Coronavirus News Asia

Becoming a manufacturing powerhouse in 2020

Seldom does a day go by lately without politicians and pundits in countries all over the world calling for re-establishing their manufacturing base to avoid the vulnerabilities exposed in the wake of Covid-19.

But the process of moving essential supplies back (or closer) to home is easier said than done: Reassessing capacity-planning strategies on the grounds of national security, re-domiciling supply lines or reviving home-grown industry all entails significant geopolitical ruptures with the patterns that have formed for the past 50 years.

The process requires a fusion of old ideas projected into new technological capacities, such as automation and quantum computing, and a design that promotes a continuum of stability and cooperation from the old order. And while every nation will certainly think of itself first, it would be suicidal not to think outside of one’s borders, starting with regionalization. 

So where is a nation-state in 2020 going to start with this transition? Where is the multilateral red tape?

Regarding the World Trade Organization specifically, Trade-Related Investment Measures, or TRIMs for short, must be abrogated if countries are serious about re-establishing domestic manufacturing capability.

These are regulations that explicitly prohibit local-content requirements, prioritization of domestic firms for public-works procurement, foreign-exchange restrictions (which are particularly important for emerging economies now totally reliant on dollar funding access by the US Federal Reserve), and export restrictions.

As TRIMs are annexes to the main WTO accord, they can be abrogated without stepping outside the bounds of the main agreement itself, which means that their elimination doesn’t necessarily presage a return to some kind unregulated law of the jungle with respect to global trade.

During the current pandemic, virtually all of these provisions, especially the export restrictions, are routinely broken, as every nation scrambles for vitally needed medical supplies. Yet the world’s global trading system has not collapsed into a total free-for-all.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *