Why the WTO is bashing the Americans
The United States promotes "friend-shoring" to create a globalization without China. But the director of the WTO invites us to think carefully about friendships
Can you recognize a false friend?
Interviewed by Reuters during the Davos World Economic Forum , the director general of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, issued an implicit warning to the United States of America.
“Who is a friend? You [can't be] too sure he'll be a friend again tomorrow, we've seen examples of that,” Okonjo-Iweala told the agency. The Nigerian economist refers to one of the most widespread terms in the geopolitical lexicon of recent terms, friend-shoring , a sort of "globalization between friends".
WHAT IS FRIEND SHORING
The New York Times defines friend-shoring as "the practice of offshoring supply chains to countries where the risk of disruption due to political chaos is low." According to Bloomberg , friend-shoring is "encouraging companies to shift production from authoritarian states to allied ones."
Friend-shoring is a concept promoted mainly by the United States, and in particular by Treasury Secretary Janet Yellen, with the aim of convincing American companies and the governments of partner countries to reduce exposure to China, excluding it from the most critical supply chains and opening manufacturing plants elsewhere. That is, in the nations closest in values or form of government, where the probability of political retaliation on supplies is low.
The destinations most often evoked in speeches on friend-shoring are Vietnam (a socialist republic, in reality, but can boast of low manufacturing costs), India (formally a democracy, among many contradictions ) and Mexico (ally of the United States, geographically close to and well integrated into North American value chains).
WHAT OKONJO-IWEALA SAID
Okonjo-Iweala told Reuters that friend-shoring – and therefore the definition of "friend" – should be extended to those nations now marginal to international trade. “Friends shouldn't just be in Asia; there is Latin America, there is Africa. There are countries where manufacturing can very well be de-concentrated. You insert them in the supply chain, and in this way you include them” in the global trading system.
Furthermore, according to the economist, the very notion of "friend" is misleading and should be applied with caution by the promoters of friend-shoring , because friendship does not necessarily last forever.
DO NOT LEAVE THE WTO
Given the abandonment of Russia by many Western companies, the talk of detachment from China and the goals of reshaping globalization, Ngozi Okonjo-Iweala thinks that the WTO must reform its institutions and processes in order to succeed to effectively promote free trade. However, the director called on governments not to abandon the organization and its trading system.
"You don't have to throw the baby out with the bathwater," she said. "If you do that, it creates an all-against-all situation and I don't think it would be to anyone's advantage."
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ngozi-okonjo-iweala-wto-friend-shoring/ on Fri, 20 Jan 2023 14:52:12 +0000.