Sorry, Globalism As We Knew It Isn’t Coming Back

By

John F. Phillips

Politics From The Heartland, LLC

Ah yes, globalism! Remember that?

There is considerable speculation that if Joe Biden is elected in November, there will be a return to the “good old days” of globalism as we knew it in the early part of the 21st century.

A recent article in The Economist (“How Would Joe Biden Change America’s Trade Policy?”, 9/19/20) casts some light on this question. The reporting suggests that Biden’s “Made in America” plan seems to cast doubt on whether globalism as we knew it will return, at least in the short or intermediate term. With the plan’s emphasis on investing in America, restricting imports from China, and providing incentives for the recovery of American industry, especially using subsidies to encourage companies to keep jobs in the United States, it seems unlikely that there will be significant deviation from President Trump’s approach to international trade and economics, at least in the first year of a Biden administration. Of course, this speculation is all for naught if Mr. Biden loses the election!

There are many factors that contributed to the dissatisfaction with globalism. The rise of populism in Europe and the United States after the financial crisis of 2008-09 encouraged a more inward looking approach to international trade and economic issues and served as the foundational principle of the UK’s BREXIT movement and Mr. Trump’s “America First” approach to international affairs.

The rise of China has also contributed to the decline of globalism. China’s economic and diplomatic reach into Europe, Asia and the southwest Pacific region has seriously threatened the economic and political interests of the United States, India, Australia, and New Zealand as well as the interests of smaller nations (Singapore, Malaysia, Indonesia, Vietnam, and the Philippines). Sensing increased vulnerability because of China’s aggressive approach toward the EU, Germany is reconsidering its economic and trade policies toward China, an important crossroads in the relationship, given that China is Germany’s largest export market. The tensions over freedom of navigation in the South China Sea and other areas of the Pacific also threaten international trade and the flow of goods.

The global pandemic also forced countries to reexamine their economic vulnerability in areas such as supply chain security and “just in time” inventory management and investment. Because the pandemic exposed critical problems of access, the United States and other countries are more likely to reduce their reliance on China and India as major suppliers of generic medicines and other critical medical supplies. Access to critical strategic resources from China and Russia that are needed for technology is also vulnerable to supply chain disruption

Does that mean that long term trade policy under Biden will mirror Mr. Trump’s approach to trade and international economics? Not likely. First, Biden’s policy making will be more consistent and consultative and not governed by whims or “gut” feelings..

Second, there will be considerable pressure on Biden to reenter the Trans Pacific Trade Agreement. America’s participation will be in the interests of the United States in that it will allow the United States to influence events and policies that will serve as an economic/strategic counterbalance to Chinese actions in the Pacific Rim.

In Europe, relations with the EU as a whole, as well as relations with individual countries should be much more positive. The economic and political relationship between the EU and the United States has been seriously damaged because of Mr. Trump’s use of tariffs as a retaliatory weapon in trade and political disputes. While tariffs may remain in place in the short term because they offer leverage for trade agreements that are more favorable to the United States, they won’t be used as aggressively as weapons of economic retaliation. The US will more than likely be interested in creating a more favorable trade environment to counterbalance increased Chinese influence in Europe’s economy.

So the question becomes, is globalism as we knew it, consigned to the historical past? Highly unlikely. The global economy, despite recent setbacks, is still symbiotic in nature and far too complex and interconnected to be completely dismantled.

It is imperative, however, that globalism is restructured in such a way that national sovereignty isn’t sacrificed for increased access to markets, economies of scale, or comparative advantage. There has to be a balance. Josep Borrell of the EU said it best:

We will need to devise arrangements for a new kind of globalization capable of striking a balance between the undeniable advantages of open markets and interdependence, and between sovereignty and security of countries.” (Josep Borrell- Policy Brief ecfr.eu/publications/the_post_coronavirus_world_is_already_here, 30 Apr 2020)

This approach and level of cooperation is also essential to solve future problems such as climate change, energy policy, environmental security, and food security.

As an international community, in a more interdependent world, are we up to the challenge, or will we continue to retreat into a world of self interest and isolation?

Your thoughts?

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