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Global trade and protectionism: a new balance post-Covid

    • Meeting in digital format
    • 6 July 2021

          The pandemic has not halted global trade and, with recovery now in sight, the data offer an encouraging picture. Nevertheless, the scenario has changed dramatically. The globalization of the 1990s and the early 2000s have given way to a global fragmentation that has led various countries to reinforce bonds with historic allies and trusted partners. Nor is this solely the legacy of Donald Trump’s “America First” and his trade wars; although the Biden administration embraces multilateralism, projecting a pragmatic attitude toward China and renewing alignment with European allies, it is not averse to maintaining nationalistic economic policies. 

          It is the advent of a new era of fragmentation, with global trade marked by tighter controls on exports and restrictions on international investments. From the domestic standpoint, on the other hand, both the United States and Europe are ramping up government stimulus with ambitious economic recovery plans. Signs of recovery are promising in this case too, but some important sectors are feeling the pressure – raw materials and semiconductors for starters – as the specter of inflation peeks over the horizon. Europe presents a number of weak points, having lost competitiveness in various technology sectors dominated by the American giants and a dense network of Chinese firms. Moreover, the possibility of regaining ground is limited by the efforts of Washington and Beijing themselves to increase national control over supply chains in these areas.

          Europe’s own rules for protecting competitiveness have hampered the development of national champions due to inadequate assessment of global competition.  Moreover, this is happening at a delicate moment for European democracies that, on the one hand, confirm their support for the US in a system of alliances that was set up to oppose autocracies and, on the other, are suffering from potentially destabilizing internal imbalances. The main challenge lies in inequality, which spiked during the intense stages of globalization and intensified with the pandemic. Directly linked with this trend is a technological revolution that is changing the job market and industrial relations, demanding  a whole new set of worker profiles and skills in just a brief span of time.

          Europe, and with it Italy, need to focus on the efficiency of the democratic system. Indeed, the economic exclusion of growing segments of the population. This is preventing the full mobilization of energies for the recovery and facilitating the rise of a populism that, in turn, is standing in the way of political dialogue and common solutions to economic and social problems. The Next Gen EU resources are a significant indicator of discontinuity capable of rebooting the European economy through infrastructure programs and technical/scientific platforms. Only by fostering strategic autonomy and strengthening competitiveness will Europe regain its economic and geopolitical leadership, sharing a guiding role into this “unknown territory” of global fragmentation with the United States.

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