ally and partner except Japan has signed on to the China-led Asian Infrastructure Investment Bank (AIIB), even as these same countries sought closer security ties with the United States and expressed alarm about China’s behavior in the maritime domains across the Asia-Pacific littoral. To suggest there is a “dichotomy” between the “United States for security” and “China for commerce” would be to push the point too far. Several Asia-Pacific countries, for example, are negotiating with the United States for a TPP agreement. Other countries have expressed interest in joining this partnership in the future, although many Asian countries continue to resist more formal alliance arrangements with the United States. Even U.S. allies have considerable apprehension and limits about how far they are willing to go in terms of existing alliance arrangements. The Philippine Supreme Court, for example, continues to weigh the constitutionality of a new EDCA signed by the United States and the Philippines in 2014. Japanese Prime Minister Abe is confronting intensified opposition to his collective defense legislation by a Japanese public, with polling indicating that up to 80% of the Japanese public remains unconvinced about the need and the constitutionality of such legislation. The outcome of debates about THAAD deployment by South Korea, in the face of China’s opposition, remains far from certain. While the China “shadow” is cast over U.S. alliances and partnerships, the net effect of closer alliance cooperation may not be nearly as clear as alliance advocates would hope might be the case. ■

Akshan de Alwis is Diplomatic Courier’s United Nations Correspondent.

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Branded Story / Interface Authored by: Erin Neil Hare, Meezan, President vice president and CEOofofsustainability Global Visions forCommunication Interface, Inc.

From Negative to Positive: A Triple Win On the road to zero environmental footprint, a global carpet manufacturer found unexpectedly positive social and economic impact .

T

wenty-two years ago, an unlikely chain of events was set off in an unlikely place – in the heart of an ‘avowed capitalist’ – an entrepreneur who was, at the time, 60 years old and at the top of his career as the founder and CEO of Interface, a billion dollar commercial carpet tile company based in Atlanta. Today, that company finds itself on the brink of victory – poised to celebrate the final leg in a journey to eliminate the global enterprise’s environmental footprint by 2020. Erin Meezan has been at the helm of sustainability for the company for 6 years. In 1994, our Founder and CEO Ray Anderson challenged our then 21-year-old company to adopt a bold vision, one that required new thinking and a new model for business. His challenge was sparked by a personal “epiphany,” that was prompted by a question from a visionary project manager working on a green building long before

they were mainstream. He asked, “What is Interface doing for the environment?” While that question made the rounds at Interface, a book landed serendipitously on Ray’s desk – The Ecology of Commerce, by radical environmental thinker, Paul Hawken. Hawken’s thesis was – and is – that the Earth and all of its natural systems are in decline, and that business and industry are not only the culprit, but also the most well-positioned to reverse the damage. Ray was catalyzed by Hawken’s premise, and with the same entrepreneurial spirit by which he had built a market for modular carpet where none had existed, he challenged the company to chart a course forward, toward zero environmental footprint. We didn’t have a map, but Ray’s vision was a compass. As our path unfolded before us, a passion for this higher purpose of sustainability took hold with our people and our culture was transformed. We embraced

that original vision to the point that it became part of our corporate DNA, and over the last 22 years we have revolutionized our company, our operations and our products, deeply reducing the environmental impacts of our business and creating products that manifest our Mission Zero – our shorthand for our promise to eliminate our environmental footprint by 2020. Along the way, innovative thinking has contributed to our bottom line, with products that have broken new ground in terms of design and performance, and with a goodwill in the marketplace that has been unprecedented. By the numbers, some of the most significant accomplishments we have measured to date: • Greenhouse gas emissions reduced 92% from 1996 • 84% of energy used at Interface comes from renewable sources • Waste to landfill reduced by 91%, water reduced by 87% • 50% of the materials we use to make all our products are from recycled or bio-based sources • The carbon footprint of our products has been reduced by 50% since we started our sustainability mission In a more abstract way – and perhaps a better measure of our impact – is the role we have played changing the conversation of business. We’ve been called “the most sustainable company in the world” and “the poster child for sustainable business” and we’ve heard from countless companies about the influence we have had on them as a “case study” of sorts – an open and accessible example of what is possible when industry takes a broader role of its place in society. We are a relatively small company, fewer than 5,000 people globally, but we believe our impact is much greater than our size. As our goal year of 2020 approaches, our focus is shifting from the relentless drive to zero that has typified the first 22 years of this journey, and towards the positive social impacts that have accrued along the way. We are inspired to think more broadly about our human impact, and perhaps the best example of early thinking on the next mission is found in a project that we piloted four years ago called Net-Works™. Net-Works: Inclusive Business Among the many challenges facing us in eliminating our environmental footprint

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is phasing out a reliance on virgin raw materials, particularly those which are petrochemically-based, like nylon – the primary feedstock of carpet tile. Looking at this problem through the lens of social entrepreneurship, a small team at Interface wondered, is there an opportunity for innovation that might create a social as well as an environmental impact? Could we build a model for “inclusive business?” An inclusive business is an economically profitable enterprise that creates employment for low-income communities – either directly, or by bringing a developing group into the value chain – and that results in positive socioeconomic and environmental impact. It starts with understanding the problem of poverty. It may be difficult to imagine, but over 3 billion people (nearly half the world’s population) live on less than $2.50 USD per day. For many living in coastal and lakeside communities in developing countries, fishing, seaweed farming, and small-scale agriculture are the only ways to bring home food for the day. These livelihoods carry a high level of risk, and people have little access to financial services or social security in the event of natural disasters or other emergencies. In a world where global pressures on natural resources are increasing exponentially, conservation efforts are often difficult and expensive, and the costs of conservation often fall disproportionately on the poorest people living in rural areas. As it turns out, the main tool of the trade for those working in commercial fishing is nylon nets. And nylon is the primary feedstock of Interface’s carpet tile products. Finding ways to improve both the quality and quantity of recyclable nylon is critical to the company’s commitment to get off oil, and by connecting the dots between that goal and ›

As Our gOAl yeAr Of 2020 ApprOAches, Our fOcus is shifting frOm the relentless drive tO zerO thAt hAs typified the first 22 yeArs Of this jOurney, And tOwArds the pOsitive sOciAl impActs thAt hAve Accrued AlOng the wAy. Ise-Shima. Japan 2016 ❙ 35


From something negative comes something positive. 50% of the materials that go into our carpet tiles are recycled or bio-based, creating a more environmentally sustainable supply chain. By 2020, we plan to be at 90%. All to make the world a more beautiful place, inside and out. Join us in making a positive impact at interface.com.


Introducing the World Woven™ Collection Weaving global inspiration into positive change.

Introducing the World Woven™ Collection Weaving global inspiration into positive change.

2012 and today the program is expanded into three regions in the Philippines and also to the Lake Ossa region of Cameroon, where similar conditions are met with different challenges. And it’s making a difference: Net-Works Impact to date: • 93,000 (205,029 lbs) nets collected • 400 families involved and given access to finance • 55,000 people seeing a cleaner environment

WW860 Charcoal Tweed

› the ability for some of the world’s poorest people to become part of our supply chain required a unique and unexpected partnership with the Zoological Society of London (ZSL), one of the world’s foremost marine conservation experts. Net-Works is the result of that unlikely partnership – one which provides a creative solution, sourcing waste fishing nets as a way and smallloop. squares, to close theLarge manufacturing It is a triple planks win as spent nets, and whenskinny left to planks. accumulate on beaches and shorelines, contribute to the accumulation of plastic debris in our oceans -- one of the most pervasive, persistent and damaging forms of pollution. The nets take hundreds of years to break down, and continue to catch and kill marine life with no human benefit – an outcome known as ghost fishing. Through Net-Works, community members in fishing villages gather and sell nets to nylon manufacturer Aquafil, who in turn recycles the nets into yarn that Interface can then purchase. The program provides a valuable source of additional income that community members can use to acquire food in times of need, support education choices, or to invest into other livelihood opportunities. The Net-Works team works to develop socio-economic infrastructure at each collection site as a platform for net collection, either setting up new community banking systems or strengthening existing networks, that provide financial services and valuable savings education for men and women. Net-Works launched as a pilot program in

To learn more visit interface.com

By the end of 2020, Interface aims to reach 1 million people with a cleaner environment, give 10,000 families access to finance through community bank membership, and better protect the marine ecosystems where they live through the Net-Works supply chain. Through Net-Works, we are committed to creating a scalable model that is easily replicated in any region and by any partnership of social enterprise and business – in other words, to create a viable model for inclusive business that can, when shared, become a better way of doing business. “What’s so important about initiatives like Net-Works is the experience that you gain; it’s a win environmentally, it’s a win socially, it’s generating livelihoods for the poor, and then there are also multiple sources of income,” said Stu Hart, Grossman Chair of Sustainable Business at the University of Vermont. “So it’s a win, win, win proposition, and to me, that’s the gold standard.” Twenty-two years ago, our company embarked on a journey that no one could have imagined for our petroleum-dependent carpet manufacturing business. It’s our view that the future will continue to be shaped by unlikely pioneers who choose the uncharted path; by dreamers and innovators and entrepreneurs and inventors and nonprofits and big business, all uniting in ways we can’t yet imagine to solve the challenges that have, on the other hand, become very clear to us – climate change, poverty and prosperity for all. It’s a noble calling and one that modern business and industry are keen to heed, and a mission that will forever guide Interface. ■

WW860 Charcoal Tweed

Large and small squares, planks and skinny planks.

As Vice President of Sustainability for Interface, Erin Meezan gives voice to the company’s conscience, ensuring that strategy and goals are in sync with the aggressive sustainability vision established in 1994. She leads a team that provides technical assistance and support to the company’s global business, addressing sustainability at all levels – from operations and management, to employees and customers, and in policy forums.

To learn more visit interface.com


The G7 Global Briefing Report

Global Development Authored by: Dr. Scott T. Massey

Building a Global Action Platform A platform to create abundant food, health, and prosperity—while saving the planet’s ecology

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he grand challenges of poverty, health, and economic prosperity can be solved. Indeed, it is possible to harness an emerging alliance of institutions, a growing knowledge base, technology platforms, and innovations to unleash an abundant and ecologically sustainable future for every person and for the earth. Global Action Platform began with this bold vision in 2012. Many criticized this vision at the time, but today, our founding vision is gaining ground. Indeed, with the 2015 launch of the Sustainable Development Goals, this vision is being embraced actively by a growing network of corporations, universities, investors, governments, and NGOs around the world. We started Global Action Platform in response both to local needs and as a counter to the world’s increasing list of unmet grand challenges. Instead of focusing on scarcity and trade-off dilemmas, we decided to

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build a university-businesses platform for solutions. Locally, we also wanted to promote collaboration among twenty-two universities and a network of businesses in the urban setting of Nashville. Our interest focused on systemic solutions that would be economically viable, scalable, and sustainable. We also wanted to work toward solutions that benefited both society and the environment. We believed, and still do believe, that abundance precisely means a state in which the planet’s ecosystem and the people who are part of it, flourish together. To launch our efforts, in November 2012, four hundred leaders from ten nations, representing the corporate, research, government, finance, media, foundation, and NGO sectors convened at the first Global Action Summit in Nashville, Tennessee USA. The goal of this international gathering was to begin framing an agenda for abundance with a focus on three interconnected systems— food, health, and prosperity. At the conclusion


of the inaugural Summit, an integrated approach to these three issues was defined as an urgent priority needing attention. On November 14-15, 2016, we will convene for our fifth Global Action Summit to continue to advance this agenda. Why Food, Health and Prosperity? Founding leaders in our global initiative started with an economic concern--how to advance sustainable, shared economic growth and prosperity for a growing global, urban population. Such an economic foundation is essential to the social and political stability necessary for solving other challenges. Further, it became clear that the growing global challenges of food and health—basics for human capital—had to be addressed while developing ways to expand shared prosperity. The connection between society and the earth’s ecosystem and climate is established directly through agriculture and food. Food, in turn, is critical to health; and health is foundational to human society and the creativity that leads to prosperity and problem-solving. Food, health, and prosperity, hence form an amplifier sequence—food amplifies into health, health amplifies into prosperity—and also form a feedback loop to enable society and nature to flourish together, since innovation loops back to manage environmental conditions. Building a Global Action Platform The challenge the world faces now is to frame long term solutions and innovations that have the capacity and promise to create abundant food, health, and prosperity for everyone within the capacity of the planet’s ecosystems. Solutions are simultaneously local, regional and global. In short, solutions require local cross-sector leaders to imagine, to explore— and to specify—how innovation can create abundance, and how we can efficiently and much more effectively connect and network ›

Ise-Shima. Japan 2016 ❙ 39


The G7 Global Briefing Report

Global Development › invested leaders, research institutions and innovators to collaborate in fulfilling the promise of abundance. The Global Action Platform has been created as a mechanism to connect and align efforts to create abundance through innovation. The Platform is built around four interconnected functions: Convene, Challenge, Connect, and Communicate —and two “living laboratories”—one urban and one rural. Through the Platform, an integrated series of financial investments, tied to expert knowledge and leadership, technology and data analysis, and global multimedia communications are being implemented. Convene Our convening activity is anchored in an annual Global Action Summit, hosted by Fareed Zakaria, CNN. The Summit frames an annual agenda and helps to build a growing leadership movement for abundance. In addition, we convene Leadership Forums with the World Bank, the National Press Club, Meridian International Center, and the UN. Through these ongoing events, we engage corporate, university, investment, NGO and government leaders who can have a profound impact on food, health, and economic development. Challenge To advance scalable solutions, we have also launched a $500M Challenge Impact Fund. Through the Fund, Global Action Platform targets investments in businesses that are economically viable and can scale sustainable solutions for food, health, and prosperity. In line with a growing global movement toward impact investment as a new norm, Global Action Platform is working to take a leading role in identifying and investing in businesses that create strong financial returns coupled with strong social and environmental impacts. Connect Third, through our Connect programs, we have created online collaboration and problem-solving tools to help our partners continue to work together on an ongoing basis. In partnership with Intel, we are also developing a Global Data Scenario Lab to provide our partners with big data analysis for predictive and prescriptive analytics and innovation. Communicate In a special partnership with Diplomatic Courier, Global Action Platform shares our findings and ideas through two annual 40 ❙ g20g7.com

The fuTure welfAre of boTh humAn beings And The plAneT depend on A disTincTly humAn resource—innovATion. our emerging economies demAnd more Timely soluTions, Access To innovATion, improved efficiencies And high impAcT resulTs. on This There is broAd consensus. publications that are mailed to 25,000 global leaders in hard copy and read by millions of people online. Thus, by communicating globally, leveraging technology, making impact investments, and mobilizing leaders, Global Action Platform is working toward the goal of ending poverty, hunger, and providing for the health of everyone. We represent one approach, and a specific network of collaborating partners working intentionally to create abundance and to achieve the goals of SDG 1-3. Living Laboratories: oneCITY Urban Model In addition to the core program activities described above, Global Action Platform is involved in real world applications and model development in two “living laboratories.” This is critical, because large scale models and innovation will be needed to prepare for the world’s emerging mega-cities. As the world’s population approaches ten billion, seventy percent of that population will live in urban areas, the largest percentage in human history. This will create tremendous pressures on both urban and rural areas. Cities must begin planning now to provide scalable, sustainable solutions for the food, health, and economic opportunity needed by this enormous urban population. To help address these challenges, Global Action Platform is working with oneC1TY, a twenty-acre innovation campus being developed in Nashville, Tennessee. Through our partnership we are working to test and model solutions for tomorrow’s mega-cities. With a million square feet of space and five acres of green space, oneC1TY is a Leedcertified community that includes office space, research labs, two residential towers, two hotels, a conference center and the headquarters of Global Action Platform and our Global Data Scenario Lab. Global Action Platform serves as the think tank and trusted convener of oneC1TY,

providing thought leadership and convening programs to build a strong community and culture of innovation. Living Laboratories: Caraga Comprehensive Rural Development At the same time, rural areas around the world will face new challenges to produce the food needed by large urban populations and to provide for the well-being and prosperity of the people who live outside cities. This need will be especially pronounced in the tropics, where much of the projected population growth will occur in the coming decades. To address this challenge, and to create a new benchmark for comprehensive rural development, Global Action Platform is working as the exclusive NGO partner of the Global Partnership for Sustainable Solutions and the Indigenous People’s Economic Union (IPEU) of the Philippines. Starting with an initial 1.2M acres of land, we will work with the IPEU to create a sustainable social, economic, and environmental plan for the indigenous people of the region. As one of the most bio-diverse undeveloped areas of the world, this region offers tremendous opportunities to model innovative, large scale solutions for agriculture, health, and economic development. Innovation for Abundance The future welfare of both human beings and the planet depend on a distinctly human resource—innovation. Our emerging economies demand more timely solutions, access to innovation, improved efficiencies and high impact results. On this there is broad consensus. Mobilizing leadership for action; investing in viable business solutions, leveraging technology, communicating, and testing and creating rural and urban models for sustainable solutions is key to addressing the world’s grand challenges. As we strive to implement scalable, sustainable solutions, leaders and innovators will need to collaborate more closely together through a shared platform. With a growing network of university-business-governmentNGO-media partners, the Global Action Platform aims to become a primary distribution channel and change agent for a world of abundance. ■

Dr. Scott T. Massey is the Founding Chairman and CEO of the Global Action Platform.


Meridian is committed to producing power that is 100% renewable, sustainable, and uses local resources. So when they were asked to apply their expertise to the pristine yet incredibly challenging environment of Ross Island, in Antarctica, they jumped at the chance to help shrink the carbon footprint. New Zealand’s Scott Base is there, as is the US station at McMurdo. Once they relied largely on planet-warming diesel generators. So Meridian installed three wind turbines. These help to keep the lights on and they prevent 1,242 tonnes of CO2 from being released into the atmosphere every year. As the largest electricity generator in New Zealand, and the most significant contributor to the Government’s target of 90% renewable generation by 2025, Meridian is creating a better energy future for generations to come (even penguins). Visit meridian.co.nz


The G7 Global Briefing Report

Global Development Authored by: Philip H. de Leon

How the Private Sector Leads the Way in Food Security and Proper Nutrition Solutions Technology and innovation intersect with food security and proper nutrition and are revolutionizing agricultural activities.

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ur planet is under tremendous stress to meet the ever-growing demand of human activities. In 2015, the Earth “overshoot day” – the day each year when our demands on the planet outstrip its ability to regenerate – was reached on August 13, 2015. It is therefore critical to pause and think on how we are going to feed the world, taking into consideration that the world population will grow by an additional two billion people by 2050. In the 1970s after the first oil energy crisis, France started using the motto “We don’t have oil but we have ideas” in order to reduce the country’s energy consumption. We can’t reduce our food consumption but we can optimize its production and reduce waste. The FAO estimates that “one-third of food produced for human consumption is lost or wasted globally, which amounts to about 1.3 billion tons per year” and that “recovering just half of what is lost or wasted could

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feed the world alone. “ This is where the private sector comes into the picture with solutions that notably can address the United Nations’ Sustainable Development Goals such as Zero Hunger and Responsible Consumption and Production. These solutions consist in software to hardware and in expertise to optimize planning, production, storage, transformation and distribution of food. Technology and innovation intersect with food security and proper nutrition and are revolutionizing agricultural activities. Mobile phone applications enable smallholder farmers in emerging countries to track the price of commodities, to identify potential buyers for their crops and to facilitate financial transactions in the absence of local bank branches. Precision farming assisted by GPS technology enables more affluent farmers to connect the entire crop cycle from enterprise planning to planting, crop care, harvesting and grain storage.

It also enables them to monitor their usage of seeds, fertilizers, pesticides and water, optimizing land usage down to a precision of a few centimeters. Precision farming through data collection over several seasons helps adjust the use of expensive inputs based on the output and yields generated on clearly identified tracks of land. Better technology and the usage of it can also improve quality and security of the output: for instance, harvesting grain at higher moisture levels and drying it in dryers result in less damage which in turn reduces the risk of mycotoxins insurgence. The existence of storage, and more precisely proper hermetic storage, such as grain silos and cold storage, is critical to reduce waste, notably post harvest losses. Similarly, processing equipment for fruits, roots and vegetables can considerably reduce waste for products with a very short shelf life (such as tomatoes into cans, mangos into juices and cassava into flour).


Mobile phone applicaTions enable sMallholder farMers in eMerging counTries To Track The price of coMModiTies, To idenTify poTenTial buyers for Their crops and To faciliTaTe financial TransacTions in The absence of local bank branches.

Besides the production and productivity gains, technology and innovation prevent pollution of underground and flowing waters by adjusting the usage of fertilizers and pesticides to the level really needed. More importantly they indirectly prevent deforestation and the destruction of natural habitats by boosting production and productivity and thus profitability, reducing the need to increase acreage to increase volumes. New tools and solutions are available to farmers to make agriculture “sexy” and appealing to the youth. This can contribute to change the thinking, notably in emerging markets: agriculture can now be seen as an industry of its own and as source of profits just like energy, construction or telecommunications, not just as a subsistence mechanism. In a recent article, Akin Adesina, President of the African Development Bank and former Minister of Agriculture and Rural Development of Nigeria referred to

agriculture as a business and elaborated on approaching agriculture as an investment opportunity. If agriculture can finally be seen as a business that can generate profits to be reinvested in the business but also in healthcare, better nutrition and education then maybe the number of smallholder farmers abandoning their farms in quest of a better life in urban areas could be reduced. Small tracks of land need to be aggregated for capacity building purposes and to enable the mechanization of agriculture but the ability for some to succeed in agriculture is not a fiction. If the solutions exist why are they not more widely used? Though the private sector has the solutions to solve rapidly food security and proper nutrition issues, multiple obstacles get in the way of rolling them out. Access to finance is probably the most recurring challenge but

many more exist such as: corruption that prevent companies from operating and that diverts money from state coffers that would otherwise go to agriculture projects; red tape and overregulation that slow, impede or simply deter the conduct of business; lack of regional integration that increases the cost of doing business; lack of investments in education and training that prevent human capacity building; pushes to force foreign companies to localize manufacturing when it does not necessarily reduce costs; protectionism shielding national “champions” that are not necessarily champions when confronted to the reality of an open market, etc. Furthermore, the private sector cannot work alone. There has to be a meeting of the minds and of the means to get things done and some political will in the target country: public-private partnerships is regularly quoted as a solution and it can be. What also needs to happen is better coordination between the different players: private sector companies, governments (federal, regional, local), financing institutions (private or public banks, international financing institutions, foundations), implementers (private or public, NGOs, educational programs) and most importantly the end-users. Another problem is the goodwill intentions plagued by missing parts in the development scheme: for instance allocating money to purchase tractors but none to train the end-users or to provide spare parts; or supporting increased production without thinking about how the additional output would be stored and transformed will result in failure. Ultimately, the private sector is ready to help but success will depend on the involvement of and collaboration between all the actors. Our planet can properly feed nine billion people in a sustainable manner but all the roadblocks need to be removed to unleash its amazing potential. ■

Mr. Philip de Leon is the Director for Public Affairs and International Business Development at AGCO Corporation. Mr. de Leon is also the AGCO Staff Representative on the President’s Advisory Council on Doing Business in Africa (PAC-DBIA) and an executive board member of the Corporate Council on Africa.

Ise-Shima. Japan 2016 ❙ 43


The G7 Global Briefing Report

Global Development Authored by: Kozo Ishii, MSC Program Director in Japan

Sustainable fishing: A powerful tool for safeguarding oceans and livelihoods in Asia Fishing is one of the world’s oldest industries and remains vitally important both to the global economy and as a source of food.

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dominates the fishing industry in catch quantities, the number of people employed, consumption and number of vessels in operation. In 2008, more than 80% of all fishers and fish farmers were Asian. Five countries in Asia-Pacific are among the top ten producers of capture fish in the world. China is still by far the largest producer in the region followed by Indonesia and India. From an ecological point of view, Asia is also of critical importance, not least as the home of the Coral Triangle. This area, spanning the coastal and marine areas of Indonesia, Malaysia, the Philippines, Papua New Guinea, the Solomon Islands and Timor Leste, is considered to be the most ecologically significant epicentre of marine diversity in the world. Ensuring ocean environments remain healthy, productive

lobally, around one in 10 people depend on fishing for their livelihood, while the economic value of industries related to fishing has been estimated at about US$2.9 trillion. In effect, seafood is the world’s single most traded food commodity. In the Asia-Pacific region, fish and fishery products make vital contributions to the nutrition and wellbeing of people, possibly exceeding that of any other region of the world. The quantities produced and the sheer diversity of species and products from the region’s waters are testimony to the importance of fish in the Asian diets and cultures. According to the UN Food and Agriculture Organization (FAO), in Asia alone, about one billion people rely on fish as their primary source of animal protein. Statistically, Asia

Marine capture fisheries: Major producer countries 2012 Ranking

Country

Continent

2003

2011

2012

(tonnes) 1 2 3

2011-2012

Asia Asia

12,212,188 4,275,115

13,536,409 5,332,862

13,869,604 5,420,247

13.6 27.0

2.4 1.7

Americas Americas

4,912,627 6,053,120

5,131,087 8,211,716

5,107,559 4,807,923

4.0 –20.6

–0.5 –41.5

Asia/Europe Asia Asia Americas Asia Asia Europe Asia

3,090,798 4,626,904 2,954,796 3,612,048 1,647,133 1,053,720 2,548,353 2,033,325

4,005,737 3,741,222 3,250,099 3,063,467 2,308,200 2,169,820 2,281,856 2,171,327

4,068,850 3,611,384 3,402,405 2,572,881 2,418,700 2,332,790 2,149,802 2,127,046

31.6 –21.9 15.1 –28.8 46.8 121.4 –15.6 4.6

1.6 –3.5 4.7 –16.0 4.8 7.5 –5.8 –2.0

Asia Asia Asia Americas Europe Africa

1,649,061 2,651,223 1,283,256 1,257,699 1,986,314 916,988

1,737,870 1,610,418 1,373,105 1,452,970 1,138,274 949,881

1,660,165 1,612,073 1,472,239 1,467,790 1,449,452 1,158,474

0.7 –39.2 14.7 16.7 –27.0 26.3

–4.5 0.1 7.2 1.0 27.3 22.0

Total 18 major countries

58,764,668

63,466,320

60,709,384

3.3

–4.3

World total

79,674,875

82,609,926

79,705,910

0.0

–3.5

Share 18 major countries(percentage)

73.8

76.8

76.2

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

China Indonesia UnitedStates of America Peru Russian Federation Japan India Chile Vietnam Myanmar Norway Philippines Republic of Korea Thailand Malaysia Mexico Iceland Morocco

2003-2012 (percentage)

Source: UN FAO State of World Fisheries and Aquaculture, 2014

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and profitable is therefore vital to preserving biodiversity as well as the livelihoods of millions of people living in the region. Teach a man to fish–Asia’s long fishing history According to the FAO, in 2011/12, 18 countries caught more than an average of one million tonnes of seafood per year–11 of these countries were in Asia. While many Asian countries have shown considerable increases in marine catches in the last 10 years, there have been considerable declines in others. The decline in catches is not uniquely Asian. Total world catches of marine fish have continued to flatten, as many major fishing areas of the world are either fully exploited or overexploited. According to the UN Food and Agriculture Organization (FAO), 29% of


There has never been a more urgenT Time For seaFood businesses and Fish-loving naTions and people To make a commiTmenT To susTainabiliTy. aT sTake economically, is a mulTibillion dollar global indusTry, one oF The oldesT in The world. global fisheries have been fished beyond sustainable limits and a further 61% are fully exploited– meaning that they are fished at the maximum level which can be sustainable. With unsustainable fishing threatening ocean environments, it is clear that we have an enormous challenge on our hands, made all the more urgent by the fact that global seafood demand is expected to grow by 2025. The issue of unsustainable fishing is a significant challenge for Asia’s fishing economies – one which will need to be addressed if these countries are to preserve traditional ways of life and cater for a growing demand in seafood. A Japanese way of life Fishing has been fundamental to life in Japan for hundreds of years. Before World War II, the vast majority of Japan’s fish came from local waters. But now almost half (40%) of Japanese seafood is imported. In Japan, where eating seafood is a vital part of the nation’s culture, this stark reality is beginning to be of grave concern. Tokyo’s Tsukiji market (moving to a new location in November – Toyosu) is the world’s largest - more than 400 different types of seafood, are traded. If this market is to have a future, it is essential that all these fish are caught using sustainable methods which safeguard oceans for future generations. Conservation groups are working with industry leaders to persuade more Japanese to eat certified, sustainably caught seafood. It’s an uphill task, but one that could have significant positive impact on the world’s fisheries – and could safeguard Japanese fish stocks. There has never been a more urgent time for seafood businesses and fish-loving nations and people to make a commitment to sustainability. At stake economically, is a multi-billion dollar global industry, one of the oldest in the world. › Ise-Shima. Japan 2016 ❙ 45


The G7 Global Briefing Report

Global Development

Current and projected per capita and total consumption in 1997 and 2020 Region

Per capita consumption 1997 (kg)

Per capita consumption 2020 (kg)

Total consumption 1997 (million metric tons)

Total consumption 2020 (million metric tons)

China LatinAmerica North African and West Asia Southeast Asia India Other Southeast Asia Sub-Saharan Africa United States Japan European Union (15) Eastern Europe and former USSR Other industrial countries World

26.5 7.8

35.9 8.6

33.2 3.8

52.5 5.6

6.2 23.0 4.7

6.4 25.8 5.8

2.1 11.3 4.6

3.2 16.7 7.4

6.0

6.1

2.0

3.2

6.7 19.7 62.6 23.6

6.6 19.7 60.2 23.7

3.7 5.4 7.9 8.8

6.4 6.3 7.4 8.8

10.6

11.6

4.4

4.8

14.7 15.7

14.0 17.1

1.6 91.3

1.9 127.7

Source: Delgado et al (2003), Fish to 2020 Supply and Demand in Changing Global Markets

iF The Japanese olympic commiTTee is To make a similar commiTmenT To ThaT made by The rio olympic commiTTee To source only cerTiFied susTainable seaFood, iT musT conTribuTe To eXpansion oF susTainable Fisheries in Japan. › Simple solutions If we are to continue to benefit from marine resources, whether farmed or wild, changes need to take place at every stage – all the way from boat to plate. For change to be effective, consumers, governments, voluntary and regulatory bodies need to play their role. Consumers can contribute to the preservation of fish stocks by simply choosing certified sustainable seafood. Certification and ecolabelling have the potential to transform the way our oceans are fished, safeguarding this vast natural food resource, thereby reducing poverty. Certification programs, like the Marine Stewardship Council’s (MSC), which ensures good management systems, stock condition, and ecosystem impact, are helping to generate clear impacts on our waters. By recognising and rewarding sustainable fishing practices and influencing the choices people make when buying seafood, the MSC is helping to transform the seafood market. From one MSC certified fishery at the turn of the millennium, today, the MSC has more than 280 fisheries certified to its Fisheries Standard. Two of these fisheries are in Japan and if more Japanese retailers and consumers embrace seafood sustainability, more fisheries will be encouraged to seek MSC certification and this in turn could have a significant 46 ❙ g20g7.com

impact on ocean ecosystems. Japan knows too well that the sustainable management of fish stocks is vital for its fish-loving people. If the Japanese Olympic Committee is to make a similar commitment to that made by the Rio Olympic Committee to source only certified sustainable seafood, it must contribute to expansion of sustainable fisheries in Japan. Although total Japanese market share for MSC-labelled products remains below 1%, major retailers, such as Aeon, Japan Consumers’ Cooperative Union, Seiyu and Daiei, are selling more than 200 MSC labelled products. The MSC’s certification and ecolabelling program enables everybody to play a part in securing a healthy future for our oceans. There are huge challenges facing life in our seas, but the collaboration seen by those involved in the MSC program provides a powerful ray of hope. It is a shining example of how different people can come together and take practical steps toward a better future. In general, interest in the ocean’s health is growing, but fishery management is complicated, and needs international agreement on many of the solutions needed. I hope this meeting of the world’s leading industrial nations will serve as a platform where ocean sustainability is looked at with

the aim of influencing national commitments, and rallying together on an international level to preserve this vital marine resource for generations to come. The MSC program provides a powerful tool by which we can measure, validate, and drive the needed change. ■

Kozo Ishii has been with the MSC since May 2007. As the Program Director for Japan, he is responsible for raising the awareness of the MSC and promoting its programs among key stakeholders. Prior to joining the MSC, Ishii was a senior research consultant at the International Development Centre of Japan and was instrumental in formulating development plans in natural resource management and the environment for developing countries. Ishii holds a Master’s degree in Public Affairs from the Indiana University, School of Public and Environmental Policy in Bloomington, USA as well as a BSc in Fishery Science and Technology from the National Fisheries University in Yamaguchi, Japan.


DIPLOMATIC COURIER MAGAZINE PRESENTS

THE WORLD IN 2050 A forum about our future.

A Global Affairs Media Network

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The G7 Global Briefing Report

Global Development Authored by: Johnny Chan

Urban Planning Crucial to Mitigating Extreme Weather Risk in the Asia-Pacific Region Extreme weather events in the Asia-Pacific region have made established megacities without climateconscious designs vulnerable.

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requent extreme weather events, heat waves, and sea level rise are among the many disastrous consequences that come with global warming. The impacts of these extreme events are particularly significant in the Asia-Pacific region because of its rapid growth in the last few decades, making many established megacities without climate-conscious designs vulnerable. According to the Intergovernmental Panel on Climate Change’s Fifth Assessment Report in 2013, it is unequivocal that the current rise in global temperature is largely contributed by human activities. The temperature rise will continue if fossil fuels

remain the main source of energy for such activities. Indeed, if no change is made (the so-called “business-as-usual” scenario), the global temperature by the end of this century could be nearly 5 degrees Celsius warmer than the end of the last century. As temperatures rise, the atmospheric flow patterns can become unstable for a longer period of time, which could lead to prolonged periods of high temperatures. With the increased affluence of Asia-Pacific countries, more air conditioning will be used for cooling, which will contribute to further warming of the air. This temperature rise will be further exacerbated by heat generated by industries and vehicles, as well as the

retention of heat by buildings, pavement and roads. The increase in the use of air conditioning will create a substantially stronger demand for electricity, which could lead to power outages. The loss of power will not only lead to health problems such as heat strokes, shortness of breath and dehydration but also to disruptions in subway, train and flight transportation, businesses such as banks, stock market and data centers, and industrial production. Power outages could become even more frequent in the Asia-Pacific region due to the design of electricity production and provision that may not be able to keep pace with this rapid increase in the demand. It has been well documented that, during the last few decades, the frequency of heavy rain and the overall rainfall intensity (amount of rain per hour) have increased in many places around the world. This is another result of global warming, mainly because a warmer atmosphere can hold more moisture. Condensation of the additional moisture will lead to heavier rain and higher rainfall intensity, which will lead to greater chances of flooding. Coastal regions in Asia-Pacific countries are also affected by tropical cyclones, which deliver both heavy rain and seawater through “storm surges”. ›

CoAstAl rEgions in AsiA-PACifiC CountriEs ArE Also AffECtEd by troPiCAl CyClonEs, whiCh dElivEr both hEAvy rAin And sEAwAtEr through “storm surgEs.

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The G7 Global Briefing Report

Global Development

› Storm surges are further enhanced by the rise in sea level, due to thermal expansion of seawater and melting of polar ice caps as a result of global warming. Thus, the chance of flooding in these countries will increase substantially in the future. The impact of flooding can be disastrous. Not only can it lead to fatalities, its effects on agriculture – the livelihood of millions of people in the Asia-Pacific region – can also be significant. In addition, flooding in cities can cause damage to residential properties, businesses, underground structures such as parking, shops and storage, and infrastructure for subways, traffic tunnels and roads. Heavy rain can also trigger landslides in areas with steep terrain or heavy deforestation, both present in the Asia-Pacific region, which can lead to fatalities, damage to property and roads, and severe flooding to the downstream areas from flash floods. Drainage systems in many megacities in the Asia-Pacific region were designed many years ago and are not adequate to accommodate the expected increases in rainfall frequency and intensity. Without appropriate design, the chance of flooding in these cities is therefore much higher than better-prepared cities as global warming increases. Similarly, if coastal defense structures like levees, dykes and sea walls are not built to heights and strengths that can withstand the type of storm surges that are expected, flooding will occur more frequently. 50 ❙ g20g7.com

thE EffECts of thEsE ExtrEmE EvEnts mAy ExtEnd bEyond thE loCAl ArEA. for ExAmPlE, flooding of An industriAl PArk in thAilAnd in 2013CAusEd Almost totAl disruPtion in thE globAl suPPly of ComPutEr hArd disks And sPArE PArts for AutomobilEs. In anticipating the magnitude of sea level rise, consideration should be on the extreme rise rather than the average rise because most of the flooding events in coastal areas are caused by storm events that can bring about an extreme in the water height. In other words, in the design of coastal defense structures, one must use the projected extreme level rather than the average rise. While some areas in the Asia-Pacific region face excessive rain, other places are more likely to have prolonged droughts. Because agriculture and aquaculture are very important to this region in particular, such droughts can have severe environmental and economic consequences. In addition, accompanying the rapid growth of the Asia-Pacific region is a significant rise in

population and an increase in industrial production, both of which put a substantially heavy demand on water. Any prolonged drought can lead to reduction of industrial production and water rationing. Regions that depend on hydroelectric power for electricity generation also will be affected. With the increase in the frequency of extreme weather events due to global warming, we can expect a range of significant impacts on the Asia-Pacific region, partly because of its rapid growth and lack of planning (or planning not being able to keep pace with the region’s growth). As a result, extreme events – heat waves, flooding, sea level rise and droughts – can bring disastrous consequences including loss of lives, property, industrial production and business disruption. The effects of these extreme events may extend beyond the local area. For example, flooding of an industrial park in Thailand in 2013caused almost total disruption in the global supply of computer hard disks and spare parts for automobiles. The prevalence of the “just-in-time” philosophy for industrial production means that any break in any part of the supply chain, even one far away, can lead to severe disruption in the entire production process. The loss of agricultural products due to heat waves, flooding or drought in one area can easily lead to a shortage of food supply elsewhere. Global warming is inevitable — even though it is hoped that its growth rate can be reduced through concerted efforts from all countries. It is important that adaption measures be designed and implemented so that the region cannot only survive but can continue to thrive. ■

Professor Johnny Chan is Chair Professor of Atmospheric Science and Director of Guy Carpenter Asia Pacific Climate Impact Center at the School of Energy and Environment, City University of Hong Kong. He is a Fellow of the American Meteorological Society, an Honorary Fellow of the UK Energy Institute and Chair of the Tropical Cyclone Panel of the Working Group on Tropical Meteorology Research of the United Nations World Meteorological Organization.


Network, knowledge, know-how Under the theme “Where Business Connects,” the 10th World Chambers Congress invites business and chamber leaders from around the world to gather in Sydney in an effort to work together in facing the global challenges of business today.

400

YEARS OF SERVICING THE BUSINESS COMMUNITY

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The G7 Global Briefing Report

Global Development Authored by: Fumbi Chima

Women and Innovation: How Creativity Empowers Women Achieving gender equality will add trillions of dollars to the global economy and help lift dozens of developing nations out of poverty.

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s we celebrate International Women’s Day, the United Nations has issued a call for the business world to commit to an agenda of women’s empowerment in the hopes of achieving gender equality, not just because it’s the right thing to do – it is the right thing to do – but because doing so will add trillions of dollars to the global economy and help lift dozens of developing nations out of poverty. A recent study by the McKinsey Global Institute showed that with gender parity, women could add as much as $28 trillion to 2025’s annual GDP. In Malawi for example, one of the world’s poorest countries, closing the gender gap in just the agriculture sector would add $100 million to the national economy and lift close to a quarter of a million people out of poverty, according to a recent World Bank study. Closing the gender gap and reaping these transformative benefits requires real innovation. It requires changes in the way we govern, use technology and do business. And with women in the developed world becoming increasingly active contributors to economic development, the world is poised – now more than ever before – to utilize innovation to better women’s lives across the globe. So, what is the intersection between innovation and the empowerment of women? Innovations such as modern contraceptives, improvements in childcare provision, and quotas to ensure parity in educational

institutions and representative bodies, have improved women’s incomes, health, wellbeing and opportunities. Innovation isn’t just about a creative idea though. It’s about being able to bring that idea to market. Innovation is the implementation of creativity, and this implementation requires certain preconditions in order to occur fluidly. The most challenging barriers inhibiting women from reaching their “innovation potential” are free time, access to education and access to finance – three factors that are all too often lacking for women in the developing world. Innovations can significantly reduce women’s “time poverty,” and allow them more time to attend school, be with their families, and tend to their businesses. A study by Practical Action determined that on average, women in India spend about 374 hours every year collecting firewood, and that improved cooking stoves could save women over 70 hours annually. Innovations like the Wonderbag, a padded container that allows off the fire cooking, allow women freedom from tending stoves. Businesswoman Sarah Collins created the Wonderbag with the mission to empower women in Africa, and for every Wonderbag sold online distributes another for free to an impoverished woman in the developing world. Water collection is another huge contributor to time poverty in the developing world. In some countries, women spend as

Once AllOwed the time, educAtiOn, And finAnces tO innOvAte, the OppOrtunities exist tO Actively encOurAge Other wOmen’s empOwerment, by driving trAnsfOrmAtive sOciAl chAnge thrOugh mAcrO-level pOlicies in gOvernment And sOciety. 52 ❙ g20g7.com

much as 85 percent of their daily energy intake fetching water, sometimes walking as far as 10-15 kilometers to and from water sources. The Wello WaterWheel, a 45 liter rolling drum that moves 2-5 times as much water as traditional methods, was created by female entrepreneur Cynthia Koenig to help reduce the time women spend collecting water. In parts of rural India the use of the Wello WaterWheel has reduced the amount of time women spend collecting water by more than 30 hours per week, time that can now be used in their fields, for their businesses, or on their studies. Increased girl’s school attendance is a critical result of alleviating burdens of wood and water collection, and girl’s access to education is essential for women to reach their full potential. Educated girls perform better in the marketplace, are quicker to adopt new technologies, and make smarter choices about family planning. They enrich their families, their communities and ultimately their nations. At present though, over 62 million girls around the world are not attending school, oftentimes because of lack of finances or pressure from other obligations, but sometimes because shame caused by lack of facilities to deal with menstruation leads to high absenteeism and often failure. Uganda-based AFRIpads, a company founded by Sophia Klumpp, has an innovative solution that fulfills two goals. Her company provides low-cost reusable sanitary pads to schoolgirls and creates job opportunities for women by hiring local women to sew the pads. Items like the AFRIpad have been transformative in allowing girls – who previously stayed home and missed as much as 20 percent of schooldays due to their periods – to attend school and not fall behind their male peers. Similar basic innovations like girls’ hostels on school properties, and


separate girls’ latrines with changing areas have allowed girls in developing countries to stay in school. Access to finance and the formal economy is the third key to unlocking women’s economic potential. Social ventures like mobile banking save women time and money, and allow them access to new markets and economic opportunities. Through mobile banking, poor – and even illiterate – women can access banking services that help them manage their income, facilitate financial transactions, access credit and loans, and allow them to invest and accrue savings, all without having to spend time or transport expenses in transit to banks. Other financial innovations, such as the government-owned Bharatiya Mahila Bank (BMB) offer an innovative solution to increasing the number of women engaged in India’s formal economy. BMB, opened in 2013, is the only bank in India exclusively for women. BMB not only offers traditional savings and loan programs, it runs seminars

to increase women’s financial literacy (often run by women from the local communities) and works with NGOs to train women in vocational skills. Innovations like the Wonderbag the WaterWheel, AFRIpads, and BMB - by women for women - embody the idea of #LiftAsYouClimb, successful women using their power of innovation to better the lives of other women. By improving their social status, increasing their confidence, and allowing them to explore creativity and problem-solving, innovations can give women the capacity to help pull forward other women working their way up behind them. Breaking down barriers to women’s creative capacities is the first step in their emergence in the field of innovation. Once allowed the time, education, and finances to innovate, the opportunities exist to actively encourage other women’s empowerment, by driving transformative social change through macro-level policies in government and society.

Innovation is cyclical. The more women innovate, the more they inspire and allow other women to innovate. Cultivating innovation to empower women and encourage gender equality allows leaders, businesses, governments, and women themselves to create new solutions to difficult problems. So this Women’s Day, I encourage all of my fellow female businesswomen, leaders, artists, innovators and politicians to lift as you climb. Let’s innovate for the future of women. Let’s innovate for the future of our world. ■

Fumbi Chima is the Chief Information Officer of Burberry. She is also an Advisory Board Member of Diplomatic Courier and a Board Member of the World Affairs Council in Washington, DC.

Ise-Shima. Japan 2016 ❙ 53


The G7 Global Briefing Report

Global Finance Authored by: Matt Austen and Chris Allchin

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Modular Financial Services: The New Shape of the Industry

inancial services have endured a turbulent 10 years, including a banking crisis, an economic downturn in the U.S. and Europe, sovereign debt crises and radical re-regulation. Yet the industry has emerged more or less intact. Banks and insurers look much as they did in 2006. This should not be a surprise. Real threats to business models do not come from earnings volatility, such as experienced during the crisis and since. It comes from new ways of doing things that render old ways obsolete. While the turmoil in the financial industry has been dramatic, other industries have been more radically transformed. For example, digital technology has disrupted the

Financial services have endured a turbulent 10 years, yet the industry has emerged more or less intact.

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established business models in music and publishing. But such a transformation is on the horizon for the financial services industry. We believe financial services are becoming “modular.” Digital technology and consequent changes in consumer behavior will weaken the hold that suppliers have over their customers. New customer platforms will help structure solutions for consumers and guide them to a variety of suppliers, facilitating “dynamic switching” between suppliers to ensure customers always get the best deal. The number of financial service suppliers used by the average consumer will increase dramatically. We call this “modular demand.”

The supply side of the financial industry is also becoming more modular. Financial “products” are not physical objects but primarily contracts and advice, and the success of financial firms depends on their skill at processing information and making good decisions. As data becomes radically easier and cheaper to acquire, store, transfer and analyze, more specialist business models become viable, not only operating more efficiently, but also more seamlessly plugging into the supply chain. This is demonstrated by the visible rise of the Financial Technology (Fintech) sector, especially in payments. Our 2016 report, Modular Financial Services: The New Shape of the Industry, characterizes four broad

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industry structures that already exist in different markets across the globe (see chart below). For example, Property & Casualty insurance in parts of Europe conforms to the modular demand model and in the UK, where the trend is the most advanced, aggregators’ share of sales has risen from 5 percent to 65 percent in the last decade. Fund management is an advanced example of modular supply, with many fund managers focusing exclusively on investment decisionmaking and execution while outsourcing almost all other operations, from trade settlement to custody. U.S. mortgages are the best example of a fully modular market, with the government-sponsored agencies, Fannie Mae and Freddie Mac, allowing mortgage risk and funding to be shifted into the market for mortgage-backed securities. The demand side has had various modular structures, with brokers highly active before the crisis and now with major non-bank direct originators. Quicken, the largest online lender, now originates more mortgages than Bank of America. Modular Services Put $1 Trillion into Play Modular financial services should be very good news for consumers, who will benefit from new services and higher price transparency. On first sight, however, it looks like bad news for existing firms as banks and insurers will find cross-selling and product cross-subsidization even more difficult. Also, the downward pressure on pricing and margin capture of third-party platforms will come with limited offsetting cost reductions. With distribution via third-party platforms, a major barrier to entry is eliminated: the cost of creating distribution channels. ›

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Fund management is an advanced example oF modular supply, with many Fund managers Focusing exclusively on investment decisionmaking and execution while outsourcing almost all other operations, From trade settlement to custody.

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The G7 Global Briefing Report

Global Finance

› Competition will multiply. And the innovations that lead to a modular supply side threaten to destroy the value of incumbent firms’ antiquated “plant and equipment.” We estimate that about $1 trillion of annual profits are at stake, available to new competitors or likely to be lost through tighter pricing. But things need not work out badly for incumbents in a modular world. They can compete to become the “trusted platform,” likely having to give access to other providers, but capturing the margins that go to distribution. They also have the advantage of large existing customer bases, familiar brands and a variety of channels, each of which reinforces the others. And in product provision, established firms have an accumulation of skills, experience and customer data to assess risk and set

pricing, as well as vast quantities of capital. Not only is this important in capital-intensive parts of the business, but it means banks and insurers can buy competitors, such as Fintech startups, thereby acquiring skills and technology they lack. Modular supply will also help established banks and insurers struggling with systems that are inflexible and expensive to run, on account of their age or messy post-merger integrations. The cost of overhauling them, which can run into the billions, makes sense only for the largest firms. Smaller firms will increasingly be able to simply abandon their systems, outsourcing most back-office processes to third party suppliers that will broaden their offerings and scale up their operations.

modular supply will also help established banks and insurers struggling with systems that are inFlexible and expensive to run, on account oF their age or messy post-merger integrations. 56 ❙ g20g7.com

Incumbents’ greatest structural advantage has been regulation—in banking, at least. Government deposit protection gives banks a cheap source of stable funding unavailable to other lenders. This has proved critical not only in basic lending products, where margins are thin, but in credit cards. Monoline credit card businesses have found that smarter analytics cannot make up for expensive or unreliable funding; for example, Capital One has become a deposit-taking bank with a branch network. However, as policymakers wrestle with the digital world, some of this advantage will be threatened. Regulators may soon require banks and insurers to |make information on their customers available to competitors. Much regulation is pushing in the same direction as technology, towards more competition and ease of switching. Banks and insurers have adapted to new technology in the past and they will do so again. In 10 years’ time, when financial services will be more modular, today’s banks and insurers may look very different, but most of them will still be around. Established firms will need to adapt rapidly to the modular industry structure. Some will try to compete with commerce and technology firms and build sophisticated customer platforms. Some will develop their products to concentrate on areas of sustainable advantage, making the most of multi-channel distribution. All will reinvent their back offices as supply chains. ■

Matt Austen is a Partner and EMEA Head of the Corporate & Institutional Banking practice of Oliver Wyman. Based in London, Matt has over 17 years of financial services consulting experience, during which time he has advised clients on a broad range of strategic and operational issues in wholesale and investment banking in a number of developed and emerging markets, having spent part of his career leading the firm’s Corporate & Institutional Banking practice in Asia. Chris Allchin is a Partner in Oliver Wyman’s London office with 10 years of experience in the firm’s Corporate & Institutional Banking practice. Chris has worked in depth with major financial institutions in Eastern and Western Europe, North America and Asia with an emphasis on investment banking and corporate banking.


Book Review Review by: Winona Roylance

TWO TALES OF THE MOON By Jennifer Sun

Wall Street, cyber security, high-stakes business deals, political corruption – usually at the forefront of a political thriller, these elements instead serve as the background to a tale of human connection and love in Jennifer Sun’s debut novel, Two Tales of the Moon.

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et right after the 2008 Financial Crisis, Two Tales of the Moon follows Lu Li, a successful and principled Wall Street investment banker whose troubled past in communist China returns to haunt her after her firm takes on two large Chinese companies as their clients. Meanwhile Will Donovan, CEO and founder of a prospering cyber technology firm, wrestles with whether to keep his company autonomous or accept a lucrative deal and merge with a much larger technology corporation. Soon, both characters find themselves in the middle of a potential business partnership with China’s biggest telecommunication company, Great China Telecom. As Will and Lu’s paths continue to cross each other from Washington D.C to New York and all the way to Shanghai, their complicated feelings for each other take stage as each struggles with their past, their current predicament with Great China Telecom, and their potential future together. The highstakes business deals soon give way to a love story that shows how two career-driven people can find solace in each other, even amidst the chaos of IPOs and joint ventures. It is this element of human connection that softens the otherwise tense tale of potential business relations between the US and Great China Telecom. With US-Sino relations becoming ever more prevalent and convoluted, Two Tales of the Moon comes at a perfect time to shed light on some of the risks and benefits of increasing involvement between the US and China. On a macro level, Jennifer Sun’s novel demonstrates just how complicated business deals can be between China and America – especially when it comes to cyber security technology, in Will Donovan’s case. With China’s communist government discretely taking a part in most of their large businesses, merging US cyber security technology with a Chinese telecom hardware company would be

a political disaster waiting to happen. At the micro level, however, Sun demonstrates how the US and China can connect on a human level through her characters Will and Lu. Born on opposite sides of the world under vastly different circumstances – Will raised in an archetypical middle-class American family, Lu raised with a father in an internment camp, an absent mother, and a communist regime suppressing all aspects of her life – the two manage to find each other and fall in love against all odds. Likewise, the political differences between America and China should not deter the two countries from connecting with each other on a cultural and purely human level. However, Jennifer Sun paints a bleak picture of modern day China. Wanting to “shine a light on the effect of communism on China in the past, as well as the still-Red China’s super-power ambition in today’s increasingly globalized world,” she stylizes Shanghai as a pollution-ridden mega city, built on corrupt businesses and large, lavish buildings unrepresentative of China’s low-income population. The characters that live there, such as Lu’s mother and her brother-in-law, are portrayed as cold, condescending, and money-obsessed. The scenery, characters, and dialogue all aid in her portrayal of a corrupt economic and political landscape. Besides the harsh portrayal of China, the novel itself is steady-paced and tastefully written, with Jennifer Sun’s keen eye for fashion, food, and martinis painting a vivid backdrop for the characters to rest on. The characters of Will and Lu are strong, calm, and introspective – traits that aid them in their respective careers. With a lot of attention to detail, Sun weaves their story through flashbacks, introspection, and deep dialogue, often glancing over major plot points and instead zooming in on the smaller moments to drive home the human

Besides the harsh portrayal of China, the novel itself is steadypaCed and tastefully written, with Jennifer sun’s keen eye for fashion, food, and martinis painting a vivid BaCkdrop for the CharaCters to rest on. quality of the novel. This has the effect of making the reader feel as if they have been set down in the middle of a story, with a tangible sense of realness preceding the novel and continuing on after the last page. Overall, Jennifer Sun’s background in finance, technology, and Chinese culture serves as an intriguing backdrop on which to paint a surprisingly genuine love story. The juxtaposition between chaotic Wall Street and subtle human connection, crazy business deals and meditative reflection, and USChinese relations and Will and Lu’s love story emphasizes the human nature of the novel. Understated and elegant, Two Tales of the Moon is a great read for anyone with interests in business, international politics, and especially love. ■ Ise-Shima. Japan 2016 ❙ 57


The G7 Global Briefing Report

Branded Story / Austin Air

Indoor Air Quality: A Global Concern Outdoor air pollution is often in the spotlight while indoor air quality is rarely on our radar; at Austin Air we worry about it so you don’t have to.

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t is well-known that air pollution is a serious threat to the environment. The quality of ambient (outdoor) air has been diminishing consistently since the Industrial Revolution brought on a colossal influx of fossil fuel burning. The shift away from agrarian economies was soon followed by the advent of motor vehicles and they’ve been adding to the assault on the atmosphere ever since. We may sometimes feel overloaded by these facts - specifically in the context of climate change – but it’s too serious to ignore. Crop yields have declined in multiple regions since 1980 due to smog, black carbon, and ground-level ozone. This is akin to a nuclear winter, when the air is too thick for sufficient light to reach plants. This stunts agricultural output which is a tangible threat to food security. Air pollution is taking an enormous toll on human health as well. The most recent figures from the World Health Organization (WHO) state that one in eight global deaths were the result of air pollution in 2012. This is more than twice the amount previously believed by the scientific community so air pollution is now the leading health risk from the environment. The dramatic doubling of these figures is due to a new understanding of pollution’s role in the development of diseases such as cancer. Scientists have also gained insight into the way in which outdoor and indoor air pollution work in tandem, deteriorating health. Not typically addressed but arguably more critical – the quality of indoor air is significantly worse than the air we encounter outside. The United States Environmental Protection Agency (EPA) estimates that indoor air can have two to five times more pollutants than outdoor air but the levels of certain contaminants can be one-hundred times higher. In many parts of the world, people spend up to 90% of their lives indoors. Compromised indoor air quality is a problem we all share in our biosphere due to a combination of factors - regardless of geographical region or socioeconomic status. 58 ❙ g20g7.com

On one end of the spectrum, there are almost three billion people who rely on solid fuels and open fires to cook their food and heat their homes. The burning of wood, dung, and coal releases hazardous smoke and fumes into the home including particulate matter less than 2.5 micrometers (PM2.5) in diameter. PM2.5 is roughly 1/30th the width of the average human hair and can embed deep into the lungs when inhaled. Levels of PM2.5 can be up to twenty times higher than the accepted values in homes where biomass fuels are burned. Short-term exposure to PM2.5 has been shown to cause health problems ranging from coughing to shortness of breath. Long-term exposure increases risk of heart attack and stroke. A recently published study by the Harvard School of Public Health showed an association between autism spectrum disorder and regular contact with high levels of particulate matter during pregnancy, especially during the third trimester. Newborns exposed to high levels of PM2.5 are more likely to contract pneumonia, the leading cause of death for children under the age of five. In contrast to other quality of life indicators such as access to clean water or nutritious food, indoor air isn’t necessarily better in “modern” homes which use gas or electricity for heating and cooking. Improvements in construction have made buildings more energy efficient than ever – tightly sealed lodgings lock out wind, rain, and snow but also trap dangerous particulates and chemicals inside. Everything from furniture to paint is known to off-gas volatile organic compounds (VOCs) and other chemicals such as formaldehyde, a known carcinogen. VOCs can cause eye irritation and cold symptoms but have also been linked to brain damage and cancer. The lack of natural ventilation in newer buildings plus their components has resulted in chemical and particulate saturated air. This is best exemplified by sick building syndrome (SBS). The term, coined by the WHO in 1986,

is the phenomenon of non-specific poor health among the people who occupy a building which appears to be linked to their time spent there. With rapid economic growth transforming many of the world’s economies, more and more people are living and working in newly built structures. SBS is an increasingly prevalent occupational hazard resulting in an upsurge of sickness related absences and a decline in productivity which isn’t likely to recede soon. The amenities that accompany newer buildings aren’t the only improvements which have come at a cost. The past century has seen a drastic rise in severe asthma and allergies in industrialized nations. The hygiene hypothesis states that the jump may be related to strides in medicine, primarily treatments for infectious diseases. Lack of exposure to parasites, symbiotic microorganisms such as gut flora and probiotics, and other infectious agents, which have co-evolved with humans and potentially strengthen the immune system may have increased our sensitivities to certain compounds. For example, Immunoglobulin E (IgE) is an antibody present in all humans. IgE causes allergic reactions when it confuses innocuous items like dust, pet dander, and pollen with harmful intruders. IgE most commonly causes allergic rhinitis (inflammation of the nose) which results in nasal drip, sneezing, itching, and congestion. Asthma attacks can also be spurred by IgE-based irritation. Typical triggers for allergy symptoms often cause asthma attacks as well. The two conditions


THE AMENITIES THAT ACCOMPANY NEWER BUILDINGS AREN’T THE ONLY IMPROVEMENTS WHICH HAVE COME AT A COST. THE PAST CENTURY HAS SEEN A DRASTIC RISE IN SEVERE ASTHMA AND ALLERGIES IN INDUSTRIALIZED NATIONS. frequently happen in tandem in patients an estimated four out of five asthma sufferers also have allergic rhinitis. Poor ventilation, chemical vapors, and PM2.5 all exacerbate asthma and allergy symptoms. No matter whether one lives in a simple, single room dwelling or in a state-of-the-art home with the advances of modern medicine, poor indoor air quality is a major concern and difficult to improve but Austin Air has been on the front line of the fight for clean air for the past three decades. Inspired by a family member with debilitating respiratory problems, Austin Air founder Richard Taylor began doing research on the causes of asthma attacks in the late 1970s. By 1979, he was convinced that invisible air particles were a major culprit in asthma attacks. At the time, there was no proven prophylaxis to stop asthma attacks. The only treatments were harsh drugs with a

laundry list of side effects including dizziness, insomnia, diarrhea, nausea, vomiting, dry mouth, arrhythmia, headaches, tremors, and more. By 1982, Taylor had designed and manufactured the first High-Efficiency Particulate Air (HEPA) filter for the consumer market. Improvements were made over the next few years to maximize filter surface area, cut energy costs, and address a wider spectrum of indoor air contaminants. In 1990, Austin Air Systems, Limited was founded in Buffalo, New York, USA, introducing the first air cleaner specially designed to help people with suppressed respiratory function from asthma, allergies, and chronic obstructive pulmonary disorder (COPD). Austin was the first company to combine HEPA filtration with solid activated carbon, increasing the adsorption surface area to over 1360 acres (550 hectare). For perspective

- the entire walled in area of the ruins of the ancient city of Ephesus is 1030 acres (415 hectare)! Austin was also the first to incorporate zeolite to capture ultra-fine gas molecules. In 1999, Austin Air introduced High Efficiency Gas Absorption (HEGA) cloth filters to the consumer air purification market. HEGA was originally developed for the British military to defend against chemical warfare. It’s extremely efficient at absorbing gaseous pollutants such as formaldehyde, ammonia, toluene, and benzene. Austin Air’s groundbreaking innovations quickly garnered the attention of various public and civil entities. Austin was commissioned by the US Government to develop proprietary air cleaners to tackle fumes from oil field fires abroad. The Federal Emergency Management Agency (FEMA) and the American Red Cross chose Austin Air products to limit exposure to airborne and chemical toxins following the September 2001 attacks in New York City. Austin products were later chosen to protect citizens living in close proximity to the chemical storage depot in Anniston, Alabama during the mass incineration of Cold War-era chemical weapons. Austin Air products have also been solicited for a multitude of clinical trials. In the largest study of its kind, Cincinnati Children’s Hospital tested the Austin Allergy Machine which showed a statistically significant reduction in emergency room visits of asthmatic children. Johns Hopkins University conducted a study which proved that the Austin Bedroom Machine efficiently reduces nitrogen dioxide resulting from gas stove use. The results of this study were so promising the researchers were inspired to further study the efficacy of Austin products in three on-going clinical trials. Although respiratory health issues do not plague everyone, particulates and the increasing presence of harsh chemicals and VOCs make the matter of indoor air quality relevant to us all and must be taken into consideration. Austin Air has been a pioneer in air filter technology since Mr. Taylor started tinkering in the 1970s. Austin products continue to prove their wide range of impact not only on indoor air quality but also on the overall quality of life of their owners. ■

Find out more about this product contact Austin Air on: 1-800-724-8403 austinair.com

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The G7 Global Briefing Report

Global Policy Authored by: Dr. Corneliu Bjola

The State of Climate Negotiations: What to Expect after COP 21?

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he COP 21 summit in Paris has generally been described a major breakthrough for climate negotiations, one that would presumably provide the long overdue impetus for developing a sustainable solution to the climate change crisis. However, after so many false starts, one cannot help wonder whether the outcome of the COP 21 climate summit does indeed qualify as a negotiation breakthrough, or perhaps our expectations are again too optimistic. In other words, how can we evaluate the outcome of COP 21 as being consistent with a negotiation breakthrough as opposed to a negotiation breakdown or to business as usual (neither breakthrough nor breakdown)? In an article I published in 2014 in the journal of International Negotiation, I drew on insights offered by market trading theory to introduce a framework of negotiation breakthrough analysis (NBA) that should allow us to address this important question. My key departing point is that the outcome of each round of climate negotiations is path-dependently shaped by the results of previous meetings. In other words, decisions taken at previous COPs inform, shape and constrain parties’ expectations regarding the outcome of future COPs. The way in which parties then meet these expectations, or fail to do so, define the overall levels of support and resistance of the negotiations. As long as COP negotiation outcomes stay within the established levels of support and resistance, there is no breakthrough or breakdown, just business as usual. However, once the levels of expectations generated by previous outcomes are breached then negotiation breakthroughs are likely to occur. Positive breakthroughs take place when negotiations move outside the resistance level as they help push the negotiation agenda forward. Negative breakthroughs (or breakdowns) take place

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when the support level is pierced as they prompt parties to re-visit files already agreed upon. My model proved accurate in explaining the evolution of climate negotiations from 1995 (COP1) to 2012 (COP18), when the empirical analysis was conducted. In an effort to test the validity of my conceptual framework against the outcome of the 2015 climate summit in Paris, I have collected new quantitative (COP decisions) and qualitative date (interviews with climate experts), re-calculated the support and resistance levels, and plotted the results in the graph shown in Fig 1. The analysis confirms, in rather unequivocal terms, that the public recognition of COP 21 as a negotiation breakthrough has not been misplaced. The resistance level shaped by the outcomes of previous COP negotiations has been forcefully breached, a fact that provides strong evidence about the climate agenda moving forward as opposed to getting stalled or addressing old issues. The graph also shows that the outcome of COP 21 is not the result of an abrupt or hasty move, but it has been steadily prepared by multiple rounds of negotiations taking place after the much criticised COP 15 meeting in Copenhagen. What Fig 1 is not able to tell us is whether the COP 21 breakthrough is sustainable that is, whether we should expect climate negotiations to continue on the current positive trend or they would likely reverse to a zig-zag or negative pattern. As I’ve argued elsewhere, the sustainability of a negotiation breakthrough cannot be predicted using data pertaining only to negotiation outcomes. The analysis must also take into account the broader economic context in which negotiations take place. In other words, the momentum of international negotiations is contingent upon them taking place in a favourable context, which in the case of

climate change is largely informed by the evolution of the oil price and the influence of the sustainable economic sector. Higher oil prices tend to stimulate interest in renewable energy policies, while the expansion of


Fig 1: The evolution of climate negotiation

Fig 2: The economic context of climate negotiation

sustainable industries increases the opportunity costs of reversing to carbonintensive modes of production. The index created by combining the oil spot price and the Dow Jones Sustainability World

Index (DJSWI) is shown in Fig 2 and offers a rather sober view regarding the short term future of climate negotiations. The tremendous pressure of the global financial crisis in 2008-2009 broke the momentum of climate negotiations at COP 15 in Copenhagen (first red arrow). The economic context has steadily improved afterwards (green arrow), but it seems to enter a slight period of retraction (second red arrow), which might not bode well for the immediate future of climate negotiations. To conclude, COP 21 does qualify as a negotiation breakthrough because its outcome has substantially exceeded the parties’ expectations about what needs to be accomplished in order to address the climate change crisis. What is less clear is whether COP 22 in Marrakech in November 2016 will be able to build on COP21’s momentum and continue its positive agenda. The collapse of the oil price in the past year has introduced a negative pressure point in the broader context of the negotiations, which the sustainability economic sector might not be able to offset. ■

Corneliu Bjola is Associate Professor in Diplomatic Studies at the University of Oxford. His research interests lie at the intersection of diplomatic studies, negotiation theory, international ethics, and crisis management. He has authored or edited five books, including the recent co-edited volumes on Secret Diplomacy: Concepts, Contexts and Cases (2016) and Digital Diplomacy: Theory and Practice (2015). His work has been published in the European Journal of International Relations, International Negotiation, Review of International Studies, British Journal of Politics and International Relations, Global Policy, Journal of Global Ethics and The Hague Journal of Diplomacy. Bjola is Co-Editor of the book series on “New Diplomatic Studies” with Routledge and Editor-inChief of the new journal “Diplomacy and Foreign Policy” with Brill.

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Branded Story / Caterpillar Authored by: Neil Hare, President and CEO of Global Visions Communication

Caterpillar introduces “The Age of Smart Iron”

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s the digital transformation of the world continues at a rapid pace, the construction, mining, energy and transport sectors are proving no exception to the vast opportunities technology has to offer. Caterpillar, an industry leader in the transformative technology revolution, recently introduced “The Age of Smart Iron” at the bauma 2016 trade show in Munich, Germany. The Age of Smart Iron describes Caterpillar’s approach to maintaining its position as industry leader in the delivery of digital solutions to industry which contribute to productivity, safety, efficiency and profitability. Chairman and CEO Doug Oberhelman said while Caterpillar had always been a leader and innovator around the iron – the machinery and equipment, “we do that better than anyone and now we’re going to lead innovation in smart iron, too”. The Age of Smart Iron not only defines Caterpillar’s future, but grounds its past and present, he said. Importantly, The Age of Smart Iron positioned Caterpillar differently to its competitors because much of its business was already leading industry in the digital technology and connectivity sphere. While economic conditions and the competitive environment add to the challenge of the quest, Mr Oberhelman said Caterpillar would lead the transformation by accelerating its digital technology focus and helping customers succeed by offering powerful solutions to improve their capabilities, productivity and operating margins. Mr Oberhelman said every new Caterpillar product release had become more sophisticated, productive and efficient and the company would accelerate work on integrated approaches to analytics and applications to deliver results. In this regard, Caterpillar’s competitive advantage is its foundation of an existing, worldwide asset base and strong dealer network. “We have approximately 400,000 connected assets and an installed base 62 ❙ g20g7.com

of three million machines and engines at work around the world today,” Mr Oberhelman said. “That foundation gives us a head start, and we’re building on it.” The extensive worldwide dealer network gives Caterpillar the unique opportunity to combine data from all Cat machines onto a common platform, and share the analytics to provide multiple solutions to meet customer needs in construction, mining, energy and transport. “When you combine the expertise and experience of our people with our unmatched dealer network, you see Caterpillar’s great competitive advantage,” Mr Oberhelman said. “We know how to build solutions, and we have the distribution network to deliver and service those solutions.” He said Caterpillar had been dedicated to helping customers succeed since 1925. “Visit just about any country in the world and you’ll see Caterpillar yellow iron at work, building and delivering the infrastructure and energy that brings higher standards of living. “Think about the benefits when all of that yellow iron is smart iron, too.” To summarize The Age of Smart Iron, Mr Oberhelman said the vision was to enhance the company’s Cat Connect Technology and Services offerings. “Entire fleets and job sites – every machine, engine, truck, tablet, light tower, smart device and drone – will eventually share data on one common technology platform and speak the same language. “I can’t wait to see what that means for our customers – and for us.” The strategy was evident recently at the world’s largest construction industry trade show, bauma 2016, as Caterpillar featured more than 60 products, a large selection of work tools and a full range of dealerdelivered support services. Caterpillar Group President, Rob Charter said it provided a suitable platform for Cat technology. “While we always love to showcase our machines and engines, we’re equally excited about what’s at the centre of our exhibit: Caterpillar technology,” he said.

“This is not technology for technology’s sake. “It is technology that’s focused on solving, and even anticipating, customer problems. “We’re taking the machines, locomotives, engines and parts we’re so well known for and making them smarter, while also equipping the people who operate them with data that makes them more productive, enhances safety and improves sustainability.” Some of the main attractions of Caterpillar’s digital technologies and connected iron at bauma 2016 included Cat Connect Technology specific to the construction industry.


Cat ConneCt is hardware and software available for Cat or Competitive equipment that delivers information to Customers and is designed to help optimise their operations. Cat Connect is hardware and software available for Cat or competitive equipment that delivers information to customers and is designed to help optimise their operations. Technologies in the Cat Connect suite

specific to the construction industry segment include LINK, GRADE and COMPACT and PAYLOAD. LINK is a solution to capture vital performance and product health data and

makes that data available on the web to guide operational decision-making. GRADE and COMPACT are two productivity solutions to help operators move material faster, more accurately and with fewer passes of the machine in order to improve efficiency and productivity on the jobsite. PAYLOAD, an on-board system for haul trucks and loading tools, such as a wheeled loader, drives higher efficiency by shortening the time of each loading cycle and lowering the cost per tonne of material moved. â– Ise-Shima. Japan 2016 â?™ 63


TECHNOLOGY DELIVERS EFFICIENCY.

34% FEWER EQUIPMENT *

HOURS. See how Cat Connect Technology achieved this during our Road Construction Production Study. Scan the code to watch the video.

CAT® CONNECT TECHNOLOGY SOLUTIONS DELIVER MORE FOR YOU • Factory-integrated technology for Cat Excavators, Wheel Loaders, Track-Type Tractors, Motor Graders, Scrapers, Articulated Trucks and Compaction equipment • GRADE technology – for increased grade accuracy while cutting costs • PAYLOAD technology – measure material weights with improved productivity • LINK technologies – instantly access machine data remotely • COMPACT technology – meet soil compaction targets in fewer passes

To find out more about Cat Connect Technology contact your local Cat dealer or visit cat.com

*Figures based on single, internal Caterpillar Road Construction Production Study comparing traditional construction with technology construction, conducted in controlled environment with Cat construction and paving equipment fitted with and without available Cat technology. Actual savings will vary depending on machines and technology in use and in what environment and application. For further information about the study and to watch the video, visit cat.com/moreforyou © 2016 Caterpillar. All Rights Reserved. CAT, CATERPILLAR, BUILT FOR IT, their respective logos, “Caterpillar Yellow”, the “Power Edge” trade dress as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.


TECHNOLOGY AVAILABLE


The G7 Global Briefing Report

Global Economy Authored by: George Friedman

The Export Crisis

Today we are in a crisis of exporters, where at each link of the supply chain the ultimate disinterest in increasing imports, particularly by Europe, backs up the system and destabilizes it.

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he belief in free trade is almost religious in nature. Mainstream economists have consistently argued that free trade benefits everyone. This is in spite of the fact that the United States developed as it did under protectionist policies, as did post-war Germany, Japan and China among others. Perhaps these countries would have developed farther and faster had they developed free trade policies earlier, but there are reasons to believe this is not the case. The theory may be correct that, in the long run, the law of comparative advantages takes hold and generates greater wealth. The problem is that the ‘long run” is an unknown quantity, and that the economic

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and political clocks run at different speeds. A human being lives the biblical three score and ten give or take. He begins to work at let’s say age 21 and he ends his working life at age 65. He works for 44 years in this model. The modern work force is not fungible. A skilled steel worker cannot readily drill for oil. Consequently, when a sector loses its competitive advantage, a worker is let go who frequently cannot transfer laterally to another trade. Imagine this happening at the age of 45, which happens fairly frequently. He may never again earn the kind of living he once had. Even if the theory is correct, it deals with aggregate national wealth, not those of each sector. The total


wealth may increase dramatically, but a very large number of voters are actually badly hurt by the changes. The result is major political instability and blocking free trade. Simply, the time it takes for wealth to accumulate and flow through society may be incompatible with the life cycle of citizens. But there is a second problem, one that we are experiencing now. Exporters need customers. The inability of customers to buy the exporter’s goods creates a crisis in the exporter’s economy and polity, making the exporter hostage to the appetite of the importer. Countries that are dependent on exports shift from being efficient and competitive, to having an economic system that is being undermined. And this is the crisis we are in today—a crisis of exporters. The crisis began in 2008 when the European and American economies experienced what was in many ways a normal financial crisis and economies contracted. The United States emerged at a slower growth rate than before. Europe never truly emerged. As a result, American and European appetites for imported goods did not expand as expected. China, the most efficient exporter at the time, was pushed into a crisis it never recovered from. The flywheel of the Chinese economy was increasing exports generating cash flow, stabilizing the banking system and fueling domestic growth. When the Americans and Europeans contracted consumption, China destabilized. China’s goal was to maintain full employment, and to do that it leant money to businesses that were inefficient. Lending money to inefficient businesses created inflation which made Chinese goods more expensive than, for example, Mexican goods. China went into a downward spiral from which it has still not recovered. The world of industrial minerals existed in a fantasy that China would grow forever and the price of oil or iron ore would remain extremely high. It wasn’t understood that China was in its “new normal” because its fate was in the hands of its customers, and its customers couldn’t buy at previous levels. When it finally penetrated the markets’ consciousness that China would not return to its prior industrial growth pattern the price of minerals plunged. This extended the crisis to oil exporters like Russia and Saudi Arabia. Economic crises frequently turned into political crises. Just as free trade creates instability in countries, even as it generates in the long run higher aggregate wealth, so

too the contraction of exports creates not only sectors of the economy that are disproportionately effected, but a more general crisis of government budgets that compounds the political crisis. Today we are in a crisis of exporters, where at each link of the supply chain the ultimate disinterest in increasing imports, particularly by Europe, backs up the system and destabilizes it. Most at risk were last generation’s top exporters. Least at risk are

Today wE arE in a crisis of ExporTErs, whErE aT Each link of ThE supply chain ThE ulTimaTE disinTErEsT in incrEasing imporTs, parTicularly by EuropE, backs up ThE sysTEm and dEsTabilizEs iT. mosT aT risk wErE lasT gEnEraTion’s Top ExporTErs. inefficient exporters. For example, China, South Korea, Russia and Saudi Arabia are at risk. Germany, who exports almost 50 percent of its GDP, will I think, be shortly in trouble. The United States who has always been inefficient as an exporter, and exports only 13 percent of its GDP, nearly 40 percent to Mexico or Canada, is least effected. This sort of crisis has not been seen since World War II with the triumph of free trade. We have seen the instabilities in free trade from poor exporters, and from sectors destroyed by free trade, but we are now in a generalized crisis of exporters. That crisis, like Smoot-Hawley, has the possibility of creating massive political instability. It already has. ■

George Friedman is an internationally recognized geopolitical forecaster and New York Times best-selling author. He is the Founder and Chairman of Geopolitical Futures (www. geopoliticalfutures.com), an online publication dedicated to examining and forecasting the course of global events, and former Chairman of the intelligence firm Stratfor.

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Global Economy Authored by: Isabel George, Yaseen Lotfi, Bailey Liddell, & Jennifer Horowitz

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Global Talent Summit: The Nexus of jobs and education Four College of William and Mary students discuss what the world might look like in 2050, and what skills we will all need to develop, after attending the Diplomatic Courier’s third annual Global Talent Summit in Washington, DC.

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he new year began with the Diplomatic Courier’s third annual pre-Davos Global Talent Summit. Intended to reimagine the world in 2050 and discuss how both jobs and education will have changed, the event boasted many speakers from various fields and covered a wide array of topics. Throughout the day, several themes emerged among the speakers. Four critical trends, as we look to the future, are the importance of skill development, changes to school curricula, the need to bridge the gap between enterprise and academia, and fostering a global perspective. Skill Development for a Technological Era Developing and investing in the right skills will be crucial for people entering the workforce of tomorrow. A rapidly changing

economy, both domestically and internationally, has created a gap between the skills people are leaving higher education institutions with and the skills employers need the most. Two private sector heavyweights at the Summit, Fumbi Chima and Larry Quinlan, argued that employers will need to draw from a broader pool of academic institutions rather than falling back on the typical top-tier universities. Chima and Quinlan, both Chief Information Officers at their respective companies, Burberry and Deloitte, also placed particular emphasis on students becoming proficient with technology and quantitative skills. Acquiring technological skillsets was a theme heard throughout the Summit. Edith Cecil, Vice President at the Institute of International Education, and Jean McCormick from BraveNew primarily focused on skills that would facilitate individuals starting their career right out of school. Cecil placed particular emphasis on the value of learning computer languages. Coding, she suggested, should be prioritized earlier rather than later. Students should not be introduced to programming or even basic digital tools as late as college. Secondary schools therefore have a role to ensure that sufficient computer courses are offered. Just as Cecil declared that not enough high schools in the United States included coding in their core curriculum, Carol O’Donnell, Director at the Smithsonian Science Education Center, touched on the lack of a centralized, educational focus on ›

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The G7 Global Briefing Report

Global Economy › Science, Technology, Engineering, and Mathematics (STEM). Changing the curriculum of schools is essential as about 20 percent of the workforce currently relies on STEM skills to be competitive. Developing a Global Perspective Although many speakers highlighted the importance of hard, quantitative skills, McCormick among others stressed that acquiring foreign language skills and international experience is also critical. Foreign language is just as important as computer language. Employers find potential candidates who know more than one language to be highly desirable in our global economy. Furthermore, providing more opportunities for study abroad is crucial to growing a workforce that has a better world perspective. Programs that send people to spend time in other countries naturally feed into the global strategies of many corporations. Again, these opportunities should not begin at the university level, but become available as early as possible. As employers appreciate the value of these experiences, corporations could therefore coordinate scholarships for study abroad programs through academic institutions, further bridging the divide.

Narrowing the Gap: Human Potential v. Opportunity While skills acquired from schools, quantitative or qualitative, are essential in the changing employment environment, a fundamental part of fostering a prepared workforce is simply access to such resources. Obstacles still exist for many people seeking jobs or economic opportunity. A number of the panelists spoke of their own experiences trying to bridge this gap, both in the United States and abroad. Robert Nicholson, Chief Administrative Officer at NPower, is part of a mission to extend resources, training tools, and a vast support network, to veterans and underserved young adults. Nicholson explained that 52 percent of post-9/11 veterans will face a period of unemployment at some point in their lives, despite refined skills gained through years of military experience. The training NPower offers allows students to walk away debt free, and has found that 80 percent of students find a job in IT within six months of graduation. This gap between potential and opportunity is perhaps, as Andrew Mack of AMGlobal argued, even more pronounced in the developing world. There are currently over 122 million youth in Africa between the ages of 15-19 who could utilize their potential and

ForeiGn lanGuaGe iS juST aS iMporTanT aS CoMpuTer lanGuaGe. eMployerS FinD poTenTial CanDiDaTeS Who knoW More Than one lanGuaGe To be hiGhly DeSirable in our Global eConoMy. FurTherMore, proviDinG More opporTuniTieS For STuDy abroaD iS CruCial To GroWinG a WorkForCe ThaT haS a beTTer WorlD perSpeCTive. 70 ❙ g20g7.com

skills in the job market, but do not have the opportunity. The key to solving this issue is to implement micro-franchising and create a renewed sense of entrepreneurship, especially in developing countries. Farah Mohamed and Crystal Arredondo discussed how the gap can be reduced worldwide for one of the largest marginalized groups, women. While Arredondo is focused domestically as the Chair of the National Association of Women Business Owners, Mohamad brought in a global viewpoint as the CEO and Founder of G(irls)20. Both are leaders in advocating greater access to financial services for women, especially business owners. Increasing the labor force participation of women everywhere will convert potential economic opportunity into real, sustainable development. While entrepreneurship is a solid way for the economic empowerment of women, both speakers agreed that companies and governments alike had to push for the continued integration of women into the global economy. It is also important to help people recognize and market the skills they already have, as Jason Green, Co-Founder of Skillsmart, argued. Many times, candidates are not considered for jobs as it may appear they do not have the correct credentials. Green points out, however, that skill sets different than credentials, but a candidate capable of doing the work but lacking the appropriate diploma may be overlooked by employers who focus on credentials. Another challenge many people face is an inability to recognize or clearly articulate the skills they have acquired. Together, these twin challenges prevent many qualified people from finding employment. While many different topics were discussed at the summit, speakers seemed to agree that the world is changing. Both jobs and education need to make adjustments, maybe even large ones, to be able to keep up with the way in which the world is developing. Those who do not change will inevitably be left behind as those who embrace change and find ways to meet new demands surge ahead. ■

Isabel George, Yaseen Lotfi, Bailey Liddell, and Jennifer Horowitz are currently students at the College of William & Mary. Reprinted with permission from Young Professionals in Foreign Policy.


THE BRIDLE HIDE COLLECTION

ET TINGER.CO.UK


The G7 Global Briefing Report

Global Economy Authored by: Julie Kantor and A. Crosser

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Masala Chai and Global STEM Diversity With the turn of the century has come a flood of bright young minds looking to break into the fields of Science, Technology, Engineering, and Math (STEM).

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aking a short break from an amazing NGO Leadership Summit put on by Center for Social Leadership and Sevalaya in Chennai, India, I decided to walk the halls of Anna Technological University and look for some tea with milk and cardamom. I met a man and his wife on an alumni gathering and he shared how dramatically things have changed. “When I went to school here in 1963 just two out of one thousand engineering students were women,” he said. I cringed as I have spent the last four years hearing stories of isolation from many female engineers and computer scientists. “But walking around today, it’s filled with young women. Now, over 60% of the students are female,” he shared. “That’s the biggest change.” “Progress,” I said with a beaming smile, but then thought of the American Association of University Women report Why So Few, that shows only 12% of engineers are female in the US and we know women computer science majors have been on a significant decline in the past few decades... “Less progress,” I thought to myself with a slump. › Ise-Shima. Japan 2016 ❙ 73


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Global Economy

› With the turn of the century has come a flood of bright young minds looking to break into the fields of Science, Technology, Engineering, and Medicine (STEM), hoping that through their life’s work, they may find new innovations in the most important fields through research and development. Around the world STEM fields are growing, partially due to the rise of importance in computer science and engineering. Although the growth of these fields has meant the fulfillment of big dreams for many, many others continue to look in from the outside. Historically, STEM fields have been known to be the least diverse, with those employed typically being male Asians and Caucasians. In the United States alone, only 24 percent of STEM positions are filled by women, with African-Americans and Latinos combined making up less than 15% of the field’s workers. In more promising news, many companies around the world have taken deeper notice of the issue, and are beginning to find solutions which will better promote diversity in the workplace. One angle is to increase flexibility, needed for working families and this came up a lot in discussions with many women especially around childcare. A executive from Sevalaya shared with me a front page article that Deloitte just announced that women employees will now be receiving 26 weeks of paid maternity leave in an attempt to decrease the turnover as well as encourage more young women to apply at the company. Several other employers such as EY, PWC and KPMG, have all noted that they will also be moving to a 26-week maternity leave as well up from the country’s typical 12-week maternity plan. These companies’ efforts in India are setting an excellent example for other employers worldwide to increase diversity through offering more family friendly policies. Mark Zuckerberg, CEO of Facebook also put a real stake in the ground when he took a

few months off after the birth of his daughter. This is a time where the workforce is looking for work-life integration more than work-life balance and flexibility is paramount. In addition to these companies making efforts to encourage long-term employment for their female workforce, many initiatives are being taken in the United States to help encourage young women to pursue careers in the STEM fields. The U.S. Government has committed to increase the number of available STEM educational opportunities as well as to “broaden participation to inspire a more diverse STEM talent pool.” In addition, the New York Academy of Sciences’ are doing their part to inspire young women with several programs which will work to encourage more high school students to pursue STEM careers. For example, their 1000 Girls - 1000 Futures program aims to give one-on-one mentoring for each student in hopes that it will encourage these young women to pursue careers in STEM after college. Lockheed Martin teamed up with Girls Inc. and are scaling their mentoring program in 12-15 US cities. Diversity Rates Worldwide Most of the data being discussed so far pertains to diversity rates in STEM fields across the United States, however many other countries around the world share the low numbers and often a low pipeline of candidates. For example, in the United Kingdom it is said that only 6 percent of math professors are women, while 42 percent of math majors are women. After college, many women either pursue jobs in non-STEM fields or simply have trouble finding jobs in the field. Despite the bleak numbers of diversity coming from some of the world’s largest STEM hubs, some countries and regions are making significant progress in employing women and minorities in technical positions. For example, in Latin America, over 45

DESPITE THE BLEAK NUMBERS OF DIVERSITY COMING FROM SOME OF THE WORLD’S LARGEST STEM HUBS, SOME COUNTRIES AND REGIONS ARE MAKING SIGNIFICANT PROGRESS IN EMPLOYING WOMEN AND MINORITIES IN TECHNICAL POSITIONS. 74 ❙ g20g7.com

percent of scientific researchers are women, putting them far ahead of the world average of 29 percent. Much like Latin America, India is also becoming known as one of the greatest places for women to find careers in STEM fields. Over 30 percent of programmers in India are women, compared to only 21 percent in the United States. In addition, nearly 50 percent of STEM students are women in India, and between 35-40 percent of all STEM jobs are held by women. This gap is often attributed to the large number of female role models working in STEM fields in India. It is also said that tech fields are not considered to be masculine careers in India, which likely lends hand to the higher proportion of women workers. As in India, women in China are finding themselves more often employed in STEM careers than women in the United States. In a recent announcement by Chinese e-commerce giant Alibaba, it was stated that one third of its partners are female, with similar rates being found in their general employment numbers. To put that number into perspective, California-headquarter Google states that only one in twelve of its partners are female. I sip the last drops of Masala Chai watching four young engineering students pass me by in purple and wine color Saris with ornate gold embroidery and the smell of fresh Jasmine in their hair. I think of our host former Tata Consultancy Servicesexecutive, Murali Sevalaya who opened a school for child laborers and now has 2,000 beautiful children enrolled with robust STEM training and more. On his “spare time” he and his team assembled top non-profit leaders from all over India for the conference run by CSL’s Anthony Silard (very proud of my older brother!) on Leading with Head, Hand and Heart. Big discussions ensue on how the best leaders lead, and how they create an empowering culture based on trust, empathy, and passion to better retain their employees while driving significant change for good. ■

Julie Kantor is the CEO of Twomentor, LLC a management consulting firm that provides mentor training, strategy and global speaking to elevate women and millennials in STEM.


Global Economy Authored by: Mark Bickford

Understanding and Leveraging the Trends that will Change How Business is Conducted Management practices, technology and physical workspaces have all become increasingly interconnected, enabling leaders to build a high performing work environment unlike anything we’ve seen before.

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emarkably successful leadership requires knowledge, understanding and insight across a landscape that is both wide and deep. Management practices, technology and physical workspaces have all become increasingly interconnected, enabling leaders to build a high performing work environment unlike anything we’ve seen before. While the dynamics have become more complex, the potential to positively impact the performance of individuals, organizations and communities may offer even greater rewards than previously expected. To help uncover the potential Sodexo invited thought leaders from a wide range of backgrounds to share their insights regarding the top issues facing executive leaders today. After identifying and developing and publishing nine trends in the 2016 Workplace Trends Report, researchers then went one step further and looked for the threads across the trends. From our synthesis, we can point to these themes that signal opportunities for leaders: Leading beyond the ‘four walls’ of the organization. Throughout this year’s report, we see the importance of leaders defining programs that extend externally to drive results. The role of community partnerships as well as extending health and wellness programs to employees’ family and friends is illustrated in our Population Health Management trend. Urban Transformation highlights the significant role that Corporate Real Estate is playing to drive the transformation of communities, which in turn impacts organizations and our ways of working. In sum, we see how organizational leaders are delivering positive impact for their organizations that goes well beyond their workplaces.

Addressing employee needs holistically, with a blending of work and life, and avoiding a ‘one size fits all’ approach. From how leaders are recognizing and rewarding employees, to more effective health and wellness program design, we see the importance of a more personalized, multi-factor approach. A holistic approach to reward and recognition that effectively recognizes the varied individual employee motivators is what works in today’s multi-generation workplace. In Humanizing the Workplace we see the opportunity to leverage a range of design principles to help keep the humanness in our work. Throughout our report, we see a blending of work, life, and play as the new standard to help drive employee engagement. Leveraging technology to enable AND connect all dimensions of work. As a result of the digital business era, technology has become the glue that brings many facets of the workplace together. Big Data in the Workplace illustrates how technology is the underpinning, supporting the ability to leverage Big Data to drive productivity. In exploring the Lab of the Future, we see scientists’ way of working changing to integrate the use of technological tools to deliver value. Effective energy management and energy awareness programs are delivered through technology. It is true that technology is now not only touching every facet of work in our organizations, it is also helping leaders to understand the interconnections and build upon them. These three themes summarize how today’s leaders are driving efficiencies in this complex environment, and delivering positive impact on their health, the environment and the community. Abstracts of each of the nine trends are listed here.

Population Health Management: A New Business Model for a Healthier Workforce Population Health Management, or PHM, is a broad effort whereby individual-, organizational- and cultural-level interventions are used to improve the disease burden of entire groups or populations. By keeping people well at the onset, PHM strategies can be used to decrease overall healthcare usage and avoid future overuse of the healthcare system. PHM takes a systematic approach by stratifying populations across health-risk profiles and applying different behavioral strategies to mitigate further risk. While PHM is typically thought of in the context of hospitals, employers in the business and industry sectors are also able to play a critical role and are increasingly applying PHM principles in the workplace. The meaning of workplace PHM is still evolving, and traditional wellness programs and their components will remain an important element of population health. However, in order to bend the curve on health costs, programs that go beyond the typical employee wellness models toward a more integrated and comprehensive approach are required. Humanizing the Workplace: Using Design Principles to Inspire Workplace Thinking No one doubts that business, life and the world at-large have become ever more Volatile, Uncertain, Complex and Ambiguous. With this in mind, leadership, management and newly empowered workers are anticipating challenges, understanding the consequences of actions, appreciating the interdependence of multiple variables, preparing for alternative realities, and owning their own transformation and even disruption. › Ise-Shima. Japan 2016 ❙ 75


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Global Economy › In these times of transition and change, it is increasingly difficult to make the right decisions in creating the right work environments. When the journey is about humanizing the workplace in meaningful and compelling ways, heading in the right direction has its own special VUCA characteristics. Design principles, acting as a set of guardrails, can help shape the promise and trajectory of approaching the design and maintenance of workspaces, by inspiring new thinking, fine-tuning directions and guiding decision-making processes. This piece highlights seven design principles that can guide managers and leaders who are charged with humanizing the workplace for humans that we call workers. Reaching Every Employee in an Organization: Engagement through Recognition The vast majority of today’s employees are disengaged, and study after study indicates that engagement is one of the key drivers of business success. Corporate managers understand this imperative. Despite laser-like efforts, however, employee engagement scores in the United States remain lackluster. The stakes are increasing as the economy strengthens, the war for talent heats up, and recruiting, engaging and retaining the best and brightest employees becomes even more crucial. Many organizations are embracing a corporate-wide approach to employee engagement today. Armed with recognition training, resources and best practices, diverse and inclusive teams from across the enterprise are increasingly speaking authentically and realistically about the challenges employees face and the most effective programs to engage them. There are generally two key areas that these organizations focus on in order to boost engagement and business performance: improving quality of life for employees and reaching every employee in an organization. Smart Energy Management: A Win for the Environment, People, and Business There is growing recognition that human activities are major contributors to climate change. The new normal is likely to require consumers to become more active participants in the creation and use of energy. The trend of consumers playing a key role in energy consumption and potential reduction carries over to the workplace. The value placed on reducing energy in the workplace will grow if business consumers are educated that a unit of energy saved at 76 ❙ g20g7.com

the meter represents more than that one unit. The benefits of smart energy management go beyond the environmental impact. Smart energy management can enhance the quality of life of employees by creating a more comfortable work environment. Consumers are willing to pay more for products and services provided by companies that are committed to positive environmental impact. By implementing an action plan and working toward increasing energy awareness among employees, businesses can reap a multitude of benefits.

Big Data in the Workplace: Can It Enhance Employee Productivity and Quality of Life? Organizations today have an unprecedented ability to capture data about both their facilities and their workforce’s activities. However, while FM professionals hear a great deal about smart buildings and how Big Data supports facilities management, there seems to be far less attention being paid to smart behaviors and almost nothing to smart management. IFMA and Sodexo collaborated to host a Future of Work Roundtable conversation on the challenges and


opportunities surrounding Big Data at IFMA’s Facility Fusion 2015 conference. A number of questions were raised during the discussion. How can FM leverage the data already being captured about workplaces and the workforce in order to raise the bar on employee productivity, engagement and quality of life? What additional data can take FM to the next level of relevance and enhanced organizational performance? How can FM leaders ensure that the data they capture is used appropriately and responsibly? This piece is a summary of the roundtable conversation, and focuses on exploring some of these issues. Stories of Urban Transformation: The Rise of 18-Hour Work/Live Communities Cities all over the world are hotbeds of ideas, blending new and old concepts to create exciting urban experiences for residents, workers, enterprises and visitors. Experts in a wide variety of fields are collaborating to transform the urban environment in today’s digital business era. In the workplace, this has led to the closer merging of work/life/play in these growing cities, where previously these activities had been clearly separated. This piece focuses on a few of the most interesting stories that demonstrate early signs of these urban transformations, which will spread into more and more cities around the globe in 2016 and beyond. Each story is about how the various city players are using innovation and technology to transform the work they are doing and shape the world’s future cities. The three themes of these urban transformation stories are: • New Work/Live Places • Corporate Real Estate and the Community: A New Partnership • Horizontal and Vertical Villages Gender-balanced Teams Linked to Better Business Performance Achieving gender balance is important for workplaces not only because it is “the right thing to do” but also because it makes good business sense. To better understand and leverage this trend, Sodexo initiated an internal study to explore and understand the correlation between gender-balanced teams and performance. The Sodexo study analyzed key performance indicators (KPIs) from 100 global entities and 50,000 managers in 80 countries. For this study, the performance measures were focused on employee engagement, brand awareness, client

The vasT MajoriTy of Today’s eMployees are disengaged, and sTudy afTer sTudy indicaTes ThaT engageMenT is one of The key drivers of business success. corporaTe Managers undersTand This iMperaTive. retention and three indicators of financial performance. The preliminary results were powerful, indicating that entities with gender-balanced management performed better on all of the performance indicators. The breadth of the data collected and the geographical diversity of the study sample confirm that the results are solid and shed new light on the strategic importance of gender diversity within organizations – not just at the top, but at all levels of management. Creating the Lab of the Future: A Shift Toward Greater Agility, Flexibility, and Efficiency Aging populations, chronic diseases, market expansion, and treatment and technology advances are expected to spur life sciences sector growth in 2015. However, efforts to reduce costs, improve outcomes, and demonstrate value are dramatically altering the demand and delivery landscape. At the same time, the patent cliff remains steep, and there is a well-understood need to create more collaborative partnerships across industry and academia. The sector also faces significant difficulty in attracting and retaining talent. It is increasingly evident that the global life sciences sector is operating in an era of significant transformation. Most companies have adapted by adopting more agile and flexible operating models, and in doing so, have demonstrated a renewed focus on their laboratories. This includes reviewing the best way to obtain value from their scientific services, a function that in most cases is outsourced. Accordingly, service providers must adapt to the new demands placed on them by more effectively anticipating trends in the industry. Workplace Violence: Best Practices for a New Reality Each year, nearly 2 million American employees are victims of workplace violence.

This violence has far-reaching negative consequences for employers, employees, and the larger society, primarily because of the central role the workplace has in our lives. It is clear that boundaries are shifting and, at times, disappearing: work and home life, work and health, work and political values – all are becoming more closely intertwined. As the workplace continues to touch more elements of our personal lives, we must acknowledge the increased risk of negative spill-over effects, including violence. Because of this shift, the concept and implications of workplace violence are changing to become more encompassing. The traditional view of workplace violence has identified four types of perpetrators: criminal, customer, employee, and personal. This paper discusses the emergence of a fifth type of workplace violence – terrorism. Alongside implications for costs and risk factors, this new understanding also impacts future prevention efforts. It is clear that there are new solutions before us that can help to enhance the Quality of Life for employees, organizations and our communities. Leading beyond the organization offers interesting possibilities to realize powerful results on health and wellness, as well as in the critical areas of environmental sustainability, safety and energy management. A holistic approach to reward and recognition programs, and workplace design, is proven to help drive employee engagement and productivity. Technology is now embedded into all facets of work and ultimately is a critical tool to help link and connect workplace enhancement initiatives. Business leaders have the tools and the resources at their fingertips to maximize effectiveness and raise performance but only if they are willing to step back from their daily routine and look at the panorama of new opportunities, trends and evolutions that present unlimited potential. ■

Mark Bickford is President of Corporate Services for Sodexo North America and a strong advocate for the new performance frontier: Quality of Life. Mr. Bickford believes there is a direct link between enhanced Quality of Life and better individual, organization and community performance.

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G7 Leadership

Profiles of G7 Leaders

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Shinzō Abe Prime Minister of Japan Shinzo Abe first became Prime Minister of Japan from 2006 to 2007 before stepping down to health reasons. He was re-elected in December 2012 and has held the office since. He was elected to the House of Representatives as a representative from the Yamaguchi Prefecture in 1999, and in 2000 became Director of the Social Affairs Division and Deputy Chief Cabinet Secretary for Yoshiro Mori and Junichiro Koizumi. From 2005 to 2006 he served as Chief Cabinet Secretary, then as President of the Liberal Democratic Party during his terms as Prime Minister.

Justin Trudeau Prime Minister of Canada Justin Trudeau was elected Prime Minister of Canada in November 2015. He first became a member of the Canadian Parliament as a rep-

Abe was born on September 21, 1954 in Tokyo. Coming from a politically prominent family, he studied political science at Seikei University and graduated in 1977. He also studied public policy at the University of Southern California before moving back to Japan to work at Kobe Steel. In 1982, he began pursuing a political career and became executive assistant to the Minister of Foreign Affairs and private secretary to the chairperson of the LDP General Council and the LDP secretary-general. Abe is married to Akie Matsuzaki. The 42nd G7 Summit, which he is hosting, will be his fifth including the 33rd G7 Summit in 2007.

resentative for Papineau in 2008, after which he became Leader of the Liberal Party in 2013. In addition to his role as Prime Minister of Canada, Trudeau also assumed the office of Minister of Intergovernmental Affairs and Youth in 2015.Son of former Canadian Prime Minister Pierre Trudeau, Justin was born on December 25, 1971 in Ottawa. He received a Bachelor of Arts in literature from McGill University and a Bachelor of Education from the University of British Columbia, later becoming a teacher of French and Math at West Point Grey Academy. He also studied Environmental Geography at McGill University as part of a master’s program and pursued engineering at the Université de Montréal for two years before gaining media attention and eventually pursuing a career in politics. Trudeau is married to Sophie Grégoire with whom he has three children. The 42nd G7 Summit will be his first. Ise-Shima. Japan 2016 ❙ 79


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G7 Leadership

Matteo Renzi Prime Minister, Italy

François Hollande President, France François Hollande became President of France in May 2012. He was first elected as a member of the National Assembly for Corrèze from 1988 to 1993, and again from 1997 until 2012. He became First Secretary of the Socialist Party in 1997 until 2008, and was elected Mayor of Tulle from 2001 to 2008. He was also President of the Corrèze General Council from 2008 to 2012.

Hollande was born on August 12, 1954 and raised in Paris. He received a bachelor’s degree in law from Panthéon-Assas University and graduated from HEC Paris in 1975. He then attended Paris Institute of Political Studies and the École nationale d’administration graduating in 1980. After graduation, he became a councilor in the Court of Audit before becoming a special advisor to then-President Mitterrand. Hollande has four children with former partner Ségolène Royal. The 42nd G7 Summit will be his fifth.

Matteo Renzi became Prime Minister of Italy in February 2014. He first became President of the Providence of Florence in 2004 before assuming role of Mayor of Florence in 2009. He then became Secretary of the Democratic Party in 2013. Renzi was born on January 11, 1975 in Florence, Tuscany. He graduated with a degree in law from the University of Florence in 1999 and went on to work for his family’s marketing company. He joined the Italian People’s Party and became Provincial Secretary in 1999. He was also an amateur football referee and futsal player for a time. Renzi is married to Agnese Landini with whom he has three children. The 42nd G7 Summit will be his third.

Angela Merkel Chancellor of Germany Angela Merkel assumed office as Chancellor of Germany in November 2005. She first became Minister for Women and Youth from 1991 to 1994, and Minister for the Environment from 1994 to 1998. In 2000, she became Leader of the Christian Democratic Union. Merkel was born as Angela Kasner on July 17, 1954 in West Germany before relocating to East Germany in her youth. She studied physics from 1973 to 1978 at the University of Leipzig before working at the Central Academy for Physical Chemistry at the Academy of Sciences from 1978 to 1990. She received a doctorate for her thesis on quantum chemistry. In 1990, she was elected to Bundestag and began her political career. Merkel is married to Joachim Sauer, a quantum chemist. The 42nd G7 summit will be her eleventh. 80 ❙ g20g7.com


David Cameron Prime Minister, United Kingdom David Cameron became Prime Minister of the United Kingdom in May 2010. He first became a representative for Witney in the UK Parliament in 2001, and was elected Leader of the Conservative Party in 2005. He was Leader of the Opposition from 2005 until his election in 2010. Cameron was born on October 9, 1966 in Maryleborne, London. After receiving an exhibition to the University of Oxford, he earned his Bachelor of Arts in Philosophy, Politics, and Economics with first class honours in 1988. He worked for the Conservative Research Department from 1988 to 1993 and became a special adviser to the Chancellor of the Exchequer, Norman Lamont, in 1992. He then became a special adviser to Home Secretary Michael Howard in 1993 before leaving to work as Director of Corporate Affairs at Carlton Communications until 2001. Cameron is married to Samantha Gwendoline Sheffield with whom he has three surviving children. The 42nd G7 Summit will be his seventh.

Donald Tusk Council President, European Union

Jean-Claude Juncker Commission President, European Union

Donald Tusk became President of the European Council in December 2014. He first served as the Leader of the Civic Platform in Poland from 2003 to 2014. He then assumed the office of Prime Minister of Poland from 2007 until 2014. Tusk was born in Gdansk on April 22, 1957. He attended the University of Gdansk studying history where he earned an M.A. for his thesis on Józef Piłsudski. After graduating, he cofounded and became president of the Liberal Democratic Congress in 1991. He then became a founding chairman of the Civic Platform. Tusk is married to Małgorzata Tusk with whom he has two children. The 42nd G7 Summit will be his second.

Jean-Claude Juncker became President of the European Commission in November 2014. Hailing from Luxembourg, he first became Minister for Work and Employment from 1984 to 1999, and Minister for Finances from 1989 to 2009. He assumed office of the Prime Minister of Luxembourg from 1995 to 2013 during which he also became Minister for Treasury in 2009. Born in Redange, Luxembourg on December 9 1954, Juncker received his Baccalaureate from Lycée Michel Rodange and went on to study law at the University of Strasbourg, where he received his Master’s in Law in 1979. This will be Juncker’s second G7 Summit.

Barack Obama President of the United States Barack Obama was elected President of the United States in November 2008, and again in November 2012. He first became a member of the Illinois Senate from 1997 to 2004, and later served as a United States Senator from Illinois from 2005 to 2008. Obama was born on August 4, 1961 in Honolulu, Hawaii. He moved from Hawaii to Indonesia and back before attending Columbia University where he received a degree in political science specializing in international relations. He attended Harvard Law School where he became editor and eventually president of the Harvard Law Review. He graduated with a JD in 1991. He then worked as a civil rights attorney and taught constitutional law at the University of Chicago Law School. Barack Obama is married to Michelle Obama (née Robinson) with whom he has two daughters. The 42nd G7 Summit will be his eighth. Ise-Shima. Japan 2016 ❙ 81


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Branded Story / Taiwan Authored by: Neil Hare, President and CEO of Global Visions Communication

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Self -Determination and Fairness for Taiwan: The Case for Changing the United State’s ‘Strategic Ambiguity’ Policy The Taiwanese Civil Government (TCG) is arguing that now is the time for the Taiwanese people to finally enjoy the freedom they deserve to determine their own nationality.

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ince the end of World War II the United States has held a policy of ‘strategic ambiguity’ towards the island of Taiwan. In the name of self-determination and fairness, it is time for this policy to change. While the goal of changing any entrenched policy is a difficult one – a Taiwanese educational and advocacy group is leading the charge. The Taiwanese Civil Government (TCG), headed by respected business leader Secretary General Roger Lin, is arguing that now is the time for the Taiwanese people to finally enjoy the freedom they deserve to determine their own nationality.

Since its inception in 2008, the TCG, which holds weekly education courses to promote normalizing Taiwan’s international legal status, has experienced application rates as high as 2,000-3,000 Taiwanese monthly. Today the TCG boasts over 60 offices with more than 40,000 members nationwide. “TCG’s goals are to achieve the normalization of Taiwan’s legal status and to obtain human rights protection for the people of Taiwan,” Secretary General Lin stated. “Without these freedoms and protections, the people of Taiwan will remain stateless, and with no internationally recognized government. We have been living in political purgatory for

more than 70 years, and immediately deserve the right to a nationality of our own choosing,” he added. To further his goals, Secretary General Lin and the TCG, which is not part of the official Taiwanese government, have taken the fight to the U.S. District Court for the District of Columbia, making the case that the current international position of Taiwan and its people violates the human rights of that populous. They are asking the court for declaratory relief that their rights are being violated under international law as reflected by the United Nations Charter on human rights, thus creating a pathway for a Taiwanese referendum. See Lin v. the United States and the Republic of China, Civil Action No. 1:15-cv-00295 (CKK). To understand the TCG’s arguments and the reason behind the United State’s ongoing “strategic ambiguity” policy, it is important ›

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Branded Story / Taiwan

› understand the history of Taiwan. Post Dutch and Spanish control in 15th and 16th centuries, Taiwan was most recently controlled by Japan from 1895 until the end of WWII. When the U.S. defeated Japan, it ostensibly took over control of Taiwan as well. However, rather than administering its duties of sovereignty and direct governance, the U.S. placed an administrator in charge of Taiwan --Chiang Kai Shek. He had recently fought and lost a battle against the communists on mainland China, and was also a good friend of General Douglas MacArthur. Chiang Kai-Shek’s first order of business was to unilaterally strip anyone living on Taiwan of their entrenched Japanese identity, and instead declare everyone a national of the Republic of China (ROC). While the U.S. began supporting Taiwan financially and militarily, it began a policy of ambiguity on other issues, including Taiwanese nationality and ROC occupation. This partial policy approach was memorialized in the 1951 Peace Treaty of San Francisco, when Japan accepted its defeat and relinquished any control over Taiwan. However, once more, the treaty did not address the sovereignty concerns of the Taiwanese, and neither confirmed U.S. sovereignty, nor granted any other nation, including Taiwan, sovereignty or control. This policy of ambiguity has remained in place to this day. Since the 1951 treaty, the U.S. - Taiwan policy has continued to include financial as well as military aid, which implicitly includes defending Taiwan from any potential military attack, with a specific eye towards neighboring Communist China. In 1995-96, for example, in response to a People’s Republic of China (PRC) military build-up aimed at Taiwan, the U.S. sent two aircraft carriers and support ships to the region as a show of force. The PRC eventually backed down, averting a military conflict. However, the point was made clear that the U.S. would not stand idly by and allow mainland China to threaten Taiwan. The U.S.’s strategic policy towards Taiwan made sense post WWII and during the Cold War. The ‘Domino Theory,’ after all, was founded on the concern that if one country falls to communism, then a succession of surrounding countries could follow, leading towards a broader global expansion of communism. The theory was the driving force behind U.S. conflicts in Korea and Vietnam. Taiwan, given its proximity to the PRC, has been a part of that strategy. 84 ❙ g20g7.com

As we have seen very recently, however, long standing U.S. foreign policy can change. The US has just opened up economic relations with Cuba, closing another chapter from the Cold War story. This major shift in foreign policy occurred without regime change in Cuba or its government moving away from communism to a market economy. U.S. economic relationship building has also had an increased focus on Asia, with the centerpiece of this policy being the recently signed, eleven nation Trans Pacific Partnership trade agreement. Additionally, America’s relationship with the PRC has been front and center in the U.S. Presidential election with several candidates from both parties calling for tougher trade relations with them. What does this mean for Taiwan and the policy of “strategic ambiguity”? It means that while the U.S. can and should continue its policies of support, the ambiguity of a policy that has spanned seven decades and has bled into a brand new century should no longer hold Taiwan hostage. The TCG argues that the people of Taiwan are suffering human rights violations in opposition to international norms that protect populations against arbitrary denationalization. Several international legal instruments reflect prohibitions against arbitrary denationalization. Specifically: The UN Charter states that its purpose is “[t]o develop friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, and to take other appropriate measures to strengthen universal peace.” Article 15 of the Universal Declaration of Human Rights states: (1) Everyone has the right to a nationality. (2) No one shall be arbitrarily deprived of his nationality nor

denied the right to change his nationality. The Universal Declaration of Human Rights is a document meant to supplement the definition of “fundamental freedoms” and “human rights” in the United Nations Charter, and has been referenced as “an obligation for the members of the international community to all persons.” The 1961 Convention on the Reduction of Statelessness (“1961 Convention”) is a detailed reflection of customary international law on the subject of the individual and the collective right to determine one’s own nationality. Article 7(6) of the 1961 Convention articulates the basic international norm that a person shall not lose their nationality if such a loss would render him stateless. Taiwan has approached the United Nations six times to get its own seat at the table, and each time it has been rebuffed. Currently Taiwanese citizens travel the world not knowing whether the country they land in will even recognize their Taiwanese passport as valid. But Taiwan, a country only slightly larger than Massachusetts and Connecticut combined, has as much a right to its own recognized nationality as any other country on the planet. Regardless of the unintended consequences that took place at a time when Truman, Churchill, and Stalin controlled world’s maps, it is time for the United States to right an unintended wrong and allow a referendum in Taiwan for self-determination. The U.S. must not continue its posture of denial – particularly from a human rights standpoint – to continue to accommodate outdated foreign policies and old loyalties. Secretary General Lin and the TCG are sending a powerful signal to the U.S., the UN, and the world that the Taiwanese people deserve a nationality decided by their own citizens that will forever be recognized by the world. ■

Neil Hare is President and CEO of Global Visions Communication, is a writer, creative think tank and an expert on communications and business strategy. He is a soughtafter speaker at business events on marketing and communications, both inside and outside the Beltway.

This material is distributed by Global Vision Communications on behalf of the Taiwan Civil Government. Additional information is available at the Department of Justice, Washington, DC.


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Zurich Insurance Group Danfoss Group Engie Schneider Electric Rothschild Europe Bayer Great Eastern Energy Hanwha Daesung CinĂŠpolis Russian Union of Industrialists and Entrepreneurs Gulf One Investment Bank

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Comprising CEOs from major global corporations, the ICC G20 CEO Advisory Group effectively targets G20 policy development on a worldwide scale. The group is an enduring, legitimate voice of international business, gaining recognition by G20 governments as the primary source of business expertise on the global policy agenda. To learn more about how your company can participate in the ICC G20 CEO Advisory Group, please contact Jeffrey Hardy at Jeffrey.hardy@iccwbo.us


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Interview Interview by: Ambassador Jim Rosapepe

The Refugee and Migrant Crisis in Europe Interview with HE Lars Gert Lose, Ambassador of Denmark to the United States. Interviewed by Ambassador Jim Rosapepe, United States Ambassador to Romania (1998-2001) and Member of the Board, Council of American Ambassadors.

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n the newest episode of the Council of American Ambassadors (CAA) Podcast, Lars Gert Lose, the current Danish Ambassador to the United States, discusses Europe’s refugee/ migrant crisis, Brexit and the future of the European Union, and the US presidential primary elections. Prior to arriving in Washington, Ambassador Lose was the Chief Adviser on Foreign Affairs to the Prime Minister of Denmark. Ambassador Lose has held a range of high-level positions within the Ministry of Foreign Affairs, including Head of the Foreign Minister’s Office. The host for this interview is Ambassador Jim Rosapepe, who represented the United States in Romania from 1998 to 2001, and is a member of the CAA Board of Directors.

Rosapepe: Our guest today is the Danish Ambassador to the United States, Lars Gert Lose. Prior to arriving in Washington, Ambassador Lose was Chief Advisor on Foreign Affairs to the Danish Prime Minister. In his long career in the Danish Foreign Ministry, he’s had high-level posts including Private Secretary to Minister and Head of the Foreign Minister’s Office. Ambassador Lose, thank you for joining us today. Lose: Thank you for having me. Rosapepe: Why don’t we start off with what I’m sure is very much at the top of people’s interest in Denmark and around Europe— and a lot of concern in the United States too—which is the refugee crisis around the Mediterranean. I think a couple of months ago there was a sense that Europe was handling it in a very—from an American perspective—from a very constructive way. That there were problems and challenges but frankly with German leadership it look like Europe was coming together. Then it seemed like things kind of fell apart. Walls went up and refugees continued to come. Where do you think we’re going with this? Where do things stand now, particularly with Denmark, but more generally with the refugee crisis? Lose: Thank you, Jim. Before heading into this, I think it is important to give your listeners a sense of the magnitude of the challenge in Europe. Whenever I discuss this people in the US I think there is a bit of lack of understanding of what we are facing in 86 ❙ g20g7.com

Europe. I’ll approach this from a Danish perspective. Denmark is a country of 5.5 million. Geographically we are the size of Maryland. The influx of refugees and migrants is enormous. The numbers are not sustainable. Just to give you some facts: in 2015 we received 21,000 asylum seekers. If you translate that to an American context, that would be the equivalent of 1.3 million asylum seekers in the US. The sheer number is incredible and it is difficult to handle. We expect a 20 percent rise this year in the number of asylum seekers to Denmark, so this is not going to stop anytime soon. The challenge in itself, just to try and untangle that, there’s a political challenge, we have a challenge with integration because the numbers are so high. It puts an enormous strain on the society to integrate that many people in Denmark. Denmark is a very homogeneous society, it is also a society that wants to take part in solving this challenge. We are very internationally engaged whenever it comes to global crises and security issues and also the refugee issue. We are trying to do the best we can but the sheer number creates an enormous challenge to us. It is difficult to integrate that many people in the Danish society, but of course we have to because we want to take our share of refugees and do what we can in solving this crisis. The other part of the challenge is economic. In Denmark we have a very well developed welfare state, which means that people have the right to universal healthcare, universal education, job training, housing if you are in

need, unemployment benefits, etc. We have a very well developed, comprehensive welfare state and asylum seekers have exactly the same rights as Danish citizens. When you come to Denmark, you apply for asylum, you get asylum, and you have exactly the same rights of any Danish citizen. The costs of this are immense. It really challenges they way in which we have developed society and the welfare state of Denmark. It is not sustainable as it is now because the costs are going through the roof. The third challenge that I would like to mention is the security challenge. Again, just to compare it to an American context, you have had a very fierce discussion—especially these days in the primary elections—about refugees and the security issues connected to that. I think in the US today it takes 18 months before you can be vetted as a refugee going into the US. The number of refugees coming to the US is much lower than in Europe or in Denmark. In Denmark, we don’t have a vetting procedure. People are coming into Europe, we don’t have internal border checks, so they show up in Finland, Norway, Sweden, and Germany, and then we start the vetting procedure. Rosapepe: Let me intervene there, if I might. The original discussion several months ago, I think driven by the European Commission and some leaders in Europe, was to set up check-in points closer to where people come in, whether it’s in Turkey or Greece or other places, and vet them there, and then have the


human trafficking across the Mediterranean Sea. Greece has difficulty controlling its borders, the Balkan borders…It is just supremely difficult to control the borders. We haven’t succeeded yet, so we still have migrant and refugee flows into Europe at a very high number. As you know, we have the Schengen Agreement in Europe which means we don’t have any internal border control.

countries of Europe take quotas. It seems like neither of these things have happened. I’m curious, from a Danish perspective, why not? Lose: Because the challenge is so profound. There is a European Council meeting today where they will again try to find a European solution to this because no matter how you twist and turn this, there is only a European solution to this problem. No country handle this on its own. Not Denmark, not Germany, nobody. Rosapepe: How would Denmark like to see it handled? Lose: What we need to do is control our external borders. That’s the only way to handle the crisis and this is what they are discussing today. What can we do in terms of strengthening our external borders. Europe is in a radically different position that the US due to our geographical location. It is supremely difficult to control the external borders on the Mediterranean Sea. We tried that for many years. Strengthening our efforts. Now NATO is trying to do something against

What We need to do is control our external borders. that’s the only Way to handle the crisis and this is What they are discussing today. What can We do in terms of strengthening our external borders.

Rosapepe: You do now because people have gotten waivers from the Schengen agreement, right? Lose: Some countries have border controls now. Sweden has. Denmark has introduced not a physical border control but we have spot samples taken at the Danish border. Germany has introduced in a certain period of time, it is temporary and it will be abolished depending how this develops. But of course we see a domino effect. As soon as some countries start introducing border checks other countries will be forced to do the same. To give you an example, I mentioned the 21,000 asylum seekers but that is only the top of the iceberg… You Denmark is kind of the bridgehead to continental Europe and the Scandinavian countries. If you want to go to Sweden, Finland, Norway, you pass through Denmark. So we had 91,000 people crossing the DanishGerman border in that period of time. And then Sweden introduced border checks at the bridge in between Copenhagen and Sweden. So people that didn’t have identity papers, couldn’t identify themselves as being eligible for asylum in Sweden, they were stuck in Denmark in the Copenhagen area. We had a huge risk of a buildup of people without.. again we had no vetting procedures and we had no idea who they were. We introduced spot checks at the DanishGerman border. This was not to reduce the number of people seeking asylum in Denmark because what you were asked at the Danish border was “Do you know you can’t go to Sweden? Do you want to seek asylum in Denmark?” A lot of people said yes, probably in increasing numbers. It was a security initiative. Rosapepe: What happens at the border when people say “I want to seek asylum in Denmark?” Lose: Then the procedure starts and in Denmark you can get an accommodation and the authorities responsible for this

will start processing your application. Rosapepe: So they stay in Denmark, live in Denmark and go through a process. Playing this out a little more towards the future. What do you think is likely to happen? Do you think the European Union will be able to come up with a European-wide solution with the external borders and the vetting process and the allocation of quotas for different countries? Or is that a wonderful idea but unlikely to happen and therefore each country is really likely over the next year or two to work out their own arrangements. Lose: It is a good question. If you would have asked me four months ago if this would threaten the Schengen Agreement I would have said no. Because the Schengen Agreement, the lack of internal border control, is such a fundamental part of what we do economically, politically, identity-wise. But now we see this being questioned because countries like Sweden, Denmark, Germany, Austria, other countries are introducing border checks because we have to. So it is difficult to say how this will end. The only solution is not even external border check, it is to solve the crisis in Syria, the Middle East, and Afghanistan. Because this is where the refugees are coming from. We need to find a sustainable solution to this but until then we must check the external borders because of migrants and refugees coming into the continent as we speak. In terms of the quota idea, I have my doubts whether that will be possible. You know, Denmark is not part of the Asylum and Refugee Policy in the EU. We have opted out of that. We are part of the Schengen Agreement and the border control but not on asylum and refugee policy so we’re not part of that decision. It’s difficult. Also because there is a difference between what countries refugees and migrants want to go to. Northern European countries are the countries they want to go to because it is a safe environment, well developed welfare states, the benefits you get are good, you can get access to education and healthcare, etc. Those are very attractive countries. It also means that if you have a quota system allocating refugees to other countries in Europe where refugees don’t want to stay, they will just move again. ■ You may listen to the full interview here: https://soundcloud.com/caaliveatmeridian/ sets/ambassador-lars-gert-lose Ise-Shima. Japan 2016 ❙ 87


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Branded Story / Eden Roc at Cap Cana

Eden Roc Beach Club Boutique Suites & Beach Club: Ultimate Luxury

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den Roc at Cap Cana, already recognized for luxury, comfort and fine hospitality, made a multimillion dollar renovation of its exclusive Caletón Beach Club, which was acquired last year by Solaya Hotels & Resorts and renamed as Eden Roc Beach Club. The renovation of the Relais & Châteaux property included $ 5 million of the Beach Club facilities, a project that was revealed on December 1st, 2015 and ending in mid-summer 2016 to put the focus on experimental cuisine, comfort, beauty and relaxation. The brand “Solaya Spa Fitness and Wellness” located at Eden Roc Beach Club expands with a complete new spa area specialized in wellness and a fitness center with the latest Technogym machinery. Meanwhile, the existing Caletón Grill Restaurant will be re-fashioned into a new dinning destination highlighting the Caribbean first display of Nikkei and Robatayaki cooking techniques, and featuring a cigar cellar, wine showcase, and live music entertainment. Eden Roc at Cap Cana Boutique Suites & Beach Club seeks to show its classic and contemporary identity through the fine taste for culinary delights. Recognized Relais &

EdEn Roc at cap cana BoutiquE SuitES & BEach cluB SEEkS to Show itS claSSic and contEmpoRaRy idEntity thRough thE finE taStE foR culinaRy dElightS. REcognizEd RElaiS & châtEaux chEfS makE of thESE BoutiquE pRopERtiES an Exciting dEStination to ExpERiEncE thE intRicaciES of finE cuiSinE. 88 ❙ g20g7.com

Châteaux chefs make of these boutique properties an exciting destination to experience the intricacies of fine cuisine. As gastronomic highlights, the resort served an intimate dinner at Mediterraneo Restaurant on February 20th with the renowned chef Patrick O’Connell from The Inn Little Washington. Moreover, on March 21st a journey of flavors was presented by chef Jacob Jasinski of the Ocean House in Rhode Island. Eden Roc at Cap Cana Boutique & Suites builds important partnerships in the United States with Lush Experiences and in the United Kingdom with Geoff Moss, co-founder of Elegant Resorts, to attract guests who love culture, look for the good table and an ultimate relaxing stay. The new Eden Roc Beach Club presents natural design elements in keeping with the warmth and elegant charms that define Eden Roc at Cap Cana. Many new elements – “coralina stone”, thatched roofs, natural woods and “caña brava” – are endemic to the Dominican Republic. This harmonious complex invites you to enjoy an eternal summer immersed by the European glamour with a Caribbean twist. ■


For more information about Eden Roc at Cap Cana Boutique Suites & Beach Club, please call (809) 469-7469 or visit www.edenroccapcana.com Ise-Shima. Japan 2016 â?™ 89




The G7 Global Briefing Report

Global Economy

New issues at the WTO: Towards a Small Business Agreement

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ince the Doha Development Agenda was initiated in 2001, much has changed in the global economy and within the World Trade Organisation (WTO). After the successful conclusion of the 10th Ministerial in Nairobi last December, for many stakeholders and governments it is now time to take a fresh look at the WTO negotiation agenda so as to make it fit for the increasing need for sustainable business models that deliver growth and jobs for businesses and citizens. Particularly in times when the global economy is losing steam, as demonstrated by the International Monetary Fund having to slash already twice its outlook for 2016, policy makers should think of new untapped sources of growth within the trade arena that could secure stable growth levels for the foreseeable future. From EUROCHAMBRES’ perspective, the answer to this question is twofold: fundamentally, policy makers must resist any temptation to resort to protectionism and to national solutions to remedy global problems. In parallel, efforts must be redoubled to identify and implement innovative approaches that enable more trade and investment on a global scale. As an illustration, exports are the source of over 30 million jobs in Europe, which equates to almost 14% of the workforce. Trade has thus been a very effective tool to boost jobs and growth across the Union. It would not be an exaggeration to state that we in fact depend on our ability to develop innovative models to liberalise trade and investment, as 90% of world growth will be generated outside the European Union by 2020.

Yet the global trade agenda has stalled since the beginning of the twenty-first century, leading many members of the G7 to resort to bilateral and regional trade deals, with prominent examples being the Transatlantic Trade and Investment Partnership (TTIP) or the Transpacific Partnership (TPP). To understand some of the reasons, it is worth going back in history and seeing why the WTO was created. Initially it was created as a response to address the perceived limitations of the General Agreement on Tariffs and Trade (GATT), as world trade had grown increasingly complex and the GATT was no longer in a positon to adequately reflect business realities of that time. The current situation at the WTO is that the Doha Development agenda has, for a myriad of reasons, failed to achieve a final deal, despite a decade of talks. As with the underlying reasons for the creation of the WTO, it is now time to take a fresh look and adapt global trade rules to the fast-changing expectations of citizens and entrepreneurs. In this regard, factors such as the digitalization of our economy, or its “servisification”, are often cited and are of undoubted significance. Yet there is one other much broader and horizontal topic that so far has received little to no attention within areas to be negotiated for the future; and this is the topic of small and medium sized enterprises (SMEs). SMEs are engines for growth and the number one source of employment across the global economy, being able to also preserve a balanced distribution of population and wealth and often producing sustainable production processes.

SMES arE EnginES for growth and thE nuMbEr onE SourcE of EMployMEnt acroSS thE global EconoMy, bEing ablE to alSo prESErvE a balancEd diStribution of population and wEalth and oftEn producing SuStainablE production procESSES. 92 ❙ g20g7.com


Moreover, SMEs still have a vast untapped economic potential in an increasingly globalised economy. In today’s world where global value chains have expanded tremendously, SMEs have yet to adapt to this reality, and as a result so must policy makers. While entrepreneurs are increasingly “born global”, the gap between the number of existing SMEs with export potential and those that already export is significant. In the European Union alone, over 600,000 SMEs export outside the EU, directly employing at least 6 million Europeans. However, in relation to the over 20 million existing SMEs in Europe, it becomes apparent how much economic potential remains untapped. Not only in Europe but across the global economy, the potential of SMEs to become the economic champions of tomorrow is clearly there, but the conditions need to be right for this potential to be fully realised. It is in this context that policy makers – and first and foremost the G7 as the world’s leading economies – should develop an initiative for SMEs at the WTO. So what are the issues one could think about when designing such an initiative at the global level? Firstly, introduce a procedure for the cross-fertilisation of best practices within the G7 countries when it comes to the application of trade-supporting measures for SMEs in trade agreements. The most noteworthy element from these practices is addressing the “information gap” for SMEs on market access obstacles, regulatory compliance requirements and procurement notices. Today, SMEs considering exporting their goods or services encounter significant hurdles when it comes to identifying relevant regulations, applicable technical standards, import procedures (such as customs clearance documents) or knowing which government

body is the appropriate authority in relation to their product or service. In line with the above, EUROCHAMBRES advocates the creation of strategic points of intelligence in the form of global “one stop shops” to better help SMEs navigate through the maze of government regulations, standards and other compliance requirements. Such obstacles disproportionally impede many highly competitive SMEs from going international. At EU level, issues such as dedicated SME chapters in trade agreements or the ‘Single Digital Gateway’ for intra-EU traders are precisely being elaborated to address this challenge. Arguably, similar initiatives would make sense on the global scale as well. To be ambitious, one could even look beyond trade supporting initiatives such as increased transparency and analyse the current framework of WTO rules to see where additional measures or flexibilities could developed so that more SMEs can benefit from open markets. Naturally, with a horizontal topic such as SMEs, the opportunities are not restrained to any particular area and will require a thoroughly thought process by both policy makers and business alike. Nonetheless, it is clear to Chambers that sustainable growth models and acceptance for future trade agreements will be greatly enhanced if they optimise the growth potential of smaller businesses. As Chambers of Commerce and Industry, we have extensive expertise on the needs of SMEs, which we provide support to on a daily basis in their internationalisation process. That is why Chambers are fully committed to working with governments and all policy-makers to produce innovative solutions that help reduce the hurdles that SMEs face in going international. ■

EUROCHAMBRES: The Association of European Chambers of Commerce and Industry represents over 20 million enterprises in Europe – 98% of which are SMEs – through members in 43 countries and a European network of 1700 regional and local Chambers. www.eurochambres.eu

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Branded Story / AERT Moisture Shield

The Next Generation in Decking MoistureShield Composite Decking has a sustainability advantage that most other manufacturers do not: more than 95% recycled content.

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hile many composite lumber manufacturers are focused simply on creating a beautiful backyard, Advanced Environmental Recycling Technologies (A.E.R.T.), Inc. has taken this beauty a step further with its environmentally friendly composite decking, MoistureShield. MoistureShield composite deck boards are made with more than 95% recycled content and not only create a beautiful backyard, they keep the environment beautiful by conserving resources and helping to prevent discarded plastics from ending up in landfills. Taking Green Seriously A.E.R.T. is a leading plastics recycler and manufacturer of green composite building products. Its state of the art 70,000 squarefoot plastic recycling facility washes, cleans and separates polyethylene food packaging and wrapping films for the raw materials in MoistureShield decking products. Even the building itself is designed with LEED certifications, with no storm water discharged from the site and no potable water used in the manufacturing process. The energy efficient design includes a habitat for protected species and low emissions. A.E.R.T. was even awarded with the U.S. Environmental Protection Agency’s EPA Region 6 “Partnership for Environmental Excellence” Award. The International Code Council Evaluation Service (ICC-ES) verifies MoistureShield decking products contain 95% total recycled content – 57 percent from pre-consumer sources like packaging films and waste pallets and 38 percent from post-consumer sources like used grocery bags and milk jugs. Using these recycled sources, to manufacture MoistureShield no new trees are cut down which conserves the environment. Due to its high percentage of recycled content, MoistureShield decking products can also help earn credit in green building rating programs like LEED®.

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Eco-Friendly meets High Performance MoistureShield products do not sacrifice performance for their eco-friendliness though. Their durable composite decking is the perfect combination of nature, design and quality. For over 25 years and counting, MoistureShield has never experienced field failure due to rot, decay or delamination. They even protect their products with the industry’s leading Transferable Lifetime Warranty. Weather wreaks havoc on unprotected wood, and even pressure treated and hardwoods can be subject to performance issues. Whether from rain, snow or humidity moisture absorption in decking can cause problems like swelling, cupping, splitting, and fastener shearing. On top of that, UV radiation from the sun can break down the lignin that holds the wood’s cellulose fibers together causing the wood to gray and leaving it unsafe and unattractive. MoistureShield’s innovative patented method to fully coat wood fibers with plastic, results in decking that is so moisture resistant it can be installed on the ground, in the ground or even underwater without being damaged. These premium composites are also available in a variety of natural wood tones and finishes to mimic the beauty of a high end wood deck while offering the durability of a composite. Easy to clean and simple to install, MoistureShield’s newly expanded family of durable outdoor living products offers the right options to fit any decking application. Hidden fastener systems Sometimes it’s what you don’t see that makes a deck beautiful. Hidden fasteners are becoming increasingly popular with both homeowners and deck builders. Homeowners like the clean, smooth surface provided by hidden fasteners, and clips installed with pneumatic fasteners can install 3 to 4 times faster than traditional surface fasteners. It’s a win-win for builders: they reduce labor

time while providing customers with a more attractive deck. MoistureShield Deck Clips provide superior holding power, with a custom design that fits securely into the grooved profile of a MoistureShield board. Like our composite decking our clips are both beautiful and durable, extending the life of the deck by elevating the boards off the joists to reduce structural rot and mold. In independent laboratory testing, the MoistureShield Deck Clip tested at 391 foot pounds to the first movement versus the competitors’ fastener that averaged 274 foot pounds meaning that they can deliver 42.7% greater lateral movement resistance. In regions with wide daily temperature swings this extra holding power keeps decks from “walking” and loosening creating stronger and longer lasting fastening. They’re even backed back a limited lifetime warranty against any loose deck boards.


Deck lighting In a survey conducted by the American Society of Landscape Architects (ASLA) of outdoor living trends, 98% of landscape architects ranked lighting number one among 18 different outdoor living features requested by homeowners. Outdoor lighting even came out ahead of other perennial favorites like grills and outdoor furniture. To accommodate this growing demand, MoistureShield recently released a full line of deck lighting that can enhance any deck design. MoistureShield Deck Lights are designed to work with the company’s composite decking products to add elegance and safety to outdoor living areas. The new product line includes options for energyefficient recessed “bullet” lights, under rail strip lights, stair lights and two styles of post lights. Accessories include 3 and 5 amp transformers, wire and a drill bit sized for the bullet lights. The lights are protected by a 5-year warranty when installed

with MoistureShield light accessories. “More people are enjoying spending time on their decks in the late evening hours, so adding lighting is a natural addition to MoistureShield’s full family of products,” said Brent Gwatney, Sr. Vice President of Sales & Marketing for MoistureShield. “Lighting is a great way to create visual drama and to help people stay safe, especially around stairs.” Specialty railing With the growing popularity of high-end, well-designed outdoor living oases, homeowners are demanding railing that is attractive and not just functional. New railing designs are featuring clean, sleek lines complementing the outdoor space instead of obstructing it. MoistureShield Pro Aluminum Railing features sophisticated, modern lines that enhance any outdoor setting. Since it’s sold in kits and supplied with installed baluster connectors and ergonomic rail brackets,

enhancing a deck or patio with MoistureShield’s Pro Railing is simple. Not only is the flat-top, drink-friendly rail easy to install, but the strong corrosion resistant aluminum alloy is finished with a durable powder coated paint that will retain its color for years to come. It’s even backed by MoistureShield’s industry leading Limited Lifetime Warranty and a 15-year Paint Warranty. The contemporary design and easy-to-maintain materials complement the entire MoistureShield line of high-performance composite decking and illuminating deck lights, making it the perfect railing choice to enhance any backyard. ■

Find out more about these unique composite decking products and outdoor living accessories at moisureshield.com.

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