Friends-shoring can become exclusionary and lead to protectionist policies.
The deputy prime minister and finance minister were in Toronto on June 20.
Chris Young took this photo.
If you're from a country that Luxembourg considers a friend, it's open for business.
The economy minister of Luxembourg considers Canada to be a very friendly country. There is a strong attachment to human rights that we share. We share the same pro- environmental policies.
The Luxembourgish government visited Montreal and Toronto in June to encourage Canadians to do more business with them. Representatives of a country with fewer inhabitants might have had a hard time getting noticed. Luxembourg and Canada are friends, which gave Fayot an edge.
At a time when Russia brazenly invades an independent neighbour and China repeatedly demonstrates that it has no issue using its economic clout to get its way, trading withcountries with shared values as well as economic sectors makes a lot of sense.
The theory of comparative advantage was pioneered by David Ricardo in the early 19th century and it has been accepted that trade works best when it is guided by who makes the best stuff for the cheapest prices.
The World Trade Organization is located in Switzerland.
The photo was taken by Fabrice Coffrini.
In the late 1990s, the United States and its allies agreed to allow China to join the WTO. That was the peak of globalization and it has been in decline ever since. A Great Power rivalry with the United States has been revived after nine years of rule by the Chinese President, who has signaled an authoritarian turn. The U.S.'s commitment to free trade has wavered, as President Joe Biden has only partially stepped back from his predecessor's use of punishing import tariffs and trade sanctions.
Luxembourg is embracing a policy of "friend-shoring," a play on the term "near-shoring," which refers to trading with countries that are close to you. China has become the primary source of important inputs in the production of telecommunications gear.
trading with countries you think you can count on is called friend-shoring. Luxembourg is a member of NATO, so if you want to source iron blocks from Luxembourg, you need to know that they are a member of the alliance.
Critics say that friend-shoring can become exclusionary. When choosing where to channel foreign investment and source imports, countries are at risk of taking friend-shoring to the extreme. Free trade principles underpin the current liberal international world order. The game has changed and Canada needs to change with it according to Canada's deputy prime minister.
Freeland spoke at an event hosted by Canada 2020 in Toronto on June 20.
Luxembourg wants to strengthen its trade relationship with Canada because it sees that the world has changed a lot.
The trade between Canada and Luxembourg is not significant, but there is a shared history. During the Second World War, Luxembourgish heads of government and members of the ruling party fled the Nazis and took refuge in Quebec, which became the defacto headquarters of the Luxembourg government.
The Crown Prince of Luxembourg said that it showed how like minded they were in the past. We have a lot of things in common. We look at business and our history in the same way.
It's all for friendship. He said that the world appears to be reverting to different blocs. Canada is definitely a country that Europe needs to do more with.
Luxembourg is so dependent on unfriendly trading partners that it is indirectly dependent on Russian gas. Luxembourg doesn't get its gas directly from Russia, but it does get gas from Belgium, which supplies energy to Germany.
The U.S. treasury secretary.
The photo was taken by Al Drago.
The sort of dependency that friend-shoring seeks to address is exactly what this is.
The idea of "friend-shoring" is the idea that countries that promote a common set of values on international trade should trade and get the benefits of trade. The goal is to make sure the U.S. and its allies have multiple sources of supply and are not reliant too much on imports.
She made no attempt to describe her idea as optimal. Freeland, a former financial journalist who spent time in Central Europe at the end of the Cold War, believed that the world's countries could come together and "all get rich together" through free trade.
The world breathed a sigh of relief when the Berlin Wall fell in 1989. liberalism emerged as the victor after capitalism.
The End of History, written by political scientist Francis Fukayama, argues that the decades-long squabble between great powers over which system was best had finally come to an end and that government by liberal institutions would be better.
Putin is the president of Russia.
The photo was taken by Sputnik/Aleksey Nikolskyi.
The leaders of Russia and China seem to have different views of things.
Freeland said that the world's attempt to embrace free trade didn't work because of the illegal invasion ofUkraine. It's over. We need to find a replacement for it.
I really believe that Putin’s illegal invasion of Ukraine has shown us all: it didn’t work
Chrystia Freeland
The new norm, according to Freeland, is friend-shoring. She said that Canada should strengthen ties with countries that share values. The countries that can trust each other to not throw citizens in jail when we get mad at each other are called diplomatic hostage taking. Trust each other not to commit war crimes in that country. It seems basic, but we need that.
The countries have been turning inward for a long time. The interdependence that was once prized at globalization's apex at the beginning of the millennium has proved detrimental in a world ravaged by war and Pandemics. The global order was already in trouble due to widespread pessimism about the merits of free trade and distrust between China, the U.S., and the EU.
The Finance Minister is in Canada.
The photo was taken by Blair Gable.
Freeland said that the relationship with countries outside of the circle would be different. It is going to be a relationship that is more careful and less trusting.
She said that friend-shoring was no longer just an idea, but a real thing, and that she thought it needed some new institutions.
Bessma Momani cautions against taking Freeland's comment too literally. She doesn't think anyone wants to create another institution. Momani thinks there is a new framework.
The WTO is one of the institutions that friend-shoring will not get rid of.
The director general of the WTO said in a speech that there are moves to support re-shoring. She said that the war in Ukraine has led many to conclude that global trade and multilateralism are more threat than opportunity. We shouldn't draw the wrong conclusions from these stresses.
The WTO's director general is Ngozi Okonjo- Iweala.
The photo was taken by Martial Trezzini/ Pool.
Okonjo-Iweala shows how complicated friend-shoring can be. Canada is Nigeria's largest trading partner in Africa in 2021, with Canadian imports from the country amounting to over $2 billion. Nigeria provides Canada with mineral fuels and oils, rubber, cocoa, and lead; however, under a friend-shoring policy that prioritized values like human rights, it's not a guarantee that Nigeria would make its list of "friend"
Critics such as Okonjo-Iweala say that countries should resist the urge to tear up their trade blueprints. She said we should reform the WTO that underpins it and upgrade its rules to deal with 21st century challenges instead of retreating into ourselves.
There is an impulse for a country to be self-sufficient. She characterized friend-shoring as a trade friendly response to those who argue that the best way to counter China is to make more things at home. She said that friend-shoring groups shouldn't be too restrictive.
Smaller economies such as Canada do better in larger groups because larger countries are harder to dictate terms to.
Peter Hall was a chief economist at Export Development Canada. To be sustainable, friend shoring must be paid. Critical in the medium to long run. Failure to plan for this could be deadly.
To be sustainable, friend-shoring must pay
Peter Hall
Carolyn Rogers, senior deputy governor of the Bank of Canada, said at an event hosted by the Globe and Mail in Toronto that Canada would need to resist the impulse to take a "protectionist stance."
The period of globalization after the Cold War lifted hundreds of millions of people out of poverty. Less boats would likely be lifted by friend-shoring.
The former chief economist of the International Monetary Fund and former governor of India's central bank said in a recent commentary that friendship-shoring would exclude the poor countries that most need global trade.
Instead of promoting democracy, friend-shoring might only serve to reinforce the unfriendly qualities shown by some countries. It will make these countries fertile grounds to nurture and export terrorism. As violence increases, the tragedy of mass emigration will increase.
The former chief economist of the International Monetary Fund is also the former governor of India's central bank.
The photo was taken by David Paul Morris.
Momani said that friend shoring will come with a price tag regardless of who is admitted to the group. Canadians will need to pay more for higher labour standards and higher priced products if Canada only trades with other developed economies. She said that it would be a more expensive product in the future.
Less goods will be able to be traded because of the friend shoring policy. Minerals are mostly supplied by unfriendly countries. Is it possible for us to do it? Can we rely on friends only? Momani wanted to know. It's possible, probably not. Not for every single thing.
thorny ethical questions will arise regardless of how carefully group members are selected. India is a democracy, but the country's ruling party has a history of inciting religious violence, and Prime Minister Narendra Modi has resisted becoming a full member of the U.S.-led effort to ostracize Russia. Far-right parties are vying for power in Italy and France, and Hungary's Viktor Orbn is the leader of a repressive regime.
Momani noted that Canada's closest ally has an unfriendly side. If you have a populist leader come back, what do you do? Momani wanted to know. The United States may still be a friend.
Who is friendly and who is unfriendly will be determined by the countries. The membership of the G20 was decided in a conversation between the two finance ministers. It won't be easy to design a new trading bloc.
If it was like choosing friends in real life, you would want countries with similar values to yours, allies you can rely on. Carlo Dade is a trade policy analyst at the Canada West Foundation.
Dade said that the friend-shoring thing is worrying. You use the wordfriend. He said that you are "analyzing the institutional relationship" Human qualities are given to a political relationship. Our friend is the U.S. We're interested in the same things. We are Allies.
It is thought that friend-shoring is an attempt to humanize international relations at a time when the international sphere has become less liberal. World affairs are classified into two categories, good versus evil or friend versus foe. The friend classification should take into account the likelihood of the country cutting off trade during a crisis. He said that Canada can trust countries other than friendly ones.
Many countries cut off important exports during the Pandemic. Trade-bloc shoring is where countries trade with friendly countries but with friendly blocs. He said that moving production to a random country that is a friend doesn't make sense. He said that the bloc has institutional architecture so that trade isn't based solely on a handshake.
It would be pointless to speculate on who would make Canada's friendly countries. When trade is based on commercial decisions, it sounds like it is about politics. It won't happen if friend-shoring is too expensive. Governments can't control whether businesses trade with friends or foes
He said that these are business decisions. When it makes economic sense, near-shoring or friend-shoring will occur.
The email address is Mcoulton@postmedia.
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