Protecting globalization
Freddie Reidy

Editor's note: Freddie Reidy is a freelance writer based in London. He studied history and history of art at the University of Kent, Canterbury, specializing in Russian history and international politics. The article reflects the author's opinions, and not necessarily the views of CGTN.

As economies and borders slowly begin to reopen under an increasingly threatening cloud of COVID-19 reinfection, economic aspirations are on a collision course with political realities. The coronavirus crisis has caused a further shift toward protectionist agendas but what is driving this, and can it be reversed?

Over the last two decades, the world may have shrunk, it is cheaper and faster to travel between continents and countries than it ever has been before. Greater interoperability between nations facilitated by the internet has also led to greater economic interconnectivity. However, a crisis like COVID-19 reveals how fragile this connected world is.

As the virus approached, countries sealed their borders, even within political unions such as the European Union. The economic consequences of COVID-19 are yet to be fully felt, but the fiscal response required by nations has been vast. As many firms struggle with reduced demand and increased commodity and transit overheads, nations are increasingly looking inward to support and protect those businesses.

This shift can be societal with "go local" campaigns or structural. The French government aid package to the automotive industry, for example, was conditional on commitments to domestic manufacture. While this may be beneficial for French automotive manufacturers, it decreases foreign investment in other nations such as plants in eastern Europe. It also restricts pooled group-level manufacture. 

For Renault, this means that rather than manufacture gearboxes being in Romania, for the whole Renault-Nissan-Mitsubishi alliance, some of that manufacture will likely need to be in France, leading to higher overheads, decreased efficiency and consequently higher costs for the consumer, resulting in dealing sales and so on.

On a more immediate scale, the export restrictions on items such as surgical masks to Italy at the peak of its crisis, shocked Rome and eroded faith in the European Union. Demand was only met by imports from Russia and Italy's manufacturing base in China, demonstrating the need for a globalized marketplace.

A man wearing a face mask walks past the European Commission headquarters as the spread of coronavirus disease (COVID-19) continues in Brussels, Belgium, April 9, 2020. /Reuters

A man wearing a face mask walks past the European Commission headquarters as the spread of coronavirus disease (COVID-19) continues in Brussels, Belgium, April 9, 2020. /Reuters

The political instinct, however, has been to "protect one's own" and to some extent this is any government's duty to its citizens. This protection though cannot be achieved in the longer term by attempting to create an autarky, a system of economic self-reliance.

With continued risk, economies need redundancies and free global trade to support one another. The UK government faced domestic criticism for sending face masks to China in February while domestic supplies were low, but the government remained committed to its friendship with China and as the UK approached its own peak, many thousands of tonnes were received in turn.

If nations are forced to adapt to the realities of COVID-19, rather than await a vaccine, then they need to be ready to find new ways of maintaining a global trade in order to stave off recession and to fund domestic aid packages and healthcare infrastructure.

In Singapore, a nation founded on international trade and thriving today as a financial hub and the world's largest port, the risk of protectionism is very real. Minister for Trade and Industry Chan Chun Sing warned that "COVID-19 has accelerated the retreat from globalization and the erection of more protectionist barriers." While demanding that such moves must be resisted, "a less connected world means a poorer world and fewer opportunities for all," he said.

With a continued threat of a resurgence, nations must remain ready to weather the economic headwinds, and part of that readiness will necessitate the preservation of a global economy. Ensuring that global demand is maintained encourages investment while keeping labor costs stable reduces the risk of uncontrolled domestic inflation.

Governments must resist a descent into deepening protectionism. Long-term prosperity and sustainable employment secured through a global economy must drive policy. A protectionist agenda will only lead to inefficiencies, unsustainable industries, and an unjustified stagnation of progress on common global objectives such as COVID-19 and climate change.

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