Compliments of the season, welcome to the first trade secret of 2022. First, our format is changing starting today. Instead of a four-day-a-week newsletter, I’ll be writing a comprehensive briefing and a mid-week opinion column on Monday. The content will be similar to before, but with a sharper point of view. As always, I’m open to helpful advice, lavish praise, and gratuitous abuse, all of which can be emailed to me— [email protected]. Today’s main section looks ahead to the rest of the year and concludes that no matter what your view of normalcy, we probably won’t go back in time.

Globalization survives in a hostile environment

mine last group In the previous year’s forecast for 2020, there was such a high hit rate I’ve been reluctant to repeat this exercise in case the huge role of luck on that occasion becomes too apparent. In any case, globalization since the pandemic has not primarily consisted of a neat set of processes (trade agreements, dispute resolution cases) with clear observable outcomes. So it’s not a falsely precise forecast, it’s what I’m looking at in 2022.

• Supply chains are a wait-and-see puzzle. The biggest problem in global trade right now is supply chain disruptions that have lasted for months, and the jury is still out.i stay beautiful persuaded by members’ arguments Optimistic team temporarily rebounds Consumer durables demand Instead of pessimistic teams enduring supply-side ruptures.But I admit, my hopes for shipping and supply chain congestion relief at the end of last year turned out to be a bit Premature.

  Even if you mostly believe the demand side argument, the Omicron coronavirus variant has apparently disrupted ports, manufacturing and food supplies around the world. By the middle of this year, assuming the Omicron wave has subsided, we should see more clearly the deep-seated problems.

• Be prepared when the government starts to “rescue”. The longer supply chain problems persist, the more political discussions about industrial policy, the greater the chance of truly stupid government intervention, such as a global subsidy race Semiconductor production. The best thing governments can do for globalization in the short term is not trade policy, but macroeconomics and public health: keep domestic demand strong, people get vaccinated and wear masks.

  Still, long-term challenges such as climate change and technological competition will continue to put pressure on governments to adopt aggressive trade policies.One example: The Biden administration’s response to the EU carbon pricing plan is to propose an anti-China-managed trade union with questionable effectiveness and legitimacy, and to invest some domestic favoritism Start the electric car. Instead of being isolated from the world, China has embarked on a “dual circulation” route pioneered by China. Economic nationalism is spreading.

• Great Power Strategic Competition and the Asia-Pacific. Everyone agrees that a dominant role in the Asia-Pacific is a big deal in trade governance, but U.S. leadership efforts look pretty muted.The Biden administration has signaled that it will continue to try to get Donald Trump’s dealing with China Work.instead of joining CPTPP (comprehensive and progressive etc, you know) America is coming up with what looks like it might be vulnerable, save face Bilateral Memorandum with some of its members. Desperate for a strong US presence, US allies in the region (Japan, Australia, New Zealand, etc.) will fret over how much they can slow down China’s application to join the CPTPP.This strategic autonomy bullied by China Lithuania. Even in the first six months of the exuberant French presiding over the show, it will be a huge challenge for the EU to integrate trade into a coherent and enduring strategic approach.

• There aren’t many big trade deals on the table. In terms of formal agreements involving major trading powers, there is not much to compete with the CPTPP. Major issues between the EU and the US, including Airbus and Boeing and the steel and aluminium disputes, have been resolved, but beyond that there is little sign of transatlantic substance. Aside from scrapping pending deals with New Zealand and Australia in the second half, the EU has largely focused on arming itself with more bilateral tools to tackle what it sees as unfair competition. The December World Trade Organization ministerial meeting, which was postponed due to Covid-19, will be reconvened at some point, possibly in the middle of the year. But even if it’s considered a success, it probably won’t make the top five, maybe the top 10, the most important thing in global trade. The United States is reluctant to commit to reviving the WTO ahead of November’s midterm elections.

• Britain is ready to surrender to the EU every year. I have a solid prediction for 2022.British New Year tough talk Questions to the EU over the Northern Ireland protocol will end in a tame withdrawal. It always does.

• What forms of globalization can survive? There are too many ongoing disruptions to the trading system—climate change, data wars, technological competition, cybersecurity—for this pandemic to be a shock that simply goes away and returns normalcy. However, despite this, I am fairly optimistic that the 30-year global expansion that has experienced multiple shocks will continue to resist implosion. The question is how it will adapt to survive.

Chartered Waters

The chart below – from Excellent big read Harry Dempsey’s article on the supply chain crisis yesterday highlighted the magnitude of the rise in freight rates during the pandemic.

In the decade before the coronavirus outbreak, containerized cargo was so cheap that the industry was plagued by excess capacity and struggled to be profitable, the article said. Some carriers went bankrupt, the market consolidates, and the world’s leading nine carriers now control 83 percent of tonnage.

As this chart shows – and has been noted before this newsletter — There are signs that freight rates have fallen recently, at least on the more popular routes. However, there is still an expectation that the world will have to learn to live with high shipping costs, which will spark an economic debate about inflation given the link between shipping costs and the final price of goods.

trade link

The Federal Reserve Bank of New York designed a new index Global supply chains are under pressure.

Shipping industry experts tell the FT that supply chain disruptions are may last This year.

Former EU trade commissioner Cecilia Malmstrom optimistic suggestion The European Union (which we note borders the Arctic and Atlantic Oceans) should join the Trans-Pacific CPTPP.

Noah Barkin of the German Marshall Fund think tank, describe How German industry has mobilized to defend close trade ties with China in the face of skepticism within the new government in Berlin.

French official program As president of the EU Council of Member States for six months, he stressed the need to create an anti-coercion tool to stop bullying by other trading powers.