What the G20 didn’t mention!
The G20 in Brisbane ended on Sunday with ‘Global Value Chains’ (GVCs) hailed as the silver bullet. Barney Foran has some words of caution for Team Australia.
Generally Brisbane’s G20 meeting got reasonable plaudits all round. Tackling youth unemployment, enhancing infrastructure and reining in dodgy profit shifting by multinationals are just causes, even if growth targets might not fix the mess growth caused in this swirling globalising world.
‘Global Value Chains’ (or GVCs) are an emergent silver bullet that will make things better for most nations and people according to the OECD report released by Australia’s Trade Minister Andrew Robb. The familiar GVC story is of bits made everywhere, then assembled in a final rush with everyone along the chain better off because they’ve had a slice of the action.
The G20’s Global Impacts work just completed shows life is not that simple. Richer, more developed countries are increasingly outsourcing their GVCs causing cascading impacts across all environmental domains. Carbon leakage is the obvious one where production scale and labour costs in factory economies such as China and India see production, emissions and jobs flee to these economically more attractive hubs. What’s good for carbon also happens with biodiversity, material flow, scarce water and land, those environmental domains central to the integrity of the earth’s function. Making our GVC’s more complex, fluent and efficient will ensure that we routinely overuse biological assets well before the clunky world institutions of trade and environment can meet again to ponder effective constraints.
More developed economies with colonisation histories are especially good at GVCs and reaping their financial returns. The European standalone G20 members of the UK, Germany, France and Italy have one half of their GVC impacts outside their territorial boundaries, yet admit little responsibility for these impacts. Within the UN climate accounting protocols (which are territorially based rather than consumption based) this subterfuge allows them to maintain a “we are meeting our targets” stance when the consumption emissions for the UK for example are nearly twice those produced territorially. Rhetoric and reality are thus at odds.
But GVC’s bring jobs, income and development to lesser developed countries struggling with profound deficits in education, equality and infrastructure. This one’s a quandary analytically as employment footprint research reveals many “master servant” relationships where developed countries maintain a poorly paid servant chain particularly in complex GVCs involving electronics, chemicals and food products. Australia employs more full time workers abroad than at home and most are paid at about one seventh of our domestic wage. Rationally, that’s why we do it.
And what of Australia’s impacts through its GVCs? Our political leaders like us to “punch above our weight” and we do that in spades. In the G20 rankings on a per capita consumption basis, we are second in emissions (behind USA), second in scarce water use (behind Saudi Arabia), first in species threats (ahead of Saudi Arabia), second in land footprint (behind Canada), and first for material flows (ahead of Canada). That provides us a second ranking GDP and an agreeably low inequality. But Australia is the G20’s most indebted country in per capita net international terms with our big four banks exposing our financial resilience to the gnomes of international hedging. Thus we deplete our natural assets and indebt our future. Well done, Team Australia!
And do any G20 countries seem sustainable in a biophysical sense? Argentina and Brazil still have a fighting chance with good environmental assets and low per capita impacts, most of which is within country borders. But their inequality is high and their rich get richer while governments battle systemic corruption. “Follow us down the GVC route”, the G20 leaders enthuse, “…..and there will always be another cheaper resource and workforce to help you consume more. Eventually you could be just like us”.
Barney Foran has a professional science career spanning rangeland ecology, farming systems, whole economy modelling, energy and greenhouse transitions and now the physical impacts of international trade and the G20. He is an adjunct research fellow at Charles Sturt University’s Institute of Land Water and Society and Sydney University’s ISA Group at the School of Physics. He lives in North East Victoria.
