Meeting

Coping With Deglobalization: A Conversation With the Council of Councils

Monday, June 6, 2022
Speakers

President, Consejo Mexicano de Asuntos Internacionales

President, Council on Foreign Relations; @RichardHaass

President, East Asia Institute

Presider

Executive Director, Observer Research Foundation America

Richard Haass, Sergio M. Alcocer, and Yul Sohn assess the degree of deglobalization and the dynamics behind any trend, whether the COVID-19 pandemic significantly accelerated developments, and the implications for international cooperation moving forward.

The Council of Councils (CoC) is an international initiative created by the Council on Foreign Relations to connect leading foreign policy institutes from around the world in a dialogue on issues of global governance and multilateral cooperation. The CoC is composed of twenty-eight major policy institutes from some of the world’s most influential countries. It is designed to facilitate candid, not-for-attribution dialogue and consensus-building among influential opinion leaders from both established and emerging nations, with the ultimate purpose of injecting the conclusions of its deliberations into high-level foreign policy circles within members' countries.

Transcript:

JAISHANKAR: Welcome. Good evening.

My name is Dhruva Jaishankar. I’m executive director of ORF America, which is a think tank. It’s an affiliate of the Observer Research Foundation, a think tank based in India. But I have the pleasure of being based here in Washington, the capital of think tanks, and it’s my pleasure to moderate this evening’s discussion.

I’m here with three presidents of think tanks, which is quite daunting. There’s a lot of—it’s somewhat daunting to think about having a conversation with them, a lot of brainpower on this—on the stage, but on the particularly topical topic of globalization and deglobalization, and I’ll just briefly introduce them.

We have Professor Yul Sohn, who is the president of the East Asia Institute in South Korea. He’s an expert on Japan, on east Asia. Has authored books on, amongst other things, Korea in a(n) age of U.S.-China rivalry, which is, I think, particularly topical and timely.

Richard Haass, who needs no introduction, who’s our host, in some ways, president of the Council on Foreign Relations, noted author—a very prolific author as well, and with a distinguished career in—as a diplomat and a public servant.

And, finally, Dr. Sergio Alcocer, who is the president of the Mexican Council on Foreign Relations. He also has a long career as a university administrator and as a public servant as well.

Again, we’re meeting at a very interesting time. It’s nice to have this hybrid meeting, a lot of people here in person and virtually, to discuss, again, globalization and deglobalization. And a lot has been written on the subject. There are many different ways of defining it. I like to think of it succinctly—globalization—as the accelerated flow of goods, capital, people, energy, and information.

And, in some ways, I had my training as a historian. I like to think just in the last twenty, thirty years in a sort of short—as a short historical period. But in some ways, we are now somewhat—we’re fourteen years removed from 2008 and the global financial crisis, and the period before that—1991 to 2008—really was, I think, in hindsight the period that was the heyday of globalization.

It was a period that saw an extreme drop in poverty, of extreme poverty, particularly, from 35 percent of the world to 10 percent of the world. Life expectancy around the world grew by an average of seven years. Global GDP tripled—more than tripled, in fact. And I think some—to see how much of this was driven by globalization, I think some interesting facts to keep in mind.

Trade as a percentage of global GDP grew from 39 percent in 1991 to 61 percent in 2008. Net foreign direct investment inflows, which had never been more than 1 percent of global GDP, for periods of time in this—in the ’90s and early 2000s, topped 4 percent. Energy, you know, as a—the volume of energy flows around the world almost doubled in this period.

And, yet, we saw this jolt in 2008—the Lehman Brothers collapse, the euro crisis, the Russia-Georgia war, the Beijing Olympics, and, perhaps, a heyday of China’s integration, peak oil—the first peak oil, and in some ways the post-2008 period we already started seeing a deceleration effect.

Trade as a percent of GDP, as I mentioned, was 61 percent in 2008. It fell to 59 percent by 2018—a decade later—and this was before the pandemic.

Post-2016, of course, we’ve had more jolts to globalization—the election of Donald Trump, the trade wars that followed, Brexit, of course, and that is all before the global Coronavirus pandemic and, of course, the Russia war—Russian war in Ukraine.

So we’ve gone from an era from—where NAFTA has become USMCA, where TPP has become IPEF, where TTIP has become the TTC, and in some ways this—these changes—these acronyms reflect the changing world from a world of hyper globalization, as some have called it, to an era of something else, and that’s what we’re going to discuss today.

So I’m going to start off by asking a very quick round of questions to our panelists, which is is globalization today dead or is it dormant or is it on life support, or are we all being too pessimistic and is it expected to rebound?

So, maybe, let me start with Richard Haass, and, I guess—

HAASS: I thought sitting in the middle meant that I wouldn’t have to start.

I want to correct one thing you said. You were worried that—you said you were sitting next to three people with power. Anyone who’s ever run a think tank knows that’s the one thing you do not have. No one should ever think that.

So let me slightly take issue with the way you framed it, and probably everyone will. I think it’s useful to think about globalization as a phenomena and globalization as a response.

So globalization as a phenomena, in some ways, I’d say, is pretty strong. Look at climate change. If anything, it’s too strong. Look at the pandemic. What began in Wuhan, however it began in Wuhan, didn’t stay in Wuhan. Again, another form of globalization as a reality rather than a choice.

Now, where you have elements of deglobalization—and, by the way, I think they go back quite a ways—are, mainly, when it comes to the responses to them and, in part, that’s because of the failure of global institutions.

So there’s been all sorts of workarounds in finding regional and local alternatives to global institutions because anyone who depends on global institutions is going to be sorely disappointed, whether your favorite institution is the United Nations or the World Health Organization or any of the many institutions involved with climate change or the internet or anything else.

So, by definition, you’re—you had better be interested in, you know, deglobalization not as a bad thing but as an alternative to feckless globalization in terms of a response.

So and I guess I don’t see it as good or bad. My goal is not to bring back globalization. Again, if globalization means climate change or terrorism like 9/11 or pandemics, the less globalization the better.

What I am interested in is effective responses to it, and if they could be global so much the better. But as we learned, say, with world trade, it’s simply not on. India or other countries can block it. In the most recent geopolitical crisis we have there’s no global response, in part because the Security Council has structural vetoes and then the rest of—much of the world has decided not to.

So, again, I’m struck by the reality globalization—one last thing. Even the current crisis—you know, we talked a little bit about it; not enough today—about food, it’s a regional crisis that very quickly went global in terms of food consequences—food security consequences.

So, again, globalization is alive and well. What’s less alive and well is any sort of an effective global response.

JAISHANKAR: Mmm hmm.

Professor?

SOHN: Yeah. Let me just, you know, reduce the scope of globalization to economic globalization. Obviously, it is not dead. It is alive and, you know, in that area let me say this. Globalization presents, you know, different faces to the different people and different nations.

So, the areas, say, in east Asia, you know, their economy prospers with digital industries. I mean, you see, you know, accelerated globalization there. Some other part of the world you have traditional industries means that—you know, internationally uncompetitive industries—then you need protection.

So Trumpism is one that, you know, tried to, you know, protect, you know, the workers in traditional sectors from international competition—let’s say, Mexico, China. So you see dualism there, and also terms of, you know, cultural aspects that also you see you don’t really see deglobalization or any sort of, you know, Trumpian or Brexit type of revolt against globalization in many parts of east Asia.

But other parts of the world you see that, you know, quite severe repercussions and revolt against globalization. So this is kind of more complex processes and open ended in that sense, and so is presented differently to the region, to the people, to the nations.

So I think that’s precisely what we see, you know, globalization and deglobalization today.

JAISHANKAR: Dr. Alcocer?

ALCOCER: Thank you very much. Well, first of all, thank you very much for having us.

And I think that globalization is kicking and strong, as you have said, and if you look at globalization from the economic and trade point of view, trade is still ongoing. You mentioned some data, which is quite apparent that globalization is still there.

Of course, with the changes in climate change and natural disasters and now with COVID there have been interesting ideas for coming to reshoring and friend shoring and what have you. But from what we have seen, still, trade and economies are strong. And if you also looked in another dimension, politically, for example, the globalization in terms of economy and trade has increased in several countries a more liberal order, and this also has to do with the third dimension, which probably is the most important one, happens to do with knowledge.

So I think we are seeing more a globalized knowledge throughout the world because of digitalization and electrification, and so more and more we’re seeing societies connected and so we are seeing more, like, countries and governments that will need to invest most of their time managing expectations coming from the population because now any kid in Africa or in Latin America or in the U.S. is—has the same information, has the availability to read the same kind of information simultaneously in real time and that leads to an expectation of those people to have different types of lives.

And this, I think, is a phenomena that is related to these emerging technologies and the globalized technologies, which I think is insurmountable, not a wave to be reversed and the other way around, actually.

It will increase and that will pose some pressure into the governments and societies to roll over political regimes that may not allow the population to sort of fulfill those expectations and eventually it will be very difficult to close the boundaries just because of nationalistic ideas.

So I think the—in terms of globalized, I think the most important one will be the globalized knowledge.

JAISHANKAR: That’s interesting. I mean, I neglected to mention, you know, one of the big changes in the post-2008 period was almost more than doubling of the world internet—the number of internet users in the world, so from 22 percent in 2008 to more than 50 percent.

So, with that being said, you know, if I can ask a second round. You touched upon some of the diagnoses, the challenges, that globalization faces—weak multilateral institutions, what you—Trumpism, including the cultural aspects of that. Inequality, political factors.

Can we go—just if I could ask you to dig a little bit deeper. You know, we’re all globalists, by definition, sitting—you know, working at international think tanks, being members of the Council on Foreign Relations.

Are there things we are missing about how others see globalization that we have neglected, collectively, to properly address? So maybe start with Richard Haass on that.

HAASS: I think many people see globalization as something of a threat. The anti-immigration movement in lots of the world is a response to one manifestation of globalization. Closed societies, authoritarian societies, tend to see the free flow of ideas and knowledge as a direct threat to their ability to maintain domestic order.

It’s the reason we’ve gone from images of a global internet to some version of a splinternet to the great firewall of China, the Russian equivalent that—so you had people in parts of the world feeling that globalization was inherent—was culturally a threat, that there was this kind of vanilla like dimension of “global culture,” quote/unquote, and individuals felt their identities were somehow threatened by it. And so elements of that, particularly in parts of the Middle East and Islamic world.

Not a lot of people stand up and shout in favor of globalization. Even in this country on the economic side, you would think that trade was the greatest threat to American jobs. In fact, trade has been a great engine of jobs over the years and when jobs disappear 90 percent of it is not because of globalization but it’s because of technological innovation.

But, again, you know, not a lot of people are shouting for it. Same on immigration. America’s immigration system has been one of our great sources of strengths over the decades, again, as an engine of economic growth.

But you wouldn’t know it from—so I, actually, think, again, I’m well aware of the downsides of globalization. I began by talking about them. So I understand why people are against it.

But there are extraordinary positive aspects of globalization. Again, certain flows of people, ideas, dollars, technologies, goods, services, tourism, you name it—travel—that without it, our lives would be incomparably poorer, both economically and qualitatively.

So, to me, it’s not that globalization is good or bad, per se. Some aspects of it are desirable. Some aspects of it are, understandably, not. So then the public policy challenge is how do you push back against the bad sides of it and how do you encourage the flows of the good side. So it actually becomes a slightly more nuanced or discriminating policy challenge.

JAISHANKAR: Professor Sohn, Korea is part of RCEP, part of IPEF, part of—has signed, perhaps, the last new trade deal with the U.S.—KORUS—that was ratified by the Senate, has produced BTS and other global phenomena. In a different way, it’s a leader. It’s a—so how do you see it from Europe?

In some ways, Korea is a very globally integrated—you know, central to semiconductor supply chains. How do you see Korea sort of responding to these changes that are happening all around it, in some ways?

SOHN: Well, yes, Korea is one of the beneficiaries of globalization, one big success story of globalization, and now facing a couple of challenges. I think there are, you know, roughly, two sources. One is the belief that liberal states promote liberal international order—liberal economic international order, for example.

But now, you know, you mentioned Trumpism—I mean, Trump. Trump’s political economy is like you make it border controls. You know, the blocking transfer of jobs from domestic to China, Mexico, wherever.

But at the same time, so it’s very protectionist abroad. But at home, it is neoliberal. Its pro-business. It’s pro-rich. It’s pro-market. So there’s a sort of, you know, disjuncture between domestic and—I mean, its domestic policy and international policy.

China is reversed. It’s state capitalist. But at the same time, you know, at least Xi Jinping and others talks about globalization, free trade, things like that. So, you know, what you are facing is something very different from the period that you experience success—succeeded. You know, as I said, there’s a match between liberal states promoting liberal international order. So that’s one thing.

And then two is, you know, related to that we see geoeconomic competitions that disrupts international trade, investment, and all the other things that we very well know. So here, strategic vulnerabilities are created by increased economic interdependence.

So, particularly, you know, great powers, you know, use interdependence as a weapon to pursue its own strategic interest and Korea, for the past few years, is subject to, you know, that retaliation, first, so-called the THAAD retaliation, you know, from China and also, interestingly, you got retaliation from Japan.

You know, Japan says that you make export control of three key semiconductor materials—of Japanese materials to Korea, that has been blocked, and you invoke national security to justify that. But, actually, it’s not national security. It is about history issues and, you know, political confrontation between the two, and that disrupts international trade.

And you might recall that the United States under Trump, Section 232, again, invoking national security to protect American, you know, steel and aluminum industries from Korean exports.

So these geoeconomic competition suddenly becomes a major source of your, you know, trade relationships and all those things. So—

JAISHANKAR: Mr. Alcocer, Mexico has been another big beneficiary of globalization in some ways.

ALCOCER: I think so.

JAISHANKAR: And what—but what are some of the challenges you see?

ALCOCER: Well, I think there are two challenges. I think that globalization has—the first one is in strategic communication. I don’t think that countries have been—in countries I’m not meaning governments, but I mean private sector and social sector and what have you—have not been able to communicate what have been the benefits of globalization and whether this is related to trade or job creation, quality of life, life expectancy, and so forth.

And we just discussed this morning when we were talking about global health that the actual system worked the way it was designed. So the question is why is that we never heard about that during the crisis of COVID-19. We all expected that the system would do something different, but actually it couldn’t do anything different because it was designed the way actually reacted.

So if that was the case where was the strategic communication, in this case, for a worldwide organization like WHO. So, again, going back to the strategic communication, I think we need to do much better in communicating what have been the benefits of globalization.

And then the other because, of course, detractors from globalization will tell you, yes, but you failed in this, this, and that. But this, this, and that have to do with inequalities, and in many of the cases, my own country and, perhaps, other countries, inequality has been exacerbated because of a lack of local policies—the domestic policies that could have been implemented or should have been implemented.

For many countries, for example, free trade agreements have been thought to be the final solution for development and growth of the economy. And that’s, perhaps, true in terms of the increase in trade, but that doesn’t mean that the quality of life of the people will be improved unless you implement different policies within your own country. And we have found out in the hard way that we didn’t do that on time. And then some inequalities have risen, in some cases have worsened, and that’s why then anti-globalization or anti-global affiliates will say that globalization doesn’t work.

So there are two things—strategic communication, and you have to do the homework in your own country. This is domestic policies.

JAISHANKAR: I think—and we already got a little bit of this but that leads to my last question before I open it up to—for discussion, which is, you know, it’s one thing to throw our hands up in the air about globalization and what’s happening. If we were to put our policy prescription hats on, and we’re all in think tanks and we like to do that, what are some of the things that we should be doing?

So as we heard, strategic communication has improved. But I’m going to start with Richard Haass again.

HAASS: Well, I’d say two things we shouldn’t do and then I’ll say the one thing I think we should do.

One is I don’t think North Korea is a successful model. Let me just take a wild—walk on the wild side. Autarchy—shutting yourself off from the world—is not an effective response because you lose all the benefits of interacting with the rest of the world, the positive side of globalization.

So let’s posit that autarchy is a dead end, literally, and I think the other is unilateralism isn’t an answer policy wise either. There’s no way you can unilaterally deal effectively with things like climate change. Even if you have your own house in order on carbon emissions you’re still going to pay an enormous price if everybody else does not.

But I don’t think the other—to go to the other end, the answer—the positive response to globalization is not the U.N. General Assembly or the World Health Organization or these other global organizations. For the most part, they are partial or total failures.

So I think if there’s an answer to globalization it’s some version of coalitions of the willing, of selective multilateral responses of entities—not just countries, by the way, but entities, mainly countries but not solely countries—that are willing and able to contribute or are like minded and are relevant to the task.

So you can try to get the entire world together to deal, for example, with rules of the road on the internet. You’re never going to do it. Zero chance that the Russias, the Chinas, the Indias and Turkeys and others will go along. So why not get the transatlantic countries—Japan, Australia, and a few others—to agree, at least 50 or 60 percent of the world on the same page?

Same with climate. You don’t have to get a hundred percent of the world. A tremendous amount of climate is caused by a dozen or fifteen countries. So focus on climate change. So focus on the major emitters.

On world health, you’re not going to get everybody on board so get who you can. I mean, what we need is an approach to dealing with globalization that begins with those who are willing and able to come together. We do it all the time in the security realm. We call it alliances. OK. So why don’t we take a similar building block?

Now, I’m not against universalization of participation—of rules and participation—but we can’t make it all or nothing at the beginning. We ought to start where we can, whether it’s 50 percent, 33 percent, 62 percent of the world, get them together, show that it works, and then come up with policies.

For example, on trade, you could have trade-related policies that would encourage responsible action on climate. If you wanted to export to members of a certain trade bloc, which was one of the reasons I wanted the U.S. in TPP, and you say, fine, you can export here but if you make your product with coal you’re going to pay a fee for that.

So you are going to—essentially, your products are going to be less attractive, less competitive, than products made with oil and less competitive more with gas and less competitive even more with those made from renewables or nuclear.

So set that up. And so I think we can build, if you will, an approach to multilateralism that over time will be more and more effective towards globalization. But we can’t model it on all or nothing because we’ll end up with nothing.

JAISHANKAR: Mmm hmm.

Professor Sohn, you talked about, you know, geoeconomic competition—geopolitical competition influencing economics, about weaponized interdependence, about, you know, illiberalism on trade even if there’s liberalism at home, say, in the United States.

How are some of the ways we can—what can national leadership do, collectively, about that?

SOHN: There are two, I think. Number one is that, you know, national security and economic independence, you’ve got to strike the right balance. Sort of, you know, abuse of, you know, invoking national security in economic affairs, that is really detrimental to the economy and to, you know, international relations. So if there’s some way domestically and also internationally to, you know, find ways to delimit the range of sort of, you know, sectors and technologies that are subject to national security, so that’s very important.

Otherwise, you just—I mean, agriculture is not strategic but many industries can be, you know, named as, you know, strategically important and then protect, you know, all other things. Then the whole will be—the whole world will fall to protectionism and complete disarray of international economic relations. So that’s one thing that we need to, you know, find ways internationally. And second, for, you know, all sort of the sources of deglobalization, inequality, et cetera, I mean, it all starts from domestic.

So you need to sort of, you know, find re-embedded economies, re-embedded liberalism, and re-embedded globalization that, you know, cares about—I mean, think about, you know, regulation—proper level of regulations of finance, trade, and proper management of labor flows. So better sort of, you know, re-embedded national economies I think that is a starting point of—I mean, point towards sort of, you know, re-globalization of the world.

JAISHANKAR: Dr. Alcocer?

ALCOCER: Well, I think that more than ever we’re living in uncertainty, and perhaps I would advocate that think tanks and social sciences and—(inaudible)—politics and policymakers should work more closely with science and technology experts.

And now we have the opportunities with new technologies with data mining, with artificial intelligence and what have you to really design the future that we want so that we can establish different scenarios and from those scenarios then you can craft policies that could be eventually applied to consortia, as Richard says, or different organizations.

Let me just provide you with one example. During the COVID-19 the Royal Academy of Engineering, of course, in the U.K. established a project in which they studied through complex systems the issue of personal protection equipment for COVID, and if you look into that problem in that endeavor, in that framework, then you can identify who are the inhibitors of complex systems, understanding that a complex system is one that its response is not a small response because you have a small input, but you may have a small input where a huge output. And that’s the nonlinearity of the system.

And then you can also understand that in that system not only you have inhibitors but you can also accelerate some changes or not. And those changes may come from laws, may come from a tactical application of certain policies. And if you look at problem into that framework, then you can sort of identify which are the actual policies that you can implement in order to reduce the likelihood of failure of that particular system, in this case, providing personal equipment to—for health care people.

And I think this is one of those frameworks which we can use for different types of phenomena, and we have the information, we have the data, we have the scientists and the technologists in order to produce those scenarios so that think tanks and policymakers could use that data in order to develop policies which are based on scenarios, yes, but on empirical evidence.

JAISHANKAR: Well, we touched upon quite a wide range of issues. I still think there are a number of issues we did not cover in the limited time.

But I do want to bring in the audience, whether it’s online or in person, to address questions or comments, as long as we keep them brief. If not, I have plenty of comments myself. Please. And if you could please introduce yourself as well.

Q: Thank you. Lannoo from CEPS in Brussels, a think tank.

If I look at, I mean, this town, but if I see also what is happening in Europe, with the war in Ukraine we see a pressure now also to say here: Look, we need to decouple from China. And this is very strong. I mean, it’s a big difference, say, to before COVID to two years ago. Of course, the U.S. always had a fairly—under Trump, already fairly tough policy on China.

But now there is an explicit kind of mandate we need to decouple from China. And we have seen in Europe how difficult it is to decouple from Russia, which is, for me, a big change. Coupled with the fact that China has a problem to, basically, meet economic growth targets. Three (percent) to 4 percent is a problem.

Compare this to the last twenty to thirty years when China had—basically, was the driver of economic growth in the world, which is a big change. We have seen 10 percent economic growth, which has declined to 7 (percent), 8 (percent), 5 (percent), 6 (percent). But it has been enormous for the world economy, but similar to what the U.S. had in the second half of the nineteenth century, beginning of the twentieth century, the driver, basically, of global economic growth.

So there I see a change, and I think this is a trend break. But combine them with another element, which is also a big change. What we see now today is high inflation, which we haven’t seen for the last thirty years or even fifty years, in several countries probably with the exception of Japan. Japan is probably happy the Japanese central bank to have a bit of inflation now. But another problem—in other countries it’s a big problem. In Europe, it’s a problem. In the U.S. it’s a problem, and so on.

Combined with also very strange phenomenon in most Western economies, a tight labor market, which we didn’t see in this way. I mean, there is a scarcity of labor in many European countries, probably not yet in southern Europe but in northern Europe, certainly, it is. In the United States also we have a very vibrant labor market, then with very high energy prices, not only oil but also gas, also electricity. And then, yeah, probably very limited prospectives for economic growth.

So I think there is a big shift. There is a trend break, I think, at the moment, as compared to the last thirty years. And my big question is: What will it give in the months and years to come?

JAISHANKAR: We can take a few more questions and comments and circle back to the whole—

(Cross talk.)

Q: Thank you. I’m Chae-sung Chun from EAI, South Korea.

A question to Dr. Haass. I think when we talk about globalization the real problem is globalization without global governance, which is very competent and effective. So you touched upon—so the problem is globalization without global governance. So we have to build the governance, as you said. I think there are two models, you know, model coming from the like-minded country, as you said, so how we can make a(n) effective coalition among democracies, for example.

But you also touched upon the great-power concert, even though we have different regimes. Then we can have a more diplomatic revival of diplomacy with Russia, for example. So there are some seemingly conflicting two models. How can we make these two compatible?

JAISHANKAR: Multipolarity without multilateralism is another way I’ve heard that phrased.

But actually, Dr. Haass, since one of the questions was directed at you maybe if you could go first and then also address Karel’s questions as well, or comments.

HAASS: Let me take the first question on China.

I find decoupling is too strong of a word. I can imagine distancing rather than decoupling. I don’t think decoupling is a realistic option. Even before the recent crisis there was a desire to have, certainly, a more selective relationship in the realm of technology.

China was emerging as a competitor, not just economically but strategically and militarily. So to slow the flow of technologies or filter the flow of technologies made, I thought, good sense.

And what’s happened now is something else. In this country, there’s been a really interesting intellectual shift. But the whole argument twenty years ago, that bringing China into the WTO, by integrating it it would moderate it, that idea, shall we say, is roundly rejected and, more broadly, also, with Russia, the German idea that creating economic linkages with Russia, particularly in the energy sphere, would give Russia a stake in stability. That idea is not working out so well, either.

So I think you have a real questioning of a lot of the ideas that have informed, if you will, not just economics but geoeconomics and I would think, going forward, you’re going to have a massive debate about how we avoid replicating with China what we’ve just learned is a terrible idea with Russia, which is having economic dependence, because rather than moderating Russian behavior it’s actually worked against us.

And the question would be if China ever wants to move against Taiwan and we want to sanction China for it, how do we make sure we’re not in a situation where China has the economic leverage rather than ourselves.

So I actually think we’re on the cusp of a very big debate about how to structure economic relationships in ways that serve rather than detract from our strategic goals, and so I think the China relationship will be affected by that.

Your other arguments about what you might call—(inaudible)—mission, yeah, that’s globalization at work, whether it was 2007 or ’08 or now with inflation or so forth. That, to me, is another sign that globalization is a reality and we’re all affected to some extent by it.

I didn’t quite get the question about the global—how we manage it. But I think what—but again, if you have institutions that include countries that are not like minded, like now like Russia or China, then those institutions by definition are going to have a modest impact even without vetoes because, simply, the countries won’t be willing to row in the same direction.

So I think you probably have a world in which you have institutions that are somewhat inclusive and you understand they will rarely do much work, and then you have a parallel set of institutions among those who are more like minded and it’s not—again, it’s an imperfect alternative, but better to have a limited grouping that works somewhat than a universal grouping that works not at all, and I think that’s where we are.

JAISHANKAR: Professor, anything you want to address? I mean, other factors like, you know, whether decoupling from China and from Russia is now a sort of objective—an objective of, certainly, European and U.S. policy, how that plays into it and other factors such as high inflation, energy prices, things that are hurting people’s pocketbooks?

SOHN: Yeah. I think that’s a sort of—you know, are broad questions.

Let me respond to you this way. There’s a model that drive the national economy and the global economy. It’s a neoliberal globalization model and it’s a U.S. model, actually, and that model was discredited, as you mentioned, in 2008 and we are yet to find alternative or, you know, post-American or post-neoliberal model of the political economy that drives the global development. And here’s COVID, again, that it sort of, you know, complicated and then another, you know, devastating blow to the global economy that needs to be mentioned.

So, in that sense, we are sort of, you know, drifting without a dominant, you know, economic model and I think, you know, a post-COVID world will need to find a new model and which is—I mean, a few years back there was sort, you know, Beijing consensus type of, you know, discourses emerged. But not anymore. So we—this is a time to, you know, find a new post-neoliberal and, you know, post-pandemic economic models.

JAISHANKAR: Until then we have to do with some sort of gated globalization, as some have termed it.

ALCOCER: I just wanted to touch upon the issue of China in different countries and the Belt and Road Initiative and why China has this very large presence in different countries, for example, in Latin America.

Well, it’s not because we are interested in the Chinese values or the Chinese way of government. It’s just because China approaches governments in Latin America with resources that are needed in order to build infrastructure and to solve social problems—health problems, educational problems—and governments are taking it. And so now that the West is sort of surprised of why so many countries in Latin America, except Mexico because we are a partner to the U.S. and Canada, have this large Chinese influence.

Well, the answer is pretty obvious. Because there have not been other alternative(s) coming from the U.S. China—I mean Canada or Europe—in order to get the resources that could be used for building that kind of infrastructure.

So I don’t think that we can get away from China but we can sort of understand, at least that’s my opinion related to Mexico, that China is not a trading partner. It’s a trading competitor. And this is the way at least I approach the relation with China and related to the U.S. and Canada.

But we also need to understand that reality in African countries and other countries is that they need to solve societal problems immediately and the Chinese resources are there.

JAISHANKAR: I think we have a question online.

OPERATOR: We’ll take the next question from the Mahesh Kotecha.

Q: Thank you very much. A real treat to listen to four think tank heads at once.

My question is, really, on the case to be made, and I think Sergio Alcocer mentioned that the case has to be made and we’ve been poor at making it. You put it as the challenge of global communication about the benefits of globalization.

I think that case—I wonder how you think that can be made better. And is that a real case? I mean, who is benefiting? How do you persuade those who think they’re not benefiting but are or are not benefiting, you know, to really—to come along?

JAISHANKAR: Would you like to address that since—yeah.

ALCOCER: Sure. I think we have enough data to show that in many cases, not in all cases, that globalization has improved quality of life and so forth, and I think particularly we need to pay attention to the trend. Before globalization, the trend in terms of, let’s say, morbidity or mortality—children mortality—was, I don’t know, 1 percent—I don’t know—and then globalization was 5 percent. Oh, this is five times.

So, I mean, looking at the trend, I think, is quite significant so that we show that globalization has accelerated some improvements in the quality of life of people. Of course, there are inequalities. These are the kind of things that we need to solve. There is not a perfect situation or perfect solution. But we need to help.

HAASS: (Inaudible)—I mean, the great era of globalization, basically, came after World War II for the next several decades. That was also a time of unprecedented increases in life spans by decades in much of the world. Standards of living rose orders of magnitude in most of the world. Democracy became far more prevalent than it ever was before.

So, actually, I think globalization pretty well worked. Not to say that it’s perfect, and I think one of the interesting questions is whether you look to the world to solve issues of inequalities or whether that’s a domestic responsibility.

New technologies will come along that will eliminate jobs. I don’t think that’s necessarily an answer for the world. That’s where you need education and retraining, mobile safety nets, and so forth. There’s got to be a balance of responsibility between the international and the national level.

But, by and large, I actually think, you know, much of the positive aspects of globalization had been something of a collective free good and I think, in many ways, an outgrowth of what the institutions built and the policies implemented, in a sense, for—during the Cold War, and they mainly benefited the part of the world that was one way or another associated with the West and even beyond that.

And I think there’s a story. I mean, people like Martin Wolf, Jagdish Bhagwati, and others have written books, essentially, making the case for globalization and I think the public policy challenge then is to say, OK, not everyone benefits equally. There are losers, and the problem is that the beneficiaries often take it for granted. The losers bring great intensity into the political marketplace and that’s what we’ve seen in the trade debate in this country, and we’ve got to design public policies to help those who are actual or perceived losers from globalization.

JAISHANKAR: Any other question? Please. Front. There’s a microphone coming your way.

Q: Memduh Karakullukçu, Istanbul, Turkey.

Following up on that, the—if there is, indeed, a slowing down of globalization—I won’t use the word deglobalization—would that take the pressure off on our societies with respect to the inequalities that are related to the dynamics of globalization?

And, if not, going back to Richard’s point that we need to retrain, we need to get people to be part of this global labor force, should we be looking forward to societies where governments are more active players in the marketplace where the redistribution, retraining—because that comes at a cost.

So are we looking at a political economy of the world where we will see more socially involved governments? Is that the way to save globalization, going forward? Or will simply the pressure go away and we’ll be fine with the current structure?

JAISHANKAR: Good question. I think to Mely in the back as well.

HAASS: It’s a good question.

JAISHANKAR: Yeah.

Q: Thank you. Mely Anthony from RSIS.

When we talk about governance—and from what I’ve heard we always talk about government should do this, government should do this, state should do this, and I was wondering what you think about this whole of governments plus kind of government—governance.

In other words, there seems to be a lot of, which is natural, demands on governments and as we globalize, as we get interconnected, and as we have all of these transnational challenges—climate change, food security—the capacity of governments to deal with these issues is very much challenged.

And when you talk about digital trade or dealing with the impact of climate change, whether—you know, how to help societies adapt with the multifaceted impact of climate change—you know, natural hazards, food insecurity—what about the other actors? And is the problem with the failure of—when you say failure of institutions, is the fact that we also fail to realize that governments are no longer the only actors in dealing with these issues and that you need the interaction or the cooperation of other networks, whether it’s business or think tanks or even scientists?

I like what Dr. Sergio Alcocer has said. In a small state like Singapore we have a huge problem of food insecurity. We have a huge problem with dealing with climate change. What does the government do?

The government of Singapore is very much on top of things, but it realizes that it needs the scientists to come and help them think through systems. And maybe, perhaps, you know, there is a failure in the way we look at things and we, perhaps, need to be more innovative and involved in changing our notion of governance to just governments rather than governments plus.

Thank you.

HAASS: I, actually, think that’s happening already, because I think you’re exactly right. But if you look at what happened with COVID, one looks at the pharmaceutical companies, biotech, one looks at groups like Médecins Sans Frontières and so forth. They are part of—they’re at the table.

Increasingly, global governance is not limited to governments, and I think that’s—climate change at the last COP-26, what companies did was far more significant than what governments did.

Indeed, if I were going to meet a young person interested in climate change I’d probably say stay outside of government. I don’t think the U.S. government is necessarily the best vehicle for promoting serious policies on climate change.

I think the corporate world is far ahead, whether it’s automobile companies or technology companies or just even normal Fortune 100 companies because they’re feeling pressure from constituencies to be sensitive.

So I think in virtually every—well, not in every but in certain realms of international life—climate is a good one, public health is another one—I think we already have dealing with humanitarian issues, refugees, obviously, these organizations. Less so on some of the political military things, though there’s even elements of it there.

But I think the idea that public-private partnerships are much more common, and we need mechanisms that give a voice to actors or entities other than governments. It doesn’t necessarily argue for doubling the number of seats in the U.N. General Assembly. I wouldn’t wish that on anybody.

But I think, again, we need mechanisms that are functional that do that.

I just want to say one thing about Memduh’s comment, which I thought was interesting. I think we probably are entering an era of slower growth. If you’re thinking about just in case as opposed to just in time inventories, that would do it if you’re going to allow geopolitical concerns to, at times, overwhelm or take precedence over economic concerns. Once economies reach a greater level of maturity it’s hard to maintain certain levels of growth, demographic factors.

So my guess is we are entering exactly the cycle you suggest, an era of lower growth, but because of public pressures an era of greater government involvement, and we’re seeing it in this country. It’s interesting that even populists on left and right agree on very few things but they tend to agree they don’t want to see a reduction in the social safety net—Social Security, Medicare, and so forth.

There’s a—those are untouchables, whether—you know, Mr. Trump and Bernie Sanders don’t agree on everything but they tend to agree on that, and I think that’s a telling situation. And if we do have an era of slower growth then government is going to be looked to even more as a kind of—of providing a floor.

And I think in this country we’re probably going to have much more of a debate on things like, you know, universal basic income and what is the floor that every citizen requires or deserves, and if you start moving in those directions, obviously, you know, it’s going to have all sorts of consequences for taxation and the rest.

But my guess is we’re moving in that direction, that those issues will become more part of the pressure on government, whether you call it UBI or not. But I think the social safety net, there will be pressure on it whether government to the right or the left.

I actually think—I mean, you all have experience in different parts of the world. But I would think that that’s going to become a universal concern, not just governments as a last resort but, increasingly, governments as first resort.

SOHN: Yes. I think, you know, my comment will be sort of, you know, repetitive to Richard’s.

When you say the state versus market you tend to ignore society there. So when you make a state—I mean, you want—we want state intervention here and there, economic, particularly, you know, during the pandemic, state is everywhere.

We really infiltrated into the everyday life of the citizens. Then the state intervention should be the outcome of, you know, social consensus—social compromise and social consensus. Otherwise, it is really a one-way street and doesn’t really work.

So, for example, you know, case of Korea, the government intervention for the pandemics. I mean, one of the successful element is social support, that, you know, the big business, for example, the companies, they provide their facilities to the people infected with coordination of the government.

So you said that the public-private, you know, partnership, so industrial policy, too, that unless you have a close business-government relationship, industrial policy doesn’t really, you know, make success. So I’d like to, you know, bring up the society factors here. That needs to be integrated.

ALCOCER: Well, regarding the question from Mely, I think the G-20 is a very interesting example on some sort of public-private partnerships. You have the G-20 meeting. But before that, typically, you have the B-20 meeting and then the Y-20 meeting. So inviting businesspeople and the youth to meet before the leaders meeting.

So that tells you or that gives you the chance to listen to business leaders and also to listen to beneficiaries of the decisions of the leaders, to listen to them and to understand what are the main challenges and aspirations that they may have. And I think this is the kind of a good way of getting information and sort of developing good policies for people.

And I don’t think that deglobalization, particularly in terms of people and information, could be taken away except if you live in a dictatorship and, of course, information doesn’t flow and you don’t have access to that kind of information.

But if that doesn’t happen I think the information is going to be there, and more and more people are going to be expressing their expectations towards the quality of life, and if governments are sensible to the voters, assuming that there is a democracy there, of course, governments are going to be tending to answer those expectations through policies that will improve the quality of life.

So that’s what I would expect.

JAISHANKAR: I think we’re out of time. But this has been a very enriching discussion. I used to, in the sort of glory days of globalization, which wasn’t all that long ago, I used to go out—you know, there’s this—The Life of Brian, the Monty Python movie, has this thing, like, what have the Romans ever done for you lately and people discuss this.

And I used to go around and do this talk of sort of what has the rules-based order done for you lately, and people would say, nothing, you know, and I would try and give examples—concrete examples—so how container shipping became standardized, something we take for granted today, how a cell phone is made and how a cell phone network is constructed and how much international cooperation, whether its normative or in manufacturing, is involved.

How was smallpox eradicated? How is a public transport network financed and how is the technology transfer—how is the manufacturing done? And these are the kinds of things, I felt, that sort of touched day to day people’s lives, and I would get a lot of receptive audiences who at the end would say, well, that has nothing to do with the rules-based international order. That was all other factors that led to all these good things happening.

So it’s a hard sell. But I do think, you know, we touched upon some important issues of inequality and that the fact is there are always some losers and some winners and how do we make it more equitable. The fact identity politics—a country is not just an economy—and I think that that is—that message is being reinforced by populist leaders everywhere.

How the globalization of information is also leading to plenty of misinformation is another factor, and, of course, the elephant in the room, which has, arguably, been the biggest beneficiary of globalization but remains the biggest net exporter, hasn’t quite liberalized its own domestic market, whose lack of transparency has led to a public health crisis around the world, whose institutional capture has eroded institutional—institutions such as the WHO and which has a questionable record on WMD proliferation and outer space management and the Law of the Sea.

And I’ll leave you with this, but that elephant in the room might be a dragon.

So on that note, join me in thanking our panelists for an enriching discussion, and I hope you’ve all had an enjoyable last hour.

(END)

This is an uncorrected transcript.

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