Authors: Nicholas Ross Smith andZbigniew Dumienski*
One of the most worrying trends in the global response to the COVID-19 pandemic has been the retreat of countries from participating in the so-called “international community”. Certainly, the threat of COVID-19 has resulted in extreme measures like the closing of borders and increasing centralization of politics at the country-level. However, these measures have also been accompanied by enveloping anxiety and paranoia, both of which significantly inhibit a truly cooperative international response to the crisis.
Troublingly, isolation, it seems, is not just a strategy for defeating COVID-19 but also the default mode countries are adopting with regards to international relations at this moment.
This ‘protectionist turn’ is hardly surprising. Dissatisfaction with globalization has been rising exponentially in over the last two decades, most notably stoked by the global financial crisis. Even in the United States, a country which benefited tremendously from the deepening of global trade and finance, protectionist tones were arguably a key element of Donald Trump’s election victory in 2016. And Trump, to an extent, followed through with this protectionist bent in his policymaking since, notably the trade war the United States has been engaging in against China.
At first glance, it may seem odd that globalization, or trade liberalisation more broadly, has been attracting so much criticism because this era of globalization – often referred to as the third wave of globalization – has brought with it incredible material benefits to developed and developing countries. For instance, the percentage of people worldwide living in absolute poverty has dropped from 37% in 1990 to under 10% in 2020, while at the same time, the global population has increased by roughly 2.4 billion in the same period.
But, simply evaluating globalization in broad metrics ignores the more important question of power, both domestically and internationally. While it is true that free trade in goods and services between willing parties can be beneficial to everyone, this recent era of globalization arguably has relatively little to do with such genuinely free exchanges.
Far from simply allowing all people to trade freely, the current set of international regimes and treaties, which govern international trade, is of primary benefit to those entities that are large enough to be able to afford to adhere to them. Likewise, domestic rules and regulations create conditions in which large companies are preoccupied more with cutting the cost of labour (heavily taxed in the West), than with reducing the pollution that is the inevitable cost of transporting goods across the world.
Furthermore, this era of globalization has not just resulted in a proliferation of free trade in goods and services globally but, more insidiously, the acquisition of all sorts of monopoly privileges by the most powerful entities and individuals, with land ownership arguably being the most significant and glaring example.
Labour products wean out, but privileges are forever. The idea that free trade enriches people in both countries do not consider trade that turns one country into tenants of another country, person or corporation.
We must, therefore, remember that globalization is not a natural phenomenon, but a phenomenon that is influenced by both domestic and international power struggles. Not surprisingly, a crisis of this magnitude is bound to affect the power dynamics that have shaped how our world has become globalized.
With regards to COVID-19, globalization has been cited as a major contributing factor to the difficulty countries have had in initially fighting the pandemic. One glaring example of this has been the global reliance on China for the key medical supplies needed to reduce the contagiousness of COVID-19, such as masks and sanitizer chemicals. Once COVID-19 forced China into lockdown, global supply chains were halted, leaving numerous countries unable to access the supplies needed in combatting the outbreaks they were experiencing.
Even after China managed to contain the spread of COVID-19 by late February which enabled them to significantly increase the production of the medical supplies needed in the frontline fight against the pandemic, issues have remained. Although China’s humanitarianism in places like Italy and Spain deserves praise, some issues have arisen such as some Chinese producers have been accused of auctioning off supplies to the highest bidder. Furthermore, the quality of the products China is providing has come under the microscope, with numerous examples of faulty medical supplies being returned.
Globalization is painted as the underlying problem in all of this, but the reality is that much of the problem stems from a mutated version of globalization – examined above – that has come to dominate the international community, not globalization itself. But, the two are so intertwined in dominant discourses that protectionist responses to the crisis become attractive, especially to those that have suffered the most from globalization over the years.
If globalization is bad, then what is good? Well, protectionism seems to be a popular answer being touted now. Protectionism has always been appealing to populations because, on the surface, it seems like a positive case of a government using its power to “protect” the most vulnerable within a country. But, as Henry George stated: “What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war”.
The surging protectionist sentiment after COVID-19 is spiralling out of control in some areas. And while, in the short-term, countries will certainly be forced to fend for themselves by becoming somewhat insular, they cannot be sucked into to thinking this is a viable model for the long-term.
One only has to look at Albania during the Cold War to see the folly out of control protectionism can breed. Partly due to the anxiety and paranoia of the Cold War, the Albanian Communist leader Enver Hoxha took the desire to be “self-sufficient” to the extreme, attempting to completely disengage Albania from the international community and pursue a policy tantamount to autarky. This was not simply symbolic posturing as by the mid-1980s, foreign trade accounted for merely 6% of GDP and Albania received zero foreign assistance (Albania had been previously heavily dependent on the Soviet Union and then the People’s Republic of China).
Despite nearly implanting a complete autarky, this policy was disastrous for Albania. One of the big problems was that Albania was a largely agricultural society and had not experienced significant industrialization. Albania barely produced any machinery and the capital goods they had were mostly Soviet-made from the 1950s. As a result, Albania was left to wallow for decades in poverty without any improvement of economy or life, representing, by far, Europe’s poorest country at that time.
Communist Albania is an extreme example, but it is still a useful warning to countries which are facing increased pressure from within due to COVID-19 to become more “self-sufficient”. And while it is understandable that the COVID-19 pandemic necessitates a temporary restriction on the movement of people, it does not also have to result in the restriction of the global trade of goods and services.
Unlike in the case of past epidemics, there is now the technological capabilities to purchase goods and services directly from suppliers across the globe from within the comfort of our home. The fact that we still buy so many goods in brick and mortar shops is mostly a matter of habit than necessity. And the fact we still require countries to facilitate trade is also not a necessity.
In this context, COVID-19 could represent a critical juncture where newer, more appropriate and efficient forms of trade are established. Given the potential economic fallout that might occur due to the pandemic, radical ideas are surely needed to kickstart economic exchange. For that to occur, however, we need responsible leadership that sees trade as being an activity between people and companies, rather than perpetuate this dated idea of trade being some that should be predominately managed country-to-country.
COVID-19 also shows us that we need far more meaningful global cooperation and burden-sharing. Even the wealthiest countries with the best healthcare suffer if one country cannot contain an illness (because of poverty or incompetence). We are used to this argument in military terms. A failed state is a threat to all neighbours due to refugees, violence etc. But now maybe this thinking can extend to other areas. The real challenge is though how to boost global collaboration in a democratic and accountable way?
Protectionism is not the answer.
However, giving the growing centralization of countries and the growing protectionist sentiment in many populations, it is likely that the opportunity to reinvigorate globalization will be lost, and an era of growing protectionism and mercantilism will be upon us in no short time. This will only compound the pain of COVID-19 in the short-term while further muddying the long-term forecasts of international relations, most notably the looming US-China great power competition.
*Zbigniew Dumienski, PhD graduate in International Political Economy from the University of Auckland, New Zealand