'Protectionism won’t continue for long'

Kamal Ahmed | Update:

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Philip Kucharski is the Chief Operating Officer (COO) of the International Chamber of Commerce (ICC). Prior to joining ICC, Kucharski worked with The Economist and the European Press Agency. During his recent visit to Dhaka to attend ICC’s Asia Pacific Business Forum, he spoke to Prothom Alo on the challenges to the expansion of free trade and other issues.

Interviewed by Kamal Ahmed

Prothom Alo: First of all, just two months ago on on 13 December, ICC received observer status at the UN. What does that mean?

Philip Kucharski: This is an absolutely wonderful achievement of which we are very proud. ICC is the only business organisation that now has permanent observer status at the United Nations. That means we have the same status as some of the country delegations that go there. But what it means more than anything else is that we can now submit, propose, suggest some of our issues for business to the United Nations General Assembly. That is a very wonderful platform to be able to express some of the values and the initiatives of ICC.

Prothom Alo: The global scenario is changing since the election of President Trump. The idea of free trade is facing serious challenges from the new administration. How do you see the world progressing?

Philip Kucharski: I’m a born optimist. Some people call me a cynical optimist or an optimistic cynic but my optimistic side hopes this worrying trend in protectionism and closing down borders won’t continue for long. Being British, it started with Brexit, which was a major decision for the United Kingdom to leave a common market, to leave the European Union which took 50 years to build, and is probably the biggest free trade zone in the world. There are more on the way, but it's such a well-established free trade zone. The United Kingdom taking their decision to leave was the first alert for us.

And then of course, the last two weeks have been rich in events. The new president of the United States comes out with something which fundamentally is against our principals. I mean the principals of ICC, we will continue and even more so now to defend free trade, open borders and the whole notion of developing trade amongst nations who agree to sit down and work together. We believe multilateral trade agreements are fairer and more balanced, the world will continue to have more bilateral trade agreements between consenting countries, but the trend is worrying for us. I think we will have to just defend what we believe in.

Prothom Alo: The result of the Brexit vote was very marginal for Brexit and since then people have been saying that they didn't actually know what Brexit meant. Despite those confusions and since the election of President Trump, nothing has changed actually. The Brexit bill has been approved by parliament, the House of Commons, so it looks like Brexit is happening.

Philip Kucharski: Well, it seemed it was a surprise for everybody that the ‘leave’ camp won the referendum of Brexit. It even surprised a lot of people that voted against it. So when the referendum results came, the United Kingdom was in a situation where they didn't know what to do. Yesterday the parliament had the opportunity to discuss it, and article 50, which basically is a clause for the United Kingdom to get out of the European Union, will probably be initiated in March. So, it was a surprise for everybody, a surprise for a lot of people that I've talked to in Britain. Where they are going, they don't know. But what is very clear, like any organisation or any club, when you leave then you are no longer a member. And if you are no longer a member then the United Kingdom has to renegotiate individually with every one of those remaining 27 countries. I personally think it was a short-sighted decision. But when you have a popular referendum, that is democracy, and democracy has decided and we have to face the consequences.

Prothom Alo: The challenge for ICC is to deal with this new trade environment where trade will be dealt with bilaterally rather than multilaterally.

Philip Kucharski: From the point of ICC, as long as trade is happening and there are no barriers getting in the way, then we will support that. But it’s very different from the point of view of free trade and open trade dealing on a one-to-one basis than on multilateral basis. We absolutely favour and prefer multilateral basis. Multilateral agreements allow weak countries to actually participate on the same level as stronger ones so it stops bullying and it stops some of the strong arm tactics. But the British government has come out very strongly in favour of continuing to develop free and open trade, so it would just be bit of a longer process. Maybe by renegotiating new deals they will get some better ones. But it seems a long and laborious way to get to results which we don't know will be better than the initial European one.

What I would say as well is that there are some worrying trends in the rest of Europe. There will be elections in next few years in Holland, in France, in Germany, maybe in Italy if the government survives, and there are worrying trends of some protectionist parties that are moving in force. Nationalism in Europe means a something different than it does here for you. We have been used to taking out a car and going to Germany, driving to Spain or to Italy. So if we close down the borders, it’s a very, very different message.

Prothom Alo: What would be the impact for developing countries like ours, Bangladesh, even India, Pakistan or Nepal?

Philip Kucharski: The impact for developing countries shouldn't be negative. A country like Britain will carry on trading and all the other countries will want to trade with yours. What I regret, as part of this message at the moment, is the high reference to immigration which in some countries is verging on racism and certainly the case of Brexit decision and it is starting to grow now in France. If these countries decide to be selective of who they trade with, that goes completely against what we stand for. You don't trade based on race, or religion or gender. I think we should defend this as strongly as we can. Diversity and non-discrimination of all sorts. That's the worrying thing, the part of protectionism that is also bringing with it a new rise of discrimination.

Prothom Alo: Have you seen any worry about this at the Asia Pacific Business Forum which you attended?

Philip Kucharski: No. On the contrary, it’s always for me gratifying to hear the opposite language from what I am hearing in my own country now. In fact, most of the interventions were very much in favour of developing more free trade and partnerships as much as possible. These were right messages and ICC supports that.

Prothom Alo: About the discussions and deliberations in this Asia Pacific Business Forum, what do you think of the outcome of the forum?

Philip Kucharski: I believe is the sixth or the seventh Asia Pacific Business Forum. The last forum was in 2014. ICC Bangladesh is one of the most efficient and enthusiastic and energetic of our national committees, run by some very talented and some wonderfully energetic business leaders who are very much present in the rest of the region. This is the way for me to understanding what are the local priorities and the local particularities of the business here. But this sort of forum also opens up the region to me. I'm used to meeting people from India or China or the other big economic nations, not so much used to meeting people from Nepal, Bhutan so this is been very good for me, for a different point of view. This forum allows sharing principals, practices and codes and also a wonderful networking opportunity for business contacts as well.

Prothom Alo: What is your impression on the relations or interactions between the business, civil society and government here?

Philip Kucharski: It seems to be very close. The president came yesterday and a series of ministers, the minister of commerce and the other ministers who seemed very keen to participate in these business forums. You don't get that everywhere in the world. There are countries where there is a very strict separation between political and business community, although I must admit that is becoming less and less. Politicians are beginning to understand they need business. Business is the creator of jobs and the creator of wealth, and there are very few countries left now that are completely closed down to business. Even the president of China defended free trade in Davos, a few weeks ago. So governments now are more and more open to working side by side with business. And that is what we do at ICC. We are an independent organisation where we are self-financing and we are not political, but we work alongside government. If we want countries to adopt our codes, rules and best practices, we have to have government on our side.

Prothom Alo: Can ICC as an international body help promotion of trade and assist Bangladesh in gaining market access in the European countries, especially preferential access like the GSP which we enjoy in Europe? We are striving for GSP plus. In America Bangladesh wanted to get preference, but that didn’t happen other than for textiles.

Philip Kucharski: We are not a sectoral organisation, so we don’t intervene directly to support individual industries. We are a multisectoral organisation. The ways in what we can help you, in fact ICC Bangladesh does it already, is include the voice of Bangladesh in all of our commissions, in taskforces, in all of our work on establishing codes and rules. For example, we created the eco term rules on international trade, we work on anti-corruption, cyber security, protection of intellectual property, banking, ICC Bangladesh has a very strong banking commission, and arbitration, ICC has the international code of arbitration, which has a very strong representation in this region. Being part of that international community does raise the game for Bangladesh. And once again we have such a good national committee here in Bangladesh that they make sure that their voices are heard every time they come to our meetings.

Prothom Alo: This is your first visit to Dhaka. What is your impression of this city?

Philip Kucharski: Busy! Very busy, I mean my impression so far is a little bit from yesterday coming from the airport, and a short walk here just now from the hotel, and I hear some incredible numbers of the population of this city and the growth rate. You know I’ve been to some big cities in India but this feels bigger. Something about Dhaka that feels bigger and busier.

Prothom Alo: Brexit has already impacted Bangladesh’s exports there. Do you think Bangladesh’s exports could be affected when Brexit starts functioning?

Philip Kucharski: Maybe not in the long term. In long term it will fall into place. Anybody who wants to do business will do business. In the short term, what it is doing is creating tension and uncertainty, and uncertainty is not good for business at all. Uncertainty means people don’t invest, and they don’t hire, they don’t project. With Brexit and some of the things Trump is doing is creating international uncertainties, and you can see it. Their businesses are holding back. That will affect business. That will affect your exports to certain parts of the world and it will also affect initiatives from big companies to invest. That is something we are concerned about, new uncertainty.

Prothom Alo: About Donald Trump and the cancelation of TPP, some people think this can be a boon for countries like Bangladesh. Bangladesh’s competitor is Vietnam, so Bangladeshi exporters think this cancelation of TPP can be a boon for Bangladesh. What do you think?

Philip Kucharski: There are always opportunities that come from failed agreements or disruption in trade agreements. TPP was fundamental to trading across 15 countries. If don’t have that agreement anymore, that is opportunity for Bangladesh to fill that space. In the same ways there are for other countries. The country that is going to take most advantage is China. They are just waiting for the right messages and they will fill the gap. But by the time we get there, it will create again uncertainties. I think opportunists will move in and people who want to trade will trade.

Prothom Alo: ICC is an advocate of integration and cross-border trade, but South Asia, with India and the other countries, is the least integrated region in the world. Can ICC this region to be integrated and increase cross border activities?

Philip Kucharski: I think what you call integration is with you neighbours, your trade with India, Pakistan, Nepal, Bhutan. It seems to me, being the son of an immigrant, that integration is a natural thing to do between neighbours. In certain parts of the world it’s not that easy because history gets in the way. But the easiest people to trade with are the ones nearby. You can trade by land, its proximity. Given the level of development, the speed of development, you are growing about 7 per cent a year, which is massive compared to the rest of the world, if you continue with that speed, your population will benefit from that, people will have more to spend, when they have more to spend, they have more to buy. We believe prosperity is a big driver, not only to integration, but to the old notion of peace. We talked about peace and prosperity, we still have that as a fundamental of ICC. Integration will come through prosperity, and if we add sustainable development to this, do we need to ship goods all around the world when we can find those goods nearby? The attention to sustainable development will force us to think differently and look more closely to our neighbouring countries and neighbouring economies.

Prothom Alo: ICC basically promotes free trade, free market, and formulates rules and regulations for cross border trade and investment. Is ICC working on any new issues as the world is changing after Trump and TPP cancelation?

Philip Kucharski: There are two main areas that we will have to focus our attention on. These are SMEs, smaller companies rather than the big ones, where we traditionally worked with some of the big corporations and its SMEs that create all the jobs now. So we’ll have to develop more attentions to SMEs. And also we have to look at what is being called the fourth industrial revolution, e-commerce, digital commerce, and anticipating what is coming in certain parts of the world. There is digitalization and artificial intelligence and all of this machines that were basically created to remove jobs. So those are the challenges for us and to make sure that it is as inclusive as possible. Technological advancement means more and more people out of work.

Prothom Alo: Thank you.

Philip Kucharski: Thank you.

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