1 00:00:00,200 --> 00:00:04,440 Speaker 1: When China joined the WTO, I think there was a 2 00:00:04,519 --> 00:00:07,240 Speaker 1: view that over time they would become more like us. 3 00:00:07,560 --> 00:00:09,800 Speaker 1: I think the reality is we have become more like that. 4 00:00:14,200 --> 00:00:17,680 Speaker 2: Hello, Stephanomics. Here the podcast that brings you the global economy. 5 00:00:17,760 --> 00:00:21,520 Speaker 2: And that was Michael Frohman, former United States Trade Representative 6 00:00:21,600 --> 00:00:24,759 Speaker 2: under President Obama and a senior Treasury official in the 7 00:00:24,800 --> 00:00:29,400 Speaker 2: early two thousands. Back then, policymakers in Washington tended to 8 00:00:29,480 --> 00:00:33,480 Speaker 2: assume China would keep moving in the direction of freer markets, 9 00:00:33,840 --> 00:00:38,640 Speaker 2: more open trade. It didn't, well, not really. Instead, what 10 00:00:38,680 --> 00:00:42,080 Speaker 2: we've seen is first President Trump and now President Biden 11 00:00:42,560 --> 00:00:46,600 Speaker 2: intervening more in the US economy and putting more constraints 12 00:00:46,880 --> 00:00:50,360 Speaker 2: on global trade. A speech a few weeks ago at 13 00:00:50,400 --> 00:00:54,200 Speaker 2: the Brookings Institution, a US think tank, by National security 14 00:00:54,200 --> 00:00:59,240 Speaker 2: advisor Jake Sullivan crystallized for me the different philosophy now 15 00:00:59,320 --> 00:01:03,000 Speaker 2: underpinning US economic policy at home and abroad. 16 00:01:04,080 --> 00:01:06,680 Speaker 3: Much of the international economic policy of the last few 17 00:01:06,720 --> 00:01:10,600 Speaker 3: decades had relied upon the premise that economic integration would 18 00:01:10,600 --> 00:01:13,920 Speaker 3: make nations more responsible and open, and that the global 19 00:01:14,040 --> 00:01:18,320 Speaker 3: order would be more peaceful and cooperative. That bringing countries 20 00:01:18,400 --> 00:01:22,080 Speaker 3: into the rules based order would incentivize them to adhere 21 00:01:22,120 --> 00:01:26,960 Speaker 3: to its rules. It didn't turn out that way. In 22 00:01:27,000 --> 00:01:28,920 Speaker 3: some cases, it did, in a lot of cases it 23 00:01:28,959 --> 00:01:33,640 Speaker 3: did not. No one, certainly not me, is discounting the 24 00:01:33,680 --> 00:01:38,160 Speaker 3: power of markets, but in the name of oversimplified market efficiency. 25 00:01:38,480 --> 00:01:42,160 Speaker 3: Entire supply chains of strategic goods, along with the industries 26 00:01:42,200 --> 00:01:46,160 Speaker 3: and jobs that made them moved overseas, and the postulate 27 00:01:46,600 --> 00:01:51,360 Speaker 3: that deep trade liberalization would help America export goods, not 28 00:01:51,640 --> 00:01:56,760 Speaker 3: jobs and capacity was a promise made but not kept well. 29 00:01:56,760 --> 00:01:59,080 Speaker 2: Sullivan says a lot more in that speech. She also 30 00:01:59,160 --> 00:02:02,800 Speaker 2: talks about foreign policy for the middle class. But what 31 00:02:02,920 --> 00:02:06,560 Speaker 2: I found, maybe more striking than the content, was just 32 00:02:06,600 --> 00:02:10,160 Speaker 2: how many different people seemed to have noticed it in 33 00:02:10,200 --> 00:02:13,720 Speaker 2: the two weeks after it was delivered. A Scottish trade unionist, 34 00:02:13,760 --> 00:02:17,880 Speaker 2: a London investment fund manager, and a colleague in Singapore 35 00:02:18,080 --> 00:02:22,160 Speaker 2: all spontaneously mentioned it to me and my sister. That 36 00:02:22,360 --> 00:02:25,080 Speaker 2: doesn't happen very often. So I was interested in what 37 00:02:25,160 --> 00:02:28,280 Speaker 2: Mike Frohman thought of it, whether he was worried about 38 00:02:28,320 --> 00:02:31,880 Speaker 2: where all this talk of decoupling in the global economy, 39 00:02:32,160 --> 00:02:36,639 Speaker 2: active trade and industrial policies might lead our conversation. You'll 40 00:02:36,680 --> 00:02:39,400 Speaker 2: hear in a little bit, but we're not all talk 41 00:02:39,520 --> 00:02:43,160 Speaker 2: on Stephanomic, So no, we go out to see for ourselves, 42 00:02:43,639 --> 00:02:46,960 Speaker 2: or at least my hard working Bloomberg colleagues too. In 43 00:02:47,000 --> 00:02:51,519 Speaker 2: this case, our economic state craft expert Brendan Murray went 44 00:02:51,600 --> 00:02:57,280 Speaker 2: to Tangier because if the world is decoupling, if globalization 45 00:02:57,840 --> 00:03:02,400 Speaker 2: really is going into reverse, someone forgot to tell the Moroccans. 46 00:03:08,960 --> 00:03:11,639 Speaker 4: The first thing you notice inside the Renault factory, where 47 00:03:11,639 --> 00:03:14,360 Speaker 4: some of Europe's most popular car models are built, is 48 00:03:14,400 --> 00:03:18,320 Speaker 4: the noise, the buzzing of pneumatic drills, the stamping of 49 00:03:18,320 --> 00:03:25,400 Speaker 4: sheet metal, the constant humming of conveyor belts. Then you 50 00:03:25,520 --> 00:03:28,720 Speaker 4: notice the hundreds of young women and men operating the machines. 51 00:03:29,200 --> 00:03:32,360 Speaker 4: This production line assembles more than a thousand cars a day. 52 00:03:32,840 --> 00:03:36,200 Speaker 4: About eight thousand people work in the sprawling facility. It's 53 00:03:36,200 --> 00:03:39,040 Speaker 4: in a region of Morocco about ninety minutes south of 54 00:03:39,080 --> 00:03:42,720 Speaker 4: Spain by Ferry. It's all part of the French automaker's 55 00:03:42,720 --> 00:03:45,840 Speaker 4: strategy to develop a local auto industry with global reach. 56 00:03:46,120 --> 00:03:50,320 Speaker 4: From this northwestern corner of Africa, where no communications manager 57 00:03:50,440 --> 00:03:52,840 Speaker 4: Lamerbourdain takes me on a tour, are. 58 00:03:52,760 --> 00:03:57,040 Speaker 5: In the assembly departments will reassemble more than one thousand, 59 00:03:57,880 --> 00:04:01,200 Speaker 5: fourteen hundred pieces Flaura It's car. 60 00:04:01,600 --> 00:04:04,880 Speaker 4: The Renault plant has two production lines, each running six 61 00:04:04,960 --> 00:04:06,840 Speaker 4: days a week to meet demand. 62 00:04:06,600 --> 00:04:12,800 Speaker 6: So all the the site can produce sixty sixty cars. 63 00:04:12,800 --> 00:04:20,839 Speaker 4: Prou Yeah, but globalization is under threat. Here's US Treasury 64 00:04:20,880 --> 00:04:23,800 Speaker 4: Secretary Janet Yellen speaking at an event held by the 65 00:04:23,839 --> 00:04:27,920 Speaker 4: Atlantic Council, where she introduced the idea of friendshoring, where 66 00:04:28,040 --> 00:04:30,640 Speaker 4: rivals like the US and China try to find more 67 00:04:30,640 --> 00:04:32,000 Speaker 4: reliable trading partners. 68 00:04:32,360 --> 00:04:37,039 Speaker 7: Let's build on and deepen economic integration and the efficiencies 69 00:04:37,080 --> 00:04:41,120 Speaker 7: it brings on terms that work there for American workers, 70 00:04:41,760 --> 00:04:44,320 Speaker 7: and let's do it with the countries we know we 71 00:04:44,440 --> 00:04:49,640 Speaker 7: can count on favoring the fringe shoring of supply chains 72 00:04:50,160 --> 00:04:52,680 Speaker 7: to a large number of trusted countries. 73 00:04:53,480 --> 00:04:56,280 Speaker 4: So I wondered, how does this nation of thirty seven 74 00:04:56,320 --> 00:04:59,600 Speaker 4: million people feel about its future after spending so much 75 00:04:59,640 --> 00:05:02,800 Speaker 4: time and so much money becoming an international hub for 76 00:05:02,880 --> 00:05:06,279 Speaker 4: trade and manufacturing. I spent a few days touring the 77 00:05:06,320 --> 00:05:10,080 Speaker 4: Tangier region that's where much of the government's efforts are concentrated. 78 00:05:10,880 --> 00:05:15,040 Speaker 4: What I found was international commerce forging ahead, an oasis 79 00:05:15,080 --> 00:05:18,640 Speaker 4: from the protectionism, the geopolitical rivalries, and none of the 80 00:05:18,680 --> 00:05:26,839 Speaker 4: talk of unraveling a world stched together by trade. 81 00:05:26,960 --> 00:05:29,880 Speaker 5: So, as I said, we're pretty diverse. 82 00:05:30,680 --> 00:05:33,920 Speaker 4: First, I went to an American company called poly Design Systems. 83 00:05:34,400 --> 00:05:38,000 Speaker 4: It's an auto supplier that produces parts like sunvisors, headrests 84 00:05:38,000 --> 00:05:42,240 Speaker 4: and center consoles in the Tangier Free Zone. The general manager, 85 00:05:42,320 --> 00:05:45,640 Speaker 4: Julian Furman, showed me around. It's really a bustling place. 86 00:05:46,200 --> 00:05:47,160 Speaker 2: Yeah, it is. 87 00:05:47,839 --> 00:05:50,760 Speaker 4: As we toured Furman's facility, which has grown from fifty 88 00:05:50,760 --> 00:05:54,160 Speaker 4: employees twenty years ago to sixteen hundred today, it was 89 00:05:54,279 --> 00:05:59,360 Speaker 4: hard to fathom untangling the company's global interconnectedness. Moroccan workers 90 00:05:59,360 --> 00:06:02,840 Speaker 4: here are rating Swiss or German or Italian built machines. 91 00:06:03,400 --> 00:06:06,599 Speaker 4: Some newly stitched steering wheels were being shipped off to Portugal. 92 00:06:07,160 --> 00:06:10,599 Speaker 4: Other parts were headed to Morocco based customers like Stilanties 93 00:06:10,720 --> 00:06:14,479 Speaker 4: or Renault, or further afield to Jaguar, Range, Rover or Volvo. 94 00:06:15,120 --> 00:06:18,480 Speaker 4: All told, the company's reach extends to twenty six countries. 95 00:06:18,960 --> 00:06:23,320 Speaker 4: Inner office, Furman described an environment in Morocco or Chinese companies, 96 00:06:23,440 --> 00:06:28,039 Speaker 4: Indian companies and even Russian businesses operate alongside their European 97 00:06:28,040 --> 00:06:31,480 Speaker 4: and American rivals oblivious to the friends shoring talk from 98 00:06:31,520 --> 00:06:33,520 Speaker 4: politicians in Washington or Brussels. 99 00:06:33,640 --> 00:06:35,680 Speaker 5: I mean, you don't have any of this type of 100 00:06:35,800 --> 00:06:41,240 Speaker 5: political discussion or tension. But we're all kind of just 101 00:06:41,920 --> 00:06:45,040 Speaker 5: doing our business and shipping our parts. 102 00:06:46,960 --> 00:06:51,080 Speaker 4: To attract foreign investment, Morocco has several enterprise zones within 103 00:06:51,120 --> 00:06:53,960 Speaker 4: an hour's drive from the northern city of Tangier that 104 00:06:54,040 --> 00:06:58,120 Speaker 4: offer incentives for foreign investors like tax breaks, construction deals 105 00:06:58,279 --> 00:07:02,200 Speaker 4: and streamline paperwork. In one of these zones, called Tangier 106 00:07:02,240 --> 00:07:06,799 Speaker 4: Automotive City, tractor trailers are everywhere shuttling loads between companies 107 00:07:06,920 --> 00:07:11,520 Speaker 4: like Michigan based Lear Corporation, Chinese cable producer ZTT, and 108 00:07:11,640 --> 00:07:16,080 Speaker 4: car component makers from Italy, India, Germany, Japan and Spain. 109 00:07:17,000 --> 00:07:20,320 Speaker 4: I spoke with Ahmed Bennis, who oversees the Tangier med Zones. 110 00:07:20,560 --> 00:07:25,640 Speaker 6: Tanja MAD Zone started its activity in two thousand and 111 00:07:28,160 --> 00:07:32,720 Speaker 6: we host today more than one thousand, two hundred multinational 112 00:07:32,800 --> 00:07:36,680 Speaker 6: companies in a total footprint of five thousand hecto that 113 00:07:36,760 --> 00:07:41,400 Speaker 6: has been dedicated to the development of these special economic 114 00:07:41,480 --> 00:07:45,640 Speaker 6: zones and those industrial facilities. Two five hundred hectails have 115 00:07:45,760 --> 00:07:50,680 Speaker 6: been already developed, the the remainment footprints and the development 116 00:07:51,040 --> 00:07:54,800 Speaker 6: and will be developed in the next one hundred tenure. 117 00:07:57,040 --> 00:08:00,280 Speaker 4: None of Morocco's industrial development would be possible with out 118 00:08:00,280 --> 00:08:03,600 Speaker 4: the expansion of its biggest container port, called Tangier Med. 119 00:08:04,160 --> 00:08:06,760 Speaker 4: It's become one of the world's most connected gateways for 120 00:08:06,800 --> 00:08:10,160 Speaker 4: global markets and ranks fourth overall in the World Bank's 121 00:08:10,280 --> 00:08:13,920 Speaker 4: Port Performance Index, well ahead of even Singapore or Hong Kong. 122 00:08:14,640 --> 00:08:17,320 Speaker 4: The Danish shipping line Marisk has invested more than a 123 00:08:17,360 --> 00:08:21,360 Speaker 4: billion euros in its terminals. So I spoke with the 124 00:08:21,360 --> 00:08:25,280 Speaker 4: CEO of the Tangier Med Special Agency, Medi Tazi. He 125 00:08:25,360 --> 00:08:28,119 Speaker 4: oversees the region and explained to me how the whole 126 00:08:28,160 --> 00:08:32,080 Speaker 4: ecosystem aims to boost the nation's economy with foreign capital 127 00:08:32,320 --> 00:08:34,360 Speaker 4: and ultimately good paying jobs. 128 00:08:36,520 --> 00:08:40,280 Speaker 8: The entire Moroccan import export flows through the Tangermin port 129 00:08:41,240 --> 00:08:47,240 Speaker 8: that's on the port side, now on the industrial class platform. Obviously, 130 00:08:47,760 --> 00:08:51,160 Speaker 8: the direct impacts from rock and economy are the contribution 131 00:08:51,240 --> 00:08:57,120 Speaker 8: to GDP and jobs. We have no stopped nineteen thousand 132 00:08:57,240 --> 00:08:59,120 Speaker 8: jobs and that by. 133 00:08:59,040 --> 00:09:02,920 Speaker 9: Itself is of course it breaks through its industry. Suving 134 00:09:03,040 --> 00:09:04,360 Speaker 9: service is not in tourism. 135 00:09:04,960 --> 00:09:06,400 Speaker 8: This is pure. 136 00:09:06,160 --> 00:09:14,920 Speaker 4: Industrial along with success have come strains on one of 137 00:09:14,960 --> 00:09:19,320 Speaker 4: Morocco's biggest resources and selling points, a young and eager workforce. 138 00:09:20,080 --> 00:09:22,839 Speaker 4: In Morocco, the average age is twenty nine years old. 139 00:09:23,000 --> 00:09:26,120 Speaker 4: That's on par with Mexico and India, but in Japan 140 00:09:26,240 --> 00:09:29,440 Speaker 4: and Germany it's in the high forties, and Eastern Europe 141 00:09:29,559 --> 00:09:31,760 Speaker 4: the average ages in the low forties, and in the 142 00:09:31,880 --> 00:09:35,400 Speaker 4: US it's thirty nine. Even with all the industry jobs, 143 00:09:35,480 --> 00:09:38,640 Speaker 4: youth unemployment hovers around twenty five percent according to the 144 00:09:38,679 --> 00:09:42,319 Speaker 4: World Bank, and the jobless rate countrywide was almost thirteen 145 00:09:42,360 --> 00:09:48,640 Speaker 4: percent in the first quarter. Morocco's public transportation also needs help. 146 00:09:49,120 --> 00:09:51,839 Speaker 4: Each day at Renault, for example, some one hundred and 147 00:09:51,880 --> 00:09:54,959 Speaker 4: fifty packed shuttle buses bring workers to and from their 148 00:09:55,000 --> 00:09:58,199 Speaker 4: shifts at the assembly plant, adding traffic on the roads, 149 00:09:58,360 --> 00:10:01,680 Speaker 4: pollution in the air, and trip commutes of two hours 150 00:10:01,679 --> 00:10:04,760 Speaker 4: each day for many of them. So more affordable housing 151 00:10:04,880 --> 00:10:08,640 Speaker 4: is needed near the industrial zones. The economy could benefit 152 00:10:08,679 --> 00:10:12,120 Speaker 4: too from more women participating in the labor force. Here's 153 00:10:12,200 --> 00:10:16,360 Speaker 4: World Bank economists Fredrika Marso clearly you know that. 154 00:10:16,400 --> 00:10:18,600 Speaker 9: The short answer to your question is like no. 155 00:10:18,760 --> 00:10:22,480 Speaker 8: Currently the labor market doesn't seem in great shape. 156 00:10:22,559 --> 00:10:24,079 Speaker 9: To pick up this challenge. 157 00:10:24,800 --> 00:10:27,600 Speaker 7: It is one of the priorities in the new development model, 158 00:10:28,480 --> 00:10:31,600 Speaker 7: and so the government is trying to start us to 159 00:10:31,679 --> 00:10:32,240 Speaker 7: solve the. 160 00:10:32,240 --> 00:10:33,160 Speaker 9: Puzzle in a cell. 161 00:10:33,800 --> 00:10:37,160 Speaker 4: Companies in Morocco also need help shifting away from fossil 162 00:10:37,200 --> 00:10:40,160 Speaker 4: fuels for their energy needs or risk losing business to 163 00:10:40,280 --> 00:10:43,920 Speaker 4: jurisdictions that can do it faster. Here's Julianne Furman again 164 00:10:44,040 --> 00:10:44,800 Speaker 4: from Polly. 165 00:10:44,640 --> 00:10:48,000 Speaker 5: Design on that note. There needs to be movement and 166 00:10:48,120 --> 00:10:48,960 Speaker 5: very very quickly. 167 00:10:50,960 --> 00:10:51,960 Speaker 2: It should be feasible. 168 00:10:52,760 --> 00:10:56,440 Speaker 5: You probably see all the press information on renewable energies, 169 00:10:56,480 --> 00:11:01,160 Speaker 5: whether it's solar, wind or green hydrogen, but I think 170 00:11:02,440 --> 00:11:04,880 Speaker 5: we need to move much more quickly or we're going 171 00:11:04,880 --> 00:11:09,520 Speaker 5: to lose our competitiveness. From poly design standpoint, is something 172 00:11:09,520 --> 00:11:11,840 Speaker 5: that I want to use as a competitive advantage against 173 00:11:11,960 --> 00:11:15,120 Speaker 5: our competitors. But it's going to be difficult because our 174 00:11:15,160 --> 00:11:20,199 Speaker 5: competitors are in Europe, mostly Eastern Europe. They receive help 175 00:11:20,280 --> 00:11:26,280 Speaker 5: in financing from the European organizations and they're moving very 176 00:11:26,320 --> 00:11:29,199 Speaker 5: quickly and it could very easily freeze out Morocco. 177 00:11:31,840 --> 00:11:34,880 Speaker 4: After a few days traveling around Tangier, med a couple 178 00:11:34,880 --> 00:11:38,760 Speaker 4: of things were clear. Morocco's fast growth has stretched the 179 00:11:38,800 --> 00:11:42,400 Speaker 4: local workforce and businesses need more tools to adapt to 180 00:11:42,480 --> 00:11:46,400 Speaker 4: climate change. But it's also a place where US, Chinese, 181 00:11:46,640 --> 00:11:51,520 Speaker 4: Spanish or Indian companies are coexisting, competing, and even collaborating. 182 00:11:52,400 --> 00:11:55,720 Speaker 4: Here in Morocco, they haven't turned inward like many other 183 00:11:55,760 --> 00:11:58,520 Speaker 4: countries have when it comes to trade, but are banking 184 00:11:58,559 --> 00:12:01,440 Speaker 4: on globalization to throw I've been to the future, so 185 00:12:01,520 --> 00:12:08,320 Speaker 4: their economy can too. From Northern Morocco, I'm Brendan Murray 186 00:12:08,360 --> 00:12:09,360 Speaker 4: for Bloomberg News. 187 00:12:11,600 --> 00:12:14,080 Speaker 2: Now I'm very pleased to talk about some of these 188 00:12:14,160 --> 00:12:18,160 Speaker 2: shifting currents for global trade and economic policy that Brendan 189 00:12:18,240 --> 00:12:21,560 Speaker 2: mentioned there with someone who has witnessed close hand the 190 00:12:21,600 --> 00:12:26,840 Speaker 2: machinations of international economic policy in his various incarnations, Michael Frohman. 191 00:12:27,160 --> 00:12:29,240 Speaker 2: We both work together, as it happens, in the Clinton 192 00:12:29,280 --> 00:12:32,200 Speaker 2: Treasury a long time ago, in the late nineteen nineties. 193 00:12:32,880 --> 00:12:35,160 Speaker 2: Then I slunk back to journalism, but he went on 194 00:12:35,240 --> 00:12:38,280 Speaker 2: to be Deputy National Security Advisor and then US Trade 195 00:12:38,320 --> 00:12:42,839 Speaker 2: Representative under President Obama. He's been until very recently a 196 00:12:42,960 --> 00:12:45,680 Speaker 2: vice chairman at MasterCard, but in a few weeks he 197 00:12:45,760 --> 00:12:48,480 Speaker 2: will be taking over what I think one would say 198 00:12:48,600 --> 00:12:52,920 Speaker 2: was America's most illustrious foreign policy think tank, the Council 199 00:12:53,000 --> 00:12:56,520 Speaker 2: on Foreign Relations. Mike, thanks very much for doing this. 200 00:12:56,760 --> 00:12:58,960 Speaker 2: I don't have to quite call you mister President yet. 201 00:13:00,040 --> 00:13:01,560 Speaker 9: Thanks for having me. It's good to see you. 202 00:13:02,240 --> 00:13:04,680 Speaker 2: We've got lots to talk about, but I wanted first 203 00:13:04,760 --> 00:13:07,440 Speaker 2: to ask you about that speech that National Security Advisor 204 00:13:07,520 --> 00:13:11,079 Speaker 2: Jake Sullivan made a few weeks ago at the Brookings 205 00:13:11,160 --> 00:13:16,240 Speaker 2: Institution in Washington. It's a speech that seems to have 206 00:13:16,240 --> 00:13:18,600 Speaker 2: been heard around the world, or at least in some 207 00:13:18,720 --> 00:13:22,640 Speaker 2: surprising corners of it, and I think that's perhaps because 208 00:13:22,720 --> 00:13:26,640 Speaker 2: it seemed to capture quite how much has changed in 209 00:13:27,000 --> 00:13:31,000 Speaker 2: US thinking about international economic policy since the years of 210 00:13:31,200 --> 00:13:35,199 Speaker 2: President Clinton or Obama. So what did you think about it? 211 00:13:35,559 --> 00:13:37,920 Speaker 1: Well, first of all, I thought was really a quite 212 00:13:38,040 --> 00:13:42,360 Speaker 1: artful speech, and I think I agree with much of it. 213 00:13:42,720 --> 00:13:45,360 Speaker 1: I think for those of us who've been involved in trade, 214 00:13:45,960 --> 00:13:50,200 Speaker 1: we've often made the point that trade policy can't exist 215 00:13:50,320 --> 00:13:53,760 Speaker 1: in a vacuum, that trade policy needs to be paired 216 00:13:53,880 --> 00:13:58,640 Speaker 1: with robust domestic economic policy, because we all know that 217 00:13:58,679 --> 00:14:04,120 Speaker 1: the benefits of trade are broadly shared, but the negative 218 00:14:04,160 --> 00:14:07,800 Speaker 1: impact or the dislocations that come with trade, or can 219 00:14:07,880 --> 00:14:11,760 Speaker 1: come with trade, are more acutely felt, and one of 220 00:14:11,760 --> 00:14:14,000 Speaker 1: the challenges in the United States has been that we've 221 00:14:14,679 --> 00:14:18,800 Speaker 1: rarely had the consensus necessary to pair trade policy with 222 00:14:18,920 --> 00:14:23,520 Speaker 1: some sort of meaningful domestic policy to address those challenges. 223 00:14:23,880 --> 00:14:26,680 Speaker 1: I think what the National Security Advisor Jake Sullivan did 224 00:14:26,760 --> 00:14:30,080 Speaker 1: was lay out the Biden doctrine on this issue, which 225 00:14:30,120 --> 00:14:32,680 Speaker 1: is that very much we have to focus initially on 226 00:14:32,880 --> 00:14:36,320 Speaker 1: investing in our own country, making sure that we are 227 00:14:36,720 --> 00:14:40,800 Speaker 1: in this case using industrial policy and innovation to help 228 00:14:40,920 --> 00:14:46,160 Speaker 1: drive leadership and key technologies, help continue to support good 229 00:14:46,200 --> 00:14:50,280 Speaker 1: middle class jobs, manufacturing jobs, and not be focused on 230 00:14:51,480 --> 00:14:54,760 Speaker 1: He somewhat characterized his trade policy as being only about 231 00:14:54,840 --> 00:14:59,720 Speaker 1: tariffs but not be focused solely on terror production as 232 00:14:59,760 --> 00:15:02,640 Speaker 1: the and end all, and that I. 233 00:15:02,600 --> 00:15:03,480 Speaker 9: Entirely agree with. 234 00:15:04,440 --> 00:15:06,600 Speaker 1: I think it does show an evolution, particularly with regard 235 00:15:06,640 --> 00:15:09,280 Speaker 1: to how we're thinking about domestic policy in the United States. 236 00:15:09,480 --> 00:15:13,880 Speaker 1: Industrial policy has never been has not been popular until 237 00:15:13,920 --> 00:15:17,760 Speaker 1: recently in the United States. We've not had great experience 238 00:15:17,800 --> 00:15:19,880 Speaker 1: with it in the past. But what's been going on 239 00:15:19,960 --> 00:15:24,080 Speaker 1: between the Infrastructure Bill, the Chips Act, and the IRA 240 00:15:24,480 --> 00:15:28,400 Speaker 1: with regard to clean energy technologies, I think is a 241 00:15:28,440 --> 00:15:32,520 Speaker 1: fundamental shift, and we're seeing some quite significant progress early 242 00:15:32,600 --> 00:15:35,800 Speaker 1: days still in those areas, and I think that's an 243 00:15:35,840 --> 00:15:39,320 Speaker 1: important pillar of being able to also engage in international 244 00:15:39,360 --> 00:15:40,320 Speaker 1: economic policy. 245 00:15:41,040 --> 00:15:43,520 Speaker 2: Well, it's interesting, and you mentioned at the start sort 246 00:15:43,560 --> 00:15:46,480 Speaker 2: of the fact that trade policy you couldn't exist sort 247 00:15:46,480 --> 00:15:49,440 Speaker 2: of in a vacuum. And there's a very striking phrase 248 00:15:49,480 --> 00:15:51,400 Speaker 2: in the speech, which is, you know, the postulate that 249 00:15:51,520 --> 00:15:56,360 Speaker 2: deep trade liberalization would help America export goods, not jobs 250 00:15:56,400 --> 00:16:00,280 Speaker 2: and capacity was a promise made and not kept. I mean, 251 00:16:00,280 --> 00:16:02,360 Speaker 2: that's quite an indictment that saying, you know that the 252 00:16:02,440 --> 00:16:05,240 Speaker 2: promise that was made to people in signing up to 253 00:16:05,280 --> 00:16:08,680 Speaker 2: this these trade deals was just not kept. 254 00:16:09,640 --> 00:16:12,560 Speaker 1: So I think there's always the risk that trade deals 255 00:16:12,600 --> 00:16:15,760 Speaker 1: are over sold. I'm not sure I agree completely with 256 00:16:15,840 --> 00:16:20,320 Speaker 1: that assessment. The US has relatively low tariffs. It's an 257 00:16:20,360 --> 00:16:23,800 Speaker 1: average tariff about two point four percent, so much lower 258 00:16:23,800 --> 00:16:26,200 Speaker 1: than the global average, much lower than most of our 259 00:16:26,560 --> 00:16:30,120 Speaker 1: trading partners, which means when we engage in a trade negotiation, 260 00:16:30,840 --> 00:16:34,280 Speaker 1: they are reducing tariffs far more than we are, which 261 00:16:34,760 --> 00:16:37,720 Speaker 1: at least theoretically should help us promote our exports to 262 00:16:37,760 --> 00:16:41,000 Speaker 1: that country. It's reducing a barrier they already have effectively, 263 00:16:41,040 --> 00:16:43,960 Speaker 1: they already have access to our market and we are 264 00:16:44,000 --> 00:16:46,360 Speaker 1: now getting access to their market. And the fact that 265 00:16:46,400 --> 00:16:50,080 Speaker 1: our exports continue to grow, both in services and in goods, 266 00:16:50,520 --> 00:16:54,440 Speaker 1: I think is a testament to that. What Jake also 267 00:16:54,520 --> 00:16:57,200 Speaker 1: refers to as the China Shock in the paper, and 268 00:16:57,240 --> 00:17:02,520 Speaker 1: the impact that the China Shock had on the United 269 00:17:02,520 --> 00:17:07,200 Speaker 1: States manufacturing sector. That wasn't the result of some FTA. 270 00:17:07,400 --> 00:17:11,359 Speaker 1: We weren't giving China preferred access to our market. It 271 00:17:11,480 --> 00:17:13,560 Speaker 1: was the fact that they were a low cost producer 272 00:17:13,560 --> 00:17:18,560 Speaker 1: that American companies decided to move their production there in 273 00:17:18,600 --> 00:17:22,520 Speaker 1: the late nineteen nineties and early two thousands, and that 274 00:17:22,680 --> 00:17:26,480 Speaker 1: had a very significant impact on the US manufacturing center. 275 00:17:26,520 --> 00:17:30,440 Speaker 1: That cannot be denied. But that's a separate issue from 276 00:17:30,720 --> 00:17:34,920 Speaker 1: trade liberalization or FTAs per se. 277 00:17:34,160 --> 00:17:35,800 Speaker 2: And I guess we should talk about that sort of 278 00:17:35,840 --> 00:17:41,080 Speaker 2: broader premise underlying a lot of the international economic policy, 279 00:17:41,200 --> 00:17:43,879 Speaker 2: certainly in the Clinton White House and to some extent 280 00:17:44,359 --> 00:17:47,880 Speaker 2: Obama as well. Jake Sullivan refers to it. He says 281 00:17:47,920 --> 00:17:50,120 Speaker 2: much of the international economic policy of the last few 282 00:17:50,480 --> 00:17:54,840 Speaker 2: decades had relied upon the premise that economic integration would 283 00:17:54,840 --> 00:17:58,440 Speaker 2: make nations more responsible and open, and the global order 284 00:17:58,440 --> 00:18:01,360 Speaker 2: would be more peaceful and cooperate. If bringing countries into 285 00:18:01,400 --> 00:18:04,239 Speaker 2: the rule based order would incentivize them to adhere to 286 00:18:04,280 --> 00:18:07,760 Speaker 2: its rules. It didn't turn out that way. There was 287 00:18:07,800 --> 00:18:10,680 Speaker 2: this basic view that bringing the world closer together, having 288 00:18:10,720 --> 00:18:14,360 Speaker 2: closer economic integration, would sort of make countries better, and 289 00:18:14,400 --> 00:18:17,480 Speaker 2: that's turned out to be wrong. Do you agree that 290 00:18:17,480 --> 00:18:20,040 Speaker 2: that's turned out to be a mistake. 291 00:18:20,160 --> 00:18:24,360 Speaker 1: I think it's hard to argue the counterfactual here because 292 00:18:25,600 --> 00:18:29,399 Speaker 1: certainly as more let's leave China to the side for 293 00:18:29,440 --> 00:18:30,600 Speaker 1: one moment, we'll come back to it. 294 00:18:30,920 --> 00:18:32,280 Speaker 9: But if we look at the rest of the. 295 00:18:32,200 --> 00:18:35,560 Speaker 1: World, as they became integrated with the open they opened up, 296 00:18:35,600 --> 00:18:39,119 Speaker 1: they became integrated with each other, regionally, they became integrated 297 00:18:39,200 --> 00:18:44,800 Speaker 1: with the global trading system. Most countries I adhere to 298 00:18:44,960 --> 00:18:49,240 Speaker 1: most rules most of the time. It's never a perfect record, 299 00:18:49,600 --> 00:18:53,320 Speaker 1: but I think we've seen in general a relatively robust 300 00:18:53,440 --> 00:18:57,439 Speaker 1: rules based trading system. Now China. China is a different 301 00:18:57,480 --> 00:18:59,600 Speaker 1: case because it did come in under the rules of 302 00:18:59,600 --> 00:19:02,480 Speaker 1: the w T at the time, and frankly. 303 00:19:02,119 --> 00:19:04,080 Speaker 9: The rules that were negotiated at the. 304 00:19:04,080 --> 00:19:08,440 Speaker 1: Uraguay Round on state owned enterprises, on subsidies, on non 305 00:19:08,480 --> 00:19:13,119 Speaker 1: market economies did not fully take into account the nature 306 00:19:13,200 --> 00:19:16,040 Speaker 1: of the challenge that China would end up posing to 307 00:19:16,119 --> 00:19:19,840 Speaker 1: the global trading system, and when people talk about multilateral 308 00:19:19,880 --> 00:19:22,600 Speaker 1: trade reform or wto reform, these are the issues that 309 00:19:22,680 --> 00:19:25,639 Speaker 1: need to be looked at, because clearly the multilateral system 310 00:19:25,680 --> 00:19:29,679 Speaker 1: was not up to the bar that it needed to 311 00:19:29,720 --> 00:19:32,600 Speaker 1: be to deal with the challenge that the China posed, 312 00:19:32,600 --> 00:19:35,359 Speaker 1: an economy that big, that integrated with the rest of 313 00:19:35,400 --> 00:19:38,840 Speaker 1: the world, operating in some respects on a very different 314 00:19:38,840 --> 00:19:42,480 Speaker 1: set of rules and business models, and that has been 315 00:19:42,720 --> 00:19:44,920 Speaker 1: that has been the challenge. But to say that all 316 00:19:44,960 --> 00:19:47,840 Speaker 1: of that you know that the rules based system never 317 00:19:47,880 --> 00:19:50,679 Speaker 1: really worked, I think that is probably an overstatement. And 318 00:19:50,720 --> 00:19:53,399 Speaker 1: what we don't know, even with regard to China is 319 00:19:53,600 --> 00:19:56,280 Speaker 1: if they had not been part of the global trading system, 320 00:19:56,840 --> 00:19:59,359 Speaker 1: what kinds of policies would they have pursued, whether they 321 00:19:59,400 --> 00:20:03,399 Speaker 1: have been more protectionists that I was struck at one point, Stephanie, 322 00:20:03,600 --> 00:20:05,960 Speaker 1: as you may recall, I was the G twenty shirtpap 323 00:20:06,359 --> 00:20:09,280 Speaker 1: and I remember various G twenty summits, and each G 324 00:20:09,359 --> 00:20:12,600 Speaker 1: twenty summit is right after the financial crisis, there was 325 00:20:12,640 --> 00:20:16,040 Speaker 1: a statement in the communicate that said we stand against 326 00:20:16,480 --> 00:20:20,160 Speaker 1: trade protectionism, and we'll roll it back where it exists. 327 00:20:21,000 --> 00:20:22,640 Speaker 9: G twenty is not a legal institution. 328 00:20:22,840 --> 00:20:27,880 Speaker 1: There's no implication, no ramifications if you violate a statement 329 00:20:27,920 --> 00:20:31,800 Speaker 1: in a leader's communicate from the G twenty. And yet 330 00:20:32,160 --> 00:20:35,840 Speaker 1: I remember summits where leaders fought to the end on 331 00:20:36,000 --> 00:20:39,040 Speaker 1: that point because they did not want to be criticized 332 00:20:39,440 --> 00:20:40,919 Speaker 1: for taking protectionist measures. 333 00:20:40,920 --> 00:20:43,520 Speaker 9: So the rules based system does have. 334 00:20:43,400 --> 00:20:46,800 Speaker 1: This effect, whether it's fully enforceable in the way that 335 00:20:46,840 --> 00:20:52,639 Speaker 1: we like it or not, on constraining government behavior. And again, 336 00:20:52,840 --> 00:20:54,720 Speaker 1: without it, we don't know how much worse things would 337 00:20:54,760 --> 00:20:55,040 Speaker 1: have been. 338 00:20:55,800 --> 00:20:59,080 Speaker 2: Okay, But just to take that point, because it feels 339 00:20:59,200 --> 00:21:02,760 Speaker 2: like it is just China, there's a lot of countries 340 00:21:02,960 --> 00:21:06,760 Speaker 2: that have ended up kind of rejecting some of the 341 00:21:06,800 --> 00:21:10,440 Speaker 2: models represented by the G twenty, whether it's Russia or 342 00:21:10,480 --> 00:21:13,000 Speaker 2: the UAE or even India on occasions, you know, have 343 00:21:13,440 --> 00:21:16,199 Speaker 2: wanted to go their own way. And I guess you 344 00:21:16,200 --> 00:21:19,639 Speaker 2: know when you think about those discussions in the G twenty. 345 00:21:21,200 --> 00:21:24,200 Speaker 2: The G twenty itself was based on an idea that 346 00:21:24,320 --> 00:21:26,800 Speaker 2: you could separate. You could have kind of very different 347 00:21:26,800 --> 00:21:29,960 Speaker 2: political values sitting around the table, very different political systems. 348 00:21:30,400 --> 00:21:33,120 Speaker 2: You could part that outside the door and still have 349 00:21:33,920 --> 00:21:38,760 Speaker 2: a useful conversation and a useful goal of moving towards 350 00:21:38,840 --> 00:21:41,480 Speaker 2: economic rules, and you know, you could move the economy forward, 351 00:21:41,560 --> 00:21:44,800 Speaker 2: move economic policy forward, and kind of part the politics 352 00:21:44,840 --> 00:21:49,159 Speaker 2: outside the door just doesn't feel like that, if it 353 00:21:49,200 --> 00:21:51,760 Speaker 2: was ever possible, doesn't feel like that's possible now. And 354 00:21:51,800 --> 00:21:53,840 Speaker 2: certainly even the G twenty can't agree on anything as 355 00:21:53,920 --> 00:21:56,480 Speaker 2: long as Russia's invaded Ukraine. 356 00:21:56,680 --> 00:21:58,840 Speaker 1: Well, look, I think the G twenty was at its 357 00:21:58,920 --> 00:22:03,240 Speaker 1: best in that period of eight oh nine twenty ten 358 00:22:03,760 --> 00:22:07,760 Speaker 1: in dealing with the global financial crisis, and to your point, 359 00:22:08,320 --> 00:22:10,840 Speaker 1: countries were able to park their politics on the outside 360 00:22:10,920 --> 00:22:14,679 Speaker 1: and cooperate with each other to deal with a global crisis. 361 00:22:15,200 --> 00:22:18,200 Speaker 1: As the agenda of the G twenty evolved over time, 362 00:22:18,400 --> 00:22:21,720 Speaker 1: it was never meant to be a foreign policy forum 363 00:22:22,560 --> 00:22:26,160 Speaker 1: to deal with issues like war and peace in Ukraine 364 00:22:28,080 --> 00:22:32,320 Speaker 1: and even the even some of the other economic issues 365 00:22:32,320 --> 00:22:35,280 Speaker 1: where we do not have consensus, including with China over 366 00:22:35,760 --> 00:22:39,320 Speaker 1: the WTO or over global rules. It does certainly have 367 00:22:39,359 --> 00:22:43,960 Speaker 1: its limitations, and I think that's why countries have opted 368 00:22:44,080 --> 00:22:48,480 Speaker 1: for pursuing coalitions of the willing, coalitions of the ambitious 369 00:22:48,520 --> 00:22:51,240 Speaker 1: regional agreements, sexual agreements. 370 00:22:51,840 --> 00:22:55,320 Speaker 9: Friends, shoring near shoring. They've sort of pursued. 371 00:22:55,119 --> 00:23:00,560 Speaker 1: Things outside the wto outside those frameworks because those frameworks 372 00:23:00,600 --> 00:23:03,040 Speaker 1: have proven to be somewhat limited in their capacity to 373 00:23:03,840 --> 00:23:05,680 Speaker 1: really develop a meaningful consensus. 374 00:23:06,720 --> 00:23:08,320 Speaker 2: One more thing, going back to the speech, and then 375 00:23:08,320 --> 00:23:10,160 Speaker 2: I just want to have a couple of questions about 376 00:23:10,160 --> 00:23:13,440 Speaker 2: the future. I mean Frank four who has written quite 377 00:23:13,440 --> 00:23:15,879 Speaker 2: sort of elegantly about it in Atlantic he said, the 378 00:23:15,920 --> 00:23:19,240 Speaker 2: Biden administration is doing nothing less than rejecting the economic 379 00:23:19,359 --> 00:23:22,080 Speaker 2: orthodoxy of the past fifty years and proposing a new 380 00:23:22,160 --> 00:23:26,280 Speaker 2: theory of capitalism. Do you think that's right, even allowing 381 00:23:26,280 --> 00:23:30,840 Speaker 2: for a little bit of journalistic embellishment, I think. 382 00:23:30,680 --> 00:23:32,560 Speaker 9: That goes a bit far. If you look at what. 383 00:23:34,320 --> 00:23:37,280 Speaker 1: The administration is doing, for example, on the Indo Pacific 384 00:23:37,359 --> 00:23:42,679 Speaker 1: Economic Framework, they are taking a series of issues that 385 00:23:42,840 --> 00:23:46,160 Speaker 1: are meaningful. There's significant issues, things around supply change, things 386 00:23:46,200 --> 00:23:51,160 Speaker 1: around digital trade and working with other countries. I think 387 00:23:51,160 --> 00:23:54,280 Speaker 1: they've got fourteen other countries there fifteen other countries now 388 00:23:54,600 --> 00:23:57,080 Speaker 1: around the table to try and come up with rules. 389 00:23:58,760 --> 00:24:00,920 Speaker 9: I think Jake is right his speech that. 390 00:24:01,320 --> 00:24:04,359 Speaker 1: Oftentimes too much attention is paid to tariffs, as the 391 00:24:04,480 --> 00:24:08,359 Speaker 1: boll And end all of trade policy. But that was 392 00:24:08,359 --> 00:24:10,160 Speaker 1: also a little bit of a caricature. If you notice 393 00:24:10,160 --> 00:24:13,600 Speaker 1: in his speech he talks about the nineteen nineties and 394 00:24:13,600 --> 00:24:17,720 Speaker 1: then he talks about the twenty twenties, there's conveniently a 395 00:24:17,800 --> 00:24:18,760 Speaker 1: twenty year gap. 396 00:24:19,000 --> 00:24:21,119 Speaker 2: It's like the gap in the during which time you 397 00:24:21,200 --> 00:24:22,399 Speaker 2: were in charge of trade policy. 398 00:24:22,720 --> 00:24:27,680 Speaker 1: I'm just saying the Bush administration and the Obama administration. 399 00:24:27,760 --> 00:24:31,520 Speaker 1: It was two thousand and seven when Sandy Levin and 400 00:24:31,600 --> 00:24:34,840 Speaker 1: the House Democrats negotiated with the Bush administration a series 401 00:24:34,840 --> 00:24:38,040 Speaker 1: of agreements about how labored environment should be included in 402 00:24:38,640 --> 00:24:41,840 Speaker 1: trade agreements, and certainly the trade agreements that we pursued 403 00:24:41,920 --> 00:24:48,200 Speaker 1: during the Obama administration that was finalizing Korea, Columbia and 404 00:24:49,640 --> 00:24:54,680 Speaker 1: Panama or TPP or t TIP, they were not fundamentally 405 00:24:54,760 --> 00:24:58,360 Speaker 1: or only about tariffs. They were about rules on labor, 406 00:24:58,359 --> 00:25:04,440 Speaker 1: on environment, on standards, on new issues like digital economy, 407 00:25:04,480 --> 00:25:07,679 Speaker 1: and so I think there's been an evolution in how 408 00:25:07,760 --> 00:25:11,320 Speaker 1: people think about this. It's the teriff production that gets 409 00:25:11,359 --> 00:25:14,040 Speaker 1: the most attention, and it's the most sensitive because it 410 00:25:14,080 --> 00:25:18,280 Speaker 1: affects goods and therefore manufacturing as well as of course agriculture. 411 00:25:19,119 --> 00:25:21,520 Speaker 9: But the trade agreements. 412 00:25:21,080 --> 00:25:24,119 Speaker 1: For some time have been broader, and in fact, I 413 00:25:24,160 --> 00:25:28,720 Speaker 1: think our approach has been quite explicitly to use trade 414 00:25:28,800 --> 00:25:32,280 Speaker 1: and trade agreements to get other things done, use the 415 00:25:32,320 --> 00:25:35,280 Speaker 1: power of market access to get countries to raise their 416 00:25:35,359 --> 00:25:40,440 Speaker 1: labor standards, or use the power of tariffs to enforce 417 00:25:40,800 --> 00:25:45,120 Speaker 1: environmental agreements that were not otherwise enforceable, like the Convention 418 00:25:45,240 --> 00:25:47,280 Speaker 1: on in their National Trade and the Dangerous Species. So 419 00:25:48,119 --> 00:25:50,040 Speaker 1: I think the trading system has gone through a bit 420 00:25:50,040 --> 00:25:52,359 Speaker 1: of an evolution. I think it went further during the 421 00:25:52,400 --> 00:25:56,119 Speaker 1: Trump administration when it came to labor rights enforcement, and 422 00:25:56,119 --> 00:25:58,000 Speaker 1: we see that with Mexico, and I think that's been 423 00:25:58,040 --> 00:26:00,960 Speaker 1: a healthy step in that direction. The question for the 424 00:26:00,960 --> 00:26:06,000 Speaker 1: Biden administration to go to Frankfort's argument is not so 425 00:26:06,080 --> 00:26:10,280 Speaker 1: much it's a new theory of capitalism, but can we 426 00:26:11,160 --> 00:26:16,320 Speaker 1: pursue a robust economic engagement and leadership agenda that doesn't 427 00:26:16,359 --> 00:26:18,960 Speaker 1: have terror production at its core? And I think the 428 00:26:19,000 --> 00:26:21,359 Speaker 1: answer is potentially yes. It just means you need to 429 00:26:21,359 --> 00:26:24,200 Speaker 1: flesh out the rest of the tree there and make 430 00:26:24,200 --> 00:26:27,399 Speaker 1: sure that there are things that help bring the countries. 431 00:26:27,000 --> 00:26:27,520 Speaker 9: To the table. 432 00:26:27,760 --> 00:26:30,800 Speaker 1: And at a time, particularly in the Asia Pacific, when 433 00:26:30,840 --> 00:26:34,000 Speaker 1: there's a desire by our allies and our partners at 434 00:26:34,000 --> 00:26:37,840 Speaker 1: the US be engaged shows leadership. There's a desire to 435 00:26:37,920 --> 00:26:40,840 Speaker 1: have that opportunity to work with the US on issues 436 00:26:41,160 --> 00:26:46,600 Speaker 1: as a counterbalance to China's natural dominance in that region. 437 00:26:46,640 --> 00:26:50,240 Speaker 1: And so that's I think the great challenge and the 438 00:26:50,240 --> 00:26:51,960 Speaker 1: great opportunity for the Biden administration. 439 00:26:58,920 --> 00:27:01,840 Speaker 2: So if you will US representative, now, what is your job? 440 00:27:02,240 --> 00:27:05,600 Speaker 2: I mean, you're not doing the President Biden has suggested 441 00:27:05,640 --> 00:27:08,800 Speaker 2: anyway that free trade agreements are not really you know, 442 00:27:08,800 --> 00:27:11,160 Speaker 2: they're kind of old fashioned tool. I think he said, 443 00:27:11,280 --> 00:27:13,520 Speaker 2: we certainly don't have a great lot of energy around 444 00:27:13,560 --> 00:27:18,080 Speaker 2: the world trading WTA World Trade Organization anymore. So what's 445 00:27:18,119 --> 00:27:18,680 Speaker 2: your job now? 446 00:27:18,680 --> 00:27:22,400 Speaker 1: If you're a USTR I think you work quite innovatively 447 00:27:22,520 --> 00:27:26,520 Speaker 1: with like minded countries and like minded broadly defined. We 448 00:27:26,520 --> 00:27:29,200 Speaker 1: don't have to agree on everything. Doesn't all have to 449 00:27:29,240 --> 00:27:32,320 Speaker 1: be democracies. I mean, there can be a wide range 450 00:27:32,359 --> 00:27:35,320 Speaker 1: of countries. I think inside the tent, you know, on 451 00:27:35,760 --> 00:27:41,560 Speaker 1: concrete ways to address common international economic issues. So supply 452 00:27:41,680 --> 00:27:46,920 Speaker 1: chain resilience, making sure that there's redundancy and diversification and 453 00:27:47,280 --> 00:27:51,720 Speaker 1: security in our supply chains, access to critical minerals and 454 00:27:52,040 --> 00:27:55,800 Speaker 1: critical materials, cooperation in R and D around the most 455 00:27:55,800 --> 00:28:01,000 Speaker 1: important technologies, rules around the digital economy. We're all every 456 00:28:01,000 --> 00:28:04,159 Speaker 1: country's wrestling with this, the most recent issue being AI. 457 00:28:04,400 --> 00:28:08,680 Speaker 9: But even before you know, chat GPT hit our. 458 00:28:08,600 --> 00:28:12,119 Speaker 1: Screens, we were dealing with issues around data and how 459 00:28:12,160 --> 00:28:15,840 Speaker 1: should data be protected and treated? And privacy issues, data 460 00:28:15,880 --> 00:28:18,520 Speaker 1: localization requirements. What kind of effect does that have on 461 00:28:18,560 --> 00:28:22,600 Speaker 1: the business models? How do countries and governments benefit, how 462 00:28:22,640 --> 00:28:25,600 Speaker 1: do individuals benefits? So lots and lots of issues like 463 00:28:25,680 --> 00:28:30,400 Speaker 1: that that governments really do need to work together on, 464 00:28:30,560 --> 00:28:33,920 Speaker 1: otherwise we're going to have really a balkanization of rules. 465 00:28:34,560 --> 00:28:36,359 Speaker 2: I was going to ask you what you thought the 466 00:28:36,480 --> 00:28:39,360 Speaker 2: risks were if you have this kind of robust approach 467 00:28:39,400 --> 00:28:43,200 Speaker 2: to industrial policy and a slightly more nuanced approach to 468 00:28:43,280 --> 00:28:47,520 Speaker 2: international trade policy, you know what are the risks? I mean, 469 00:28:47,560 --> 00:28:50,120 Speaker 2: I get. What I wonder about is just the number 470 00:28:50,200 --> 00:28:53,000 Speaker 2: of politicians now all around the world thinking great, I'm 471 00:28:53,040 --> 00:28:56,520 Speaker 2: allowed to get my hands on all the strategic industries. 472 00:28:56,560 --> 00:28:59,520 Speaker 2: I can just say I'm doing industrial policy just like 473 00:28:59,520 --> 00:29:01,040 Speaker 2: the Vibe Biden administration. 474 00:29:01,240 --> 00:29:03,080 Speaker 1: Well, there is a bit of an irony here that 475 00:29:03,720 --> 00:29:08,040 Speaker 1: when China joined the WTO, I think there was a 476 00:29:08,120 --> 00:29:10,800 Speaker 1: view that over time they would become more like us. 477 00:29:11,880 --> 00:29:14,280 Speaker 1: And I think the reality is we have become more 478 00:29:14,400 --> 00:29:17,600 Speaker 1: like them, and so we're now following their lead on 479 00:29:17,640 --> 00:29:24,440 Speaker 1: industrial policy, on protectionism, on a variety of measures, restraints 480 00:29:24,240 --> 00:29:27,240 Speaker 1: on for an investment and the like. That's just the reality. 481 00:29:27,320 --> 00:29:29,920 Speaker 1: I think of feeling as though since they weren't becoming 482 00:29:29,920 --> 00:29:33,040 Speaker 1: more like us, that it was on level playing field. 483 00:29:33,480 --> 00:29:36,080 Speaker 1: And this is since we have very little control over 484 00:29:36,160 --> 00:29:38,280 Speaker 1: what they do, we only have control over what we 485 00:29:38,360 --> 00:29:40,680 Speaker 1: could do, and that this is what this is what we. 486 00:29:40,680 --> 00:29:41,200 Speaker 9: Need to do. 487 00:29:41,840 --> 00:29:48,520 Speaker 1: Look today, actually, the Council of Correlations Foreign Affairs magazine 488 00:29:48,920 --> 00:29:51,840 Speaker 1: just published an article this morning by the Director General 489 00:29:51,840 --> 00:29:56,400 Speaker 1: of the WTO and Gozi Konjouela called why the World 490 00:29:56,440 --> 00:30:00,160 Speaker 1: still needs trade? And I think the risk you a 491 00:30:00,160 --> 00:30:01,760 Speaker 1: about the risk, I think the real risk is what 492 00:30:01,840 --> 00:30:05,920 Speaker 1: she cites, which is that trade has been the driver 493 00:30:06,120 --> 00:30:11,160 Speaker 1: of poverty alleviation for the last several decades, has helped 494 00:30:11,240 --> 00:30:14,479 Speaker 1: lift one of the factors that has helped lift hundreds 495 00:30:14,520 --> 00:30:16,600 Speaker 1: of millions, if not over a billion, people out of 496 00:30:16,640 --> 00:30:21,800 Speaker 1: abject poverty. And we've seen tremendous progress both on abject 497 00:30:21,840 --> 00:30:24,480 Speaker 1: poverty but also on all sorts of other human development 498 00:30:24,640 --> 00:30:29,280 Speaker 1: indicators because of growth, and growth needs to be more inclusive. 499 00:30:29,360 --> 00:30:31,400 Speaker 1: We need to make sure that people are benefiting from 500 00:30:31,440 --> 00:30:37,320 Speaker 1: it broadly. But we've seen backsliding with the pandemic, with 501 00:30:38,280 --> 00:30:41,640 Speaker 1: countries pulling apart. I think the biggest risk going forward 502 00:30:41,840 --> 00:30:45,680 Speaker 1: is that in fact trade does not contribute as much 503 00:30:45,760 --> 00:30:49,880 Speaker 1: to that kind of positive economic development, and that we 504 00:30:49,920 --> 00:30:53,000 Speaker 1: see more people falling into poverty. 505 00:30:53,400 --> 00:30:56,200 Speaker 2: And do you think countries like Morocco will ultimately have 506 00:30:56,280 --> 00:30:56,960 Speaker 2: to pick sides? 507 00:30:57,640 --> 00:30:58,160 Speaker 9: You know, I. 508 00:30:59,680 --> 00:30:59,840 Speaker 5: Don't. 509 00:31:00,360 --> 00:31:01,280 Speaker 9: I don't think so. 510 00:31:01,440 --> 00:31:05,360 Speaker 1: I mean, I think I think the issue of decoupling 511 00:31:05,480 --> 00:31:09,160 Speaker 1: and pulling apart to two great blocks. I think that's 512 00:31:09,200 --> 00:31:11,680 Speaker 1: again a bit overstated. I think we're going to find 513 00:31:12,080 --> 00:31:14,959 Speaker 1: where there's de risking or even a bit of decoupling, 514 00:31:15,040 --> 00:31:19,800 Speaker 1: it's over a very limited set of technologies, not broadly. 515 00:31:20,040 --> 00:31:20,760 Speaker 9: We're trading more. 516 00:31:20,920 --> 00:31:22,880 Speaker 1: The US and China are trading more, and Jake says 517 00:31:22,840 --> 00:31:25,080 Speaker 1: is in a speech, we're trading more with each other 518 00:31:25,120 --> 00:31:27,760 Speaker 1: now than we ever have. You know, despite the protectionism, 519 00:31:27,880 --> 00:31:31,640 Speaker 1: despite the tariffs, despite the tensions in the relationship, our 520 00:31:31,680 --> 00:31:36,840 Speaker 1: bioloedal relationship is economic relationship is deeper and broader than 521 00:31:36,880 --> 00:31:41,480 Speaker 1: it's ever been, and so I don't think countries like 522 00:31:41,560 --> 00:31:44,080 Speaker 1: Morocco are going to have to pick size one or 523 00:31:44,120 --> 00:31:49,000 Speaker 1: the other, with the exception of some very discrete technologies, 524 00:31:49,040 --> 00:31:53,160 Speaker 1: whether it's in the telecom area, semiconductors, or you know, 525 00:31:53,160 --> 00:31:58,920 Speaker 1: maybe in some of the clean energy technologies, and you know, 526 00:31:58,920 --> 00:32:01,400 Speaker 1: I think we need to make it attractive for them 527 00:32:01,480 --> 00:32:04,120 Speaker 1: to pick our side. I think one of the challenges 528 00:32:04,160 --> 00:32:08,040 Speaker 1: we have is in Washington right now there is a 529 00:32:08,160 --> 00:32:12,560 Speaker 1: robust bipartisan consensus on the nature of the China problem. 530 00:32:13,400 --> 00:32:18,640 Speaker 1: There is less serious thought and consensus going into where 531 00:32:18,640 --> 00:32:20,600 Speaker 1: do we want this relationship to go in the future, 532 00:32:20,680 --> 00:32:23,680 Speaker 1: What is the new equilibrium that we want to establish 533 00:32:24,080 --> 00:32:26,720 Speaker 1: with China? And that's important not just so that we 534 00:32:26,760 --> 00:32:29,560 Speaker 1: know where we're going ourselves, but I think in our 535 00:32:29,640 --> 00:32:35,000 Speaker 1: conversations with Europeans with third countries, they don't want to 536 00:32:35,000 --> 00:32:37,960 Speaker 1: be put in this position of having to choose, and 537 00:32:38,080 --> 00:32:42,560 Speaker 1: they understand and in many respects share our concerns about China, 538 00:32:43,080 --> 00:32:46,120 Speaker 1: but they haven't yet seen what our vision is for 539 00:32:46,200 --> 00:32:46,880 Speaker 1: the future. 540 00:32:47,360 --> 00:32:49,680 Speaker 2: Of course, the other question in their minds is who's 541 00:32:49,680 --> 00:32:51,960 Speaker 2: going to win the next election. So what in this 542 00:32:53,880 --> 00:32:56,720 Speaker 2: approach that we've talked about for the last twenty minutes 543 00:32:56,800 --> 00:33:01,040 Speaker 2: or so changes if there's a Republican president from January 544 00:33:01,120 --> 00:33:03,440 Speaker 2: twenty twenty five. Stepping back from who it might. 545 00:33:03,320 --> 00:33:07,200 Speaker 1: Be, look, I think one thing that the Biden administration 546 00:33:07,280 --> 00:33:10,720 Speaker 1: has demonstrated is that there's a fair degree of continuity 547 00:33:11,240 --> 00:33:14,760 Speaker 1: between one administration and the next when it comes to 548 00:33:15,120 --> 00:33:20,320 Speaker 1: the diagnosis of the problem and even even some of 549 00:33:20,360 --> 00:33:25,120 Speaker 1: the responses. So the Biden administration has embraced the US 550 00:33:25,320 --> 00:33:30,280 Speaker 1: Mexico Canada Agreement and the labor provisions of that. Of course, 551 00:33:30,280 --> 00:33:34,640 Speaker 1: I mean it's a good agreement. My guess is a 552 00:33:34,720 --> 00:33:37,680 Speaker 1: future administration would continue to embrace some of the industrial 553 00:33:37,720 --> 00:33:42,080 Speaker 1: policy that the Biden administration has launched, the investment in chips, 554 00:33:42,560 --> 00:33:46,760 Speaker 1: in infrastructure, in electric vehicles, and the supply chain around 555 00:33:46,800 --> 00:33:49,440 Speaker 1: electric vehicles. So I think there's just a lot of 556 00:33:49,600 --> 00:33:51,800 Speaker 1: continuity at this point on these questions. 557 00:33:52,480 --> 00:33:54,560 Speaker 2: The final question, in a couple of weeks time, you're 558 00:33:54,600 --> 00:33:55,960 Speaker 2: going to be a few weeks time, you're going to 559 00:33:56,000 --> 00:33:58,120 Speaker 2: be taking over the reins at this as I said, 560 00:33:58,240 --> 00:34:01,800 Speaker 2: very illustrious institution. I think in some ways one might 561 00:34:01,840 --> 00:34:04,360 Speaker 2: think what the Council and Foreign Relations is most focused 562 00:34:04,360 --> 00:34:07,920 Speaker 2: on is what the at least the elite global conversation 563 00:34:08,120 --> 00:34:10,200 Speaker 2: is going to be about in the next few years, 564 00:34:10,480 --> 00:34:12,239 Speaker 2: where do you think where do you think you're going 565 00:34:12,320 --> 00:34:17,480 Speaker 2: to be putting more resources and sending more people to 566 00:34:17,480 --> 00:34:19,200 Speaker 2: think about at the Council. 567 00:34:19,400 --> 00:34:24,040 Speaker 1: Well, look, I think we've got the return of geopolitics 568 00:34:24,440 --> 00:34:29,040 Speaker 1: and war in Europe, which of course has to be 569 00:34:29,239 --> 00:34:32,480 Speaker 1: a major focus. We've got the rise of China and 570 00:34:32,520 --> 00:34:35,120 Speaker 1: the whole management of strategic competition. I think that's an 571 00:34:35,120 --> 00:34:37,000 Speaker 1: area that we'll need a lot of focus. And then 572 00:34:37,040 --> 00:34:41,280 Speaker 1: I think the whole area around technology and foreign policy, 573 00:34:41,400 --> 00:34:44,759 Speaker 1: technology and national security. I think we're just beginning to 574 00:34:44,760 --> 00:34:48,000 Speaker 1: scratch the surface in terms of what impact AI quants 575 00:34:48,040 --> 00:34:53,080 Speaker 1: of computing, synthetic biology, other new innovations in the technology 576 00:34:53,080 --> 00:34:57,920 Speaker 1: and science area are having or could have on international relations, 577 00:34:58,040 --> 00:35:00,160 Speaker 1: on global governance in the life. 578 00:35:00,680 --> 00:35:03,120 Speaker 2: So if you're good on those things, get your resumes 579 00:35:03,160 --> 00:35:05,520 Speaker 2: into the Council form relations in the next few weeks. 580 00:35:05,840 --> 00:35:06,839 Speaker 2: Michael Freeman, thank you. 581 00:35:06,840 --> 00:35:08,120 Speaker 9: Very much, thanks for having me. 582 00:35:14,000 --> 00:35:16,319 Speaker 2: Well that's it for this episode of Stephanomics. Next week 583 00:35:16,360 --> 00:35:18,640 Speaker 2: we'll have more, But in the meantime you can get 584 00:35:19,040 --> 00:35:22,400 Speaker 2: all your economic insight and news from the Bloomberg terminal 585 00:35:22,520 --> 00:35:26,360 Speaker 2: website or app. This episode was produced by Magnus Henrickson, 586 00:35:26,480 --> 00:35:29,719 Speaker 2: Yang Yang and Samma Sadi, with help from Moses and 587 00:35:30,800 --> 00:35:34,840 Speaker 2: special thanks to Brendan Murray and Michael Froehman. The executive 588 00:35:34,840 --> 00:35:37,520 Speaker 2: producer of Stephanomics is Molly Smith and the head of 589 00:35:37,560 --> 00:35:40,000 Speaker 2: Bloomberg Podcast is Sage Bowman.