WEBVTT - Vaccine Is 'Strategic Asset' That Hackers Will Target: Clint Watts 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.400 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:21.240 and on Bloomberg dot com. Just over the last twenty 0:00:21.239 --> 0:00:23.080 four hours, we've had a lot of news, it seems, 0:00:23.079 --> 0:00:25.599 about the hacking of various computer systems. We had the 0:00:25.600 --> 0:00:27.760 Twitter hack where a lot of the big name accounts 0:00:27.800 --> 0:00:31.840 were hacked on Twitter yesterday Today news that the UK, 0:00:32.320 --> 0:00:36.200 US and Canada jointly accusing Russia of cyber tax against 0:00:36.240 --> 0:00:41.479 coronavirus research centers. So again, cybersecurity right back into four 0:00:41.720 --> 0:00:45.479 which we're fortunate now to have Clint Watts joined us 0:00:45.640 --> 0:00:47.839 to talk about this. He's a distinguished Research Fellow with 0:00:47.920 --> 0:00:52.200 the Foreign Policy Research Institute's also senior Fellow the Centator 0:00:52.440 --> 0:00:55.680 for Cyber and Holy and Security at George Washington University. Clint, 0:00:55.920 --> 0:00:57.520 thanks so much for joining us. I think I want 0:00:57.520 --> 0:01:02.480 to start with the potential allegations that the Russians have 0:01:02.520 --> 0:01:06.800 been trying to hack into some of the coronavirus testing sites. 0:01:06.840 --> 0:01:11.760 What do you know about that? Yeah, it's it's not surprising. Um, 0:01:11.800 --> 0:01:14.119 it's a little bit different for them. Traditionally we think 0:01:14.120 --> 0:01:17.319 of the Chinese hacking for intellectual property. That's always been 0:01:17.360 --> 0:01:20.280 a big concern, particularly in the United States. UM. But 0:01:20.720 --> 0:01:23.400 the truth of it is, whoever gets the vaccine first, 0:01:23.480 --> 0:01:26.640 or whoever it can replicate it very cheaply and accelerate 0:01:26.640 --> 0:01:29.160 their ability to get that vaccine, not only are they 0:01:29.160 --> 0:01:31.000 going to be able to protect their own country and 0:01:31.040 --> 0:01:33.039 help their own country, but they will be able to 0:01:33.080 --> 0:01:37.319 really move economically as an exporter. It almost becomes a 0:01:37.440 --> 0:01:40.240 valuable asset for a country if they can gain that. 0:01:40.440 --> 0:01:43.240 So I think any of these countries that are lagging behind, 0:01:43.280 --> 0:01:46.240 that really don't have the ability to develop such a 0:01:46.319 --> 0:01:48.600 vaccine are going to take targets. And one of the 0:01:48.680 --> 0:01:51.279 strategic assets of Russians have we know this from election 0:01:52.120 --> 0:01:56.400 to now is they use hackers prolifically to gain information 0:01:56.440 --> 0:01:59.120 in the UK UH and this at this point not 0:01:59.200 --> 0:02:02.520 just today with the vaccines, but also announcing with their 0:02:02.520 --> 0:02:05.800 parliament UH interpretence from twenty nineteen, it seems to be 0:02:06.200 --> 0:02:08.440 a big target for Russia. It does seem to be 0:02:08.440 --> 0:02:12.000 in the DNA, so to speak. But Clint, isn't there 0:02:12.040 --> 0:02:16.320 an agreement among global superpowers or the ones that months 0:02:16.320 --> 0:02:19.000 were superpowers, that there will be sharing If there is, 0:02:19.160 --> 0:02:22.120 you know, significant breakthroughs when it comes to vaccines and viruses, 0:02:22.160 --> 0:02:26.720 it's in everybody's interest to share this. It is. But 0:02:27.120 --> 0:02:29.639 in this case, and it's interesting because that that was 0:02:29.680 --> 0:02:32.040 really kind of Bill Gates mandate, right. He was taking 0:02:32.040 --> 0:02:34.880 that on to make sure that all these vaccine could 0:02:35.240 --> 0:02:38.359 could be used by everybody. But you have to look 0:02:38.360 --> 0:02:39.839 at it in terms of who's going to be able 0:02:39.840 --> 0:02:42.760 to have the capacity to develop it, who's going to 0:02:42.800 --> 0:02:45.720 have the economic structure and incentives behind it once they 0:02:45.720 --> 0:02:48.600 do develop it and be able to distribute it rapidly 0:02:49.000 --> 0:02:51.520 and all over And whatever country can get out in 0:02:51.520 --> 0:02:53.880 front of that first, he is going to have an advantage. 0:02:53.919 --> 0:02:55.839 You'd just be able to replicate it. You'd be able 0:02:55.880 --> 0:02:58.840 to make more of the vaccine, you be able to 0:02:58.880 --> 0:03:02.600 distribute it quicker, which gives you a leg up geopolitically 0:03:02.639 --> 0:03:06.440 across all countries. I do think there will be sharing, um, 0:03:06.600 --> 0:03:09.120 But just imagine the United States right now, what a 0:03:09.160 --> 0:03:11.200 dire need we have for vaccines so that we can 0:03:11.240 --> 0:03:13.560 get back up on our feet, and if we had 0:03:13.600 --> 0:03:16.840 a competitor that could maybe hold that overhead to a 0:03:16.880 --> 0:03:19.560 different degree, it just becomes a strategic asset over time. 0:03:20.400 --> 0:03:24.240 But do we have any idea as to the uh, 0:03:24.360 --> 0:03:28.080 the protections the security that the healthcare sties, big farmer companies, 0:03:28.120 --> 0:03:32.000 biotopic biotech companies have you know, in place right now 0:03:32.040 --> 0:03:36.440 to protect kind of they're testing and the results. This 0:03:36.480 --> 0:03:39.280 is one of those interesting things where sector by sector, 0:03:39.320 --> 0:03:42.280 as a sector you get hit, the cybersecurity of protections 0:03:42.320 --> 0:03:44.720 become better. So the first people who really get hit, 0:03:44.720 --> 0:03:46.880 we're banks and financials, right, and they stood up to it. 0:03:46.960 --> 0:03:50.320 You saw that with manufacturing next, but healthcare and the 0:03:50.320 --> 0:03:53.120 health care sector lagged, and so did research and development 0:03:53.160 --> 0:03:55.760 for a very long time. Many of the big companies 0:03:56.240 --> 0:03:59.600 UM are very good in terms of protecting their their 0:03:59.640 --> 0:04:02.040 I P in their their networks and their systems. However, 0:04:02.400 --> 0:04:06.480 you're talking about a global, you know, a global vaccine 0:04:06.600 --> 0:04:10.680 race where you see many many companies coming online, probably 0:04:10.680 --> 0:04:14.280 companies that weren't traditionally even trying to pursue a vaccine 0:04:14.320 --> 0:04:16.640 that maybe have an ability to jump over trying to 0:04:16.760 --> 0:04:21.279 enter that market, you're probably going to see excessive communication 0:04:21.400 --> 0:04:23.240 and people that are in a rush. When you're in 0:04:23.279 --> 0:04:27.240 a hurry, you're always more vulnerable for cyber incident or 0:04:27.240 --> 0:04:30.240 a cyber attack. It's easier to be socially engineered. And 0:04:30.600 --> 0:04:33.839 so if you put all these circumstances together, people get hasty, 0:04:33.920 --> 0:04:36.400 people are moving very quickly. It's just a lot of 0:04:36.400 --> 0:04:39.880 opportunities there for someone to penetrate in network. So it 0:04:39.960 --> 0:04:44.240 might be a little less you know, disingenuous or or dangerous. 0:04:44.320 --> 0:04:47.680 Let's say, but until we heard about Russia hacking on vaccines, potentially, 0:04:47.920 --> 0:04:52.719 we yesterday got some major accounts hacked at Twitter, and 0:04:52.880 --> 0:04:55.480 you know, bitcoins come going around the likes of Bill Gates, 0:04:55.520 --> 0:04:57.839 Joe Biden, Brock Obama, Jeff Bezos, Warren buff that they 0:04:57.880 --> 0:05:01.880 were all affected. Who might have been behind this? I mean, 0:05:01.880 --> 0:05:04.279 could it have been some kid with not very much 0:05:04.320 --> 0:05:08.280 to to, you know, to prove except that he could 0:05:08.279 --> 0:05:10.320 do this, or could it have been something more sinister? 0:05:11.880 --> 0:05:15.159 I think it's definitely something more sophisticated than one off 0:05:15.320 --> 0:05:18.480 lucky hacker or individual. This seems to be an organized syndicate. 0:05:19.040 --> 0:05:21.680 What strange is that they chose bitcoin or as a 0:05:21.680 --> 0:05:25.320 bitcoin sort of like aggregation operation. Uh, there's a lot 0:05:25.320 --> 0:05:27.279 of different ways to do cyber attacks to make money. 0:05:27.520 --> 0:05:30.520 That's not one that's necessarily the most profitable. But it 0:05:30.600 --> 0:05:34.039 did really illustrate a weakness or of vulnerability, which is 0:05:34.080 --> 0:05:37.520 if you can get inside Twitter systems and you can 0:05:37.800 --> 0:05:41.640 gravitate towards and be able to manipulate accounts with a 0:05:41.760 --> 0:05:43.960 very high following, which is what they did. They really 0:05:43.960 --> 0:05:49.760 focused on outstanding influencers, big companies. Uh, if you have 0:05:49.920 --> 0:05:53.320 that ability, you can broadcast, you can enter into the 0:05:53.360 --> 0:05:57.600 information space in a very dynamic way. And so you know, 0:05:57.880 --> 0:06:00.000 this seems to be a financial scam and I'm sure 0:06:00.120 --> 0:06:02.839 will get more for Twitter, But imagine how to spend 0:06:03.160 --> 0:06:06.800 the day before the election or the day of the election. Um, 0:06:06.880 --> 0:06:10.000 what if they had taken over media accounts like Bloomberg 0:06:10.120 --> 0:06:12.719 or any of the mainstream media outlets right and started 0:06:12.760 --> 0:06:16.160 putting out in authentic results of elections or ballots. It 0:06:16.200 --> 0:06:19.000 would be would cause mass chaos in an election in 0:06:19.000 --> 0:06:20.760 a scenari and way. We are going to have to 0:06:20.800 --> 0:06:23.440 continue this conversation. It is a fascinating one and it 0:06:23.440 --> 0:06:25.480 will be with us throughout the election and beyond our 0:06:25.600 --> 0:06:31.520 thanks to you, Clint there for joining us well. Given 0:06:31.560 --> 0:06:33.520 the market action that we've seen over the last couple 0:06:33.560 --> 0:06:35.560 of months that bounce off the bottom, a lot of 0:06:35.560 --> 0:06:38.920 investors are asking themselves, you know, how do I play this? 0:06:38.960 --> 0:06:41.640 Do I get in? Is it too late? Even Bill 0:06:41.760 --> 0:06:45.880 Miller uh said value stocks advantages is probably short lived. 0:06:46.080 --> 0:06:48.920 He's counting on a comeback for growth stocks to get 0:06:48.960 --> 0:06:51.240 a sense of kind of maybe where we move from here. 0:06:51.560 --> 0:06:54.640 We welcome Barry Ridholts, Bloomberg opinion columnists and host of 0:06:54.720 --> 0:06:57.360 Masters in Business on Bloomberg. Ready is also founder and 0:06:57.440 --> 0:07:00.880 chief investment officer of Ridholt's Wealth Management. Barry, thanks so 0:07:00.960 --> 0:07:04.960 much for joining us here. Bill Miller talking about growth stocks? 0:07:04.960 --> 0:07:08.400 What do you make of that? So Bill nowhere tells 0:07:08.400 --> 0:07:13.480 a fascinating story about his um come to Jesus moment 0:07:13.680 --> 0:07:16.720 after the eighty seven crash. You know, they had put 0:07:16.760 --> 0:07:21.120 together a nice track record, but in eighty nine they 0:07:21.320 --> 0:07:25.400 really were struggling, and he went back and re evaluated, 0:07:26.360 --> 0:07:31.120 under what circumstances does value beat growth and how can 0:07:31.160 --> 0:07:33.760 we better measure value? When they came up with a 0:07:33.800 --> 0:07:38.760 series of um variations that are different than the traditional 0:07:38.920 --> 0:07:43.120 price to earnings ratio one is straight up return on capitol. 0:07:43.800 --> 0:07:47.400 And as soon as they began to implement these, he 0:07:47.520 --> 0:07:51.559 had a spectacular run from one to two thousand and five, 0:07:52.320 --> 0:07:56.520 fifteen consecutive years of a major fund beating the SMP five. 0:07:57.240 --> 0:08:00.280 There's never been another streak like that in his three 0:08:00.360 --> 0:08:03.280 So when when Bill Miller says, hey, coming out of 0:08:03.280 --> 0:08:06.080 a recession, value is cyclical, it tends to be more 0:08:06.120 --> 0:08:09.520 sensitive to interest rates and to inflation, and it tends 0:08:09.600 --> 0:08:13.920 to to do better. But in a very low yield environment, 0:08:14.200 --> 0:08:16.080 growth is going to be advant is going to have 0:08:16.120 --> 0:08:20.560 the advantage. So don't expect the value stops to be 0:08:20.720 --> 0:08:24.040 growth for very much longer. And Barry has now done 0:08:24.200 --> 0:08:27.720 two Masters in Business podcasts with the legendary Bill Miller. 0:08:27.760 --> 0:08:30.400 I can't recommend them enough. Some things that you really 0:08:30.400 --> 0:08:33.640 would not expect to be in there in there, including 0:08:34.480 --> 0:08:38.040 what Barry has just voiced about, you know, a legendary 0:08:38.080 --> 0:08:42.000 value investor talking about growth stocks so much so, Barry, 0:08:42.080 --> 0:08:44.959 what about finings? I mean, are we do for sort 0:08:44.960 --> 0:08:49.720 of a rollover? You know? I keep seeing these comparisons 0:08:49.800 --> 0:08:52.920 between the run up of the fang stock and and 0:08:53.040 --> 0:08:57.760 the dot com collapse in the late everybody wants to 0:08:57.840 --> 0:09:01.360 draw the wrong lesson from from the implosion we saw 0:09:01.559 --> 0:09:04.520 in two thousand and I think there are There are 0:09:04.640 --> 0:09:09.520 several really specific differences that that are important to note. 0:09:10.240 --> 0:09:13.679 The first is in the nineties, the tech stocks had 0:09:13.720 --> 0:09:17.720 a thousand percent appreciation over five years. Over the past 0:09:17.800 --> 0:09:22.280 five years, uh, the big Tex stocks are up about 0:09:22.280 --> 0:09:26.000 a hundred and seventy. That's a huge difference. It's you know, 0:09:26.120 --> 0:09:29.480 it was five times more aggressive back then than than 0:09:29.520 --> 0:09:33.640 it is today. So that's number one. Second, you cannot 0:09:33.640 --> 0:09:37.040 help but look at the big Tex stocks and notice, 0:09:37.760 --> 0:09:42.040 dear lord, these are cash machines. Microsoft and Apple and 0:09:42.160 --> 0:09:45.880 Google and Facebook. They are just printing money. And and 0:09:45.920 --> 0:09:50.760 now you throw in Netflix, Amazon another one just gaining 0:09:50.800 --> 0:09:53.720 market share, printing money. And on top of everything else, 0:09:54.000 --> 0:09:58.720 Amazon Cloud Services a big profit engine, so very different 0:09:59.240 --> 0:10:03.079 era today, a with profits, not only revenue, but profits 0:10:03.200 --> 0:10:07.040 versus the nineties. Certainly a big difference. But but I 0:10:07.080 --> 0:10:11.520 think the most the difference that explains why the market 0:10:11.600 --> 0:10:15.200 is confounding people to such a large degree. You know, 0:10:15.320 --> 0:10:17.600 people look around and they see the U. S. Economy 0:10:17.720 --> 0:10:21.720 is not doing great. It's improving, but it's still wildly 0:10:21.800 --> 0:10:24.880 off from where it was in this time last year 0:10:24.960 --> 0:10:29.960 or even you know, January February, and the reopening has 0:10:30.040 --> 0:10:33.880 gone poorly. We've we've bungled the whole COVID nineteen management. 0:10:34.280 --> 0:10:36.560 But you look around the rest of the world and 0:10:36.720 --> 0:10:41.400 places like Germany and South Korea and Taiwan and China 0:10:41.440 --> 0:10:44.160 are all doing a better job than than we are. 0:10:44.960 --> 0:10:47.400 And to tie that back to the fangs, to tie 0:10:47.400 --> 0:10:51.280 that back to the big tech companies, these companies derive 0:10:51.480 --> 0:10:56.040 the majority of their revenues from non US sources appled 0:10:56.040 --> 0:11:01.960 most of all, as much as six in some quarters. Uh, Microsoft, Facebook, Google, 0:11:02.040 --> 0:11:05.840 in the you know, about half, maybe a little more Amazon, Netflix, 0:11:05.920 --> 0:11:09.600 also a little more. Amazon is the lagguar because so 0:11:09.679 --> 0:11:12.199 much of the retail sales between whole foods and the 0:11:12.320 --> 0:11:16.160 delivery service is in the US. Um So not only 0:11:16.160 --> 0:11:19.800 are most of the big tech companies getting the majority 0:11:19.800 --> 0:11:23.600 of their revenues from overseas, but overseas is their fastest 0:11:23.640 --> 0:11:27.560 growth markets. Also, it really explains why we could have 0:11:27.640 --> 0:11:31.000 such a mediocre economy in the US and why the 0:11:31.080 --> 0:11:34.600 big text box are doing so well. It's not as 0:11:35.080 --> 0:11:39.800 irrational as it appears. So Barry, I think I know 0:11:39.840 --> 0:11:41.439 a lot of folks would agree with you that the 0:11:41.559 --> 0:11:44.800 US federal governments bungled, to use your term, that the 0:11:44.880 --> 0:11:48.040 response to COVID nineteen. At some point, do the markets 0:11:48.280 --> 0:11:55.040 need to see some significant coordination improvement here to move higher, 0:11:55.040 --> 0:11:57.840 because it seems like despite some of the weaknesses that 0:11:57.840 --> 0:12:01.000 we've seen in key markets at California, Texas, US Florida, 0:12:01.040 --> 0:12:04.720 the market has been generally pretty nonchalant about this flare 0:12:04.800 --> 0:12:08.760 up here. Yeah, so some of that is the improvement overseas. 0:12:08.920 --> 0:12:11.800 Some of that is we were expecting a second wave 0:12:11.880 --> 0:12:15.359 in the fall, and I think some people are incorrectly 0:12:15.520 --> 0:12:18.640 considering this a second wave. This is just an extension 0:12:18.679 --> 0:12:22.120 of the first wave. And I can't help but feel 0:12:22.200 --> 0:12:27.160 that the run of very positive news about UM, the 0:12:27.240 --> 0:12:31.760 various vaccines MODERNA is one and the one out of 0:12:31.760 --> 0:12:35.320 Oxford is the other, and and the improving treatments for 0:12:35.360 --> 0:12:40.920 people even if they do get UM catch coronavirus kind 0:12:40.920 --> 0:12:43.600 of has people looking past this flare up and the 0:12:43.640 --> 0:12:46.840 full flare up to hey, we're very likely to have 0:12:47.200 --> 0:12:49.320 by this time next year, there should be some sort 0:12:49.360 --> 0:12:54.040 of a widespread vaccine. That's a fair guest from a 0:12:54.160 --> 0:12:57.400 non doctor, and I think a lot of the investors 0:12:57.600 --> 0:13:01.079 share my lack of qualifications to open on this, but 0:13:01.400 --> 0:13:05.200 it appears that we're moving in the right direction on 0:13:05.320 --> 0:13:09.599 the medical treatment. Even if we mess up the reopening 0:13:09.720 --> 0:13:13.840 and we mess up the herd immunity, uh, there'll be 0:13:13.880 --> 0:13:17.840 a magic bullet that will allow us to return to 0:13:17.960 --> 0:13:22.199 normal sometime in the future. And and just the market 0:13:22.240 --> 0:13:25.040 seems to be saying, hey, it's a mulligan. Just forget 0:13:25.040 --> 0:13:30.559 about it. Let's look towards Barry, always amazing chatting with you. 0:13:30.720 --> 0:13:32.760 Wanted to talk to you sometimes about Robin Hood as well, 0:13:32.800 --> 0:13:36.400 because apparently yesterday he saw the Robin Hood traders jump 0:13:36.400 --> 0:13:38.800 on the modern A bandwagon as well, and so we'll 0:13:38.800 --> 0:13:40.520 have to see how that plays out. But Barry is 0:13:40.960 --> 0:13:44.439 always full of really down to worth interesting market thoughts. 0:13:44.480 --> 0:13:47.439 He's founder of Riddle's Wealth Management. He's also, of course 0:13:47.520 --> 0:13:51.880 a Bloomberg opinion columnist, and he is also host of 0:13:52.120 --> 0:13:54.439 Masters in Business and do go and have a look 0:13:54.480 --> 0:13:57.199 at those Bill Miller Masters in Business podcasts that he 0:13:57.280 --> 0:13:59.400 put out. One is for a couple of years ago 0:13:59.400 --> 0:14:02.240 and the other is just this week. So really interesting 0:14:02.520 --> 0:14:06.400 stories there from Bill Miller, a legendary investor Barry Rittle's 0:14:06.520 --> 0:14:11.800 thank you. The World Trade Organization has been in existence 0:14:11.840 --> 0:14:14.760 for twenty five years, but it's never been more front 0:14:14.800 --> 0:14:17.040 of mind than in the last couple of years. President 0:14:17.040 --> 0:14:19.480 Trump and Brexit, of course, keeping the w t O 0:14:19.680 --> 0:14:23.880 in the news headlines constantly. Well, the referee at the 0:14:24.000 --> 0:14:26.680 w t O is the apple At Body. Let's welcome 0:14:26.680 --> 0:14:29.080 now the former chairman of the Apple Body of the 0:14:29.240 --> 0:14:32.160 w t O, Jim Bakas Distinguished University Professor of Global 0:14:32.200 --> 0:14:34.960 Affairs at the University of Central Florida and an adjunct 0:14:35.000 --> 0:14:37.960 scholar at the Cato Institute as well. His latest work 0:14:38.080 --> 0:14:42.320 is The Willing World, Shaping and Sharing a sustainable Global Prosperity, 0:14:42.360 --> 0:14:45.840 and that's out from Cambridge University Press. So Mr Bacas, 0:14:45.880 --> 0:14:49.480 thank you so much for joining. Where does the apple 0:14:49.480 --> 0:14:52.040 At Body at the w t O stand at the moment? 0:14:52.120 --> 0:14:59.880 In terms of world significance? Of the Apple at bog 0:15:00.080 --> 0:15:05.200 body stands still because under the rules of the w 0:15:05.360 --> 0:15:10.440 t O Treaty UH, the I Thought Body cannot hear 0:15:10.520 --> 0:15:14.200 any new appeals unless it has at least three members. 0:15:14.240 --> 0:15:19.800 It ordinarily has seven, it currently has one and um 0:15:19.800 --> 0:15:24.920 this is entirely because the United States under President Trump 0:15:24.960 --> 0:15:29.280 has refused to join in the needed consensus with other 0:15:29.440 --> 0:15:34.680 WTO members to appoint two judges. The significance of this 0:15:35.120 --> 0:15:41.480 is that it undermines the ability of the w t 0:15:41.640 --> 0:15:47.120 O to make binding and enforceable judgments in inevitable international 0:15:47.160 --> 0:15:50.120 trade disputes, as it is done in hundreds of cases 0:15:50.520 --> 0:15:54.360 vary successfully over the past twenty five years. Were now 0:15:54.440 --> 0:15:57.120 suddenly back to the days before the w t O, 0:15:57.280 --> 0:16:02.520 in which in effect, any one country can block ruling 0:16:02.600 --> 0:16:06.720 against it by a w t O panel. Thus, we're 0:16:06.800 --> 0:16:12.480 heading towards a situation which anything goes, especially for the 0:16:12.600 --> 0:16:17.440 larger company countries that have the political and economic leverage 0:16:17.840 --> 0:16:21.480 to get away with ignoring w t t TOO rulings. 0:16:21.520 --> 0:16:25.320 So far, the US has been one and the only 0:16:25.360 --> 0:16:31.440 one that has tried this approach. So, Jim, give us 0:16:31.440 --> 0:16:33.400 a sense of how you think this might play out 0:16:33.400 --> 0:16:35.240 at the w t O. Again, as vy as mentioning 0:16:35.280 --> 0:16:38.200 it's been in existence for twenty five years, the US 0:16:38.240 --> 0:16:41.360 has been a willing and able participant in the w 0:16:41.560 --> 0:16:44.840 t of the World Trade Organization to the extent we 0:16:44.880 --> 0:16:48.680 get a new administration in a matter of months, will 0:16:48.720 --> 0:16:52.800 that change perhaps the the way the US views it's 0:16:52.880 --> 0:16:58.480 rolled in the w t O. I think it will um. 0:16:58.520 --> 0:17:02.920 Donald Trump is not going to chan change, support him 0:17:02.960 --> 0:17:05.440 or oppose him. I think we can all agree on that. 0:17:05.640 --> 0:17:10.520 And if he's reelected, this stalemate is likely to continue 0:17:10.560 --> 0:17:14.399 with previous effects in world trade for the United States 0:17:14.400 --> 0:17:18.680 and for all other countries. If Joe Biden is elected, 0:17:18.720 --> 0:17:22.480 I think we'll see a return by the United States 0:17:22.960 --> 0:17:31.200 to more multilateral approaches that give more emphasis to international cooperation. 0:17:32.040 --> 0:17:34.199 The w t O is one of those places in 0:17:34.240 --> 0:17:38.959 which we uh will see that, I think and I 0:17:39.080 --> 0:17:42.400 predict that one of the first evidences of that new 0:17:42.400 --> 0:17:46.320 approach would be the United States joining with other members 0:17:46.320 --> 0:17:51.320 of the w t O to resume the work of 0:17:51.359 --> 0:17:55.280 the Appellate Body. Mr Backus, I mean, we should remind 0:17:55.320 --> 0:17:57.960 people that one of the reasons why the Appellate Body 0:17:58.040 --> 0:18:03.400 is so important is that it protects countries really from 0:18:03.400 --> 0:18:08.159 retaliation against trade partners with you know, without fear of 0:18:09.520 --> 0:18:14.800 expressing their opinion or of you know, not having a 0:18:14.880 --> 0:18:17.600 referee in between the two. So smaller states, you know, 0:18:17.800 --> 0:18:20.080 might be at a disadvantage if it weren't for this 0:18:20.200 --> 0:18:23.000 kind of referee, this global referee. But as we move 0:18:23.040 --> 0:18:25.480 into a period and we've were already in it really 0:18:25.760 --> 0:18:28.880 of countries turning inwards, of you know, states being more 0:18:28.880 --> 0:18:32.639 important again and so on. How can the w t 0:18:32.800 --> 0:18:37.640 O Appellate Body referee in a world like that where 0:18:37.720 --> 0:18:42.160 even trade is almost less important. Well, I don't think 0:18:42.200 --> 0:18:46.879 trade is less important. It's been declining during the pandemic, 0:18:47.000 --> 0:18:49.400 but I think trade links are all the more important 0:18:49.720 --> 0:18:52.159 as they go forward in the world. We have to 0:18:52.240 --> 0:18:54.959 increase global wealth so that we'll be able to address 0:18:55.040 --> 0:18:59.560 all the many problems we have, and we can't increase 0:18:59.640 --> 0:19:06.080 proces verity if we're decreasing trade. As for the Appellate Body, uh, 0:19:06.200 --> 0:19:09.639 it is a panel of jurists. They are independent and 0:19:10.160 --> 0:19:17.280 impartial referee, as you rightly said, and it's important to 0:19:17.359 --> 0:19:21.080 have them there so that we can resolve peacefully and 0:19:21.200 --> 0:19:29.159 positively the trade disputes that inevitably occur in the n 0:19:30.119 --> 0:19:33.880 of all world commerce that it falls within the scope 0:19:34.400 --> 0:19:39.040 of the w q O Treaty. Without an impartial and 0:19:39.119 --> 0:19:44.320 independent judge of these disputes, there is much more danger 0:19:44.840 --> 0:19:48.480 that the disputes could get out of hand, especially in 0:19:48.520 --> 0:19:56.560 today's more precarious and perilous world. Um people forget that 0:19:56.840 --> 0:20:00.199 one of the reasons we invented the trading system in 0:20:00.200 --> 0:20:04.439 the first place, UH after World War two was to 0:20:04.440 --> 0:20:09.399 help prevent World War three, and so far we succeeded 0:20:09.440 --> 0:20:12.760 in that. But in order to continue to see seed 0:20:12.800 --> 0:20:17.639 in that, we need to have a global trading system 0:20:17.680 --> 0:20:21.280 based on agreed rules in which the rules are upheld 0:20:21.320 --> 0:20:24.960 fairly under the rule of law. That's where the impellate 0:20:24.960 --> 0:20:28.440 body comes in. Yeah, it's interesting. We have to play 0:20:28.840 --> 0:20:31.200 continue to follow this, Jim Backus, thanks so much for 0:20:31.280 --> 0:20:33.800 joining us. Jim as a professor of Global affairs at 0:20:33.800 --> 0:20:36.639 the University of Central Florida, Florida and the former chairman 0:20:36.720 --> 0:20:39.639 of the Appellate Body of the World Trade Organization. I 0:20:39.680 --> 0:20:42.760 think it's a really exesting conversation, Vonnie, to think about 0:20:42.800 --> 0:20:45.840 the future of the World Trade Organization, what role is 0:20:45.880 --> 0:20:48.480 going to play in global trade. As as you mentioned, Vannie, 0:20:48.840 --> 0:20:50.560 a lot of countries, not just the United States, a 0:20:50.600 --> 0:20:53.200 lot of countries are starting to look more inward, perhaps 0:20:53.240 --> 0:20:56.680 a little bit less international, a little bit less global, 0:20:56.880 --> 0:20:58.520 And we'll have to see if that is a trend 0:20:58.720 --> 0:21:01.520 that continues. Certainly in the pandemic will certainly have some 0:21:01.560 --> 0:21:06.240 impact on that. It is time for Bloomberg Opinion. We 0:21:06.280 --> 0:21:10.040 are joined by Bloomberg Opinion columnist Michael Schumann. He's author 0:21:10.560 --> 0:21:14.920 UH and columnist Bloomberg Opinion based in Hong Kong. An interesting, 0:21:15.359 --> 0:21:19.320 really fascinating column out today talking about, you know, amid 0:21:19.359 --> 0:21:22.240 the rising tensions between the U S and China, the 0:21:22.320 --> 0:21:25.840 question is to what extent can US companies really decouple 0:21:26.480 --> 0:21:29.520 from China? Michael, thanks so much for joining us. So 0:21:29.640 --> 0:21:31.639 again let's go to that issue there. What are we 0:21:31.720 --> 0:21:34.960 seeing from corporate Americas it thinks about how to deal 0:21:35.040 --> 0:21:41.160 with China, both as a supplier and as a customer. Well, 0:21:41.200 --> 0:21:43.280 I think what what CEO is have to have to 0:21:43.400 --> 0:21:46.680 kind of weak up to is that, you know, there's 0:21:46.680 --> 0:21:49.040 a lot of debate in the US about well, should 0:21:49.080 --> 0:21:52.040 should the US the couple from China? Shouldn't the US 0:21:53.720 --> 0:21:56.560 the couple? What should the strategy be? The reality on 0:21:56.600 --> 0:21:58.680 the ground is that it's kind of already happening. I mean, 0:21:58.880 --> 0:22:00.399 we don't know how far it's going to go. Are 0:22:00.440 --> 0:22:03.639 these two economies really going to pull totally, totally pull apart? 0:22:04.200 --> 0:22:06.560 Probably not. But I think if you're if you're running 0:22:06.560 --> 0:22:08.240 a company, you have to have in your head that 0:22:08.680 --> 0:22:11.680 the relationship with China is changing going forward, and it's 0:22:11.720 --> 0:22:13.920 it's it doesn't look like it's it's really going to 0:22:14.000 --> 0:22:17.040 reverse back to the way things were. So I don't 0:22:17.160 --> 0:22:19.119 even if you don't wanted the couple, even if you 0:22:19.119 --> 0:22:21.520 don't you don't want to change your your business in China, 0:22:22.000 --> 0:22:23.800 I think you have to be thinking out five ten 0:22:23.880 --> 0:22:26.679 years ahead. Well, what are what are my alternatives? What 0:22:27.640 --> 0:22:30.280 you know, what can I do to either decrease my 0:22:30.400 --> 0:22:34.480 reliance on China to diversify both in terms of where 0:22:34.480 --> 0:22:37.080 I'm making my products, will also where I'm selling my products. 0:22:37.720 --> 0:22:42.399 And Michael, this isn't because solely geopolitical issues are causing, 0:22:42.560 --> 0:22:44.600 you know, a bit of a deterioration in the relationship. 0:22:44.640 --> 0:22:47.439 It's also for very practical reasons. You point out in 0:22:47.480 --> 0:22:51.679 your piece, for example, that it's a more useful consumer 0:22:51.840 --> 0:22:54.439 in Southeast Asia than it is and will be in 0:22:54.600 --> 0:22:58.199 China for some time to come. And also that an 0:22:58.200 --> 0:23:01.560 age in China will lose thirty million people whereas the 0:23:02.760 --> 0:23:06.240 Asian region is going to add forty million working age 0:23:06.240 --> 0:23:12.720 people by well, look, you know you can't replace China 0:23:12.880 --> 0:23:15.000 as a consumer market, right, It's I mean, it's one 0:23:15.040 --> 0:23:18.800 point for billion people and they're getting increasingly wealthy and 0:23:18.800 --> 0:23:21.240 they and they increasingly like to spend more and more money. 0:23:21.280 --> 0:23:24.720 So you know, it's not like O, G. I don't 0:23:24.720 --> 0:23:27.880 need this market. At the same time, you know, if 0:23:27.880 --> 0:23:30.439 you're if you're looking to diversify, you're looking for new 0:23:30.520 --> 0:23:34.200 sources of customers, they are out there. When you look 0:23:34.280 --> 0:23:37.159 at projections, for example, the growth of the middle class 0:23:37.160 --> 0:23:42.200 and in places like India, UH, Southeast Asia as you mentioned, uh, 0:23:42.240 --> 0:23:45.400 you know, there's a tremendous amount of potential growth out there. 0:23:45.840 --> 0:23:47.879 And in some cases you know where where China is 0:23:47.880 --> 0:23:50.520 actually forth aging and the working age populations you said, 0:23:50.520 --> 0:23:53.639 they're shrinking in some of these areas for example, and 0:23:53.720 --> 0:23:59.040 you know in Southeast Asia you have much better demographics. 0:23:59.080 --> 0:24:01.879 You're actually you know, any working age people who are 0:24:01.880 --> 0:24:04.359 going to be you know, earning, earning more and more money. 0:24:04.800 --> 0:24:07.240 So you know, again, you know, I don't think anyone 0:24:07.320 --> 0:24:09.320