The economic planet: will the world remain closed?

Closed. Placarded. The whole world is paralyzed by a pandemic the magnitude of which no one had suspected. If we barely start to take stock of the event, we can already be sure that the world will never be the same, once on the other side of the crisis.

All countries that have cruel recognition of their vulnerability in terms of food, drugs and medical equipment will have the reflex to stop relying on others. We will be producing them at home, masks, drugs and medical equipment, rather than going to fight on the airport tarmac to buy them when we need them.

This could revive manufacturing activity in several countries that had abandoned it in favor of low-cost production centers.

This withdrawal is to be expected and it is probably inevitable. This is the end of globalization, some argue. It is indeed tempting to associate all the evils of the planet, and especially the current pandemic, with the globalization of trade.

The globalization movement has gone far enough to defy common sense. In rich countries, it has made it possible to eat exotic fruits all year round, to buy cheaper and cheaper clothes, to travel and to consume excessively without asking too many questions.

“We took it for granted that we had easy access to everything,” sums up Richard Ouellet, a professor at Laval University and specialist in international trade, who foresees a return to more local consumption.

Already signs of backlash

Before the crisis, signs of backlash had already appeared. The 2008 financial crisis exposed the excesses of a model that eventually got out of hand.

Tariffs and protectionist measures have multiplied, not just between China and the United States. Since 2009, the value of goods subject to import restrictions has been increasing steadily. Before the crisis, restrictions applied to 7.5% of all imports into the world, a historically high level, according to the World Trade Organization (WTO).

Confidence between states, on which international trade rests, has crumbled. There is no longer any at all, we note with the war that countries are waging for masks or medicines.

The states, which had given way to businesses and adopted their objectives, will want to regain the control that had eluded them. WTO treaties and principles do not weigh heavily in the balance.

His organization could not do much to prevent the great withdrawal movement that would succeed the crisis. But globalization is unlikely to die from the consequences of the coronavirus. Richard Ouellet is one of those who believe that multilateral trade will be replaced by managed trade between states, based on contracts rather than treaties. “We will not go back, because there is too much to lose,” he said.

The globalization of trade has led to excesses and has become synonymous with monstrous profits and glaring inequalities. But it has also been a source of wealth. The opening of markets has lifted thousands of people out of poverty and enriched the world culturally and socially.

The temptation to be self-sufficient, however, will be great, especially for countries whose wealth is least dependent on international trade. But even those would lose. Canada, whose third of GDP depends on trade, is said to be poorer.

Paradoxically, international cooperation is diminishing and could disappear when the world most needs to make decisions together, to fight against enemies who know no borders, such as the coronavirus and the climate change that threatens us all.

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