TOPICAL ANALYSIS 6 : DEGLOBALIZATION

Globalization refers to the economic, social, and political integration of nations. Economic globalisation can be seen in the exchange of goods. It can also be seen in the rising movement of people and capital around the world.

However, Globalization is under attack these days from all quarters. It is because the race of globalization has left majority of the world's population far behind. According to UNICEF, the richest 20 per cent of the population gets 83 per cent of global income, while the poorest quintile has just 1 per cent. This trend is getting worse. A new UNDP report called "Humanity Divided" estimates that 75 per cent of the population lives in societies where income distribution is less equal now than it was in the 1990s, although global GDP ballooned from $22 trillion to $72 trillion.

Also the fundamental challenge posed by the increasing reach of global markets is that global markets are inherently dis-equalizing, making rising inequality in developing countries more rather than less likely. This is due to following reasons:

• First, the tremendous economic gains associated with deeper and more efficient global markets are not equally shared. Markets, after all, reward those who have the right assets - financial capital, human capital, entrepreneurial skills.
• A second reason why globalization is dis-equalizing is that global markets are far from perfect. They fail in many domains. The classic example of a market failure is that of pollution, where the polluter captures the benefits of polluting without paying the full costs. At the global level, high greenhouse gas emissions of the US are imposing costs on poor countries. Similarly with global financial crises; the financial crises was due to policy errors in few countries. But a healthy portion can be blamed on the panic that periodically plagues all financial markets.
• Finally, global markets tend to be dis-equalizing because trade, migration, and intellectual property regimes at the global level naturally reflect the greater market power of the rich.

In developing countries inequality is economically destructive; it interacts with underdeveloped markets and ineffective government programs to slow growth - which in turn slows progress in reducing poverty. Economic theory suggests why: weak credit markets and inadequate public education mean only the rich can exploit investment opportunities. Middle income and poor households cannot borrow and miss out on potentially high returns on their own farms and small business ventures for example - often higher returns than the rich are getting on their capital. The most able children of the less rich miss out on the education and skills that would maximize their own economic prospects and their countries' own growth.

Due to this, the trend has started to reverse to deglobalisation. Several prominent countries including the UK resisted globalisation by rising tariffs. Far-right parties in Europe gained popularity in this atmosphere of financial weakness and supporting deglobalisation.

What are the indicators of deglobalization?

Apart from rise of right wing parties across globe, which is political manifestation of deglobalization, economic indicators show that post 2008 economic slowdown de-globalization is becoming the norm.

• Trade: With global demand weak, and many nations erecting import barriers, trade is slumping. Measured as a share of global gross domestic product, trade doubled from 30 percent in 1973 to a high of 60 percent in 2008. But it faltered during the crisis and has since dropped to 55 percent.
• The flow of capital - mainly bank loans - is retreating even faster. Frozen by the financial crisis and squeezed afterward by new regulations, capital flows have since slumped to just under 2 percent of G.D.P. from a peak of 16 percent in 2007.
• The flow of people is slowing, too. Despite the flood of refugees into Europe, net migration from poor to rich countries decreased to 12 million between 2011 and 2015, down by four million from the previous five years.

What are the reasons for this new trend?

There are several reasons behind this trend today. Some of them are:

• Unequal distribution of benefits of globalization, rising inequalities, job loss especially in developed countries.
• MNCs across the countries and workers from developing countries benefitted the most leading to perception that workers from developing countries have stolen jobs from developed countries. This led to demands of stricter visa regime and relocation of industries.
• Global slowdown exacerbated the above mentioned situation and led to increase in demand for protectionist measures across globe.
• Rise of ISIS, increased instances of terrorist attacks and emerging security threats across globe. Immigration crisis further accentuated the security situation and as it is happening at the time of economic slowdown thus leading to anti-immigrant stand.
• Rise of populist leaders globally re-enforces the trend

Concept of de-globalisation

According to Walden Bello and Focus on the Global South, who coined the term "deglobalisation", the objective is not to withdraw from the global economy, but rather to trigger a process of restructuring the world economic and political system so as to strengthen local and national economies instead of weakening them.

De-globalisation questions the integration process dominated by the logic of capital and the supposed rationality of the economy that erodes the decision-making capacity of the people and States. Deglobalising means starting to think and build an integration process based on the needs of peoples, nations, communities and ecosystems.

Deglobalisation does not oppose trade nor the exchange of products or services, but proposes that trade is not done at the expense of the communities, the local and national economies and the diversity of its products whether agricultural or industrial.

The one size fit all policy of structural adjustment programs pushing countries to only remain producers of particular cash crops or goods, destroys that country's ability to satisfy people's needs, diversify and more importantly, be self-reliant in its ability to feed its people.

Deglobalisation embraces the principle of subsidiarity that affirms that all political or economic decisions must be adopted by the level of government that is closest to the problem. The ones who know the most about the local situation and will be the first to suffer the consequences of a decision must be the first to give their opinion and state their position. A political or economic decision that affects a local area must fundamentally be made at this level and only when it is truly necessary should this decision-making power be transferred to the national, regional or global level.

Currently, trade rules cannot be the same for all countries. Trade and investment rules must be asymmetrical so as to favour the smallest economies and countries whose economies and agricultural sector were weakened by transnational capital, colonialism and the interventionism of the superpowers. Trade policies - such as quotas, tariffs and subsidies - must be used to protect local economies from imported goods subsidised by large corporations that set prices at artificially low rates.

Principles of De-globalization by Walden Bello

1. Production for the domestic market rather than production for export markets must again become the center of gravity of the economy.
2. The principle of subsidiarity should be enshrined in economic life by encouraging production of goods at the level of the community and at the national level if this can be done at reasonable cost in order to preserve community.
3. Trade policy - that is, quotas and tariffs - should be used to protect the local economy from destruction by corporate-subsidized commodities with artificially low prices.
4. Industrial policy - including subsidies, tariffs, and trade - should be used to revitalize and strengthen the manufacturing sector.
5. Long-postponed measures of equitable income redistribution and land redistribution (including urban land reform) must be implemented to create a vibrant internal market that would serve as the anchor of the economy and produce local financial resources for investment.
6. De-emphasizing growth, emphasizing upgrading the quality of life, and maximizing equity will reduce environmental disequilibrium.
7. The power and transportation systems must be transformed into decentralized systems based on renewable sources.
8. A healthy balance must be maintained between the country's carrying capacity and the size of its population.
9. Environmentally congenial technology must be developed and diffused in both agriculture and industry.
10. A gender lens must be applied in all areas of economic decision making so as to ensure gender equity.
11. Strategic economic decisions must not be left to the market or to technocrats. Instead, the scope of democratic decision-making in the economy should be expanded so that all vital economic issues - such as which industries to develop or phase out, what proportion of the government budget to devote to agriculture, etc. - become subject to democratic discussion and choice. This will entail the demystification of economics and a return to its origins as political economy and moral economy.
12. Civil society must constantly monitor and supervise the private sector and the state, a process that should be institutionalized.
13. The property complex should be transformed into a "mixed economy" that includes community cooperatives, private enterprises, and state enterprises, and excludes transnational corporations.
14. Centralized global institutions like the IMF and the World Bank should be replaced with regional institutions built not on free trade and capital mobility but on principles of cooperation that, to use the words of Hugo Chavez in describing the Bolivarian Alternative for the Peoples of Our Americas (ALBA), "transcend the logic of capitalism."

BREXIT, one of the biggest geopolitical risks of 2016, became a reality on June 23 2016 when the "Leave" camp won by a small margin with 51.9 percent of the vote.
 
The referendum, with an unprecedented voter turnout of 72 per cent, has attracted the attention of the whole world, as its outcome will not only impact the future of the United Kingdom, but also bring about huge and unpredictable changes to the European integration process, as well as to the future of globalization.
 
From a strategic and global perspective, BREXIT may be defined as the first wave of anti-globalization and rising populism that washes over the world, in particular the advanced nations. What follows next will certainly be more intense and ferocious as globalization and anti-globalization forces engage in fierce battles in different fields involving more countries both in and outside the EU.
 
What does BREXIT mean?

It is a word that has been used as a shorthand way of saying the UK leaving the EU - merging the words Britain and Exit to get BREXIT.
 
What was the breakdown across the UK?

• England voted for BREXIT, by 53.4% to 46.6%. 
• Wales also voted for BREXIT, with Leave getting 52.5% of the vote and Remain 47.5%.
   
• Scotland and Northern Ireland both backed staying in the EU.
   
• Scotland backed - Remain by 62% to 38%, 
   
• Northern Ireland - while 55.8% in Northern Ireland voted Remain and 44.2% Leave.

In economics, protectionism is the economic policy of restraining trade between states (countries) through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations. Protectionist policies protect the producers, businesses and workers of the import-competing sector in a country from foreign competitors. According to the proponents, these policies can counteract unfair trade practices, to allow fair competition between imports and goods and services produced domestically. WTO rules allow countries to use methods of protectionism but in a limited manner and in specific cases.

1. Tariffs - A tariff is a tax on imports, which can either be specific (so much per unit of sale) or ad valorem (a percentage of the price of the product). Taxing imported goods increase the cost to importers and raises the price of the imported goods in local markets. This gives domestic equivalents a comparative advantage. As such, tariffs are distorting the market forces and may prevent consumers from gaining the benefit of all the advantages of international specialization and trade.
    
2. Quotas - Limiting the number of goods that can be produced abroad and sold domestically limits foreign competition in domestic markets. Once again, they reduce the amount of imports entering an economy and increase the equilibrium price within the market. The government receives no revenue from a quota, as it does with a tariff, unless it can set up a system of licenses.
    
3. Exchange controls - The government could limit the amount of foreign currency available for paying for imports.
    
4. Export subsidies - Export subsidies allow exporters to supply the market with more product than the natural equilibrium would have allowed. Foreign consumers will enjoy increased economic welfare as the price of their purchases fall. Domestic employees might enjoy more wages and job security. But taxpayers are footing the bill for this. Domestic firms might divert trade into exports and ignore the home market. This could lead to increase in domestic prices.
    
5. Exchange Rates - Intervening in the foreign exchange (forex) market to lower a currency's valuation can raise the cost of imports and lower the cost of exports.
    
6. Import Quotas Domestic Subsidies - Subsidizing costs or providing cheap loans to domestic companies can increase their competitiveness against foreign imports.
7. Administrative obstacles - Countries can set administrative hurdles. For example, they may require significant levels of paperwork and then deal with these processes slowly making it difficult for importers to compete on a level playing field with other firms.
    
8. Health and safety standards - Countries may set onerously high health and safety standards for goods that are imported, once again making life difficult for importers.
    
9. Environmental standards  - Countries can set high environmental standards that they know only domestic firms are likely to be able to achieve, once again making life difficult for importers.

Introduction

Multilateralism is the process of organizing relations between groups of three or more states. Beyond that basic quantitative aspect, multilateralism is generally considered to comprise certain qualitative elements or principles that shape the character of the arrangement or institution. Those principles are:

• An indivisibility of interests among participants,
• A system of dispute settlement intended to enforce a particular mode of behavior.

Multilateralism has a long history, but it is principally associated with the era after World War II, during which there was a burgeoning of multilateral agreements led primarily by the United States. The organizations most strongly embodying the principle of multilateralism are to be found in trade (the World Trade Organization [WTO]), security (the North Atlantic Treaty Organization [NATO]) and environment (numerous multilateral environmental institutions also exist).

To better understand the nature of multilateralism, it is useful to contrast it with bilateralism. Bilateralism is the conduct of political, economic, or cultural relations between two sovereign states. It is in contrast to unilateralism or multilateralism, which is activity by a single state or jointly by multiple states, respectively. Some examples in different sectors are -

1. a) Security arrangement

• In security arrangements, the principles of multilateralism are best embodied in a collective security system such as NATO, in which a war against one state is considered to be a war against all states, ensuring that any act of aggression against a member of the collective system is met with a response from all members.
• By contrast, a bilateral arrangement only ensures that A comes to the aid of B in the event of an attack by C. It would not ensure that C receives similar protection from A in the event of an attack on C by B. In that instance, the system discriminates against C.
• Bilateral security arrangements are, therefore, like their counterparts in commercial policy is being inherently discriminatory, whereas multilateral arrangements have a more-inclusive character in which all participants are afforded equal treatment.

Dispute Settlement

• Having a system of dispute settlement enables participating countries to treat their interests as indivisible and to accept relations of diffuse reciprocity: they know that should the expected benefits not be forthcoming because of noncompliance by other participants, there is a mechanism through which redress may be sought.
• The above principles taken together form an "ideal type" of multilateralism. Although there was huge growth after World War II in the number of multilateral institutions, they have not always fully conformed to all aspects of this ideal model. Such institutions undoubtedly played a significant role in postwar global governance.

More controversially, it has been argued that multilateral institutions may be inherently more stable than other forms of organization in that the principles underlying them appear to be more durable than other arrangements and more able to adapt to external changes.

Thus, despite the perceived decline in the relative power of the United States after the 1970s, the multilateral institutions continued to play an important role in shaping the international system.

However due to 'Great Recession',  Globalisation concept is at a crossroads.

The dynamics of freer circulation of goods, capital and people has lost steam. Trade protectionism is on the rise. Multilateral institutions such as the International Monetary Fund, the World Bank and the World Trade Organisation provide slow and often insufficient responses to contemporary challenges.

Reasons for failing Multilateralism

• Geopolitical competition. [E.g. USA vs. Russia = NATO & Warsaw Pact & Syrian Crisis]
• Faith in multilateral institutions has dropped because of rigid rules, and slow paced reforms.

–       WTO negotiations are stuck in gridlock.

–       Developing nations are not getting due membership in UNSC.

• Multilateral institutions have become prone to conflict instead of consensus.
• Bilateral and Regional groups are considered as offering better deals through access to deep market, while balancing free trade with social goals (Subsidy, poverty, etc.).
• Developed societies have changed, embracing individualism over social democracy [Joint family to Nuclear family].
• Negative consequences of Globalization - income inequalities between developed and developing, crony capitalism, WTO like organizations favoring developed countries over developing, etc.

Some examples are as follows:

UN (The most important Multilateral Institution) is undermined by

• The regional security pacts like NATO, Warsaw Pact, Shanghai Cooperation Agreement, etc.
• Russia's absorption of Crimea.
• U.S.A's military mobilization against Bashar Al Assad's Syrian regime without the approval of the UN.
• China's rejection of the Permanent Court of Arbitration's decision in the South China Sea case, despite signing up to the United Nations Convention on the Law of the Sea.
• United Nations Security Council failed to restrict terrorism by their use of the veto. In the most recent example of this power being exercised, Russia and China voted against a draft resolution that would have condemned a crackdown on anti-government protests in Syria and called on Bashar al-Assad, the Syrian president, to step aside.
• At the creation of the UN in 1945, the United States was the only nation in the world to own and test nuclear weapons. In 1970, the nuclear non-proliferation treaty was signed by 190 nations, including five nations that admitted to owning nuclear weapons: France, England, Russia, China, and the US. Despite this treaty, nuclear stockpiles remain high, and numerous nations continue to develop these devastating weapons.

WTO's (the most important multilateral trade organization) failure:

• WTO was driven to irrelevance by the collapse of the Doha trade round in 2008.
• Cluster of regional and bilateral trade agreements such as the Transatlantic Trade and Investment Partnership, Trans-Pacific Partnership, RCEP etc. are making WTO irrelevant.
• The lack of transparency is often seen as a problem. Politicians can negotiate for regulations that would not be possible or accepted in a democratic process in their own nations. "Some countries push for certain regulatory standards in international bodies and then bring those regulations home under the requirement of harmonization and the guise of multilateralism." This is often referred to as Policy Laundering.
• WTO is highly biased towards the developed and rich nations.
• WTO supposedly operates on a consensus basis, with equal decision-making power for all. Involvement of the poor countries is less in the decision making process and they have less bargaining power.

IMF failure:

• In its structural adjustment policies IMF has been guided by the supremacy of the free market in promoting economic growth. Thus, it indirectly promotes the interests of the developed countries ignoring the requirements of developing countries.
• IMF policy of providing financial assistance to the poor developing countries subject to the fulfillment of certain conditions by the latter has come in for severe criticism. In fact, capital market liberalisation proved to be disastrous for many countries because they were not ready and able to deal with the great volatility of capital inflows and outflows, as happened during East Asian crisis of 1990s.
• IMF policy of laying emphasis on elimination of subsidies, liberalisation of trade and capital market privatisation as conditions for providing financial assistance to the developing countries has not led to the solution of the twin problems of poverty and unemployment in the developing countries.
• AIIB and BRICS Bank are seen as rivals of IMF and WB.

Rise in "Our country First" concept

• Multilateral systems such as the EU or NATO, and other forms of international cooperation have been among the greatest successes since the Second World War, based as they are on the fundamental principles of democracy, peace, and collaboration among war-torn countries in Europe. However, now there has been rise of ‘Our country first’ concept.
• The "Our country first" approach is being pushed by many populist movements on a global level and it seems that governments are starting to reject their responsibilities towards the international community by undermining global cooperation.
• One of the most recent signals of this movement against multilateral cooperation is "Brexit", or the UK's decision to leave the EU. Multilateral cooperation is also facing a challenge on a global level. Especially when it comes to engagement in sustainable development, the multilateral system seems to be mired in stagnation due to global political changes and movements.
• US president Donald Trump wants to reduce US funding of the United Nations by around 30 %. The US is traditionally the biggest funders of the United Nations, and last year spent two billion dollars on the World Food Programme (WFP), a quarter of the WFP's entire budget.
• The executive order to be signed by the US government will also impact the United Nations Populations Fund (UNFP), which mainly works with women and children.
• The biggest failure of global treaties is that poverty has never been the focus of global treaties that directly relate to women and children. Therefore, the question arises of what kind of effect this will have on the people affected. A lot of people will not accept poverty as their destiny and will make the journey to richer countries. This in turn creates anger and fear in the destination countries, which, combined with personal frustration regarding their national economy and politics, is a potent source of nationalism. Nationalism has been a key source of conflicts, especially in the twentieth century.
• However, it is unclear whether these populist movements will gain momentum and impact, or if they will spark counter-movements that will give the concept of multilateralism a new direction. This could happen if there is an active civil society that is able to effect change on local and global levels.
• But concerns remain - both that current trends could trigger a crisis in the multilateral system and over how global cooperation can be strengthened.

 Conclusion

The current context, characterized by a weakening of multilateralism, the return of protectionism and the rise of extremist political movements, undermines the advancement of that global consensus, poses a grave challenge to the world economy and threatens the attainment of the Sustainable Development Goals.

Today more than ever, we must promote and expand cooperation and integration on a multilateral basis. The 2030 Agenda and the SDGs are universal not only in that they aspire to include all the world's countries and that their attainment may develop inclusive society, they are also needed to improve the national efforts by global & regional cooperation.

• Conflict: Armies fighting for control may try to weaken the other side by threatening lives of civilians, kidnapping children, raping women, burning crops and forests, destroying houses, schools and health clinics, polluting wells and laying landmines. People flee in fear to escape further pain and loss.
   
• Oppression: The ruling power may not respect human rights by imposing harsh treatment, especially on people it suspects of disagreeing or opposing it. This means people flee in fear for their safety.
   
• Hatred: Hostility, retaliation and injustice between ethnicities, religious or other groups can threaten people's lives. As a result, people flee in fear for their lives.
   
• Environmental issues: Natural disasters and climate change also cause people to flee. Despite the difficulties they face, they are not protected by international refugee laws. In some cases environmental issues cause resource shortages that lead to conflict, creating refugees.

• Today, some 84% of those reaching Europe come from the ten countries that produce the most refugees: Some 84% of those reaching Europe come from the ten countries that produce the most refugees: Syria, Afghanistan, Somalia, Sudan, South Sudan, the Democratic Republic of the Congo, Myanmar, Central African Republic, Iraq, and Eritrea. In these countries, large areas are affected by war and severe civil strife.
   
• The majority of arrivals to the European Union in 2016 have come via the Mediterranean. Since the beginning of the year, more than 4,600 people have died or gone missing while attempting to reach Italy from the North African coast. This is the highest recorded number of deaths in the Mediterranean to date.
   
• The highest number of migrants arrives in Greece and Italy, often after a perilous journey across the sea. In Greece, around 62,000 people are waiting to have their asylum applications processed, with about 11,400 of them held in facilities on the Greek islands. Each month, less than 1,000 asylum decisions are given, with more than that number of asylum seekers arriving. In Italy, over 11,000 people per month applied for asylum in 2016, and on average between 6,000 and 8,000 are processed every month. Faced with this unprecedented situation, both countries have struggled to provide decent reception facilities with even basic services.

• The EU Common European Asylum System (CEAS) is a set of EU laws, completed in 2005. They are intended to ensure that all EU member states protect the rights of asylum seekers and refugees. The CEAS sets out minimum standards and procedures for processing and deciding asylum applications, and for the treatment of both asylum seekers and those who are recognized as refugees. Implementation of CEAS varies throughout the European Union. A number of EU states still do not operate fair, effective systems of asylum decision-making and support, leading to a patchwork of 28 asylum systems producing uneven results.
   
• Asylum seekers have no legal duty to claim asylum in the first EU state they reach, and many move on, seeking to join relatives or friends for support, or to reach a country with a functioning asylum system. However, the "Dublin" regulation stipulates that EU member states can choose to return asylum seekers to their country of first entry to process their asylum claim, so long as that country has an effective asylum system.
   
• EU countries in the north, the desired destination of many refugees, have sought to use this Dublin system to their advantage, at the expense of the south, where most refugees first arrive. Yet these efforts have been obstructed by failures of asylum systems in the south. Domestic and European courts have ruled against asylum seekers being returned to Greece, notably in a landmark case in 2011 that found Belgium in violation of the European Convention on Human Rights for exposing an Afghan national to detention, harsh living conditions, and risks arising from shortcomings in Greece's asylum system after a return.

• To address the uneven application of CEAS and the problems of the Dublin system, a reform of the CEAS was proposed in 2016. Among the proposed reforms is one that risks endangering the right to asylum in the EU, with an obligation to verify first if asylum seekers could find protection outside the EU. Some EU countries have already voiced opposition to some of the reforms, notably the obligation to take refugees from other EU countries.

• Prioritize saving lives at sea through sustained search and rescue operations along the main migration routes in the Mediterranean. Renew efforts to obtain permission to operate in Libyan waters so that EU-flagged vessels can assist in search and rescue operations there.
   
• Ensure that any efforts to "externalize" migration management do not worsen access to protection and respect for human rights, including by:
   
• Designing, implementing, monitoring and reporting publicly on EU migration cooperation arrangements with third countries to ensure this cooperation does not trap people in abusive situations, prevent them from accessing fair asylum procedures, or lead to refoulement.
   
•  Delinking development aid from migration control in those countries where this linkage appears to be in place.
   
• Ensuring that programs developed with security forces and other government agencies in countries of origin do not contribute to human rights violations.
   
• Ensuring that migration cooperation with Libyan authorities, including the training of Libyan Coast Guard and Navy officers, has a strong human rights component, with monitoring and accountability for any abuses and independent, impartial and transparent monitoring of conditions and treatment in Libyan detention centers to ensure that they meet basic standards. The EU should suspend the training program if abuses continue.
   
• Increase safe and legal channels into the EU to reduce demand for smuggling and dangerous journeys.
• Accelerating the pace of relocations and setting up a timeline for the implementation of the relocation targets. The European Commission should open infringement procedures against member states that are failing to comply with their relocation obligations.
   
• Ensure that all beneficiaries of protection already in the EU enjoy the right to family reunification without onerous conditions or waiting periods. There should be no distinction between subsidiary protection and refugee status with respect to family reunification rights.
   
• Governments also need to stop blaming refugees and migrants for economic and social problems, and instead combat all kinds of xenophobia and racial discrimination. Doing otherwise is deeply unfair, stirs up tensions and fear of foreigners, and sometimes leads to violence - even death.