A new phase in globalisation?

Trade and strategic overreliance on global supply chains: A new phase in globalisation?

26 August 2020

This third webinar in The Azure Forum 2020 Webinar Series on ‘Peace, security and defence during and beyond the Covid-19 Crisis: Lessons for future global crises’ brought together experts with different professional backgrounds to examine policy-relevant questions surrounding the nature of strategic overreliance on global supply chains in light of dilemmas arising with healthcare equipment and medical supplies during the pandemic. This seminar aimed to identify those steps that could now be taken by decision-makers in preparation for future global shocks in relation to diversification of supply, global trade, and economic resilience when rethinking global supply chains post-Covid. Experts provided their thoughts on whether we are witnessing the next ‘new phase of globalisation’ where some argue that the ‘era of offshoring is over’ whilst others argue for a better mix of domestic and overseas production together with international cooperation for emergency supplies.

A number of international trade and geoeconomics trends have been exacerbated by the Covid-19 crisis and this seminar especially focused upon likely future positions of China, Japan and South Korea given the potential global impact on future supply chain patterns and current global economic interdependencies. A number of proposals are under consideration in several jurisdictions, including Japan, to reshore the production of critical medical and technological supplies as well as other critical components for “self-sufficiency”. The expert panellists explored the policy implications of these developments for future global trade (including protectionism trends), economic statecraft and economic resilience.

Notably, there are industry concerns about a tendency by some world leaders to extol the virtues of protectionism. To what extent then are these calls for protectionism driven by a desire to control supply chains to safeguard supplies of critical equipment, technologies and medicines in a time of emergency by reshoring production? And to what extent are these calls for protectionism a reflection of pre-pandemic anti-globalisation trends whereby Covid-19 is merely another driver and forcing function for anti-globalisation through its heightened exposure of global supply chain vulnerabilities and potential overreliance on other jurisdictions for manufacturing? Previous crises, such as the 2008 global financial crisis, disrupted supply chains too and some countries were already working towards reducing their supply chain dependencies before the current Covid-19 crisis. Nonetheless, how will this current crisis impact and potentially damage the global trading system for medical and non-medical sectors in years to come? For speakers’ commentary on these questions following the seminar, see here.

Caitríona Heinl moderated this discussion between James Crabtree, Associate Professor in Practice at the Lee Kuan Yew School of Public Policy and Senior Fellow at the Centre on Asia and Globalisation; Paul Gillespie, Deputy Director of the Institute of British-Irish Studies and Adjunct Senior Research Fellow at the School of Politics and International Relations, University College Dublin; and David Ramirez. Lt. Col. Gareth Prendergast, Adjunct Senior Fellow at The Azure Forum and Chief Finance Officer with the Irish Defence Forces provided his perspectives as Discussant.

Key takeaways included:

  • A likely regionalisation of globalisation patterns;
  • A likely trend towards the reconfiguration – rather than reversal – of globalisation away from pre-pandemic ’hyper-globalisation’;
  • A need to closely examine the growing ‘weaponisation’ of trade policy; and
  • A need to review pooling of resources.