 Good morning from New York. Good afternoon to those of you in Europe and good evening to those in Asia and elsewhere If I've missed anyone out, I apologize. Welcome to this Briefing panel For the World Economic Forum. I'm Jerry Baker. I'm the editor at large of the Wall Street Journal It's great pleasure to be here. Thank you indeed to The forum for hosting this in these unusual circumstances, but I know we're gonna have a very good discussion We've got a particularly interesting topic Which is on the issue of de-globalization? Obviously it's become a feature of the discussion of global economics in the last year that the pandemic has had a Significant effect and will have a significant long-term effect In terms of accelerating the trends and intensifying the trends towards De-globalization that have been that have been in place in the last few years the political and social backlash against globalization particularly in the developed world in North America and in Europe that we saw over the last few years to the Globalized the globalization of the previous 30 years Does seem to have been going in reverse in the last few years and it's been widely argued that the Pandemic with its effect on global supply chains and its broader impact on security Insecurity and feelings of insecurity that people have Is going to intensify those trends both at a business level and at a policy level We're going to look at that to the this morning this afternoon with three Real experts in their field Beata Jelorchik who is the chief economist of the European Bank for Reconstruction and Development. She's joining us today in Zurich Richard Trumka the president of the AFL CIO of course in the United States. He's joining us from Washington the largest Umbrella trade union organization in the United States and Simon Evernet who's the founder of the St. Garland Endowment for prosperity through trade. Are you joining us from St. Garland in Switzerland too? So thank you very much indeed all of you for joining us looking forward to a lively discussion Simon, let me start with you if I may and and pick up that question that I laid out in the in the introduction Which is if this belief I think a lot of people have that the pandemic is accelerating the trends towards De-globalization towards the the the disintegration if you like of of the global economy Through its effect on global supply chains and perhaps more broadly through policy and public public sector responses How by the way, I was struck yesterday reading the World Economic Forum's Survey of chief economists. This was something that they actually think is a relatively small risk Over the next few years. They think you're much larger because they don't they think the the the talk of de-globalization has been overdone Simon, what's what's your view of this? I know it's a different because the pandemic has had differential impacts on different types of Trade and different types of economic activity. Give us your sense of of what the long-term structural impact of the pandemic will be in this field Thanks for thanks for this question I would say that globalization in many respects is stored in key areas like in trading goods and in movements of fact Factories foreign direct investment and we must contrast that with digital delivered services, which I'll say a bit about in a minute We have seen over the past 10 years very weak Growth in trading goods. It has stored compared to the growth in the underlying world economy And we have seen even worse in the case of foreign direct investment So I think there is a case for saying that globalization is not becoming not advancing in that area I'm not sure you can go so far as to say it's reversing and I think that's a key point Which might be what the chief economists were picking up on in there in their assessment now If you ask why is it stalling at least on the good side? I think of course We've had the trade war which got a lot of attention But it actually predates that because there have been a it's been a surge in uncertainty about public policy towards cross-border business and all the indicators we have of that show That essentially planning for cross-border trade and investment decisions has become so much harder and not surprisingly I think businesses are doing less of it when you contrast that stalling with what we're seeing in cross-border delivery Delivery of services and particularly digitally delivered services. We are seeing an absolute boom And what's interesting there is we don't have any global rules on that type of trade But we see we and we can't put the growth down to liberalization at all So this has happened organically and that part of globalization I would contend is alive and kicking and it's creating a lot of opportunities for people who are stuck at home Who want to be able to reach out to to new employers and who want to engage in entrepreneurial activity as well Be out of I may come to you as Simon says the impact of this pandemic has maybe that has been Varied and maybe differential perhaps particularly between Trade in goods where global supply chains have clearly been disrupted and trade in services Where thanks largely to digital activity. There's probably been expansion What's your from from your perspective the EBRD in your own perspective? What's what what what's your sense about where these trends are going and what large longer term and larger impact they'll have on An integrated global economy Thank You Jerry. I think that claims of globalization being rolled back have been vastly exaggerated I think that to a large extent we have already Exhausted the benefits of moving production to low-wage location So it would be unreasonable to expect that trade in goods would continue to grow at such a Breakneck speed as we saw it in the 1990s At the same time, I think that the pandemic is Accelerating trade in services, but as Simon mentioned, it's a particular type of trade in services pandemic through millions of workers into remote work and Now that many firms have discovered that this remote work setup works for them They will think about, you know, why limit ourselves to employees who are in our city or even in our country Why not hire somebody abroad? You know, if you are sitting in London or in Paris, you know, why not hire somebody from Warsaw or Bucharest? Of course, there are limitations, you know, it helps if your employees are in the same time zone It helps if they are subject to the same data protection regimes It helps if they can travel to your premises without a visa So from the EBRD's perspective, this is an opportunity for new EU member states It's an opportunity for Western Balkan countries and for the broadly defined EU neighborhood Now, where we are going to see changing globalization is when it comes to geography of global value chains I think we are going to see relocation, but because global FDI flows have been subdued 40% below the level in 2019, this change is going to happen slowly Thanks, Beard. Richard, it seems to be generally true that the globalization of the last 30 years or so from the 1980s onwards While it obviously lifted hundreds of millions of people in the developing world out of poverty, it clearly had much more questionable effects and benefits on workers in developed countries, and indeed it's partly that political response to that, the response to that, the response to stagnant wages to sharp declines in unionization, obviously, which you represent, that there's been a kind of political backlash in the last few years Tell us if you would, and now with the pandemic in the last year, seeming to elevate the importance of domestic procurement We're at domestic sourcing of manufacturing for more emphasis on supporting the domestic economy and the domestic workers and relying less on global supply chains Tell us if you would how you see the, especially from your perspective at the AFL-CIO, how you see trade unions emerging from this and how much more we can expect to see of a reassertion of the importance of the domestic workforce Well, first of all, in the United States, labor unions are at their highest popularity ever, and MIT says that 60 million workers rejoin the union tomorrow have given the opportunity Because of our antiquated labor laws, we can't give them that opportunity, and we're going to change those laws, but that's a different subject Look, we've been talking about whether to globalize or de-gobalize, and I think that's totally the wrong question we ought to be talking about We ought to be talking about the rules of globalization, because for the last 40 years, the rules of globalization have been written for corporate capital, international capital and corporations to the detriment of workers, the environment, and social stability around the world So there have been big problems with globalization before COVID. Take the labor share of income Labor share of the top 35 advanced countries dropped from 54% in 1980 to 50% in 2011. In the US, it went from 63% in 2000 to 56.7% in 2016 All that COVID did was expose what this model is, and this model that we currently have in globalization is low wages, weak social protections, violations of workers' rights, and tax avoidance by many corporations And so long as that is the model, there's going to be continued internal and domestic pressure in all the advanced countries to de-globalize If we switch the model, and the model is based on democracy, based on decent work, based on a sustainable wage-led growth and broadly shared prosperity, then the demand will be for more globalization But until there's a realization that this system not only is unfair, but it doesn't work in the long run because it doesn't produce sustainable wage-led growth, and only that will lead people out of poverty and keep globalization growing Thanks Richard. Beate, may I come to you? As Richard says, the political reality has been driven in large part by understandable concerns that workers in the developed countries have clearly not benefited anything like as much as either workers in emerging markets or indeed the owners of capital in the developed world Assuming I think as we all agree there is going to be some long-term effect and a kind of political response to reassert the primacy of the domestic economies as a result, simply even at minimum as a result of the insecurity that people have felt in the last year We've seen huge increases in unemployment over the last year. We've seen tremendous economic suffering in much of the world in the last year. What role do you think? How do you think policy will respond as we begin to emerge from this pandemic? We've seen a huge role in fiscal policy, for fiscal support, for economies. How does that transition, do you think, to the post-pandemic world in the way in which economic policy is conducted? And particularly the role of the state and how much more important role of the state may become in the post-pandemic economy? Well, over the last 20 years we have seen an increased public support for the role of the state in the economy. This increase has been present in advanced countries, in post-communist countries, where 45% of respondents say they would be in favor of greater role of the government in firms and in industry And in emerging markets, it's over 50%. And if history is any guide, we are going to see even growing support for state involvement in the economy as a result of this pandemic And this may mean that as firms, private firms struggle with their debts during the recovery phase, governments may rush to rescue them by injecting equity stakes, by actually doing outright nationalizations And this may be quite problematic in emerging markets, where rules governing state-owned enterprises are quite deficient. So for instance, in post-communist countries, in about half of those countries, there are no rules that would separate state ownership from regulation And in fifth of countries, it's actually state-owned enterprises that are regulators in the sector. In most post-communist countries, there are no rules that would prevent state-owned enterprises from getting financial advantage from their status And there is a real danger that this will tilt the playing field against the private sector and make many emerging markets less attractive destinations for foreign direct investment. So this would be a force that would push towards de-globalization Simon, to what extent are these pressures towards de-globalization organic, both organic in the sense of being driven by companies themselves, by the private sector in terms of global supply chain, concerned about the security of global supply chains? And how much are they policy driven by some of the things that the artist has been talking about by issues like procurement, an emphasis on promoting domestic procurement? What's the mix there? What's the mix between policy and organic private sector response? I would say the mix is heavily on the policy side. The private sector has had to think on many occasions about how to deal with disruption and supply chains. And they're, I think, pretty good at figuring out how diversified you want to have your sourcing patterns to be, what the trade-offs are. And this has, I think, come through very clearly in analysis of private sector responses. What we're seeing, which I think is interesting on the policy side, is we have, indeed, public procurement measures like the Buy America measures which were announced yesterday. We see more countries implementing those. We also see more countries putting lots of money on the table to firms to either expand domestic production or repatriate production. Japan has a multi-billion dollar fund to encourage firms to leave China and either go back home or to Southeast Asia. Germany announced in December a scheme which would incentivize the expansion of domestic medical production facility in Germany, so long as the goods were not too many goods were exported outside of the EU. And so we're seeing a lot of money being put on the table by governments as well. I should add just to build on what Piata was saying, if we look back over the last 10 years, the response to the previous financial crisis was to see a sharp expansion, permanent expansion in the amount of subsidization in national economies. And it's not just a matter of China. It's not just a matter of state-owned enterprises. There's a lot of this going around at national and subnational levels. So we've had a much more distorted global economy for at least a decade. I mean, Richard, all this sounds presumably like music to your ears, a bigger role for the government, more emphasis on domestic sourcing and the domestic workforce. In some ways, not a complete reversal of some of the things we've seen over the last 30 years, but certainly both at the policy level and at the broader economic level, a move towards moving a direction that will presumably help domestic workers rather more than you've seen. This is presumably welcome to you. Well, I think that's welcome to all workers. As I said to you earlier, the current system has produced low wages, weak social protections and violations of worker rights and tax avoidance by many corporations. And that has put tremendous pressure on domestic governments to do something. Also, the 2009 recession and the current pandemic have demonstrated that the market is not all knowing it's not all fair and it's not very smart sometimes. It will over-indulge. That's why government involvement is absolutely essential on both the domestic level and international level to make sure that corporations, for instance, can't go shopping for lower taxes. So we would support, for instance, a corporate tax level of 20 to 25% globally so that everybody would have to pay something. And that would do two things, Jerry. That would, one, it would prevent tax shopping from corporations. And two, it would help replenish revenue to governments that's needed right now, especially during the pandemic. One, to corral the pandemic. And then two, grow our way back out of the out of the hole that we've created in the economy after the pandemic's over. So government involvement is essential at two levels, the domestic level, but also at the multinational level. We have to create more multilateralism on all of these fronts, whether it's confronting tax avoidance, COVID, or anything else. Richard, staying with you, if I may, for a moment, your organization, your unions, big supporters of Joe Biden. Joe Biden himself, for a long career, has been seen very much as an ally of unions. You've already heard, Simon mentioned, just saw yesterday his announcement of the Buy America proposals, toughening the rules on Buy American for federal agencies, relative, obviously, a tiny part of the US economy overall, but nonetheless symbolically significant. Tell us what you think Biden and Minister, and there is a kind of a view out there, obviously, that the Trump administration with its very aggressive assertive America first trade war against China, burgeoning trade war against the EU. You know, a very tough line on trade. There was a, there's a view that Biden, you know, Biden administration may take a different view, but, but with all that you've said and with all that I've just laid out of Biden's background and what Biden stands for. Tell us what you are expecting in terms of the Biden administrations, what the Biden administration will do for US workers and what that will mean for the globally integrated economy. Well, first of all, there is a misperception about the Trump administration about how it was America first. It was America first, but it wasn't American workers first. Under the administration, American workers really took it on the chin. He rolled back health and safety rules. He rolled back social protection. He attacked collective bargaining. So that was bad. And Joe Biden has a philosophy. He wants to build back better. And Jerry, the old economy that we had, if we just went back to it, really wasn't working for a lot of people. It had created three inequalities in this country. The inequality of wealth and wages, inequality of opportunity, particularly for people of color and women, but mainly the inequality of power for workers and employers. So until you fix the inequality of power between employees and employers, you'll never be able to fix inequality of wealth or inequality of opportunity. Joe Biden wants to do that. The first thing is to do is to change our antiquated labor laws. The labor laws that the US operates were written 80 years ago. They've been amended a couple of times and each amendment was to take more rights away from workers. Now, workers in this country, the pandemic has really demonstrated to them how absolutely essential it is to have a voice on the job. MIT says 60 million would join a union today. We have a 65% approval rating. People need protection on the job and we're going to give them that. Passing the PRO Act would do that. But Joe Biden also knows that that does something else. It's not just the labor law reform. That would actually be a stimulus bill because it would help wages rise for everybody. It would help people, which would create consumer demand, which would lead to job creation. And two, it would be a civil rights bill because it would help end the systemic racism if more people had unions and could get fair treatment on the job. So Joe Biden, we expect him to be the best labor union president that the country's seen since Franklin Delano Roosevelt. There's a good note on which I want to be asked. Just as Richard has portrayed it there, it sounds a little bit like Back to the Future here. And I don't mean that in any way disparagingly, but with a greater role for government, with perhaps the revival of trade union membership, the growth of trade unions, less trade, less global economic integration. It sounds, forgive me, I don't mean this again in any cynical way, but someone who grew up in Britain in the 1960s and 70s, it sounds like Back to that kind of world, which of course was, in many ways, as Richard says, a better world for unions and a better world for their workers. But in terms of that, it did lead to what was seen as slow growth and stagnation and low productivity and it was seen that the global integration that we saw over the last 30 years did actually help to improve overall, if you like, global economic performance. You know, with that with question marks about the distribution of the benefits of that. Is that a concern that you have that we may the world as as as the globalization does continue that we are going to see an extended period of maybe of global economic stagnation. Well, I'm an optimist, but of course how well we do depends on how successful we are with fighting the pandemic. Take the example of Eastern European countries. Last summer, they were praised for doing extremely well in managing the pandemic. Now they have mortality rates, you know, among the top third in the top third of the global figures. So, all bets are off, but you know pandemic creates opportunities for global cooperation. Richard mentioned here, they need to cooperate on taxes, you know, after the pandemic government will emerge heavily indebted they will be looking for new sources of revenue. And I think that their citizens will be willing to pay more if they perceive taxation as fair and taxation will be perceived as fair if corporations pay what is due. And, you know, last October, October, actually, 2019, the OECD produced a proposal for an agreement on global taxation, allowing countries to tax corporations that have no physical presence in their countries. They produced a proposal for a global minimum tax. And I think the pandemic may cure those tax ailments by giving governments an incentive for greater cooperation on that front. And you may want to comment on some of the things you've heard and please do but I also want to move you on in the time we have remaining to another very topical issue, which I think is kind of emphasizing these trends of domestic policy domestic the domestic workers and the domestic populations first, which is this tension we've seen over backs over vaccines. We've seen within the within within Europe real tensions over tensions between the UK and the in the EU over the distribution of vaccines, some countries are seem to be accelerating doing very well, Britain in particular, in terms of promoting the role of rolling out the vaccine other other countries in Europe not so well, that seems to creating tensions and it very much comes back to you know looking after your own populations first. And there's also a larger impact of course, you know, it is very clear, sadly for much of the developing world that the these vaccines are going heavily to develop countries the countries that are advancing most rapidly so far the United States as well, the UK, some countries in Europe, other countries are going to lag very much behind. What impact is all of that do you think have on on on globalization and it's and it's and it's and it's opponents if you like. I think the I think the opponents in the cynic cynics of globalization are going to have a field day with during this period of vaccine rollout. So we have the industrialized countries cornering the market as one Indian diplomat put it to me recently buying up as much vaccine, and even amongst the industrialized countries, they're now fighting over who gets it we have the EU about to impose an export authorization scheme which is a fancy way of curbing exports, allowing their member states to curb exports, and this is already causing massive tensions, you can expect that policy to be copied by other countries. And you can expect some developing countries to turn around and force compulsory licensing of the vaccine hoping to manufacture it. I'm not sure they have the capabilities to do that but they'll try. And then you can imagine that some countries, which produce the ingredients for these vaccines are going to hold up the exports there. So we have I think a real potential here for a train wreck. This will not cover any of the global institutions involved in in any glory. And we did read desperately need here some very sensible heads to be bashed together and to come up with some type of response, which gets enough vaccines out to everyone and of course, the deeper underlying problem is the scaling up of production for billions of vaccines which clearly is going much more slowly than people had anticipated. We have just very short amount of time left so I want to get a very brief answer from each of you finally to this question. We've obviously talked a lot about globalization and it's and it and the and the stalling or even the reversal of it over the last few years. Richard if I can come to you first. And you've talked about how the United States looks under Joe Biden to be going in a you know very much a pro worker direction pro worker dressing. Is there do you think some some synthesis in which we can, which the World Economic Forum after afterwards after all has been searching for this kind of holy grail for the last 10 or 15 years, which is where we can continue to gain the benefits of globalization and yet make sure that we are protecting the disadvantaged in countries is there a way. Is there is there is there a middle way between the extremes of globalization and all the impact that has had on American and European workers over the last 20 30 years, and the kind of domestic America first Europe for in isolationist domestic protectionist policies is there a very briefly is that is there is there a synthesis that can be achieved. Absolutely. That's what I said, we can come together and form a system of global roles that centers on democracy that provides decent work that provides sustainable wage led growth and brought broadly shared prosperity. That is the system that's the formula for success. I have to challenge something you said earlier Jerry, you said that we, because there was more union involvement there was stagnation before in government involvement, there was stagnation that's simply not true. That didn't occur until the global rules of the rules of globalization took away wage growth and may gave us low wages weak social protections violations of worker rights and tax avoidance. That's when things started to go negative and stagnate that can be reversed and all of us can win the trade agreement we did with Mexico is designed to raise the standard of living for Mexican workers so that they can become consumers as well. It's absolutely essential. Be asked very quickly, is there a middle way or we is the pendulum just going to swing back towards the globalization. I think there's a lot of scope for international cooperation, not just on vaccines and taxes, but also on climate change. So a lot of goods can be achieved through cooperation. Simon, very perfect final word to you. Yes trades have been a human imperative for millennial we have to figure this out. Terrific. Thank you all very much indeed.