To read the original commentary from New Republic, please visit here

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This disruption also came on top of an already brittle logistics system which is currently grappling with several unprecedented challenges, including equipment shortages and decreased schedule reliability, to name a few. Right now, the reliability that the vessel carrying your goods or expected to pick up your goods will show up on time is roughly 5%. At this time last year, it was around 80%+. And, as ocean carriers introduce more blank sailings or skip ports to start improving the reliability percentage, that means the freight that was skipped is now added to the backlog of containers that will flow into the next vessel.

It’s likely we won’t see a large shift in congestion until the demand levels out.  And while this market does not lend itself to a silver-bullet solution, there are things shippers can do to keep their supply chain afloat:

1. Be open to hyper flexibility

While flexibility is important any time global logistics are involved, the phrase ‘now more than ever’ holds true here. Currently, delays at the Port of Yantian are ranging from 10-15 days, which is a large jump from the 2-7 day delays we experienced just few weeks back.

Switching between ports, modes, and trade lanes has been an active strategy to avoid these delays, but shippers can’t rely on only adjusting once or twice since other shippers are also making these shifts as they compete for limited space. A good example of how this plays out is in the case of congestion at the Port of Oakland. Over the last few months, as the delays at the LA port were mounting, carriers started diverting sailings to Oakland. The result? Oakland is now also severely congested and suffering from the same unpredictability.

Fact remains, ocean carriers are deploying the most capacity on the U.S. west coast (USWC) routing, and as complexities in the interior of the U.S. continue to be exacerbated (i.e. lack of chassis and rail congestions), carriers continue to limit options for containers moving inland. Shippers need to continue to be flexible in enabling containers terminating on the USWC and leveraging transloading and trucking inland options.

When considering flexibility across modes, keep in mind air may be the solution for a few shipments, but it’s not a feasible option to shift all your ocean freight to air. Instead, exploring a mix of modes, like LCL + air, may offer a more realistic opportunity for your company in a more cost-competitive way. Having the right partner with a global suite of service and technology offerings coupled with scale and a strong inland network, is going to make the difference for supply chains in the market.

2. Prepare for ultra-prioritization

Prepare to make tough decisions on what freight is most important to move. This can be especially difficult for companies importing seasonal items, like patio furniture or pools since their selling window is limited.

With today’s demand, most shippers would classify all their freight as a top priority but shipping it all at once may not be realistic. It’s important to sit down and have those conversations now so when the opportunity presents itself for portions of your freight to move, like in an LCL shipment, you’re ready to make the call.

3. Don’t dismiss historical data

I’ve been in the business 20 years and never seen anything like this in a global magnitude, impacting almost all core trades. However, a unique situation does not mean historical data no longer lends itself to helping us find solutions.

The market will improve, and things will get better. However, these issues tend to be cyclical as we look at the data. We need to build resiliency around supply chain and continue to have options to navigate. While some of these events are hard to predict and plan, there are things that you can do, such as diversifying distribution center locations, sourcing, etc.

Final Thoughts

Until the high demand subsides, the above points will be crucial moving forward. C.H. Robinson has always been focused on working alongside our customers to help them succeed – and that’s no less true during times of incomparable volatility. It’s important to keep an open line of communication and to be open to creative solutions. 

Sri Laxmana is the vice president of global ocean product at C.H. Robinson. He is currently responsible for driving the global strategy, revenue and ocean freight volumes.

To read this commentary in full, please visit here

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Taiwan is the United States’ ninth-largest trading partner and its seventh-largest destination for agricultural exports, with total trade in goods valued at $90 billion in 2020. Trade with Taiwan supports over two hundred thousand U.S. jobs. Taiwan also occupies a central position in global technology supply chains, in particular semiconductors. The United States trades more with Taiwan than it does with India, France, or Italy. Beyond trade, Taiwan is an important partner on regional and global issues, working with the United States on everything from climate change to global health, anticorruption, women’s empowerment, sustainable development, and counterterrorism.

The United States and Taiwan signed a Trade and Investment Framework Agreement (TIFA) in 1994, which provides a forum for officials from the Office of the United States Trade Representative (USTR) to meet with their Taiwanese counterparts to discuss and hopefully resolve irritants to bilateral trade and investment. Since 2007, the trade relationship has not been able to get past Taiwan’s barriers to U.S. agricultural exports. The main stumbling block has been Taiwan’s ban on imports of U.S. pork and beef because they often contain ractopamine, an additive (currently also banned in the European Union and China) that promotes leanness. To signal its displeasure with Taiwan’s stance, USTR suspended TIFA talks, resuming them from 2013 to 2016 (after Taiwan allowed some beef imports containing ractopamine), before the Trump administration suspended them again in 2017.

Taiwan’s President Tsai Ing-wen, a trade negotiator by training, recognized the primary hurdle as well as the importance of improving trade ties with the United States. After handily winning reelection, in August 2020 President Tsai announced that she would remove the ban, to significant domestic political backlash. This policy change is now subject to a nonbinding referendum that will be held in August. The Trump administration, despite all its talk about the importance of U.S.-Taiwan relations, did not initiate trade talks, reportedly because it was concerned that doing so would prompt China to walk away from the phase one trade deal.

USTR has identified remaining issues that could be addressed during negotiations, namely Taiwan’s barriers on agricultural products, in particular rice, genetically modified foods, ground beef, and animal byproducts. USTR likely also would push Taiwan to lower tariffs on distilled spirits, large motorcycles, and soda ash, and create a more level playing field in the pharmaceutical and medical device sectors. There is also scope for Taiwan to more effectively combat copyright infringement, especially with respect to online piracy, and to provide greater access to its cloud computing market. Progress on these issues should be attainable.

Despite a general lack of appetite for new free-trade agreements, there appears to be a large degree of congressional support for a deal with Taiwan. In the fall of 2020, a bipartisan group of fifty senators signed a letter calling on then-U.S. Trade Representative Robert Lighthizer to begin working toward a comprehensive trade agreement with Taiwan. This followed a similar bipartisan letter signed by 161 members of the House in 2019 and the passage in 2020 of the Taiwan International Protection and Enhancement Initiative (TAIPEI) Act by unanimous consent, which called on USTR to further strengthen bilateral trade and economic relations with Taiwan.

This strong bipartisan support reflects an appreciation of Taiwan’s constructive role on regional and global issues and recognition that Taiwan’s continued security is critical to regional stability in the Asia-Pacific. As China’s military strength and confidence increase, the United States needs to find additional ways to continue to deter Chinese adventurism. In addition to the economic merits of a trade deal, this development would also send a strong signal to China on the importance the United States places in its relationship with Taiwan and increase Taiwan’s confidence, allowing Taipei to approach the mainland from a position of strength.

China’s strategy for Taiwan is to employ a range of tools in an attempt to cause Taiwan’s twenty-four million people to conclude that their only viable future is to join China. In the economic realm, it has cut tourism to Taiwan, banned imports of Taiwanese pineapples, and most importantly sought to marginalize Taiwan in international trade. Although Taiwan is a member of the World Trade Organization (WTO) and the Asia-Pacific Economic Cooperation (APEC) forum, it is not a member of the two largest regional trade groupings, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP) that includes Canada, Japan, Mexico, and eight other countries and the Regional Comprehensive Economic Partnership (RCEP) that includes China, Japan, South Korea, Australia, New Zealand and the Association of Southeast Asian Nations (ASEAN) countries. Taiwan is excluded largely because members fear Chinese retaliation. Taiwan only has two free trade agreements with countries that do not maintain diplomatic relations with the island – deals with Singapore and New Zealand – and China has pressured other countries not to conclude trade agreements with Taiwan. This despite the fact that China signed an Economic Cooperation Framework Agreement (ECFA) with Taiwan in 2010, which significantly reduced tariffs and trade barriers. There is a well-founded fear that without the ability to join in trade liberalization, Taiwan’s economy will fall behind, which would add to China’s leverage over the island. A U.S.-Taiwan trade deal, however, could provide political cover for other countries to begin negotiations of their own with Taipei.

While resuming TIFA talks is a positive step, this dialogue alone is unlikely to generate enough momentum toward a trade agreement. The time is ripe to be more ambitious. President Tsai has three years left in her second term, and because she does not have to stand for reelection she is in a position to spend political capital to finalize a trade deal with the United States. Her successor, regardless of political party, will be unlikely to make the necessary concessions during a first term. President Tsai, who has focused on diversifying Taiwan’s economy away from China (with mixed success), would view a trade agreement with the United States as an important part of her legacy, and can be expected to negotiate in good faith.

A U.S.-Taiwan trade agreement would increase the island’s economic and national security while further opening an important market for U.S. exports. It would signal support for an important partner and underscore the U.S. interest in cross-strait stability. The time is right for an ambitious U.S.-Taiwan trade agenda.

David Sacks is a research fellow at the Council on Foreign Relations, where his work focuses on U.S.-China relations, U.S.-Taiwan relations, Chinese foreign policy, cross-Strait relations, and the political thought of Hans Morgenthau. He was previously the Special Assistant to the President for Research at the Council on Foreign Relations.

Jennifer A. Hillman is a senior fellow for trade and international political economy at the Council on Foreign Relations (CFR), specializing in U.S. trade policy, the law and politics of the World Trade Organization (WTO), international organizations, and Brexit.   

To read the full commentary from the Council on Foreign Relations, please visit here

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However, recently released trade statistics across the world reveal that those forecasts may have been overly pessimistic and underestimated the relative resilience of the global trading system. In fact, in June, after several months of sharp declines, trade volumes recorded their biggest monthly rise on record, with a 7.6 percent increase. East Africa may be shadowing these global trends.

Kenya, the largest regional trader, is a good barometer of broader East African trends. The country was initially hit quite hard in terms of the decline in trade volumes, with a 19 percent drop in total trade volumes in April. As warned in our earlier Brookings policy brief, re-exports to the rest of the region were hit extremely hard, with a 83 percent decline in April. Since June, though, total trade volumes have begun to recover rapidly, with a 9 percent increase in June and a 12 percent increase in July (Table 1). Moreover, the story is a similar if the analysis is undertaken using year-on-year percent changes.

Table 1. Kenyan trade, percent monthly change, January-July 2020

Source: Kenya National Bureau of Statistics, 2020

STRONG SIGNS OF RECOVERY

Kenyan exports have proved to be particularly resilient during this crisis. If we take the data for “domestic exports” alone (i.e., subtracting the re-export of goods to other countries), it is clear that the export performance has been extremely volatile, with a record monthly peak in export revenues in March, followed by a sharp drop in April/May. However, by July, domestic exports were 12.7 percent higher than in July of the previous year (Figure 1, Panel A). More specifically, although Kenya’s large cut-flower industry has not yet fully recovered, seasonal exports of tea, fruit, and vegetables have held up extremely well, in part due to government measures to protect these sectors from the negative impacts of lockdowns. Among the measures undertaken were the ring-fencing of the tea sector from mobility restrictions to minimize the disruption to exports; the re-equipping of some passenger planes to be able to carry cargo; and the creation of mobile laboratories for cross-border testing to facilitate smooth trade flows with Tanzania.

The other salient characteristic in Kenya’s trade performance throughout the COVID-19 crisis is that exports to the rest of the East African Community (EAC) recovered very rapidly indeed (Figure 1, panels B, C, and D). In our earlier Brookings policy brief analyzing data up through May, we flagged with some alarm the apparent collapse of intra-regional trade, as reflected in the sharp decline in Kenya re-exports to the rest of the region. By July, however, exports to Uganda and Rwanda had exceeded their pre-COVID-19 peaks, and re-exports towards Tanzania also accelerated sharply. Notably, the recovery picture is broadly confirmed by data recently released by the Bank of Uganda. Both export and import performance have recovered, and Ugandan coffee exports almost reached a historic high in July, despite relatively low coffee prices in international markets.

Figure 1. Patterns of trade—Kenya vs. other EAC countries

Source: Authors, from Kenya National Bank of Statistics data.
Note: Shaded area represents period of COVID-19 pandemic. Dotted lines are 3-month moving averages.

Initially, measures to prevent the spread of COVID-19 across borders, such as mandatory COVID-19 tests on lorry drivers, caused large-scale disruption to East African trade. But the subsequent rebound in intra-regional trade is a testimony to the effectiveness of actions taken by national governments and the EAC Secretariat to ensure the smooth functioning of transport corridors, as well as initiatives like TradeMark East Africa’s $20 million Safe Trade Emergency Facility (STEF) and GIZ’s support of mobile laboratories, test kits, and personal protective equipment to the East African Community.

IMPLICATIONS FOR ECONOMIC RECOVERY STRATEGIES IN EAST AFRICA

In summary, despite the depth of the economic crisis precipitated by the COVID-19 pandemic, since May 2020 intra-regional trade in East Africa has shown significant resilience with a notable positive correlation with measures put in place to protect transport corridors from severe disruptions.

While the V-shaped recovery in trade is encouraging, East African economies are not out of the woods yet. Three policy conclusions stand out:

1. The crisis is far from over. Governments in the region—especially those of landlocked Burundi, Rwanda, South Sudan, and Uganda—should continue to maintain exceptional measures to support cross-border trade and a favorable trading environment, particularly for intra-regional trade.
2. Protecting key export sectors from the negative impact of any COVID-19-related measures is essential. Kenya has shown that it is possible to keep value chains operating and shelter strategic sectors from adverse impact. Sustaining export revenues, at a time of growing foreign exchange shortages, is also a macroeconomic imperative.
3. Finally, one area where policy measures have been less effective is in avoiding the collapse of cross-border informal trade. Until free movement of people is reestablished, it is unlikely that border communities dependent on this trade will recover. Cross-border communities—particularly women traders who account for the bulk of informal trade—are still highly vulnerable to this crisis and will continue to need additional support.

Andrew Mold is chief, Regional Integration and AfCFTA Cluster, Office for Eastern Africa, United Nations Economic Commission for Africa.

Anthony Mveyange is director of research and learning at TradeMark East Africa.

To read the original blog post, click here

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The G20 Trade and Investment Ministerial Meeting Communique is now available and is embedded below.

One of five agreed areas of cooperation and coordination by the G20 ministers was on supporting “the necessary reform of the World Trade Organization (WTO) which the Riyadh Initiative on the Future of the WTO provides political support”. Other areas of cooperation and coordination include supporting recovery of international trade and investment from the fallout from COVID-19; encouraging “greater international competitiveness of Micro-, Small and Medium-Sized Enterprises (MSMEs); fostering “economic diversification”; and strengthening “international investment”. Page 1, para. 3.

This post focuses on the second area of cooperation and coordination, reform of the WTO. The Communique contains an articulation of G20 agreement in paragraphs 13-22 and provides in Annex 1 the Chair of the Trade and Investment Working Group’s (TIWG) “Summary of the Exchange of Views under the Riyadh Initiative on the Future of the WTO”. The Annex was prepared under the Chair’s “own responsibility and is without prejudice to the positions of individual members.” Page 3, para 14.

15. We reaffirm our commitment to the objectives and principles enshrined in the Marrakesh Agreement Establishing the WTO.

16. We recognize that the effectiveness of the multilateral trading system depends on the implementation of WTO rules by all Members, as well as their respective enforcement, in order to maintain the balance of Members’ rights and obligations.

17. We remain committed to working actively and constructively with other WTO Members to undertake the necessary reform of the WTO. We recognize that this reform should improve the functions of the WTO and we encourage a constructive discussion of all proposals in this regard.

18. We recognize transparency as an important condition for enhancing trade predictability and fostering trust between WTO members with regards to the compliance with their WTO obligations. In this regard, we reaffirm our commitment to fulfill our WTO transparency obligations and to lead by example and we call on all other WTO Members to do so. We recognize the need for assistance to WTO Members that face capacity constraints in meeting their notification obligations. We acknowledge ongoing discussions to enhance transparency and bolster compliance with notification obligations at the WTO.

19. We underscore the significance of ongoing WTO negotiations and reiterate our support to achieve an agreement by 2020 on comprehensive and effective disciplines on fisheries subsidies, as WTO Ministers decided at the 11th Ministerial Conference. Many members affirm the need to strengthen international rules on industrial subsidies and welcome ongoing international efforts to improve trade rules affecting agriculture. Many of us highlighted agricultural subsidies and agricultural market access. We also stress that urgent action is necessary regarding the functioning of the dispute settlement system in order to contribute to predictability and security in the multilateral trading system.

20. We note the ongoing discussions under the Joint Statement Initiatives (JSI) at the WTO, including the JSI on E-Commerce, Investment Facilitation for Development, MSMEs, and Services Domestic Regulation. G20 participants in these initiatives call for significant progress in the lead up to the 12th WTO Ministerial Conference. We note that concerns have been expressed on rule-making by some G20 members who are not part of the JSIs.

21. We note the process under-way to select the next Director General of the WTO. We look forward to working with all WTO Members towards concluding the selection process by the 7th of November 2020.

22. The 12th WTO Ministerial Conference represents an important milestone in an inclusive and ambitious process of WTO reform. We will use the additional time available until then to bolster our efforts to work constructively with other WTO Members to achieve meaningful progress in advancing our shared interests, including emerging stronger from theCOVID-19 pandemic and progressing with the necessary reform of the WTO to improve its functioning.” [Emphasis added]

While the G20 Communique lays out a number of areas of potential cooperation on WTO reform — fisheries subsidies, joint statement initiatives, transparency — there are other issues where language is qualified (e.g., industrial subsidies, rules on agriculture, agricultural subsidies, and concern re new rules established through plurilaterals). Thus, the known tensions between major G20 members are reflected in the joint Communique.

Similarly, the Annex 1 on the Riyadh Initiative on the Future of the WTO, TIWG Chair’s Summary, pages 8-13 contains sections on “Common Objectives,” “Foundational Principles,” “Collective Vision to Advance the Necessary WTO Reform,” and “Conclusion”. The Annex demonstrates the continued division within the G20 on many aspects of WTO reform. Consider the section on Foundational Principles:

FOUNDATIONAL PRINCIPLES

With respect to the principles that underpin the WTO, the Chair notes that G20 members’ responses referred to the foundational principles embodied in the Marrakesh Agreement and included in the covered agreements, with most members noting that some of these foundational principles are also reflected in the Marrakesh Declaration.

The Chair notes the following outcomes of the exchange of views on foundational principles:

• All members agreed to list the following as part of the principles of the WTO:

• Rule of law
• Transparency
• Non-discrimination
• Inclusiveness
• Fair competition
• Market openness
• Resistance to protectionism
• Reciprocal and mutually advantageous arrangements, acknowledging that agreements provide for differential and more favorable treatment for developing economies, including special attention to the particular situation of least developed countries

Most members stressed that ‘sustainability’ is a principle of the WTO

Most members stressed that ‘market-oriented policies’ is a principle of the WTO.

Some members stressed that ‘special and differential treatment’ is a principle that is integral to and underpins the WTO and that should be preserved. Many members, highlighting that WTO rules contribute to economic growth and development, expressed the view that S&DT is a tool to facilitate the achievement of WTO objectives and should be applied on the basis of demonstrable needs.

Members noted the practice of consensus-based decision making in the WTO, expressly carried over from the GATT in the Marrakesh Agreement. Some members consider this practice to be a principle of the WTO.” Pages 11-12 [Emphasis added].

The qualifications included reflect deep divisions on some issues. For example on whether “market-oriented policies” is a principle of the WTO, China strongly opposes the concept and views discussion of the matter as outside of the WTO’s mandate.

The same presence of divergent views is seen in the Conclusion:

CONCLUSION

The Saudi G20 Presidency extends its appreciation to all TIWG representatives for their feedback and engagement in the Riyadh Initiative. The Presidency notes the following outcomes of the Riyadh Initiative:

G20 support for the objectives enshrined in the Marrakesh Agreement Establishing the WTO, with most members noting that some of these objectives are also reflected in the Marrakesh Declaration.

Affirmation of foundational principles of the multilateral trading system with different views being expressed on various issues.

Determination to tackle the necessary reform of the functions of the WTO and to discuss all proposals in this regard.

The need for Members to fulfill their notification obligations as a necessary condition for Members to effectively monitor compliance with existing rules.

Recognition by most members of the value of pursuing plurilateral negotiations on issues where progress can be achieved and emphasis by some members that new rules be adopted by consensus.

Shared sense that the dispute settlement system needs urgent reform, with divergent views on the nature of such reforms.

The Saudi G20 Presidency sincerely hopes that the Riyadh Initiative will help advance the shared interest of WTO Members in bringing about the necessary reform of the WTO, so it can fulfill its objectives of improving the lives of the world’s citizens and ensuring peaceful, inclusive and sustainable economic development through multilateral cooperation.” Page 13 [Emphasis added].

It is obviously a positive development that the G20 trade and investment ministers have been meeting during the COVID-19 pandemic and working together on various issues including keeping markets open, supporting investment (and more) and that the G20 countries are supportive of WTO reform. So today’s Communique is an important positive for many reasons including for the effort to get some focus on WTO reform at the WTO. However, the deep divisions among even the G20 countries show that the road for reform at the WTO will be long and complicated.

Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.

To read the original blog post, click here

To read the G20 Trade and Investment Ministerial Meeting Communique, click here

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Accepting his nomination, Fox, a passionate advocate of free trade and a pro-Washington candidate, underscored his belief “that if we want to keep the WTO relevant and vibrant our task is clear: Update. Strengthen and reform.”

Indeed, the longtime friend of The Heritage Foundation highlighted the fundamental principle of open trade in his 2018 Margaret Thatcher Freedom Lecture at Heritage. Fox made an unambiguous case for free trade by pinpointing

T]rade is not an end in itself. It is a means to spread prosperity. That prosperity underpins social cohesion. That social cohesion in turn underpins political stability, and that political stability is the building block of our collective security. It is a continuum that cannot be interrupted without consequence. … 

The structures of the international system may not have caught up with the modern world. But that is cause for reform and renewal, not rejection. The U.K. and U.S. are ideally placed to work together to modernize, and make the international rules-based trading system work better.

Not surprisingly, history has clearly proven that trading freely and expanding the freedom to trade are the cornerstones of the most pragmatic economic strategy for people all over the world.

No single nation has the natural resources, infrastructure, and human capital in sufficient quantity and quality to enable the standard of living to which developed nations have become accustomed and to which developing nations aspire. And so, people trade.

Furthermore, as The Heritage Foundation’s data-driven annual Index of Economic Freedom documents, people in countries with higher degrees of trade freedom tend to enjoy higher per capita incomes, more food security, enhanced political stability and social progress, and a better track record on protecting the environment.

In a highly multifaceted global trade and investment environment, open and free trade is a constantly evolving phenomenon and process. The temptation to seek short-term advantages through protectionist measures abounds and has been increasing. Defending and advancing trade freedom is more critical than ever, particularly in the context of the coronavirus pandemic.

The freedom to trade, whether bilaterally, regionally, or multilaterally, must be guarded and enhanced to spark constructive, free-market competition and ensure private-sector growth for the post-pandemic global economic recovery.

The nomination of Fox as the next chief of the multilateral trade organization signals the intention of the U.K., following its departure from the European Union, to reclaim its historical role as a pillar of the international trading system.

As an avowed free trader, Fox himself is a welcome addition to a crowded field of candidates for those countries that want to see the WTO emerge from its current crisis as more effective in its promotion of open, market-based free trade.

As Fox pointed out in his Heritage Foundation speech, the World Trade Organization, a negotiation forum for the resolution of trade disputes between its members that has no independent power to enforce its decisions, is not a perfect institution. 

That is why the U.S., the U.K., and other like-minded and willing members of the WTO should work together to upgrade and reinvigorate the institution they helped create 25 years ago.

The forward-looking message Fox shared in the conclusion of his Margaret Thatcher Freedom Lecture at Heritage still resonates clearly. As he reminded us:

We must have the optimism and self-confidence now to shape it for the future: free markets, through free trade, for the benefit of free people. I will leave you today with the words of President [Ronald] Reagan: ‘The freer the flow of world trade, the stronger the tides of human progress and peace among nations.’ There is no greater prize than that.

To view the original blog post at the Heritage Foundation, please click here

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The coronavirus crisis has cut deep into global trade flows.  The ‘Great Lockdown’ has shut borders, curtailed consumer demand, and broken supply chains. Ports have been closed and international travel has virtually ceased. The global economy is set to shrink by 6 – 8 per cent in 2020, and world trade by up to 12 per cent. Yet ‘slowbalisation’ was already taking hold in the global economy before Covid-19 jumped from a bat to a Hubei farmer sometime in late 2019. Global trade rose only marginally faster than global output in the decade after 2010, having risen at more than twice the pace of output in the early 2000s. The share of Global Value Chains in trade fell during the same period. Rising protectionism, the US-China trade war, automation and increased domestic production, all took their toll on the model of globalisation that had structured world trade in the ‘long 1990s’ before the financial crisis.

In a wide ranging interview with the Financial Times, French President, Emmanuel Macron, declared that this model of globalisation had reached ‘the end of its cycle’.  It had lifted millions out of poverty and deposed totalitarian governments, but had also increased inequality and undermined democracy, he argued. The Covid-19 crisis has accelerated this reassessment.

National governments are now taking stock of their economic resilience against future pandemics. Can they build or get enough ventilators, masks, personal protective equipment and diagnostic tests, and produce vaccine supplies?  Do they have national control over strategic sectors, like pharmaceuticals and telecommunications, as well as defence? The German government recently bought a 23 per cent stake in Curevac, a biotech company based in Tubingen that is developing a Covid-19 vaccine, in order to block a US takeover. Macron has declared that France will seek ‘medical self-sufficiency’ and is investing in national research and production capabilities. And pandemic preparedness bleeds easily into geo-political industrial strategy: the EU commission has set out plans to block access to public procurement contracts from state-subsidised Chinese companies. It now describes China as ‘systemic rival’ to the EU.

Industrial and commercial concerns are increasingly overlaid by foreign and security policy objectives. The US is challenging its allies to come into line behind its attempts to constrain and contain China, citing security concerns for pushing prohibitions on Huawei in 5G development, blocking involvement in China’s Belt and Road initiative, and limiting foreign investment by Chinese companies.  The Johnson government has launched ‘Project Defend’ – an examination of the UK’s national capabilities for producing essential supplies and an assessment of its economic vulnerability to hostile governments. It has folded the Department for International Development back into the Foreign and Commonwealth Office, largely on trade and security grounds. Much of this is code for rethinking the UK’s relationships – both economic and political – with China.  The shifts in government policy reflect rising hostility to China on the Tory backbenches, of which the formation of a new hawkish ‘China Research Group’ is emblematic.

Emerging from the pandemic, world history will have two main vectors: climate change and strategic competition between the US and China. Where does this leave ‘Global Britain’?

Brexit was a political project launched on the prospectus of opening Britain up to the world, uncoupled from the EU’s customs union and single market. Even without a slowdown in global trade and the colossal impact of the Covid-19 pandemic, this was always fraught with risk. Geography trumps history in trade, and the cost of erecting barriers to the flow of goods and services with Europe will outweigh any benefits from new free trade deals with the rest of the world. But now the UK government must reckon with pressure to align with the US against China, risking retaliation from Beijing, while simultaneously pulling up the economic and diplomatic anchors of its EU membership. Autarky is not an option. The pandemic has brutally exposed the weakness of both the state’s capabilities and domestic manufacturing in the UK. Nor is an ‘Anglosphere’ alliance of the ‘5 Eyes’ nations of Australia, New Zealand, Canada and USA likely to be more than gestural. Britain will have to find a new place for itself in the world.

Global trade will recover in 2021 but it will not bring back the old model of globalisation. The opportunity exists for governments to use the pandemic as a critical juncture for building a new global order, with the goals of public health, peaceful coexistence, tackling the climate emergency, and distributing economic growth more equitably, at its core.  This is a task – as big as anything faced at Bretton Woods – to which a genuinely ‘Global Britain’ might contribute.

Nick Pearce is Professor of Public Policy and Director of the University of Bath Institute for Policy Research (IPR).

To read the original commentary from the University of Bath Institute for Policy Research (IPR), please visit here

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