The cross : How do you explain the current questioning of globalization?
Pascal Lamy : Globalization did not wait for the war in Ukraine or even the Covid to be called into question. From the outset, this has been criticized by those who believe that it would be harmful to the development of poor countries. This idea, which has not stood the test of time, has been gradually replaced by what could be called the more legitimate social critique of globalization in developed countries, which has led in 2016 to the election of Donald Trump and Brexit.
In recent years, the idea has also developed that globalization, by transporting products from one end of the planet to the other, is harmful to the environment. This is often debatable, since from the point of view of the carbon footprint, it is better to import a green bean from Kenya than to produce it in greenhouses in the Netherlands. Moreover, market capitalism theoretically has a solution to respond to global warming: sharply increase the price of carbon. It’s more complicated in practice.
The latest criticism is that of the resilience of value chains, the Fukushima accident, the Covid crisis, and more recently the war in Ukraine, having demonstrated the fragility of certain supply chains. But here again, we must be wary of hasty conclusions: security of supply does not necessarily mean fewer exchanges, it can even result in more exchanges if we consider that it involves diversification rather than by inevitably costly relocation.
In your opinion, therefore, there is no de-globalization…?
P. L. : Not really. For several years now, we have witnessed a slowdown in globalization, that is to say that international trade continues to increase, but less rapidly than world growth. Political phenomena have been added to this, such as the Sino-American trade war, which have strained world trade, but without seriously calling it into question, even with certain relocations in tech. I remain convinced that the structures of market capitalism, driven by economies of scale, technological progress and digitization, will continue to prevail.
Moreover, we tend to forget it, but the Covid has saved five years for the digitization of the economy, which today constitutes, with the increase in the share of services in the economies, an enormous contribution to globalization. So, of course, it is difficult to imagine that the global data market will be treated tomorrow as the socks market was yesterday. There will be more rules, norms, differences, but no global withdrawal.
What could this new globalization look like?
P. L. : With the rise of illiberal regimes, it will inevitably be more turbulent. Today some speak of a fragmented globalization, between several “friendly” blocs, as the US Treasury Secretary Janet Yellen said recently, and in my opinion too hastily.
Certainly the rules of the game are changing. In Western countries, in particular, governments no longer seek to protect companies from foreign competition through customs duties, but rather their populations against various health, technological, social, environmental and even national security risks.
This is what I call precautionism, which has come to supplant protectionism in rich and aging societies. However, this new precautionism will be more difficult to overcome, because it is not only a question of agreeing on the level of customs duties, but of harmonizing standards and norms of safety or quality, a much more complicated undertaking. The challenge will be particularly for poor countries, which will find it difficult to comply with these standards.
While the WTO seems permanently paralyzed, what could a new global trade governance look like?
P. L. : Undoubtedly to something much more flexible than were the great multilateral organizations of the post-war period. For it to work, international cooperation must in fact free itself more from the principle of State sovereignty, which has been blocking all progress for some time, by creating dialogue between all the stakeholders, the public authorities, but also businesses and Civil society. A little on the model of the Paris climate agreement, which could be described as an institutional tent, to be opposed to the cathedrals that the Kyoto agreements could represent. Or like the UN Sustainable Development Goals. Or as we began to do with the multi-actor coalitions at the Paris Peace Forum that are achieving less ambitious, more partial, but faster results.
With the war in Ukraine, the old idea that trade would be a guarantee of peace is also being challenged…
P. L. : We now live in a world where geopolitics has taken over economics, one of the world’s great powers being able to bring down its economy for a political project that violates all international rules. That said, we must be wary of hasty conclusions: Russia, whose main wealth is based on its hydrocarbons, is one of the least globalized countries on the planet. It is therefore perhaps no coincidence that it has the luxury of attacking the system.