At the end of December, I wrote an article (Preparing for the Apocalypse) in which I mused about the state of the world and the implications for Canada looking into 2022 and beyond. I characterized the world as a dangerously turbulent place, given the pandemic, the gloomy outlook for climate change, and the increasingly aggressive autocracies now dominating the world stage. I suggested “In a world where war, famine and pestilence are growing threats, we should take concrete action to re-establish capability to produce important products ourselves”. I went on to suggest that we work with our best international partners to establish revised trading rules that allowed liberal democracies to insulate themselves from some of the less reliable trading partners in the world.

In a later epistle, on the use of economic war, I suggested that the OECD should consider banding together to establish a large, integrated, international trading organization. To be a member of that trading bloc, countries would be required to demonstrate some reasonable measure of human rights practices and a sincere commitment to international rule of law.

I’m probably not going to suggest much in the rest of this article that hasn’t already been suggested in the two paragraphs above. I’m simply going to ramble on a bit and consider some of the drivers for and consequences of a deliberate attempt to reduce globalization.

I am a subscriber to the online magazine Economist.com. I think it’s remarkably insightful and well written. In fact, there are times when I go to write something and I research a little in the Economist and I think “Oh crap, I’m really not adding anything new.” (You could think of reading my blog as a way to save money on a subscription to The Economist, I suppose). 

A recent Economist article summarized Chinese interests thusly: “Asked to describe China’s strategic goal, diplomats at more than a dozen embassies in Beijing are in near unanimity. They say China wants a world order built around spheres of influence, with China in control of Asia, Russia wielding a veto over security arrangements in Europe and America pushed back to its own shores.” That picture of the world is one to which Canada could not subscribe. There are too many peaceful liberal nations in Asia with whom we have strongly interlinked trading relationships from which we would not wish to withdraw. We do about $15B in annual trade with Japan and South Korea, for example. We wouldn’t want to have to lose those import/export opportunities, nor would we want to sentence those progressive countries to a future in a Chinese controlled economic bloc. So there is, and will be, an ongoing struggle for the hearts and minds of Japanese and Korean customers. 

Also in the far east, Canada has recently opened trade negotiations with the ten nations forming the Association of South-East Asian Nations (ASEAN). Those ten nations (Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam, Viet Nam, Laos, Myanmar, and Cambodia) would together be our 6^th largest trading partner, with annual trade approaching $33B. But that alliance would not be without warts. Human Rights Watch hasn’t a good word to say about any of them. 

Now, mind you, Human Rights Watch has been criticized for exhibiting bias, for poor research methods, and for being inconsistent about what they recognize as a Human Rights issue. My litmus test was to read what they said about Canada… “global reputation as a defender of human rights, aided by a solid record on core civil and political rights protections… human rights challenges relate to the rights of Indigenous peoples, including violations of their right to safe drinking water and police mistreatment and abuse of Indigenous women and girls.” I think that’s a fair evaluation. So, when I read accusations like “extrajudicial killings, violent attacks, and politically motivated prosecutions,” (Cambodia), or “mass killings, arbitrary arrests, torture, sexual violence, and other abuses against protesters, journalists, health workers, and political opposition members” (Myanmar) I am inclined to believe that these countries are not model children in the world school-yard. And most of the remaining ASEAN countries garner similar judgements by HRW.

So the question is, how do we deal with such nations in our new world order? Do we impose sanctions on the whole bloc until they clean up their act? If we do that, we encourage them to migrate towards a China-driven East bloc. Maybe that’s the right thing to do.

Alternatively, we pinch our nose, and agree to a partnership with some unsavory regimes. Why would we do that? What’s the difference between China and Myanmar? They both have pretty dismal human rights records.

I think the difference is that China is acting as a pretty aggressive autocracy on the world stage, whereas Myanmar’s government is acting as a petty tyrant within its own borders. If we economically isolate all of the repressive regimes in the world, we strengthen the hands of the aggressive nations by forcing others into their camps. That being said, however, there’s no reason why we shouldn’t use economic power to “encourage” some reforms within these ugly trading partners. Canada could, in developing a trading agreement with ASEAN, create some two-tier relationships – you get the “A” treatment with us if you exhibit these characteristics, but the “B” treatment if our auditors rate you as less than satisfactory in specific areas of concern. Those areas of concern should include child labour, forced labour, sexual discrimination and persecution of journalists as a minimum.

But unity is the real power. If Canada tried to impose trading rules as I’ve suggested above, it’s likely that the negotiations would break down and no agreement would be forthcoming. However, if all the OECD nations took the same approach, would those nations not be forced to clean up their act? And if the OECD nations get together and refuse to trade with China or Russia as long as they are threatening the territorial boundaries of peaceful nations, then they are either going to be an isolated and economically deprived minority trading bloc, or they’re going to amend their ways.

That sort of polarization in the world’s economies creates some stressful situations of course. What about nations that are currently doing their best to remain neutral? India, the world’s second most populous country, is currently trying to pretend that the situation in Ukraine isn’t really happening, because they have a significant trading relationship with Russia and would like to stay in Putin’s good books. However, they cannot openly support Russia for fear of coming afoul of the sanctions being imposed on those doing business with Russia. Israel is in similar position, having some significant economic ties to Russia as well as to America, and would be forced to choose sides in an increasingly polarized world. I think that the development of polarized trading wouldn’t exclude nations from trading with Russia or China, but it might impose a penalty for certain types of trade – in weapons, for example, or in child labour products. And then countries like India or Israel would have to make sensible choices. The important thing would be for the developed world, the progressive world to establish standards and policies so that the outcomes of trade choices are known in advance.

Since the late 1980’s, the world has been opening up to increasingly complicated and interconnected trading relationships. The arguments in favour of globalization are that we should encourage everyone to participate in the global economy, and that trade will improve the lot of developing nations (while increasing the profits of large international corporations). Increasing development and prosperity ought to lead to peace on earth and goodwill amongst nations. 

Sadly, the outcomes have been less than satisfactory. There is good evidence that autocracies are on the rise, and that democracy is under attack world-wide. Developing countries’ governments are rife with corruption and repression, and larger autocracies are displaying the kind of aggression that argues against the establishment of a smoothly functioning “mutual interests” global economy. 

It’s time to turn the paradigm on its ear. Instead of arguing that Globalization will lead to an era of peace and cooperation between nations, we need to argue that peace and cooperation between nations, along with observance of human rights within nations, will be your key to participation in the Global economy. Organizations like the G20, the OECD, the United Nations need to get much more prescriptive, more assertive, more judgemental about what does and does not qualify as acceptable conduct within the world trade context.

Where do we start? I’ll go back to what I stated earlier in the previous two articles. First, we need to establish and maintain a really solid and modern military capability so that we are not pushed around by the bullies in the schoolyard. Second, we need to critically examine our trading relationships to identify vulnerabilities, and we need to modify trade agreements to address those vulnerabilities. Third, we need to influence international bodies to establish a convention for the unified use of economic power to maintain world order.

There are, I would argue, two significant lessons to be learned from the Russian invasion of Ukraine. The first is that the threat of nuclear war is crippling international diplomacy and constrains the use of conventional military force as a mechanism to restore world order. The frustration and angst we all feel watching Ukraine taking a brutal pounding to satisfy a madman’s ego is painful. It will be tempting for historians to compare the unfolding of events in Ukraine with the Hitler/Chamberlain appeasement talks prior to World War Two, and as I’ve previously argued, I believe that the Russian nuclear arsenal is the wild card that invalidates those comparisons. 

I hope and believe that historians will come to see this war as the trigger for the development of Economic power as the primary tool in the hands of diplomats to manage aggression in the global market. Economic inclusion should become the carrot in our hands, with economic exclusion backed by conventional military being the stick. This approach diminishes the threat of nuclear war because it allows intervention at a much earlier stage, hopefully long before blood gets spilled and autocrats get committed to a disastrous path.