Page 85 - COVID-19: The Great Reset

vulnerabilities of our long-distance interdependence”. [81] For
years, with the partial exception of direct trade between the US

and China, globalization (as measured by the exchange of goods)
was already becoming more intraregional than interregional. In the
early 1990s, North America absorbed 35% of East Asia’s exports,
while today this proportion is down to 20%, mainly because East

Asia’s share of exports to itself grows every year – a natural
situation as Asian countries move up the value chain, consuming
more of what they produce. In 2019, as the US and China

unleashed a trade war, US trade with Canada and Mexico rose
while falling with China. At the same time, China’s trade with
ASEAN rose for the first time to above $300 billion. In short,
deglobalization in the form of greater regionalization was already
happening.

COVID-19 will just accelerate this global divergence as North
America, Europe and Asia focus increasingly on regional self-
sufficiency rather than on the distant and intricate global supply
chains that formerly epitomized the essence of globalization. What

form might this take? It could resemble the sequence of events
that brought an earlier period of globalization to an end, but with a
regional twist. Antiglobalization was strong in the run-up to 1914
and up to 1918, then less so during the 1920s, but it reignited in

the 1930s as a result of the Great Depression, triggering an
increase in tariff and non-tariff barriers that destroyed many
businesses and inflicted much pain on the largest economies of
that time. The same could happen again, with a strong impulse to

reshore that spreads beyond healthcare and agriculture to include
large categories of non-strategic products. Both the far right and
the far left will take advantage of the crisis to promote a
protectionist agenda with higher barriers to the free flow of capital

goods and people. Several surveys conducted in the first few
months of 2020 revealed that international companies fear a
return and aggravation of protectionism in the US, not only on
trade, but also in cross-border mergers and acquisitions and

government procurement. [82] What happens in the US will
inevitably ricochet elsewhere, with other advanced economies
imposing more barriers to trade and investment, defying the

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