AI Can Help Shape China-US Trade Deal

Advanced economies throughout the world will soon have to begin discussions regarding how to best balance a future that will inevitably be dominated by artificial intelligence (AI) and the next generation of industrial automation on the one hand, along with a people-centric approach to society on the other. AI and automation will improve the quality of life for millions of people by creating greater efficiency in business, commerce, education and entertainment. At the same time, the 4th Industrial Revolution that will usher in ever more sophisticated technologies will also permanently alter long standing realities regarding the very nature of an industrial workforce.

While AI and automation will put highly advanced and user friendly technologies into the hands of ordinary people, many of these same people will see their jobs supplanted by robots. Every advanced economy must therefore prepare for this inevitability. Pretending that jobs in production, services and retail will not be threatened by the rise of AI is naive and unrealistic. Therefore, concepts such as universal basic income funded through the profits generated by AI and next generation automation require serious consideration. At the same time, heavy investment into new forms of education so that people of all ages can learn modern skillsets is also a likely necessity.

But while these issues are being discussed within individual countries, they also will have a substantial impact on trade. One of the arguments put forward by protectionists and economic nationalists is that tariffs protect domestic jobs. History shows that this is not usually the case, but the simplicity of such arguments is attractive to certain people. But when the very jobs that tariffs are supposed to protect are taken away not by jobs in foreign factories but by robots in domestic factories, the entire tariffs-to-jobs ratio will become an obsolete concept both in theory and in practice.

As such, the 4th Industrial Revolution will actually see an increase in domestic production throughout much of the developed world for the simple reason that a robot producing goods nearby does not necessitate importing goods made by the same kind of robot in a foreign country. This will therefore change the nature of global trade. The ideal way to prepare for this is to acknowledge that in such a new era, every country will likely excel in different areas of automated production.

Because of this, future trade deals forged on a win-win basis will look different to those of the past. Future trade deals will have to incorporate an understanding that while one country might excel at the designing and manufacturing of high quality motor vehicles, another might excel at the designing and manufacturing of high quality computing, smart phone and server technologies.  Another country yet might excel at AI driven pharmaceutical research and development.

While such statements may have sounded like science-fiction as recently as twenty years ago, today it is a matter of preparing for “when” rather than “if” such changes will occur. It would therefore be supremely beneficial for China and the US to discuss these trends in the context of current trade talks because however good a final China-US trade deal might be, all trading agreements will soon have to take into account the fact that the links between trade and jobs will eventually be largely broken by the AI and automation revolution.

Those who prepare at the earliest time for such wide reaching changes will be best placed to achieve a win-win balance between leadership in AI and automation on the one hand and positive people-centric social approaches on the other.

 

Comments are closed.