'Deglobalization has been going on for 10 years'

The newspapers are full of news about trade embargoes. Because of the war in Ukraine, Western countries took many measures against Russia. And recently, India announced another export freeze on wheat and sugar. Instinctively, the political influences on the (agricultural) markets are increasing.

The term 'deglobalization' is heard more and more often, but is this really the case? We ask Tristan Kohl (39), associate professor of international economics at the University of Groningen, about this.

Is the number of trade embargoes indeed increasing, or is that sentiment?
"The number of sanctions - including trade embargoes - is steadily increasing. And that is logical. After all, world trade has increased sharply in the past few decades, so countries and economies are more in each other's way and sanctions can be used more quickly as a means of preventing countries under economic pressure. But trade embargoes are an extreme form of a trade restriction to stop a large part of trade.In practice, lighter forms are chosen, whether or not in combination with the deployment of other means through diplomatic or military channels ."

Can you say that trade sanctions are effective, as the West now aims to change Russia's mind?
"Trade sanctions are often linked to other measures. For example, Western countries are now freezing Russian assets and imposing travel restrictions on prominent Russians. However, it is a misconception to think that such sanctions will simply stop Russia from waging war. More is needed. diplomatic negotiations and the deployment of armed forces, or – as is happening now – the supply of arms to Ukraine."

"This makes it more difficult to assess whether trade sanctions are effective. That just depends on what exactly the purpose of a specific sanction is: to disrupt a country economically/politically or to prevent a war. Sanctions are also increasingly being used to transition in countries, for example for better human rights. Such measures often last for a long time, which makes it difficult to assess their effectiveness in the short term."

Countries can also impose sanctions themselves by protecting their own economies. India recently halted its own wheat and sugar exports due to a disappointing harvest. Do you expect the number of trade sanctions to increase?
"The measures taken by India do not surprise me. India is a protectionist country. When the harvest is disappointing, the cessation of exports is a logical consequence in order to be able to supply crucial resources at home. Whether the number of sanctions in the will increase further in the future? That is to be expected: sanctions and other protectionist measures testify to political leadership. Muscle language, so to speak. It probably tastes like more, especially in the run-up to elections."

Sanctions are in a sense a form of deglobalisation, which is increasingly discussed. Do you also see that trend?
"Since the 80s, trade liberalization and globalization have clearly been taking place. Economies became interconnected and world trade increased rapidly. Over the past five to ten years, countries have come up with more rules to protect their own economies. You could speak of These are often technical measures at ministerial level that do not immediately catch the eye, such as the imposition of phytosanitary requirements on agricultural and food products. The election of Trump as US president in 2016 and the Brexit confirmed This trend also follows. Globalization also produces losers, because jobs disappear to low-wage countries, for example. The Covid crisis also makes us realize that it is dangerous to depend on the manufacturing industry in one country. And the war in Ukraine shows the vulnerability around the availability of grains.You can then expect that there will be more regional distribution and. For example, countries are more inclined to organize their own food and energy needs."

Are there any drawbacks to that? 
"You can say that, for example, think of climate change, which is an urgent problem worldwide. We share this jointly and countries cannot solve it in isolation. Now that countries are banning Russian gas en masse and energy prices are sky-high, there is also a danger that the social will for the energy transition is crumbling. Inflation is also a danger. A free market economy with free trade in theory leads to the last price and the best innovations. But deglobalization, sanctions, and the reorganization of production chains within their own borders also increase the costs resulting in price increases and further inflation."

Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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