Waging War in the Markets: How to Sustain Economic Peace
Replay the panel discussion and read the summary below.
Waging War in the Markets: How to Sustain Economic Peace (Panel 2)
Chaired by: Natacha Valla, Dean of the School of Management and Innovation, Sciences Po. | Student Greeter: Martha Fiehn, PSIA student, Master in International Economic Policy.
- Taeho Bark, President of Lee&Ko Global Commerce Institute and Professor Emeritus, Seoul National University; Former Minister for Trade, South Korea
- Pamela Coke-Hamilton, Executive Director, International Trade Center
- Merit Janow, Dean, School of International and Public Affairs, Columbia University
- Pascal Lamy, Chair of the Paris Peace Forum; Former Director-General, World Trade Organization (WTO)
- Stefan Maukner, PSIA student, Master in International Economic Policy
The world is interlinked through various trade networks that serve as instruments for economic peace. The Cold War economic order, however, is threatened. Structurally, currency wars and the technological changes in global value chains bring uncertainty; a trend further heightened by the Covid-19 pandemic. Can institutions in their current form guarantee lasting peace and sustainable growth? Such is the scene set by the student greeter, Martha Fiehn, and the panel chair, Natacha Valla.
Trade: between geopolitics and Covid-19
The current crisis has severely affected the service industry worldwide, with little prospects of quick recovery. Nevertheless, there is reason to be hopeful according to Taeho Bark, as “trade in goods could go back to pre-crisis intensity,” particularly in the technological and the medical sectors, Pascal Lamy added.
Geopolitics also affect the intensity of economic exchanges: “trade does not exist independent of politics,” Stefan Maukner highlighted. Thus, trade barriers and accords are shaped by political processes. As put by Pamela Coke-Hamilton, “trade wars, I prefer to call them geopolitical tensions.” Working towards economic stability thus implies increased multilateral cooperation as opposed to aggressive bilateralism towards perceived strategic trade competitors, Merit Janow declared. Turning to protectionist measures will not help countries but rather impede economic recovery. Acknowledging interdependency, open economies should be at the center of tomorrow’s strategy according to Taeho Bark and Pascal Lamy.
Future prospects for the United States, Asia and the European Union
Dynamics in and towards Asia will be determining factors in developing future global trade, all panelists agreed. Answering the question from the digital audience, a consensus appeared on Asia’s transition from an export-based model to a domestic consumer-market model of economic growth. Having analyzed Japan’s own transition to domestic demand-led growth, Bark asserted that “sooner or later, China will also go on that path” if it aspires to build a sustainable, efficient, and diverse economy. Janow argued that this shift was already taking place and accelerated by the pandemic and current trade wars, as manufacturing industries increasingly migrate to South East Asia.
In her presentation, Janow shared her expectations on Asia’s return as a focus of US policy under the Biden administration. However, if anything, the last four years have demonstrated that global economic dynamics cannot depend on the willingness of the United States’ administration to further multilateral cooperation. In a world where great powers compete to gain unique economic and financial advantages, Maukner argued that the European Union, as an independent actor, can play a role to ensure lasting economic peace. Secondary sanction regimes and trading power of the euro currency are examples of tools at its disposal. At the individual level, including enfranchised European citizens in the framework of financial structures can serve to further international financial stability.
Adapting multilateral institutions to current challenges
The world is increasingly faced with challenges that can only be tackled at a global level, such as global inequality, climate change, and the rise of cryptocurrencies. “It is imperative that we rebuild international cooperation for those who are vulnerable,” Coke-Hamilton declared with emotion. In particular, grassroot small businesses have to be encouraged with initiatives such as the World Trade Organization (WTO)’s Informal Work Group on Micro, Small and Medium-sized Enterprises (MSMEs). Technology should be harnessed, namely through improved internet coverage around the world, as it has become necessary not only for social connectedness but also for economic survival. Innovation can also be challenging. Indeed, cryptocurrencies can be “a threat in that it allows individuals to circumvent the state,” Maukner noted, but a “Central Bank-issued currency [primarily in Europe] would extend the institution’s control over it,” thereby limiting its risks.
As a response to an audience question, the option of creating preferential arrangements within multilateral institutions for developing countries were discussed. Bark emphasized the importance of local capacity-building and proposed for multilateral institutions to create “a match-making function” so that needs are paired with adequate funds. Coke-Hamilton argued in favor of realistic preferential arrangements for certain countries to stimulate a diversification of their economy.
Analyzing challenges posed to institutions’ aspirations to further increase economic and financial openness, Lamy underlined that “we are changing to a new world of trade” and explained the shift from protectionism – the desire to protect domestic producers from foreign competition – to precautionism – a wider willingness to protect people from risks. Regional economic institutions as well as the WTO have mostly been managing the former rather than the latter, which they are ill-equipped to combat. Thus, Lamy proposed the creation of new global hubs to bring together trade organizers and regulators in order to lower precautionist barriers.
Trade and human rights
All panelists highlighted the impact that trade flows can have on human rights. Coke-Hamilton emphasized the growing public awareness of human rights abuses, such as child slavery and the general deplorable working conditions in the Congo mines. She however deplored the lack of organized movement or strategy to address these issues from a trade perspective. For Maukner, the rise of individuals’ voices can help in formulating such a strategy and putting pressure in crucial times, such the U.S. Supreme Court’s recent case on claims of human rights abuses on the part of Cargill and Nestlé.
There is nevertheless an asymmetry between the institutionalization of trade and that of human rights. Strong international human rights laws are needed to guarantee that trade flows will not disregard abuses in order to maximize profits. Lamy concluded: “Trade should never be an obstacle to human rights.”
(c) An article written by Emylie Bobbi, PSIA student in the Dual Degree program with MGIMO, 2021