Opening Remarks by Angel Gurría
Tokyo, Japan - 12 April 2018
(As prepared for delivery)
Ladies and gentlemen, distinguished guests,
It is a pleasure to be with you today at what is now a regular and highly valued dialogue between the OECD and the Japanese business community. Japan has been a powerhouse of innovation and firmly integrated in global value chains for many years. But like other OECD countries, it must now make digital transformation work for its economy and society.
Today’s seminar is asking the right questions at the right time:
Japan is already well positioned.
It is among the few OECD countries spending more than 3% of GDP on research and development (R&D). Moreover, it is the business sector that is providing this springboard for transformation, with 79% of total R&D expenditure, the second highest share in the OECD.
Japan embraces digital technologies. The share of fibre in fixed broadband connections is the second highest in the OECD. Japan is the second most robot-intensive economy in the world. And Japan is a top player in emerging ICT technologies, accounting for 33% of patents in areas such as 3D object manipulation and image analysis.
And Japan is a leader in pushing for progress on digital trade, including as one of the 71 WTO Members that agreed to initiate exploratory work toward future WTO negotiations on e-commerce in Buenos Aires. You continue to encourage a positive dialogue in Geneva; moreover, you are active on this issue in the G20. Japan recognises that digital trade is key for the future of trade, and for Japanese companies competing in a global market.
But there remains room for further leveraging digital transformation for Japan’s economy and society. Remarkably few Japanese businesses engage in sales via e-commerce, even the larger ones (28% in 2015, compared to the OECD average of 40% for large firms). Just 53% of Japanese Internet users purchased online in 2015, compared to an OECD average of 61%. And Japan lags the OECD average on machine-to-machine (M2M) SIM card connections per head, implying strong potential for expansion of this Internet-of-Things technology.
The OECD has been working to enhance the understanding and measurement of digital trade, at both the micro level within the house and at the macro level through the G20 Task Force on International Trade in Services Statistics, which we co-chair with the WTO. We are working to understand what market openness means in digital trade – and we welcome the insights of business for this work.
The OECD stands ready to help Japan address these challenges and to support the Japanese G20 Presidency, including in discussions to promote greater international understanding on how to tackle key issues for trade policy-making in the digital world. Our cross-cutting project on the digital transformation – Going Digital – has highlighted that reaping the benefits from digital technologies requires a multi-faceted policy approach. There is no quick fix – no one silver bullet.
First of all, access to digital infrastructure is not enough. Complementary investment in skills, R&D, software and data, an ability to engage in organisational change and process innovation, and a sound competitive environment that boosts business dynamism are all essential.
Labour market and social policies and institutions will also need adapting, to support people through labour market restructuring and to provide adequate social protection for workers in emerging forms of work.
And digitalisation must be harnessed to narrow gender gaps. Digital technologies can fuel women’s economic empowerment. For instance, women who perform more ICT-intensive tasks in their job receive on average a 12% higher pay increase than men. I see great potential to advance the G20 Gender Target on labour force participation under your G20 Presidency.
Now let me pause for a moment on the foundational role of data.
Efficient, flexible and cheap data flows drive data analytics, machine learning and artificial intelligence. They are essential for trade and investment, underpinning the export of services and digital products, and the smart products that are the future of manufacturing. Data flows allow firms to operate globally and co-ordinate GVCs. They are integral to modern customs and trade facilitation in a just-in-time world.
But keeping data flowing and reaping the benefits requires international dialogue on regulatory approaches, to ensure the inter-operability of differing regulatory regimes. We must succeed in hitting multiple policy goals – reaping the benefits of digital trade, and protecting privacy, security and intellectual property rights.
The power of globally co-ordinated action to tackle the tough issues around digital transformation should not be underestimated. Japan’s G20 Presidency offers a great opportunity to advance work on these areas and achieve an ambitious collective outcome through multilateral dialogue.
I cannot think of a better example than the OECD’s recently published G20 Interim Report on the Tax Challenges Arising from Digitalisation. While there are different views on what the digitalisation of the economy ultimately means for international tax rules, we all recognise the need to revisit such fundamental concepts as nexus and profit allocation. The 113 members of the BEPS Inclusive Framework agreed to work together on long term solutions to fix the international tax system.
Ladies and gentlemen,
Let me close by stressing the voice of business is crucial in advancing the G20 discussion on the digital agenda. The OECD has worked closely with the B20 under the leadership of my Sherpa, Gabriela Ramos. We look forward to our co-operation under the Japanese B20 Presidency and we count on the strong leadership of Keidanren.
Japan can also count on the OECD as it takes up its G20 Presidency next year. This is an exciting time – the opportunities are immense if we get the policy right. Let’s focus today on seizing the benefits of digital transformation not only for Japan but for more inclusive growth on a global basis. Thank you.