1 00:00:03,800 --> 00:00:06,080 Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the 2 00:00:06,120 --> 00:00:08,680 Speaker 1: global economy to you. And yep, I'll admit it. I'm 3 00:00:08,720 --> 00:00:11,880 Speaker 1: in Davos this week for a special early summer edition 4 00:00:12,080 --> 00:00:15,360 Speaker 1: of the World Economic Forum. This is the place they 5 00:00:15,400 --> 00:00:18,479 Speaker 1: say millionaires come to hear billionaires tell them what the 6 00:00:18,480 --> 00:00:22,400 Speaker 1: middle class is thinking. From my experience, you very rarely 7 00:00:22,400 --> 00:00:25,840 Speaker 1: come away from Davos feeling more optimistic. And the talk 8 00:00:25,880 --> 00:00:30,080 Speaker 1: here was of Ukraine inflation the risk of a global 9 00:00:30,120 --> 00:00:33,800 Speaker 1: food crisis. We have some of that rather gloomy talk 10 00:00:33,840 --> 00:00:36,920 Speaker 1: coming up. The selected highlights from a session I moderated 11 00:00:37,000 --> 00:00:40,440 Speaker 1: featuring Big Jesus like the European Trade Commissioner and the 12 00:00:40,479 --> 00:00:43,800 Speaker 1: Director General of the World Trade Organization. We also have 13 00:00:43,880 --> 00:00:46,400 Speaker 1: some very clear thinking on the future of global trade 14 00:00:46,440 --> 00:00:50,120 Speaker 1: from the brilliant economist Richard Baldwin. But what you never 15 00:00:50,159 --> 00:00:52,519 Speaker 1: get in Davos is a sense of what any of 16 00:00:52,560 --> 00:00:55,840 Speaker 1: this feels like at ground level. So let me start 17 00:00:55,920 --> 00:00:59,960 Speaker 1: this week's show with this report from Texas. While US 18 00:01:00,000 --> 00:01:18,520 Speaker 1: Economy reporter Dmitrieva Midland, Texas is not the kind of 19 00:01:18,560 --> 00:01:22,080 Speaker 1: place you'd expect high prices, but it's the city with 20 00:01:22,200 --> 00:01:25,319 Speaker 1: the highest inflation in the United States. For the past 21 00:01:25,400 --> 00:01:28,839 Speaker 1: six months, the consumer price Index from Midland, which tracts 22 00:01:28,880 --> 00:01:32,320 Speaker 1: how much residents pay for everyday things, has hovered around 23 00:01:32,360 --> 00:01:40,000 Speaker 1: ten percent. That's above even the national average. The city 24 00:01:40,000 --> 00:01:43,160 Speaker 1: in West Texas is small, about a hundred and twenty 25 00:01:43,200 --> 00:01:47,800 Speaker 1: thousand people, give or take. It's remote, surrounded by oil fields, 26 00:01:47,800 --> 00:01:50,760 Speaker 1: and almost a five hour drive to the nearest major city. 27 00:01:51,880 --> 00:01:55,200 Speaker 1: These two things, a limited labor pool and remote location, 28 00:01:55,480 --> 00:01:59,480 Speaker 1: are sending prices skyrocketing here and in other smaller cities 29 00:01:59,560 --> 00:02:02,600 Speaker 1: in the within Midwest. And that's on top of the 30 00:02:02,640 --> 00:02:06,080 Speaker 1: supply chain disruptions plaguing every region of the US right now. 31 00:02:06,560 --> 00:02:10,600 Speaker 1: Melinda Hernandez lives in South Midland. She's currently planning a 32 00:02:10,639 --> 00:02:14,119 Speaker 1: high school graduation party for her son, usually a big 33 00:02:14,120 --> 00:02:17,080 Speaker 1: event for her Hispanic family, this year it's going to 34 00:02:17,080 --> 00:02:22,440 Speaker 1: be different thanks to inflation. Shopping for is food items, 35 00:02:22,560 --> 00:02:25,240 Speaker 1: you know, just seeing that it's double from when I 36 00:02:25,240 --> 00:02:27,640 Speaker 1: did the party for my first son, I would get 37 00:02:27,760 --> 00:02:31,440 Speaker 1: less for more, so that makes sense. So it's just 38 00:02:32,440 --> 00:02:35,320 Speaker 1: it's crazy to me. Hernando's lost her job at an 39 00:02:35,400 --> 00:02:39,519 Speaker 1: energy services company in March. The industry hasn't picked back up, 40 00:02:39,600 --> 00:02:43,880 Speaker 1: so demand remains low. For administrative workers. Like her, service 41 00:02:43,880 --> 00:02:48,320 Speaker 1: sector wages also leg far behind other industries. While she's 42 00:02:48,320 --> 00:02:51,359 Speaker 1: getting paid ten dollars an hour delivering pizzas at night, 43 00:02:51,880 --> 00:02:55,359 Speaker 1: less than half her old wage, everything else is going 44 00:02:55,440 --> 00:03:00,480 Speaker 1: up in price. Her electricity bill has doubled, food prices 45 00:03:00,520 --> 00:03:03,400 Speaker 1: are so high she had to tap a local nonprofit 46 00:03:03,480 --> 00:03:07,280 Speaker 1: and church for help. And gas prices have been skyrocketing. 47 00:03:07,760 --> 00:03:10,200 Speaker 1: Make sure my elector bills paid and I have a 48 00:03:10,280 --> 00:03:13,000 Speaker 1: roof over my head, and that's all that matters right now. 49 00:03:13,560 --> 00:03:16,400 Speaker 1: Inflation was also in the mind of policymakers this week 50 00:03:16,560 --> 00:03:20,160 Speaker 1: in Davo, Switzerland, gathered at the World Economic Forum for 51 00:03:20,320 --> 00:03:24,480 Speaker 1: rounds of meetings, seminars, and unofficial holiday discussions. But if 52 00:03:24,520 --> 00:03:26,880 Speaker 1: ready to Me comes down to inflation, we may see 53 00:03:26,919 --> 00:03:30,680 Speaker 1: prices even going kaya being much more volatized. Raising interest 54 00:03:30,760 --> 00:03:33,160 Speaker 1: rates is not going to solve the problem with inflation. 55 00:03:37,720 --> 00:03:41,040 Speaker 1: Taming inflation is one of the top global challenges in 56 00:03:41,040 --> 00:03:44,640 Speaker 1: the post pandemic economy, but there's a big gap between 57 00:03:44,680 --> 00:03:48,040 Speaker 1: monetary policy and the realities on the ground in places 58 00:03:48,080 --> 00:03:52,200 Speaker 1: like Midland, Well, it's the best tool the Federal Reserve has. 59 00:03:52,720 --> 00:03:56,440 Speaker 1: Raising interest rates doesn't address the problems of high food 60 00:03:56,480 --> 00:03:59,840 Speaker 1: and gas prices and the drivers of that the war 61 00:04:00,120 --> 00:04:12,040 Speaker 1: Ukraine and supply chain disruptions. The West Texas Food Bank 62 00:04:12,120 --> 00:04:15,120 Speaker 1: near Midland has more than four cars lined up each 63 00:04:15,160 --> 00:04:19,800 Speaker 1: Wednesday for free food. The line grows each week. It's 64 00:04:19,839 --> 00:04:22,320 Speaker 1: the longest since the darkest days of the pandemic. In 65 00:04:24,320 --> 00:04:28,040 Speaker 1: Libby Campbell, the President says, food costs are increasing because 66 00:04:28,040 --> 00:04:31,039 Speaker 1: of fertilizer prices and how hard it's getting to transport 67 00:04:31,080 --> 00:04:34,680 Speaker 1: food into the region. Increased checks at the border with 68 00:04:34,800 --> 00:04:37,640 Speaker 1: Mexico means lots of food is going to waste as 69 00:04:37,680 --> 00:04:42,279 Speaker 1: it sits in line increasing prices in the region. It's 70 00:04:42,320 --> 00:04:45,560 Speaker 1: just the cost of what things you know are to 71 00:04:45,600 --> 00:04:48,160 Speaker 1: live every day, and it's truly causing us stress on 72 00:04:48,279 --> 00:04:52,400 Speaker 1: our community. The Federal Reserve and other central banks are 73 00:04:52,440 --> 00:04:55,880 Speaker 1: raising interest rates, but it remains to be seen how 74 00:04:55,960 --> 00:05:17,200 Speaker 1: much that will help in Midland. MMM. So, there's lots 75 00:05:17,200 --> 00:05:21,159 Speaker 1: of interesting people here a Davos with grand theories about 76 00:05:21,160 --> 00:05:23,880 Speaker 1: the world, But Professor Richard Baldwin is someone who actually 77 00:05:24,040 --> 00:05:27,640 Speaker 1: has facts and experience to back up his theories. Professor 78 00:05:27,680 --> 00:05:31,080 Speaker 1: of International economics at the Graduate Institute in Geneva and 79 00:05:31,279 --> 00:05:35,400 Speaker 1: an author of several excellent books on different aspects of globalization, 80 00:05:35,480 --> 00:05:39,839 Speaker 1: which we've discussed in the past on Stephanomics, Richard. This 81 00:05:39,880 --> 00:05:43,719 Speaker 1: has been one of those forums where people are getting 82 00:05:43,720 --> 00:05:47,800 Speaker 1: into all the conversations about the end of globalization. You're 83 00:05:47,880 --> 00:05:53,960 Speaker 1: someone who's charted the future of globalization from a particular perspective. 84 00:05:55,000 --> 00:05:57,400 Speaker 1: What do you think about everything that's been said this week? 85 00:05:57,680 --> 00:06:01,720 Speaker 1: The basic narrative is globally say is dying. There was 86 00:06:01,880 --> 00:06:05,039 Speaker 1: some recent op ed pieces in the Financial Times as 87 00:06:05,080 --> 00:06:07,840 Speaker 1: not there's a whole session here because the dying or 88 00:06:07,880 --> 00:06:10,520 Speaker 1: is the d global? I think it's just completely wrong. 89 00:06:11,080 --> 00:06:16,400 Speaker 1: People are misthinking what globalization means because they're stuck in 90 00:06:16,480 --> 00:06:20,760 Speaker 1: the sort of nineteenth century view that trade means goods 91 00:06:20,760 --> 00:06:24,640 Speaker 1: crossing borders. Nowadays, if you write anything with trade, they 92 00:06:24,720 --> 00:06:27,040 Speaker 1: stick a containership at the top of the article. And 93 00:06:27,600 --> 00:06:29,520 Speaker 1: there are a lot of container ships queuing up around 94 00:06:29,560 --> 00:06:33,159 Speaker 1: the world. There are, there are, But since about the 95 00:06:33,240 --> 00:06:37,120 Speaker 1: mid two thousand's, the trade and goods to GDP ratio 96 00:06:37,279 --> 00:06:41,160 Speaker 1: has peaked and is declining, but the trade of services 97 00:06:41,200 --> 00:06:45,040 Speaker 1: to GDP is continuing to soar. So my idea is 98 00:06:45,080 --> 00:06:50,799 Speaker 1: that fundamentally globalization is driven by arbitrage and there's arbitrage 99 00:06:50,800 --> 00:06:53,560 Speaker 1: and goods that was what we've had in the past. 100 00:06:53,960 --> 00:06:57,159 Speaker 1: There's arbor grammage of services, which is just starting right now, 101 00:06:57,400 --> 00:07:00,160 Speaker 1: people taking advantage of differences in prices and then sort 102 00:07:00,200 --> 00:07:02,920 Speaker 1: of trading those way. Exactly, it's an arbitrage on wages. 103 00:07:03,000 --> 00:07:07,400 Speaker 1: So it's essentially working from home when homes abroad, but 104 00:07:07,480 --> 00:07:11,280 Speaker 1: if home is Bogata, five dollars an hour is a 105 00:07:11,280 --> 00:07:14,080 Speaker 1: middle class living. If you work two thousand hours a 106 00:07:14,160 --> 00:07:17,080 Speaker 1: year for five dollars, that's ten thousand, and in most countries, 107 00:07:17,320 --> 00:07:20,000 Speaker 1: ten thousand dollars a year is a middle class wage. 108 00:07:20,440 --> 00:07:24,760 Speaker 1: So instead of having your receipts checked against expense claims 109 00:07:24,800 --> 00:07:28,040 Speaker 1: in New York or London, you offshore to Bogata and 110 00:07:28,120 --> 00:07:30,680 Speaker 1: have it done for much cheaper and you integrate that way. 111 00:07:30,720 --> 00:07:33,560 Speaker 1: So that kind of service, and it's important to point 112 00:07:33,600 --> 00:07:36,720 Speaker 1: out that this is what we call intermediate services, not 113 00:07:36,840 --> 00:07:40,440 Speaker 1: final services, because final services are very regulated, but all 114 00:07:40,480 --> 00:07:44,200 Speaker 1: the inputs, if you will, the service value chain, is 115 00:07:44,240 --> 00:07:46,480 Speaker 1: not regulated. So what kind of thing just in terms 116 00:07:46,520 --> 00:07:48,680 Speaker 1: of people can make the distinction in their heads. So 117 00:07:48,800 --> 00:07:52,040 Speaker 1: for example, uh, if you're an architect, to do a 118 00:07:52,040 --> 00:07:55,640 Speaker 1: building in Switzerland, you need a Swiss diploma. But to 119 00:07:55,800 --> 00:07:59,200 Speaker 1: design the toilet blocks or decide how thick the windows 120 00:07:59,200 --> 00:08:02,679 Speaker 1: will be, that all be outsourced to India or a Kenya, 121 00:08:03,000 --> 00:08:05,440 Speaker 1: and it's the architect in Switzerland who's in charge of 122 00:08:05,480 --> 00:08:08,360 Speaker 1: making sure that it's good. But there are no formal 123 00:08:08,400 --> 00:08:11,360 Speaker 1: regulations and barriers there, so it's only a question of 124 00:08:11,400 --> 00:08:15,119 Speaker 1: whether this architect can work together closely enough with people 125 00:08:15,120 --> 00:08:18,560 Speaker 1: in low wage countries to make everything cheaper. So that's 126 00:08:18,600 --> 00:08:21,880 Speaker 1: that's what the whole sometimes called business processing outsourcing is 127 00:08:22,080 --> 00:08:26,400 Speaker 1: intermediate services KPO. Knowledge process outsourcing is also that way, 128 00:08:26,680 --> 00:08:28,840 Speaker 1: and a lot of the big Balta nationals called to 129 00:08:29,320 --> 00:08:33,760 Speaker 1: service sector h shared service centers to do it um. 130 00:08:33,800 --> 00:08:36,840 Speaker 1: There's also these online freelance platforms which will give you 131 00:08:37,360 --> 00:08:39,560 Speaker 1: very good idea what's going on. It's like eBay but 132 00:08:39,679 --> 00:08:43,160 Speaker 1: for services. And that was something I remember you, you know, 133 00:08:43,520 --> 00:08:46,360 Speaker 1: the big book that you wrote the last time that 134 00:08:46,400 --> 00:08:50,280 Speaker 1: we speke was about that power of that of ai 135 00:08:50,520 --> 00:08:53,160 Speaker 1: UM and even people who are people being able to 136 00:08:53,200 --> 00:08:56,760 Speaker 1: do these jobs in the far flung country who don't 137 00:08:56,760 --> 00:08:58,559 Speaker 1: have English as their second language. You know, as you've 138 00:08:58,559 --> 00:09:00,679 Speaker 1: got as you have a machine trying lation get better 139 00:09:00,800 --> 00:09:03,959 Speaker 1: in best of that itpens up that whole market country. 140 00:09:05,160 --> 00:09:09,200 Speaker 1: It was low skage, low skilled workers walking into factories. 141 00:09:09,240 --> 00:09:11,720 Speaker 1: Now it's going to be low wage workers working into 142 00:09:11,760 --> 00:09:14,719 Speaker 1: our walking into our offices. So that I must say 143 00:09:14,720 --> 00:09:16,959 Speaker 1: that was one of my better calls. I did not 144 00:09:17,080 --> 00:09:20,280 Speaker 1: know COVID what's coming, but I was telling people about 145 00:09:20,360 --> 00:09:24,360 Speaker 1: this telemigration opening up the door to globalization and offshoring. 146 00:09:24,880 --> 00:09:27,320 Speaker 1: And I used to have to show videos of people 147 00:09:27,440 --> 00:09:31,520 Speaker 1: working teleworking literally nobody like you, especially in Europe. They go, 148 00:09:31,600 --> 00:09:33,839 Speaker 1: you can't do that from home, and now we all 149 00:09:33,880 --> 00:09:36,760 Speaker 1: do so. Essentially we've had five to ten year advance 150 00:09:36,840 --> 00:09:41,079 Speaker 1: and the ability to make remote teams in the service 151 00:09:41,080 --> 00:09:45,199 Speaker 1: sector work together. So the ability to do this is exploding. 152 00:09:45,440 --> 00:09:48,440 Speaker 1: But it was. The basic facts are that trading services 153 00:09:48,480 --> 00:09:51,760 Speaker 1: has grown two or three times faster than trading goods. 154 00:09:52,040 --> 00:09:56,160 Speaker 1: So it is a simple matter of calculation that trade 155 00:09:56,160 --> 00:10:00,000 Speaker 1: and services is the future of trade. And I guess 156 00:10:00,000 --> 00:10:02,240 Speaker 1: it's also the case that some of this, if it's 157 00:10:02,280 --> 00:10:06,040 Speaker 1: if it's digital transfers of services, it won't it won't 158 00:10:06,200 --> 00:10:09,880 Speaker 1: potentially show up in a lot of these traditional statistics, 159 00:10:09,880 --> 00:10:12,319 Speaker 1: even the services trade, you might find that you're not 160 00:10:12,520 --> 00:10:14,840 Speaker 1: capturing enough. I think that that is really going to 161 00:10:14,840 --> 00:10:18,160 Speaker 1: be the wave. The other thing to to to say 162 00:10:18,200 --> 00:10:22,360 Speaker 1: about the statistics is they're terrible. They are absolutely terrible. 163 00:10:22,400 --> 00:10:27,160 Speaker 1: They were essentially designed to track financial transactions and they 164 00:10:27,160 --> 00:10:29,360 Speaker 1: were held by the central bank, so they're called the 165 00:10:29,360 --> 00:10:33,920 Speaker 1: extended balance of payment statistics. So the central bank would 166 00:10:34,000 --> 00:10:37,760 Speaker 1: find an international financial transaction and if it didn't pass 167 00:10:37,760 --> 00:10:39,960 Speaker 1: through customs, they would be pulling their hair out as 168 00:10:40,000 --> 00:10:43,079 Speaker 1: to where to stick it. And the central banks, without 169 00:10:43,160 --> 00:10:47,000 Speaker 1: thinking anything about statistical analysis, put together a whole bunch 170 00:10:47,040 --> 00:10:49,280 Speaker 1: of stuff just to give you a very One of 171 00:10:49,280 --> 00:10:52,440 Speaker 1: my favorite examples is one of the bigger slices that 172 00:10:52,400 --> 00:10:56,120 Speaker 1: has been growing quite quickly. It is called Information and 173 00:10:56,160 --> 00:11:01,480 Speaker 1: Communication UM services, and in there they stick the utility 174 00:11:01,559 --> 00:11:05,720 Speaker 1: bits of payments for telephones and all the Indian I 175 00:11:05,840 --> 00:11:10,959 Speaker 1: T offshore soft software, as if the utility had anything 176 00:11:10,960 --> 00:11:12,679 Speaker 1: to do with the software if you wanted to do 177 00:11:12,800 --> 00:11:16,760 Speaker 1: jobs or policy is in many countries don't separate them out, 178 00:11:17,200 --> 00:11:19,760 Speaker 1: so it's really not fit for purpose, and it's one 179 00:11:19,800 --> 00:11:21,400 Speaker 1: of the things we're just going to have to get 180 00:11:21,640 --> 00:11:26,560 Speaker 1: done right because in the rich countries work in the 181 00:11:26,640 --> 00:11:29,959 Speaker 1: service sector and will be affected by this. But we can't, 182 00:11:30,080 --> 00:11:32,120 Speaker 1: and we don't even have the basic statistics to say 183 00:11:32,160 --> 00:11:35,480 Speaker 1: how much. So that it is. The statistics are really 184 00:11:35,520 --> 00:11:38,080 Speaker 1: really disappointing, but no matter what you do, you still 185 00:11:38,080 --> 00:11:41,640 Speaker 1: see it climbing now. And another one I've been exploring 186 00:11:42,080 --> 00:11:45,200 Speaker 1: is to see if we can think about the data 187 00:11:45,280 --> 00:11:48,280 Speaker 1: flows for which there's a little bit better data as 188 00:11:48,320 --> 00:11:51,360 Speaker 1: a proxy for services, because you can I mean, if 189 00:11:51,360 --> 00:11:53,920 Speaker 1: you if you think about it, it's hard to imagine 190 00:11:54,040 --> 00:11:58,679 Speaker 1: data crossing border that's not somehow related to somebody making 191 00:11:58,720 --> 00:12:01,839 Speaker 1: money in a service, and so I don't think it's 192 00:12:01,840 --> 00:12:04,600 Speaker 1: a terrible proxy. And although that we don't have very 193 00:12:04,600 --> 00:12:07,360 Speaker 1: good data for that, at least you can see how 194 00:12:07,400 --> 00:12:11,040 Speaker 1: steeply it's rising, and if you take that as an 195 00:12:11,040 --> 00:12:14,679 Speaker 1: indication of some service being sold across some border, it's 196 00:12:14,800 --> 00:12:20,040 Speaker 1: enormous that can I just do say parathetically, Um, there's 197 00:12:20,120 --> 00:12:23,160 Speaker 1: nobody in charge of measuring data flows in the world. 198 00:12:23,760 --> 00:12:26,480 Speaker 1: Believe that you should do another podcast on that. There's 199 00:12:27,240 --> 00:12:29,920 Speaker 1: I was talking to people at the o c D 200 00:12:29,960 --> 00:12:34,000 Speaker 1: and the International Telecommunication there's no international organization that keeps 201 00:12:34,000 --> 00:12:36,360 Speaker 1: track of it, and there's a couple of private sector 202 00:12:36,440 --> 00:12:40,760 Speaker 1: firms who trace the like the bandwidth not what actually 203 00:12:40,760 --> 00:12:43,800 Speaker 1: goes through, but the bandwidth. But obviously there's a computer 204 00:12:44,280 --> 00:12:47,000 Speaker 1: or a whole bunch of computers which having precise data 205 00:12:47,480 --> 00:12:50,360 Speaker 1: on where it's going, when it goes, etcetera like that, 206 00:12:50,640 --> 00:12:53,160 Speaker 1: but nobody in the world gathers it. And everybody says 207 00:12:53,240 --> 00:12:56,160 Speaker 1: data as the world's future. Nobody's gathering data. A funny 208 00:12:56,160 --> 00:12:58,440 Speaker 1: feeling that you could talk to the giggles of this 209 00:12:58,480 --> 00:13:00,280 Speaker 1: world and you would find that they had quite a 210 00:13:00,280 --> 00:13:01,800 Speaker 1: lot of these days, so they might not find it 211 00:13:02,000 --> 00:13:05,280 Speaker 1: useful to shap Let me just make a separate point. 212 00:13:05,320 --> 00:13:08,400 Speaker 1: The first breakfast two days ago, I went to Microsoft 213 00:13:08,400 --> 00:13:11,440 Speaker 1: cafe and Brad Smith was there, president of Microsoft, and 214 00:13:12,000 --> 00:13:15,520 Speaker 1: the Ian Bremer, who's the famous international relations guys, and 215 00:13:15,559 --> 00:13:20,199 Speaker 1: we were talking of about Ukraine, of course, and the 216 00:13:20,240 --> 00:13:24,240 Speaker 1: presenter said, uh, you know, the attack was I was 217 00:13:24,320 --> 00:13:27,920 Speaker 1: hybrid to start with, and it started, you know, at 218 00:13:27,960 --> 00:13:30,720 Speaker 1: the same time as the ward and Brad raised hand said, no, 219 00:13:31,920 --> 00:13:36,920 Speaker 1: it started twelve hours before the war. Because Microsoft monitors 220 00:13:36,960 --> 00:13:39,679 Speaker 1: all the systems around the world, so they knew when 221 00:13:39,679 --> 00:13:42,920 Speaker 1: the attack was happening in real time. And right next 222 00:13:42,920 --> 00:13:45,080 Speaker 1: to him was the woman who was ahead of the 223 00:13:45,120 --> 00:13:49,640 Speaker 1: cyber defense of the United States, and they cyber defense 224 00:13:50,160 --> 00:13:53,000 Speaker 1: looks to I T companies to tell them about the 225 00:13:53,160 --> 00:13:56,160 Speaker 1: cyber attacks that are happening. So you're absolutely right, it's 226 00:13:56,200 --> 00:14:01,000 Speaker 1: the Google's Amazon Microsoft Web service in Microsoft to have 227 00:14:01,120 --> 00:14:05,520 Speaker 1: the data. Well, just going back on on Ukraine, because 228 00:14:06,320 --> 00:14:09,680 Speaker 1: everything you said is very compelling, particularly from the standpoint 229 00:14:09,720 --> 00:14:13,199 Speaker 1: of businesses who are thinking about how to organize their 230 00:14:13,200 --> 00:14:16,920 Speaker 1: work across countries and just how to do it most efficiently. 231 00:14:18,080 --> 00:14:20,960 Speaker 1: In the conversations that there have been endeavors, there's been 232 00:14:21,000 --> 00:14:24,520 Speaker 1: a big focus on new divisions between countries. You know, 233 00:14:24,560 --> 00:14:27,280 Speaker 1: if the world does seem increasingly divided between the sort 234 00:14:27,280 --> 00:14:29,200 Speaker 1: of US and Europe on the one hand, and a 235 00:14:29,240 --> 00:14:34,720 Speaker 1: few other democracies and potentially China, Russia and countries that 236 00:14:34,760 --> 00:14:39,119 Speaker 1: are at least not wanting to just to be separated 237 00:14:39,160 --> 00:14:42,760 Speaker 1: from them, those kind of geopolitical forces, how likely is 238 00:14:42,800 --> 00:14:45,200 Speaker 1: it do you think that that will affect the pattern 239 00:14:45,520 --> 00:14:48,200 Speaker 1: of business relationships and even the ability to do this 240 00:14:48,320 --> 00:14:52,040 Speaker 1: kind of integration well, potentially long run. But one of 241 00:14:52,080 --> 00:14:54,960 Speaker 1: the things I have been doing recently that that's beyond 242 00:14:55,000 --> 00:14:58,680 Speaker 1: my book, is trying to develop measures of foreign exposure 243 00:14:58,800 --> 00:15:01,160 Speaker 1: of supply chains to that with an economist at the 244 00:15:01,200 --> 00:15:05,040 Speaker 1: Bank of England, Rebecca Freeman, and uh so, we use 245 00:15:05,160 --> 00:15:07,800 Speaker 1: this these input world input output tables to try and 246 00:15:07,840 --> 00:15:11,200 Speaker 1: figure out how much you're actually buying from China. And 247 00:15:11,240 --> 00:15:13,520 Speaker 1: one of the amazing things we found is that you're 248 00:15:13,520 --> 00:15:16,200 Speaker 1: buying probably two or three times more than you thought 249 00:15:16,240 --> 00:15:20,280 Speaker 1: you were because everything you're buying from anyone has China 250 00:15:20,680 --> 00:15:23,720 Speaker 1: puts into it. So we were on the US auto industry. 251 00:15:23,760 --> 00:15:26,000 Speaker 1: It looks like they depend upon two percent of the 252 00:15:26,080 --> 00:15:30,120 Speaker 1: gross inputs come from China. If you do the whole calculation, 253 00:15:30,200 --> 00:15:33,120 Speaker 1: the leontif as they call it, the roundabout it's about 254 00:15:35,160 --> 00:15:38,320 Speaker 1: so they're going to have a hard time on scrambling 255 00:15:38,320 --> 00:15:43,280 Speaker 1: this onland. So they talk about disengaging with China and stuff, 256 00:15:43,320 --> 00:15:45,520 Speaker 1: but I think that's mostly talked. You know, there'll be 257 00:15:45,520 --> 00:15:50,560 Speaker 1: a few sectors where they semiconductors, maybe medical, uh supplies 258 00:15:50,600 --> 00:15:54,600 Speaker 1: and things like that, but the vast majority, the truth 259 00:15:54,680 --> 00:15:57,640 Speaker 1: is is that China is the opeque of industrial inputs 260 00:15:57,680 --> 00:16:00,640 Speaker 1: for the entire world. And you can't shut OPEC off, 261 00:16:00,720 --> 00:16:03,360 Speaker 1: at least not very very quickly. So that I and 262 00:16:03,760 --> 00:16:07,840 Speaker 1: who was it saying this morning, It was the UM 263 00:16:08,600 --> 00:16:10,920 Speaker 1: I think it was the head of the American input 264 00:16:10,760 --> 00:16:13,720 Speaker 1: at Export Bank, who was saying, there's all this jew 265 00:16:13,800 --> 00:16:17,480 Speaker 1: strategic tensions. But actually, the United States exports to China 266 00:16:17,560 --> 00:16:19,920 Speaker 1: this year are as high as they ever have been, 267 00:16:20,280 --> 00:16:23,120 Speaker 1: and US imports from China have been as high as 268 00:16:23,160 --> 00:16:26,600 Speaker 1: they ever have been. So it seems like the businesses 269 00:16:26,640 --> 00:16:29,280 Speaker 1: have not got the memo that they're supposed to be 270 00:16:29,480 --> 00:16:33,840 Speaker 1: separating everybody and so and and just given how much 271 00:16:33,880 --> 00:16:37,120 Speaker 1: of the world's manufacturing capacity is in China now and 272 00:16:37,160 --> 00:16:40,680 Speaker 1: how specialized they are. You know, let's basically, all socks 273 00:16:40,880 --> 00:16:43,400 Speaker 1: are made in China unless there's some sort of you know, 274 00:16:43,440 --> 00:16:45,920 Speaker 1: your mother knit them or something. There's because there's a 275 00:16:45,920 --> 00:16:48,480 Speaker 1: whole village that makes socks, and nobody else in the 276 00:16:48,480 --> 00:16:51,280 Speaker 1: world will set up that village to make socks just 277 00:16:51,320 --> 00:16:55,360 Speaker 1: because Biden says, you know, we should separate. So that 278 00:16:55,520 --> 00:16:58,280 Speaker 1: that's I find I don't think that. I think that 279 00:16:58,360 --> 00:17:01,000 Speaker 1: disengagement's happening slowly, and there's a sort of in the 280 00:17:01,040 --> 00:17:05,080 Speaker 1: digital world that's already happened, and we'll probably exaggerate, but 281 00:17:05,160 --> 00:17:08,159 Speaker 1: in the physical world, especially manufactured goods, I think it 282 00:17:08,200 --> 00:17:11,520 Speaker 1: will be very very hard to unscramble that armor. China's 283 00:17:11,960 --> 00:17:15,879 Speaker 1: global trade share had actually gone up quite significantly since 284 00:17:15,960 --> 00:17:18,240 Speaker 1: COVID and in this whole period that we've been talking about, 285 00:17:18,280 --> 00:17:21,600 Speaker 1: the accelerated deglobalization and even with all the supply chain 286 00:17:21,640 --> 00:17:23,679 Speaker 1: issues and everything else, they have increased their share of 287 00:17:23,680 --> 00:17:26,280 Speaker 1: global trade. Final question for you, Richard, I've got to 288 00:17:26,280 --> 00:17:27,920 Speaker 1: do a session with the head of the w t 289 00:17:28,000 --> 00:17:30,400 Speaker 1: O and I should probably get some questions from you, 290 00:17:30,760 --> 00:17:32,639 Speaker 1: the best questions to ask them. In the world that 291 00:17:32,680 --> 00:17:34,720 Speaker 1: you've described, it doesn't seem like there's much of a 292 00:17:34,840 --> 00:17:38,600 Speaker 1: role for this traditional World Trade organization and those kind 293 00:17:38,600 --> 00:17:41,560 Speaker 1: of trade agreements. Well, I think the days of traditional 294 00:17:41,560 --> 00:17:45,679 Speaker 1: trade agreements are over. But actually the W two has 295 00:17:45,760 --> 00:17:48,880 Speaker 1: moved beyond the old big rounds things where the old 296 00:17:48,960 --> 00:17:52,720 Speaker 1: days it was everything had to be agreed before anything 297 00:17:52,800 --> 00:17:56,280 Speaker 1: was agreed, and everybody had to agree with everything. But 298 00:17:56,359 --> 00:17:59,760 Speaker 1: my my song right now is that we really need 299 00:17:59,760 --> 00:18:02,720 Speaker 1: the w t O to get the cloud and the 300 00:18:02,760 --> 00:18:06,800 Speaker 1: attention of heads of state because the great challenges of 301 00:18:07,040 --> 00:18:12,240 Speaker 1: our time, climate change above all, will not happen unless 302 00:18:12,320 --> 00:18:16,440 Speaker 1: trade goes on. So let me break that down. Mitigation 303 00:18:16,680 --> 00:18:20,400 Speaker 1: will require technology to move from a handful of countries 304 00:18:20,600 --> 00:18:23,240 Speaker 1: to the entire rests of the world, and that technology 305 00:18:23,359 --> 00:18:28,520 Speaker 1: is generally embedded in goods, services, investment, and intelectro property rights, 306 00:18:28,800 --> 00:18:31,440 Speaker 1: all of which need to cross borders. And if it's 307 00:18:31,440 --> 00:18:33,200 Speaker 1: going to get paid for, because it's not going to 308 00:18:33,280 --> 00:18:35,679 Speaker 1: all be done on charity, there has to be lots 309 00:18:35,720 --> 00:18:38,439 Speaker 1: more trade going back the other way, potentially trade and 310 00:18:38,480 --> 00:18:42,080 Speaker 1: services for example. So if we fall into the world 311 00:18:42,200 --> 00:18:48,679 Speaker 1: where this disc disagreements over commercial matters breaks down the 312 00:18:48,760 --> 00:18:52,360 Speaker 1: trading system, we will not get a climate rescue. So 313 00:18:52,440 --> 00:18:56,040 Speaker 1: I call it the w t O Rising Imperative. And 314 00:18:56,080 --> 00:19:01,000 Speaker 1: we absolutely need G seven G twenty leaders to say 315 00:19:01,280 --> 00:19:04,880 Speaker 1: we need this to solve humanities problems. Just to take 316 00:19:04,880 --> 00:19:08,280 Speaker 1: a very specific one food. If you look at the 317 00:19:08,320 --> 00:19:10,880 Speaker 1: I p c C report and the f A report 318 00:19:11,480 --> 00:19:14,480 Speaker 1: that we are going to have an extra billion people 319 00:19:15,000 --> 00:19:18,920 Speaker 1: in places which increasingly can't grow their staple crop because 320 00:19:18,920 --> 00:19:22,080 Speaker 1: there's not enough water heat. So you have three options. 321 00:19:22,560 --> 00:19:26,680 Speaker 1: Either we do more trade and food and the technology 322 00:19:26,720 --> 00:19:29,600 Speaker 1: to allow them to do it, or they die or 323 00:19:29,640 --> 00:19:32,959 Speaker 1: they move all. The only one of those that's acceptable 324 00:19:33,040 --> 00:19:35,440 Speaker 1: is more trade. And if we get into a world 325 00:19:35,480 --> 00:19:39,000 Speaker 1: where there's a sort of breakdown us China spills over 326 00:19:39,080 --> 00:19:43,240 Speaker 1: nobody's cooperating the rules aren't respected, that won't happen. So 327 00:19:43,359 --> 00:19:46,280 Speaker 1: it's I think it's it's time to start realizing that 328 00:19:46,720 --> 00:19:50,680 Speaker 1: fixing the world's problems means moving things from where they're 329 00:19:50,680 --> 00:19:55,359 Speaker 1: abundant to where they're scarce, and in particular technology, and 330 00:19:55,400 --> 00:19:58,399 Speaker 1: that though technology which is answered to basically all of 331 00:19:58,400 --> 00:20:02,320 Speaker 1: our challenges, in the future will require a well functioning system. 332 00:20:02,359 --> 00:20:05,199 Speaker 1: So I hope they'll start to think of the W 333 00:20:05,359 --> 00:20:08,479 Speaker 1: two like the w h O, which we actually needed 334 00:20:08,640 --> 00:20:11,200 Speaker 1: during the COVID. It has it has its own problems, 335 00:20:11,400 --> 00:20:14,199 Speaker 1: but nobody's thinking about the w h O, where you 336 00:20:14,280 --> 00:20:19,560 Speaker 1: send some ambassadors and trade ministers to haggle over commercial disputes. 337 00:20:19,960 --> 00:20:24,719 Speaker 1: We realize that these this organization was critical to saving 338 00:20:24,880 --> 00:20:27,639 Speaker 1: hundreds of millions of lives. Well, I'm going to be 339 00:20:27,680 --> 00:20:29,600 Speaker 1: talking to the head of the World Trade Organization. I 340 00:20:29,680 --> 00:20:32,520 Speaker 1: will make check in see whether she's ready for that, right, 341 00:20:32,680 --> 00:20:43,240 Speaker 1: Thank you very much, rich Reportman, Thank you. Now. Straight 342 00:20:43,280 --> 00:20:45,840 Speaker 1: after that chat with Richard Baldwin, I did have the 343 00:20:45,840 --> 00:20:48,480 Speaker 1: pleasure of leading a conversation about the future of global 344 00:20:48,520 --> 00:20:51,160 Speaker 1: trade with not only the Director General of the World 345 00:20:51,160 --> 00:20:55,080 Speaker 1: Trade Organization Dr. And Gorzia corn Joy Wheler, but also 346 00:20:55,160 --> 00:20:59,480 Speaker 1: the Indian Commerce Minister, Pios gal and Ryan Peterson, chief 347 00:20:59,560 --> 00:21:03,600 Speaker 1: executive of global logistics company Flexport. You'll hear all of 348 00:21:03,600 --> 00:21:06,520 Speaker 1: them in a minute. But I started the panel by 349 00:21:06,560 --> 00:21:11,320 Speaker 1: asking Valdis Dombrowski's the European Commissioner for Trade and Executive 350 00:21:11,440 --> 00:21:15,480 Speaker 1: Vice President for the Economy, about the European Union's response 351 00:21:15,520 --> 00:21:20,360 Speaker 1: to the invasion of Ukraine. Specifically, given the internal tensions 352 00:21:20,400 --> 00:21:25,160 Speaker 1: around further limiting energy imports from Russia, I asked him 353 00:21:25,200 --> 00:21:28,399 Speaker 1: whether the European Union was reaching the limit of what 354 00:21:28,480 --> 00:21:35,960 Speaker 1: it could do to punish Russia. Minister, well, you won't 355 00:21:36,000 --> 00:21:38,560 Speaker 1: be surprised that I will ask you a question on 356 00:21:38,600 --> 00:21:41,639 Speaker 1: this topic. India has made it very clear that it 357 00:21:41,680 --> 00:21:44,280 Speaker 1: needs to buy cheap oil from Russia. It's buying more 358 00:21:45,280 --> 00:21:49,760 Speaker 1: oil discounted Russian oil, and it buys more Russian weapons 359 00:21:49,840 --> 00:21:52,640 Speaker 1: than any country in the world. The US has been 360 00:21:53,000 --> 00:21:58,000 Speaker 1: understanding about India's position, has said they're sort of playing 361 00:21:58,000 --> 00:22:01,000 Speaker 1: the long game though, because they believe ultimately that the 362 00:22:01,080 --> 00:22:03,879 Speaker 1: US is the key strategic partner for India. So can 363 00:22:03,920 --> 00:22:07,600 Speaker 1: I just ask you what steps are you taking over 364 00:22:07,640 --> 00:22:10,879 Speaker 1: the longer term to reduce dependent on dependence on Russia? 365 00:22:11,040 --> 00:22:16,080 Speaker 1: Even as you buy more from Russia. Right now, I 366 00:22:16,119 --> 00:22:22,800 Speaker 1: think we've been very clear from the beginning that dialogue 367 00:22:23,200 --> 00:22:26,720 Speaker 1: is the way forward. We must sort out this dispute. 368 00:22:26,760 --> 00:22:30,240 Speaker 1: It's doing nobody any good and it's important that we 369 00:22:30,680 --> 00:22:36,280 Speaker 1: that all the concerned countries and the neighbors find a 370 00:22:36,359 --> 00:22:41,080 Speaker 1: solution to this very very unfortunate conflict. In terms of 371 00:22:41,119 --> 00:22:46,640 Speaker 1: India's own dependence on oil from Russia, we have never 372 00:22:46,720 --> 00:22:52,240 Speaker 1: traditionally been a very large importer of petroleum products from Russia. 373 00:22:52,720 --> 00:22:57,760 Speaker 1: In fact, on an earlier occasion, our Foreign Minister has 374 00:22:57,840 --> 00:23:03,240 Speaker 1: clarified that we buy le petroleum products from Russia in 375 00:23:03,280 --> 00:23:06,840 Speaker 1: a month than what is consumed or bought by the 376 00:23:06,920 --> 00:23:13,040 Speaker 1: European countries in an afternoon. So therefore, I think any 377 00:23:13,680 --> 00:23:18,840 Speaker 1: suggestion that India is increasing imports from Russia is any 378 00:23:18,840 --> 00:23:25,360 Speaker 1: way contributing to the situation suddenly doesn't stand scrutiny. Over 379 00:23:25,400 --> 00:23:29,000 Speaker 1: the years, there have been a friend of India, and 380 00:23:30,000 --> 00:23:33,640 Speaker 1: we believe that the right way would be to find 381 00:23:33,720 --> 00:23:39,240 Speaker 1: an amicable solution. In terms of the long term, India 382 00:23:39,280 --> 00:23:43,959 Speaker 1: has always looked at diversified sources for our petroleum requirements. 383 00:23:44,560 --> 00:23:49,239 Speaker 1: But in the current situation, when inflation is at an 384 00:23:49,240 --> 00:23:53,320 Speaker 1: all time high. It has caused severe stress to people 385 00:23:53,520 --> 00:23:57,240 Speaker 1: all over the world. The European Union and other countries 386 00:23:57,280 --> 00:24:01,600 Speaker 1: in Europe continue to buy far are more larger quantities 387 00:24:02,000 --> 00:24:04,840 Speaker 1: than India has ever even thought of buying or will 388 00:24:04,880 --> 00:24:08,239 Speaker 1: ever buy. So I don't think at all India at 389 00:24:08,280 --> 00:24:13,040 Speaker 1: this point of time is in any way responsible for 390 00:24:13,080 --> 00:24:17,760 Speaker 1: the petroleum exports of Russia. Having said that, I must 391 00:24:17,840 --> 00:24:22,199 Speaker 1: also placed on record that I was personally advised that 392 00:24:22,359 --> 00:24:27,720 Speaker 1: there is no sanction on petroleum production, petroleum goods or 393 00:24:27,800 --> 00:24:31,919 Speaker 1: food grain procurement from Russia and no sanctions have been 394 00:24:32,000 --> 00:24:37,760 Speaker 1: placed on that by senior leaders of the coalition which 395 00:24:37,800 --> 00:24:41,720 Speaker 1: has put in the sanctions. So I think India as 396 00:24:41,760 --> 00:24:48,040 Speaker 1: well within the current framework which has been designed by 397 00:24:48,200 --> 00:24:55,040 Speaker 1: the countries who have put put in the sanctions. Obviously, 398 00:24:55,080 --> 00:24:59,880 Speaker 1: one of the very worrying UH counter effects A side 399 00:24:59,880 --> 00:25:03,720 Speaker 1: of efects of the crisis in Ukraine is this growing 400 00:25:03,800 --> 00:25:08,119 Speaker 1: fear of a food crisis and food short global food shortages. 401 00:25:09,280 --> 00:25:14,120 Speaker 1: What what practically are you thinking about in your position 402 00:25:14,280 --> 00:25:17,159 Speaker 1: to help governments respond to this crisis. Is there anything 403 00:25:17,160 --> 00:25:21,359 Speaker 1: that the w t O can do well? Thank you? Certainly, 404 00:25:21,480 --> 00:25:24,760 Speaker 1: the food crisis is a real worry, and it's not 405 00:25:24,920 --> 00:25:27,639 Speaker 1: just about this year. I think it might be about 406 00:25:27,720 --> 00:25:31,760 Speaker 1: next year even beyond that UM. And the reason I'm 407 00:25:31,800 --> 00:25:34,400 Speaker 1: saying that is if countries are not able to get 408 00:25:34,480 --> 00:25:40,040 Speaker 1: fertilizer UM to to plant the next crop those that 409 00:25:40,080 --> 00:25:43,359 Speaker 1: need fertilizer, then yields are going to be lower. There 410 00:25:43,359 --> 00:25:46,040 Speaker 1: will be less supplying the world across the board of 411 00:25:46,040 --> 00:25:49,719 Speaker 1: all types of grains and food. UM. If we are 412 00:25:49,720 --> 00:25:52,520 Speaker 1: not able to evacuate the twenty five million tons or 413 00:25:52,560 --> 00:25:57,520 Speaker 1: thereabout of Ukrainian grain that is presently stored um and 414 00:25:57,680 --> 00:26:02,520 Speaker 1: the harvest is next month for another twenty five million terms, 415 00:26:02,600 --> 00:26:07,520 Speaker 1: then that's going to be really, really difficult for the world. 416 00:26:07,880 --> 00:26:12,640 Speaker 1: So I'm saying that this food crisis is real and 417 00:26:12,960 --> 00:26:16,560 Speaker 1: we must find solutions. Of course, if the war stopped, 418 00:26:16,640 --> 00:26:19,920 Speaker 1: that would be the quickest and best solution for everyone. 419 00:26:20,640 --> 00:26:24,359 Speaker 1: But have said that if we had corridors open on 420 00:26:24,440 --> 00:26:27,040 Speaker 1: the Black Seat to evacuate some of Ukrainian green, that 421 00:26:27,119 --> 00:26:30,879 Speaker 1: would help. If we don't find solutions, of course, the 422 00:26:31,200 --> 00:26:35,280 Speaker 1: ones countries that would suffer would be the countries, the 423 00:26:35,320 --> 00:26:40,360 Speaker 1: poorer countries of the world. Now at W two, what 424 00:26:40,400 --> 00:26:44,240 Speaker 1: are we trying to do? One is not to exacerbate 425 00:26:44,320 --> 00:26:50,399 Speaker 1: the problem by having export restrictions of prohibitions of members, 426 00:26:50,800 --> 00:26:55,840 Speaker 1: because that tends to take the prices, make for more 427 00:26:56,119 --> 00:26:59,440 Speaker 1: volatility and and and you know prices can spike if 428 00:26:59,440 --> 00:27:03,320 Speaker 1: we if we do that UM, So our members the 429 00:27:03,520 --> 00:27:07,080 Speaker 1: message to them is to try to restrain. Although it's 430 00:27:07,119 --> 00:27:11,320 Speaker 1: not against w T rules. UM. If you have that, 431 00:27:11,400 --> 00:27:14,960 Speaker 1: for there's a security clause that allows that to be done, 432 00:27:15,000 --> 00:27:19,280 Speaker 1: but it has to be temporary, proportionate and transparent and 433 00:27:19,359 --> 00:27:22,960 Speaker 1: reported to the w TU UM. But so far now 434 00:27:23,320 --> 00:27:27,800 Speaker 1: we we have about twenty two members who have export 435 00:27:27,840 --> 00:27:31,359 Speaker 1: restrictions and the idea is for that to be lower. 436 00:27:31,480 --> 00:27:33,439 Speaker 1: So we don't take us a bit the problem I 437 00:27:33,480 --> 00:27:37,240 Speaker 1: think are members have taken that on board. UM. The 438 00:27:37,320 --> 00:27:40,000 Speaker 1: second issue that we're looking at is of course auto 439 00:27:40,080 --> 00:27:44,880 Speaker 1: multiply the supply on the world market. So any country 440 00:27:44,920 --> 00:27:48,399 Speaker 1: that has additional grains that they can put on the 441 00:27:48,400 --> 00:27:51,960 Speaker 1: world market, we're encouraging that very much to be the case. 442 00:27:52,680 --> 00:27:54,959 Speaker 1: Can I come back to your commissioner very briefly just 443 00:27:55,040 --> 00:27:58,680 Speaker 1: to ask are you talking to Russia about creating solidarity 444 00:27:58,760 --> 00:28:05,480 Speaker 1: lanes in the Blacks to allow grain shipments from Ukraine? Well? Uh, 445 00:28:05,640 --> 00:28:09,280 Speaker 1: First of all UH in this conflict, they need to 446 00:28:09,320 --> 00:28:12,720 Speaker 1: be clear who is aggressor who is a victim, And 447 00:28:12,800 --> 00:28:18,840 Speaker 1: it's Russia's unprovoked and illegal aggression against Ukraine which is 448 00:28:19,160 --> 00:28:24,800 Speaker 1: creating the problem. So correspondingly, we are engaging with Ukraine, 449 00:28:25,760 --> 00:28:30,200 Speaker 1: trying to help Ukraine to deal with this situation. Obviously, 450 00:28:30,480 --> 00:28:36,360 Speaker 1: UH the discussions on different ways how the grain shipments 451 00:28:36,400 --> 00:28:40,240 Speaker 1: can be done, So already now we are ramping up 452 00:28:40,360 --> 00:28:43,160 Speaker 1: the capacity to do it, and the shipment is already 453 00:28:43,200 --> 00:28:49,760 Speaker 1: happening through the land corridors through UH Poland, through Romania 454 00:28:49,920 --> 00:28:54,320 Speaker 1: and from those ports, but clearly it's not replacement. Were 455 00:28:54,360 --> 00:28:57,720 Speaker 1: also assessing other land options to get to other ports, 456 00:28:58,440 --> 00:29:03,040 Speaker 1: but clearly UH it's not able to replace in a 457 00:29:03,080 --> 00:29:11,640 Speaker 1: short term the UH UH, the sea roots UH and 458 00:29:11,640 --> 00:29:17,080 Speaker 1: and the fact that currently Russia is blocking Ukrainian ports 459 00:29:17,080 --> 00:29:21,320 Speaker 1: and this export of grain is not possible. And in meanwhile, 460 00:29:21,320 --> 00:29:24,360 Speaker 1: of course, we're seeing seeing other tendencies that Russia is 461 00:29:24,960 --> 00:29:31,080 Speaker 1: looting Ukrainian grain from occupied territories, it's burning down Ukrainian 462 00:29:31,120 --> 00:29:37,040 Speaker 1: food storages in other territories, it's destroying other Ukrainian agricultural 463 00:29:37,360 --> 00:29:42,760 Speaker 1: infrastructure and equipment. So clearly there is a deliberate action 464 00:29:42,840 --> 00:29:45,920 Speaker 1: of Russia to create these globals food security issues. I 465 00:29:45,920 --> 00:29:49,320 Speaker 1: guess that's why I wonder why we think why it 466 00:29:49,360 --> 00:29:52,920 Speaker 1: seems possible that you might have those that safe passage 467 00:29:53,040 --> 00:29:55,720 Speaker 1: when the Russians have made clear that they are willing 468 00:29:55,760 --> 00:30:00,800 Speaker 1: to sustain an enormous amount of humanitarian collassal damage. Well, 469 00:30:00,920 --> 00:30:04,240 Speaker 1: that's why we're working on different directions. Of course, if 470 00:30:04,280 --> 00:30:07,320 Speaker 1: there is a way to open those UH corridors for 471 00:30:07,680 --> 00:30:11,000 Speaker 1: Ukraine and grain exports h through as the Black Sea 472 00:30:11,080 --> 00:30:15,040 Speaker 1: from Ukrainian imports excellent in parallels I said, they're working 473 00:30:15,080 --> 00:30:21,480 Speaker 1: on other land routes, beating up capacity, simplifying procedures, administrative procedures, 474 00:30:21,480 --> 00:30:24,840 Speaker 1: customs procedures BOSS for Ukrainian imports to the EU and 475 00:30:24,960 --> 00:30:29,480 Speaker 1: for transit to other countries. Ryan Peterson, what are you 476 00:30:29,560 --> 00:30:31,600 Speaker 1: seeing when you look at supply chains, when you look 477 00:30:31,640 --> 00:30:34,800 Speaker 1: at the collateral damage in the trading system that businesses 478 00:30:34,840 --> 00:30:37,960 Speaker 1: at dealing with every day from this crisis and from 479 00:30:38,000 --> 00:30:40,640 Speaker 1: the other snarl ups that we've seen. Well, we've seen 480 00:30:40,920 --> 00:30:44,640 Speaker 1: um the last seven or eight years that you've had 481 00:30:44,640 --> 00:30:47,640 Speaker 1: it almost every single year in increasing level of disruption 482 00:30:48,000 --> 00:30:50,520 Speaker 1: in global trade. Um. Starting you can go back to 483 00:30:50,640 --> 00:30:53,080 Speaker 1: Tift when we had a strike on the west coast 484 00:30:53,160 --> 00:30:55,400 Speaker 1: of the United States and you couldn't import anything into 485 00:30:55,520 --> 00:30:58,680 Speaker 1: into the United States. Uh. We may have another one 486 00:30:58,720 --> 00:31:03,320 Speaker 1: this summer. The tract is up for renegotiation in July. Um, 487 00:31:03,400 --> 00:31:06,200 Speaker 1: you've had we had the cheapest ocean freight of all time. 488 00:31:06,240 --> 00:31:09,200 Speaker 1: Everyone likes to talk about expensive ocean freight. Was the 489 00:31:09,280 --> 00:31:12,840 Speaker 1: cheapest ocean freight probably in the history of humankind. Uh. 490 00:31:12,960 --> 00:31:16,000 Speaker 1: Great for importers and exporters, terrible for the asset owners. 491 00:31:16,000 --> 00:31:18,880 Speaker 1: They almost went in fact, Huningen did go bankrupt Korean 492 00:31:18,880 --> 00:31:23,440 Speaker 1: Ocean carrier seventeen eighteen nineteen, we had trade wars, we 493 00:31:23,520 --> 00:31:27,000 Speaker 1: had a pandemic which caused a collapse in purchase orders, 494 00:31:27,040 --> 00:31:29,479 Speaker 1: and then the worst sport congestion that we've seen all 495 00:31:29,480 --> 00:31:31,560 Speaker 1: over the world. And trade has never been more difficult. 496 00:31:31,600 --> 00:31:34,240 Speaker 1: And I think it's an interesting moment to ask is 497 00:31:34,280 --> 00:31:36,600 Speaker 1: globalization going to continue? Are we going to be able 498 00:31:36,640 --> 00:31:38,959 Speaker 1: to continue to trade or is it going to fray? 499 00:31:39,120 --> 00:31:44,520 Speaker 1: And um our system depends on peace, rule of law. Um. 500 00:31:44,720 --> 00:31:47,560 Speaker 1: We've we've built like an incredible amount of prosperity off 501 00:31:47,560 --> 00:31:50,120 Speaker 1: of the global trading system that is at risk right 502 00:31:50,160 --> 00:31:53,880 Speaker 1: now and it's um terrible to see the human implications 503 00:31:53,880 --> 00:31:56,080 Speaker 1: of that, and it has me very very concerned because 504 00:31:56,080 --> 00:31:58,520 Speaker 1: it uh we look at what happened with the Arab 505 00:31:58,560 --> 00:32:02,680 Speaker 1: spring and all these government really anarchy almost in the 506 00:32:02,720 --> 00:32:04,760 Speaker 1: Middle least, and that was really the result of high 507 00:32:04,760 --> 00:32:08,120 Speaker 1: food prices. And I don't know how to make predictions 508 00:32:08,120 --> 00:32:11,600 Speaker 1: because my predictions have been wrong the last few years. Uh, 509 00:32:11,840 --> 00:32:13,520 Speaker 1: but I'm still willing to do it, and I predict 510 00:32:13,560 --> 00:32:16,080 Speaker 1: you're going to see similar levels of crisis across any 511 00:32:16,120 --> 00:32:18,480 Speaker 1: food importing nation, especially the poor ones that don't have 512 00:32:18,480 --> 00:32:21,680 Speaker 1: fossil fuels, and that has me very very concerned. Tots. 513 00:32:21,720 --> 00:32:26,280 Speaker 1: He actually mentioned the question about food security and potential 514 00:32:26,480 --> 00:32:30,640 Speaker 1: what might be considered food protection is um um. So 515 00:32:30,680 --> 00:32:33,120 Speaker 1: there is a question, how does India intend to prevent 516 00:32:33,520 --> 00:32:38,280 Speaker 1: its recent wheat export ban from negatively affecting food security 517 00:32:38,720 --> 00:32:42,600 Speaker 1: in developing countries? And I see you've also limited sugar export. Yeah, 518 00:32:42,640 --> 00:32:44,960 Speaker 1: I'm glad you asked that question because there's a lot 519 00:32:44,960 --> 00:32:49,080 Speaker 1: of misinformation going around the place. Until two years ago, 520 00:32:49,240 --> 00:32:54,080 Speaker 1: India had no exports of it at all. Two years ago, 521 00:32:54,520 --> 00:32:58,600 Speaker 1: we had a nominal surplus of two million tons, which 522 00:32:58,640 --> 00:33:03,960 Speaker 1: is barely one percent, only one percent of global weight 523 00:33:04,040 --> 00:33:07,520 Speaker 1: trade that we had as a surplus which we allowed 524 00:33:07,560 --> 00:33:12,760 Speaker 1: to be exported last year. This year, starting April, our 525 00:33:13,000 --> 00:33:16,440 Speaker 1: estimate was that we would produce hundred and eleven million tons, 526 00:33:16,480 --> 00:33:20,680 Speaker 1: against which our domestic requirement and consumption is about hundred 527 00:33:20,680 --> 00:33:23,280 Speaker 1: and five million tons, so we thought we would have 528 00:33:23,280 --> 00:33:28,920 Speaker 1: about six seven million tons again which we could export. Unfortunately, 529 00:33:28,960 --> 00:33:32,640 Speaker 1: there was a huge climate problem. We had a heat 530 00:33:32,680 --> 00:33:35,880 Speaker 1: wave in most parts of North India which is in 531 00:33:36,000 --> 00:33:39,960 Speaker 1: public domain. Most people, I'm sure know about it, due 532 00:33:39,960 --> 00:33:44,600 Speaker 1: to which the wheat got shriveled and our production fell significantly. 533 00:33:45,000 --> 00:33:47,440 Speaker 1: In fact, dtr andengs the fields. It has fallen even 534 00:33:47,480 --> 00:33:51,240 Speaker 1: more than what we estimate, due to which we would 535 00:33:51,240 --> 00:33:55,280 Speaker 1: actually have to draw from our food security reserves to 536 00:33:55,640 --> 00:33:59,800 Speaker 1: even ensure price stability and food security of the people 537 00:33:59,840 --> 00:34:04,040 Speaker 1: of India. In this situation, from first April to tenth 538 00:34:04,040 --> 00:34:09,200 Speaker 1: of May, in forty days, are we exports increased six 539 00:34:09,280 --> 00:34:14,200 Speaker 1: times six or what it had what had happened in 540 00:34:14,200 --> 00:34:17,040 Speaker 1: the forty days last year. So we saw two million 541 00:34:17,120 --> 00:34:20,359 Speaker 1: tons going only forty days, and the speed with which 542 00:34:20,400 --> 00:34:23,080 Speaker 1: it was going we would have had a crisis in 543 00:34:23,120 --> 00:34:28,120 Speaker 1: our own country for food stability, food security and pricing, 544 00:34:28,640 --> 00:34:33,480 Speaker 1: and therefore it was an imperative that we regulate what 545 00:34:33,719 --> 00:34:37,400 Speaker 1: is being exported. Even now, we have left the window 546 00:34:37,400 --> 00:34:41,879 Speaker 1: open for countries on a government to government basis to 547 00:34:41,920 --> 00:34:45,040 Speaker 1: take wheat from India, because we don't want the surplus 548 00:34:45,040 --> 00:34:48,560 Speaker 1: suet available, if any, to go into the hands of 549 00:34:48,640 --> 00:34:51,920 Speaker 1: speculators or holders who would then charge an arm in 550 00:34:51,960 --> 00:34:54,720 Speaker 1: a leg to the less developed countries, of the poorer 551 00:34:54,760 --> 00:34:58,480 Speaker 1: countries who would need that or the vulnerable countries who 552 00:34:58,480 --> 00:35:01,880 Speaker 1: would need that drain. Analyze the exports and we found 553 00:35:01,880 --> 00:35:05,600 Speaker 1: instead of Bangladesh or the less developed countries, it was 554 00:35:05,640 --> 00:35:09,399 Speaker 1: actually being exported to trading centers from where they would 555 00:35:09,400 --> 00:35:13,120 Speaker 1: have all the ability to manipulate prizes. And therefore we 556 00:35:13,200 --> 00:35:17,080 Speaker 1: regulated it. And therefore we believe this is a step 557 00:35:17,120 --> 00:35:21,680 Speaker 1: in the right direction to ensure equitable and social distribution 558 00:35:21,760 --> 00:35:24,560 Speaker 1: of any surfaces. That we have a lot of conversations 559 00:35:24,560 --> 00:35:26,319 Speaker 1: that people will have been in this week, and one 560 00:35:26,360 --> 00:35:31,560 Speaker 1: way or another ended up with um the fragmented fragmentation 561 00:35:31,640 --> 00:35:35,320 Speaker 1: of the global economy and the global institutions still function 562 00:35:35,440 --> 00:35:39,680 Speaker 1: that they still have as a role when major members 563 00:35:39,719 --> 00:35:42,200 Speaker 1: of those institutions no longer seem to be heading in 564 00:35:42,200 --> 00:35:44,480 Speaker 1: the right direction. How do you make the w t 565 00:35:44,640 --> 00:35:47,320 Speaker 1: O fit with the world in which people don't agree? 566 00:35:47,719 --> 00:35:51,800 Speaker 1: I must compliment the Director General, Miss h and go Z, 567 00:35:52,680 --> 00:35:55,600 Speaker 1: because it's a very tough job she has on our hands. 568 00:35:55,719 --> 00:35:57,640 Speaker 1: I I don't think any of us would end me 569 00:35:57,640 --> 00:36:00,480 Speaker 1: a job. Nobody would like to be that seat in 570 00:36:00,480 --> 00:36:04,520 Speaker 1: the current challenging times, particularly when she has to balance 571 00:36:04,560 --> 00:36:07,239 Speaker 1: the interests of the less developed of very poor countries, 572 00:36:07,880 --> 00:36:12,600 Speaker 1: the developing world which has the less the smaller income, 573 00:36:12,760 --> 00:36:16,560 Speaker 1: the middle income, the higher income, all within the developing world, 574 00:36:16,920 --> 00:36:20,279 Speaker 1: and then the very developed countries. By compliment her for 575 00:36:20,320 --> 00:36:24,000 Speaker 1: her patience, for her ability to bring so many different 576 00:36:24,040 --> 00:36:27,400 Speaker 1: interests on the table and persevere for a solution. All right, well, 577 00:36:27,400 --> 00:36:30,160 Speaker 1: I'm sure she's very glad to have that compliment, But 578 00:36:30,239 --> 00:36:32,239 Speaker 1: why don't you help her? How are you going to 579 00:36:32,280 --> 00:36:35,160 Speaker 1: Actually you're all helping. They're all helping, And I think 580 00:36:35,160 --> 00:36:38,759 Speaker 1: we've all agreed even today in an earlier session, to 581 00:36:38,880 --> 00:36:42,839 Speaker 1: look at how political consensus can be drawn trying to 582 00:36:42,880 --> 00:36:48,240 Speaker 1: bring equity with different interests on the table. Can I can? I? Well, 583 00:36:48,280 --> 00:36:51,239 Speaker 1: thank you Stephanie for eliciting so much love for me 584 00:36:53,239 --> 00:36:56,799 Speaker 1: it's wonderful. Um. I just want to say that, you know, 585 00:36:57,120 --> 00:37:01,520 Speaker 1: as a peuge mentioned is very difficult to agree things 586 00:37:01,600 --> 00:37:04,400 Speaker 1: multilaterally and that has been plague in the w T 587 00:37:05,040 --> 00:37:07,879 Speaker 1: and we shouldn't break light of it. And that's why 588 00:37:07,920 --> 00:37:11,160 Speaker 1: we need to find ways forward to agree some things 589 00:37:11,600 --> 00:37:15,719 Speaker 1: to show that the organization can confunction. Um. But what 590 00:37:15,760 --> 00:37:18,800 Speaker 1: I wanted to say is, let's not take the multilateral 591 00:37:18,800 --> 00:37:22,359 Speaker 1: trading system likely. You know, people are talking a lot 592 00:37:22,400 --> 00:37:28,560 Speaker 1: of fragmentation of moving away from multilateralism. In practical terms, 593 00:37:28,560 --> 00:37:32,120 Speaker 1: there's a lot of geopolitical tension. But the counter factual 594 00:37:32,160 --> 00:37:36,000 Speaker 1: to having a multilateral organization people need to look at 595 00:37:36,040 --> 00:37:40,160 Speaker 1: that is very costly um. And and you know, only 596 00:37:40,200 --> 00:37:44,279 Speaker 1: the poorer and weaker countries would suffer because if if 597 00:37:44,320 --> 00:37:48,200 Speaker 1: you don't have such an organization, imagine a poor country 598 00:37:48,840 --> 00:37:50,960 Speaker 1: in a developing part of the world trying to have 599 00:37:51,040 --> 00:37:54,960 Speaker 1: a bilateral agreement with a larger country. How do you 600 00:37:55,000 --> 00:37:57,640 Speaker 1: think that will look? If you had to do that 601 00:37:57,719 --> 00:38:01,279 Speaker 1: for almost everything, it would be very difficult. So we 602 00:38:01,360 --> 00:38:05,920 Speaker 1: need that multilateralism. Lastly, some problems we have now of 603 00:38:06,040 --> 00:38:10,320 Speaker 1: the global commons cannot be solved by any one country alone, 604 00:38:10,719 --> 00:38:14,480 Speaker 1: and we are facing these simultaneous crisis of the global commons, 605 00:38:14,840 --> 00:38:21,280 Speaker 1: which needs the kind of solidarity that a multilateral setting provides. Therefore, 606 00:38:21,360 --> 00:38:24,600 Speaker 1: you can't solve the pandemic on your own, you can't 607 00:38:24,680 --> 00:38:29,000 Speaker 1: solve climate change on your own. You can't even solve 608 00:38:29,080 --> 00:38:32,719 Speaker 1: food on your own, because we have net food importing 609 00:38:32,800 --> 00:38:35,480 Speaker 1: countries who don't have the ability to grow their own food. 610 00:38:36,160 --> 00:38:39,640 Speaker 1: So we are in it together, and therefore that's why 611 00:38:39,640 --> 00:38:43,000 Speaker 1: we need to strengthen organizations like the w T and 612 00:38:43,040 --> 00:38:47,120 Speaker 1: make sure we don't take it lightly about its breaking 613 00:38:47,320 --> 00:38:50,480 Speaker 1: of all in a part. Well, I've just noticed we've 614 00:38:50,480 --> 00:38:53,560 Speaker 1: probably run out of time, so but I did. There's 615 00:38:53,600 --> 00:38:56,240 Speaker 1: quite a few questions to run Pietres were various versions 616 00:38:56,280 --> 00:38:58,440 Speaker 1: of the same one, which is, can you tell us 617 00:38:58,600 --> 00:39:01,720 Speaker 1: how I t and help solve some of the trade 618 00:39:01,719 --> 00:39:05,239 Speaker 1: disruptions that we're seeing. Yeah, and so I run a 619 00:39:05,280 --> 00:39:07,200 Speaker 1: technology company. So you probably think I'm going to talk 620 00:39:07,239 --> 00:39:10,759 Speaker 1: about big data or machine learning satellites, but actually the 621 00:39:10,800 --> 00:39:12,680 Speaker 1: technology that take is going to be the most important 622 00:39:12,719 --> 00:39:15,000 Speaker 1: in the next year or two is an ancient one. 623 00:39:15,040 --> 00:39:19,880 Speaker 1: We've actually a two thousand years ago. Maritime insurance was 624 00:39:19,960 --> 00:39:23,839 Speaker 1: invented in Rome to provide security for people who are 625 00:39:23,840 --> 00:39:26,160 Speaker 1: going to Egypt to get grain and bring it back 626 00:39:26,680 --> 00:39:30,160 Speaker 1: to Rome. And we're gonna need to find insurance solutions 627 00:39:30,160 --> 00:39:32,360 Speaker 1: so that ships can go into the Black Sea in 628 00:39:32,400 --> 00:39:35,560 Speaker 1: a war zone, get grain and leave. Because I don't 629 00:39:35,560 --> 00:39:37,120 Speaker 1: know that the private sector alone is going to do that. 630 00:39:37,160 --> 00:39:39,359 Speaker 1: I think they'll end up uh not wanting to take 631 00:39:39,400 --> 00:39:40,799 Speaker 1: that risk. If I own the ship, I don't want 632 00:39:40,840 --> 00:39:42,719 Speaker 1: to lose my ship. It's too expensive. And this is 633 00:39:42,800 --> 00:39:45,480 Speaker 1: where a role for government perhaps can come in uh 634 00:39:45,480 --> 00:39:47,480 Speaker 1: and provide some kind of a backstop of insurance that 635 00:39:47,560 --> 00:39:49,560 Speaker 1: was we've seen in many other places. I think something 636 00:39:49,560 --> 00:39:52,680 Speaker 1: like that is probably the most important technology right now. Well, 637 00:39:52,719 --> 00:39:56,839 Speaker 1: like many conversations this week, it's begun and ended with 638 00:39:57,320 --> 00:39:59,960 Speaker 1: some aspect of the Ukraine crisis. But in the meantime, 639 00:40:00,000 --> 00:40:02,359 Speaker 1: I'm we've got a bit of help, certainly a lot 640 00:40:02,400 --> 00:40:05,719 Speaker 1: of love for Dr and gosi Um and some explanations 641 00:40:05,760 --> 00:40:09,000 Speaker 1: of of the other relevance of trade policy at the moment. 642 00:40:09,080 --> 00:40:26,640 Speaker 1: So thank you very much, speaker. Well that's it for 643 00:40:26,640 --> 00:40:30,360 Speaker 1: this bumper episode of Stephanomics from the World Economic Forum. 644 00:40:30,360 --> 00:40:32,560 Speaker 1: We'll be back next week, but in the meantime, do 645 00:40:32,880 --> 00:40:35,279 Speaker 1: please rate the show if you like it and check 646 00:40:35,320 --> 00:40:37,920 Speaker 1: out the Bloomberg News website for more economic news and 647 00:40:38,000 --> 00:40:40,480 Speaker 1: views on the global economy. You can also follow at 648 00:40:40,520 --> 00:40:44,640 Speaker 1: economics on Twitter. This episode was produced by Magnus Henrickson 649 00:40:44,840 --> 00:40:48,759 Speaker 1: with support from Summer Sadi. Special thanks to Katia Dmitrieva, 650 00:40:49,160 --> 00:40:54,240 Speaker 1: Professor Richard Baldwin, the World Economic Forum, dr Angrzio, Condroy Wheeler, 651 00:40:54,880 --> 00:41:01,080 Speaker 1: Minister Pure Brian Peterson, and Commissioner Valdis Dombrovskis. Mike Sasso 652 00:41:01,200 --> 00:41:04,080 Speaker 1: is executive producer of Stephanomics and the head of Bloomberg 653 00:41:04,160 --> 00:41:05,960 Speaker 1: Podcast is Francesco Needy.