The sustainability of globalization: A Q&A with Janice Stein

Acclaimed academic Janice Gross Stein—delivering a keynote speech to The ONE conference on September 18— shares her insights on the challenging road ahead for our interconnected global economy.

Globalization became something of a mantra for governments and businesses in recent decades, but, over the past two years, it has suffered a series of setbacks. In her address to The ONE conference, on September 18, 2017, in Ottawa, acclaimed academic Janice Gross Stein—founding director of the Munk School of Global Affairs at the University of Toronto, and current professor of Conflict Management in U of T’s department of political science—explores the sustainability of globalization and what we can expect, on both a political and economic level, in the months and years ahead. CPA Canada got a preview of her talk in mid-August.

The title of your address is “The sustainability of globalization.” Why do you think that globalization is actually sustainable?
The title should have a question mark: Is Globalization Sustainable? For the last 25 years, we’ve been living in a period of hyper-globalization, where world trade exploded, tariff and non-tariff barriers fell, and many of the obstacles to the movement of goods, services and ideas diminished. People who began their careers 25 years ago have known no other system. But history tells a different story. Globalization has not moved forward in a straight line. On the contrary, it has accelerated for a time, then stalled, at times fallen back and halted, and taken decades to recover. The big question is: Are we at one of these hinge moments now?

It does feel that globalization has stalled in recent years, what with Brexit, the rise of Donald Trump and the failure of TPP. Why did this happen all around the same time?
The Trans-Pacific Partnership (TPP) did not fail. Trump, in one of the first acts of his presidency, declared that the United States was withdrawing. It is worth noting that Japan and Chile are pushing for a TPP agreement even without the U.S. Even if they do succeed, it will be a much less important agreement, both politically and economically, than the one President Obama wanted.

Why Brexit and Trump? Britain and the United States were at the forefront of the neo-liberal world and the push for deregulation, at home as well as abroad. The Thatcher-Reagan revolutionaries believed that reducing regulation at home would spur productivity and confer a competitive advantage in global markets. Over the longer term, everyone would win as economies pursued their comparative advantage. That is nice in theory, but politics is a short-run game.

The U.S. lost millions in manufacturing jobs to China and those unemployed factory workers did not become coders in Silicon Valley. Much the same holds for the industrial heartland of Great Britain. Brexit and Trump were the consequences, the end result, of hyper-globalization and deeply integrated global supply chains. It is no small irony that today China is the satisfied economic powerhouse, wanting above all to preserve the status quo, while the United States, under President Trump, is the revolutionary power—determined to change the global rules.

What’s often described as “the liberal international order” is in decline. How long do you figure this will last? Is it temporary, or is there a more fundamental shift going on?
There is a more fundamental economic shift. Governments in the developed world are going to have to pay more attention to those who have lost as a consequence of hyper-globalization. They will have to pay greater attention to national economic and social priorities than they have in the past 25 years. They will have to invest seriously in retraining, in thinking about a future where people no longer work in the traditional manufacturing sectors that created the middle class. As technology transforms work, how will governments sustain the broad middle classes that have been so essential to democracy?

If you go back 30 or 40 years, Canada wasn’t exactly a big proponent of globalization—a whole election pivoted on the question of the Free Trade Agreement in 1988—and yet now we’re one of the world’s top evangelists for free trade and integrated economies. How and why did that happen?
As globalization took off, Canada faced the choice of walling itself off from an integrating global economy—not a very attractive choice—or integrating into North American supply chains which, by the way, were centered in the U.S., then the epicentre of the global economy. The choice was clear. Today, our auto industry is deeply integrated into global supply chains, as are most of our globally competitive companies. Our economic future—our capacity to retain and increase jobs—depends on these global supply chains. It is no surprise that our government is in an all-out struggle to defend NAFTA against the neo-mercantilism of Donald Trump.

What leverage, if anything, does Canada have in this “neo-mercantilism” fight with the U.S. administration?
It’s a tough fight, but Canada has many allies inside the United States—both governors of states that export overwhelmingly to Canada and big companies that are integrated into NAFTA supply chains. Our government has done a terrific job of mobilizing a broad non-partisan group of public and private sector leaders to make our case across the U.S. So the fight is not as unequal as it looks.

What role can and should Canada play going forward, as it relates to advancing global economic relationships?
Canada is a small economy, so there is only so much that we can do. Top of the list, of course, is the preservation and promotion of a modernized NAFTA that can deal with the digital economy of the 21st century. Beyond that, pushing for the continued reform of global financial services is an area where we pack a punch.

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Disclaimer

The views and opinions expressed in this article are those of the interview subject and do not necessarily reflect that of CPA Canada.

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