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Bloomberg
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Studios
podcasts,
radio,


news.


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>> Hello
and
welcome
to
another
episode
of


the
OddLotss
podcast.
I'm
Joe
Weisenthal

>> and
I'm
Tracy
Aloway.

>> Tracy,
you
know,
we're
several
months,
I


guess
like
five
months
or
so,
recording


this
September
16th.
5
months
or
so


since
liberation
day,
since
the
uh
trade


war
started.

>> By
and
large,

>> the
world
is
still
kind
of
working,


right?
You
could
see
its
effects
for


sure
in
certain
categories
and
so
forth,


but
by
and
large,
I
don't
think
the


contours
of
the
economy
look
that
much


different
than
they
did
say
in
March
or


April.

>> Look,
I'm
still
missing
my
auction
item


that's
supposed
to
be
mailed
from
the


Netherlands.
So,
it
has
affected
me


directly.

>> Wait,
what
happened
with
it?
Wait,
wait.


Say
more.
Say
more
about
So,
I
I
won

something
from
a
Dutch
auction
house
and


um
they
were
supposed
to
mail
it


in-house
shipping
and
instead
of
mailing


it,
they
sent
out
an
email
saying
that


they
can't
mail
it
because
everyone's


trying
to
figure
out
the
new
tariff


schedule
and
customs
and
things
like


that.
I
still
haven't
heard
from
them,

but
it
still
feels
like
something


happened.
There
was
some
sort
of


rupture.
kind
of
hard
to
imagine
going


to
a
March
2025
world
again,
but
also


hard
to
imagine
going
to
a
pre-Trump
one


world
ever.
Like,
it's
hard
for
me
to


imagine
that
in
my
lifetime
that
there


will
ever
be
a
sort
of
2015
style


trading
relationship
between
the
US
and


China.

>> I
could
be
wrong.

>> Never
say
never,
but

>> it's
just
hard
for
me
to
see
at
this


point.

>> At
this
point,
like
it's
not
a
single


administration
thing,
right?
We've
had


Trump
1.0


And
then
Biden
continued
a
lot
of
the


tariffs
and
even
added
some
new
ones.


And
then
we
have
Trump
2.0
which
is


arguably
going
even
harder
on
China.
So


it
does
seem
like
at
least
a
durable


trend,
not
a
flash
in
the
pan.

>> And
as
we've
discussed,
you
mentioned


the
fact
that
Biden
was
a
continuation


arguably
an
expansion
of
Trump
won


particularly
with
some
of
the
export


restrictions
on
technology.


Um,
yeah,
this
is
one
of
the
rare
trade


rethinking
the
global
trading
system,


whatever
that
means,
is
one
of
the
rare


areas
of
bipartisan
consensus
in
DC
as


has
come
up
in
many
episodes.

>> Yeah,
that
and
housing

>> the
long
long
long
ago

the
long
long
long
ago
global
trading


system
and
uh
who
could
talk
about


whatever
remnants
of
that
are
left
or


even
maybe
who
can
explain
to
me
what


the
global
trading
system
was.
We're


going
to
be
speaking
with
Michael


Froman.
is
the
president
of
the
council


on
foreign
relations
and
he
was
the


former
US
trade
representative
during


the
Obama
uh
Obama
2
administration
2013


to
2017
has
continued
to
write
a
lot


about
this
topic
so
uh
Michael
Frman


thank
you
so
much
for
uh
coming
on


outlaws
thrilled
to
have

>> thanks
for
having
me

>> absolutely
what
does
the
US
trade


representative
do
you
you
had
that
job
I


actually
realize
I
don't
really
know

>> like
it's
fine
it's
a
great
job
um
uh
it


really
has
the
function
of
negotiating


trade
agreements
okay
um
and
enforcing


US
trade
rights
under
previous


agreements.
Um
the
reason
I
love
the
job


is
that
it
combines
high
diplomacy,


sitting
down
with
ministers,
presidents,


prime
ministers
of
other
countries


trying
to
reach
agreements
with
having


to
have
a
really
detailed
understanding


of
elements
of
the
US
economy.
I
mean,
I


learned
more
from
American
farmers


teaching
me
the
500
things
you
can
do


with
a
molecule
of
milk
and
how
they


manipulate
a
molecule
of
milk
to
to


circumvent
trade
restrictions
and
get


around
tariffs.
You
export
it
as
butter


or
as
whey
or
as
low
calorie
powder
or


whatever.

>> This
is
a
whole
episode,
right?

A
whole
episode
right
there.
But
that's


only
one
example
of
of
the
literally


thousands
of
issues
you
have
to
learn
as


US
trade
rep
to
be
able
to
sit
down
with


your
counterparts
in
other
countries
and


negotiate
agreements.

>> Can
you
give
us
an
idea
or
a
sense
of


the
average
negotiation?
What
exactly
is


the
process?
Like
do
you
meet
for
the


first
time
in
a
designated
room


somewhere
or
is
there
prep
that
goes


into
these?
You're
exchanging
emails.


What
exactly
happens?

So
in
the
in
the


in
the
past
and
of
course
it's
a
very


different
situation
now
but
in
the
past


the
US
or
another
country
might
come
up


with
an
idea
of
what
they
wanted
to
do


in
a
trade
negotiation
a
set
of
issues


they
wanted
to
take
on
a
set
of


countries
they
wanted
to
negotiate
with


and
they
would
go
around
and
do


consultations
with
other
countries
float


the
ideas
see
what
kind
of
feedback
they


got
and
scope
out
the
nature
of
the


negotiation.
Is
it
going
to
be
just


about
goods
and
tariffs?
Is
it
going
to


touch
upon
agriculture
and
regulations


and
services
and
labor
and
environment


and
all
various
other
issues
that
have


become
part
of
trade
negotiations
in
the


past
and
get
agreement
by
the
other


countries
that
this
was
the
agenda
and


then
in
the
past
usually
it's
the
US


that
has
been
sort
of
driving
the


agenda.
These
would
be
the
topics
we


would
deal
with.
The
US
would
come
up


with
proposals
of
what
are
the


disciplines
that
we
would
like
to
see
in


each
of
these
areas.
What
are
the
rules


that
we'd
like
to
see?
And
it
was
the


way
the
US
brought
other
countries
along


to
adopt
high
standard
rules
across
one


sector
or
one
subject
matter
or
or


another.
And
the
idea
was
uh
we
know
we


live
in
a
high
wage
um
highly
regulated


economy.
We
compete
with
economies
that


often
times
have
lower
wages,
lower


regulation.
And
if
we
could
raise
other


count's
standards
closer
to
our
own,
it


would
level
the
playing
field
for


American
workers
and
farmers
and


ranchers
and
make
it
easier
for
us
to


compete.

>> I
mean,
for
better
or
worse,
it
really


just
seems
like
a
totally
different
era.


Now,
the
idea
of
getting
to
the
idea
of


going
back
to
some
world
where
the
US
is


actively
working
with
a
bunch
of
country


on
rules
rather
than
rates,
tariff,
it


really
does
seem
it
seems
like
ancient


history.
It
just
seems
so
right.

>> Look,
I
think
that's
right.
First
of


all,
I
think
I
think
the
the


international
trading
system
had
been


under
stress
for
some
time.
President


Trump
in
some
ways
put
was
the
final


nail
in
the
in
the
coffin
of
it.
But,


you
know,
the
global
multilateral


rulesbased
system,
that's
like
the
WTO,


the
World
Trade
Organization,
where
160


plus
countries
got
together,
agreed
to
a


set
of
rules,
agreed
to
some
mechanisms


for
enforcing
those
rules
and
for


monitoring
them.
That's
been
under


stress
for
for
a
long
time.
There's
been


dissatisfaction
and
I
think
now
in
fact


is
you're
you're
right.
I
think
we
can't


go
back
to
the
way
things
were


pre-Trump.
We're
going
to
have
to
think


about
what
comes
next.

>> Just
to
play
devil's
advocate
for
a


second,
to
what
extent
did
we
actually


have
a
rules-based
trading
system
in
the


sense
that
everyone
was
actually


beholdened
to
the
same
limitations
or


the
same
rules?
Because
looking
back,


there
were
always
accusations
about


China
cheating
or
maybe
the
US
was


taking
advantage
in
in
some
way.
And
in


fact,
you
could
argue
that
that
sense
of


unfairness
is
kind
of
what
got
us
to


where
we
are
today.
So,
was
it
really


rules-based
for
everyone?

>> So,
I
think
we
have
to
look
back
at
the


the
whole
history
of
the
post-war


period.
Uh
because
for
decades,
China


wasn't
a
factor.
It
wasn't
part
of
the


global
trading
system.
It
wasn't
a
major


economy
and
it
was
the
US
and
Europe,


Japan,
others
who
came
together
to


really
form
this
set
of
rules
and
it's


never
a
perfect
system.
You
my
my
sense


is
you
what
what
rules
means
is
that


most
countries
follow
most
of
the
rules


most
of
the
time.

Not
that
it's
100%
perfection.
By
the


way,
that's
true
when
you
have
laws
in


the
United
States.
I
mean,
we
have
laws


in
the
United
States
because
people
do


commit
crimes.
The
existence
of
laws


does
not
prevent
people
from
committing


crimes.
That's
why
you
need
enforcement.


Same
thing
is
true
on
the
international


side.
Uh
as
well
the
big
difference
as


you
pointed
out
Tracy
is
when
China


became
a
major
factor
in
the
global


economy
and
began
to
integrate
globally.


Um
on
one
hand
there
was
an
opportunity


to
say
okay
this
is
an
opportunity
for


bring
China
into
the
global
system.
Get


them
to
adopt
these
set
of
rules
that


the
rest
of
us
have
all
agreed
to


because
they
appear
to
be
on
this
path


towards
market
reform,
openness,


liberalization.
Right?
I
think
what


happened
in
reality
is
that
that


trajectory
wasn't
as
linear,
didn't
go


as
far,
didn't
go
as
fast
as
people


anticipated.
And
what
we
did
not


anticipate
is
that
somebody
like


President
Xi
would
come
in
and
in
fact


stop
or
reverse
it.
And
so
now
we
have


an
economy
that
is
huge,
second
largest


economy
in
the
world,
biggest


manufacturing
part
of
the
uh
the
global


economy,
likely
to
be
accounting
for


something
like
45%
of
all
global


manufacturing
in
a
few
years,
which
is


the
biggest
that
any
country
has
ever


been
in
history.
And
it's
following
a


fundamentally
different
set
of
rules.


And
that
has
led
to
a
lot
of
the
stress


in
the
international
system.

[Music]

Can
you
explain
maybe
the
philosophical


premise
behind
the
idea
that


trade
with
China


I
guess
why
do
we
care
about
what
their


internal
rules
are
right
theory
of
trade


it's
sort
Okay,
they're
cheaper
for


whatever
reason
or
they're
more


efficient,
etc.
And
so,
you
know,


comparative
advantage,
we
benefit
from


that.
Why
does
the
global
trading


system,
why
is
it
or
was
it
or
is
it


premised
on
this
notion
that
all
of
the


participants
would
trend
in
some
sort
of


more
liberal
direction
with
their


domestic
economies?

You
know,
I
think


it's
because
the
actions
that
China
has


taken
domestically
to
drive
their
really


quite
remarkable
economic
growth
over


the
last
few
decades
uh
does
have


ramifications
outside
of
China
has


ramifications
for
the
rest
of
the
world


for
manufacturing
in
the
rest
of
the


world
for
for
other
factors.
And
so
it's


it's
not
something
that
can
be
limited


to
China.
If
if
China
gets
to
where
it's


going
because
it
steals
intellectual


property
uh
because
it
produces


overcapacity
so
it
produc
creates
far


more
factories
than
it
needs
to
for
the


reasonable
demand
for
a
product
in
order


to
drive
other
producers
out
of
the


market
in
other
countries
that
has
an


adverse
effect
on
us.
If
they
subsidize


stateowned
enterprises
um
or
even


private
enterprises
in
such
a
way
that


it
creates
this
unlevel
playing
field


then
it
affects
the
rest
of
us
as
well.


And
I
think
that's
what's
really


happened
is
that
uh
China
whether
it's
a


stateowned
enterprises
subsidization


intellectual
property
rights
theft


government
intervention
into
the
private


sector
all
towards
positioning
China
as


the
leading
manufacturer
but
it
has
come


at
the
expense
of
other
industrialized


countries
in
some
cases
other
emerging


economies
and
that's
why
there's
been


this
counter
reaction.

M
so
I
know
you


were
a
trade
representative
before
the


tensions
with
China
really
ramped
up
um


under
the
first
Trump
administration
but


how
were
you
thinking
back
then
about


incentivizing
other
countries
when
it


comes
to
trade
negotiations
like
carrot


and
stick
strategy
was
it
mostly
about


incentives
and
if
so
what
were
you


giving
them
or
was
it
sometimes
maybe


threats

>> so
you
have
to
use
both
I
think
on
the


threat
side
it's
not
really
threats
it


was
enforcement


that
we
would
bring
cases
against


countries
including
China


at
the
WTO
or
against
other
trading


partners
where
we
had
arrangements
uh
if


they
we
felt
that
they
were
violating


our
rights
under
those
agreements.
Uh
we


brought
during
the
Obama
administration


I
think
we
brought
the
most
cases
ever


brought
against
China.
We
won
all
the


cases
that
got
to
conclusion.
The


problem
was
China
would
find
ways
either


of
delaying
implementation
or
by
the


time
the
fix
was
implemented
the


relevant
industry
in
the
United
States


or
elsewhere
was
gone.
And
so
it
was


really
sort
of
cold
comfort
and
that's


one
of
the
challenges
I
think
that
we


saw
in
the
in
the
World
Trade


Organization.
I
think
on
the
incentive


side
that's
where
trade
agreements,
real


trade
agreements
come
into
play.

Uh
I
was
involved
in
something
called


the
Trans-Pacific
Partnership
which
was


12
countries
around
the
Asia-Pacific


region
that
were
working
on
opening


their
economies
to
each
other
abiding
by


a
high
standard
set
of
of
rules.

Some
of
the
countries
already
had
free


trade
agreements
with
us.
about
half
of


them
did.
So
we
weren't
giving
them
any


more
access
to
our
economy.
We'd
already


given
them
access,
but
at
the
table
we


had
Japan.
And
Japan
was
a
economy
that


had
never
really
opened
up
to
other


markets.
And
these
other
countries
knew


that
they
couldn't
get
Japan
to
open
on


their
own.
But
if
the
US
was
pushing


Japan
to
open,
they
would
benefit
from


it.
M

so
you
had
countries
like
Peru
or
Chile


who
had
already
had
free
trade


agreements
with
us
willing
to
raise


their
labor
standards
or
willing
to


enforce
environmental
laws
because
they


were
getting
access
not
to
our
market


but
to
Japan
and
that
incentive
was
one


that
was
powerful
for
them.

>> That's
a
very
uh
that's
a
very


interesting
dynamic.
talk
a
little
bit


more
about
those
years
2013
pre-Trump


and
the
actions
toward
China
because
if


you
said
by
that
point
Obama
had
already


introduced
a
record
number
of
actions


against
China
winning
many
of
them
or


winning
all
of
them
did
you
say

>> all
of
them
that
went
to
conclusions

all
of
them
that
went
to
conclusion
but


it
didn't
really
matter
because
either


there
was
some
way
to
evade
or
the
US


industry
had
been
decimated
was
there


something
pre-Trump
I
mean
I
don't
know


whenever
that
was
was
there
a
feeling


that
something
has
to
change


fundamentally
in
how
the
US
and
China


trade
or
the
rules
governing
that
trade


even
at
that
point.

>> No,
absolutely.
Look,
the
the
day
one
of


the
Obama
administration,
uh
the
the


world
had
been
involved
in
something


called
the
Doha
round
of
negotiations
at


the
World
Trade
Organization.
It
had


been
going
on
since
2001.

And
I
remember
going
to
a
G20
summit.


There
was
one
in
April
in
London.
and


all
the
other
leaders
around
the
table.


Here
was
the
new
president
of
the
United


States
on
their
mind
was
asking
him,


okay,
what
are
you
going
to
do
to
bring


the
Doha
round
to
successful
conclusion


this
year?
And
the
president
said,
"All


right,
we're
going
to
go
back
and
take
a


look
at
this."
And
he
asked
a
group
of


us
to
do
a
study.
And
by
the
summer,
uh,


we
had
come
back
to
him
and
said,
"This


Doha
round
isn't
going
to
get
done."
Uh


but
the
DA
round
was
founded
on
this


fundamental
premise
in
2001
that


basically
developing
countries
should
it


was
called
the
development
round
and
the


primary
beneficiaries
of
the
DA
round


would
have
been
developing
countries
not


industrialized
countries
and
the


fundamental
premise
was
developing


countries
shouldn't
have
to
live
by
too


many
rules.

industrial
countries
should
and
this


would
help
the
developing
countries


catch
up.

By
2009,
when
we
saw
what
had
happened


with
China
between
2001
and
2009,
there


was
no
way
that
an
agreement
that
gave


China
a
pass
on
rules
so
that
it
could


continue
to
expand
its
manufacturing
and


undermine
manufacturing
around
the
world


that
that
was
going
to
fly.
And
the


president
went
back
to
the
other
leaders


at
the
next
G20
meeting
and
said
the


Doha
round
is
not
going
to
get
done
on


the
path
that
is
currently
on.
And
I


remember
we
were
at
a
G20
summit
and
the


other
leaders
all
went
around
and
read


their
talking
points.
The
traditional


talking
point
at
the
time
was
a
Doha


round
will
get
completed
by
December


this
year
or
by
the
ministerial
this


year.
And
you
know,
President
Obama


intervened.
He
made
his
point.
the
other


leaders
read
their
talking
points
and
he


put
his
flag
back
up

and
said,
you
know,
you
guys
aren't


listening.
This
isn't
going
to
happen.


And
that
was
the
first
indication
that


something
needed
to
change.

Yeah.
And
then
we
were
sitting
down
with


the
Chinese
bilaterally
in
lots
of


consultations
um
sort
of
unending


consultations
and
we'd
have
this


conversation
with
them
and
remind
them


that
their
tremendous
success
was
based


on
a
benign
international
environment


the
capacity
to
export
to
the
rest
of


the
world
and
that
if
we
didn't
address


these
underlying
concerns
stateown


enterprises
subsidization
IPR
rights
etc


that
benign
international
environment


was
going
to
disappear
and
that
of


course
is
exactly
what's
happened
and


that's
the
bipartisan
consensus
against


China
that
has
now
emerged.
We
started


warning
them
of
that
back
in
2009
2010


and
I
think
we
made
some
modest
progress


during
the
Obama
administration
to
get


them
change
certain
certain
practices


but
by
the
time
President
Xi
came
in
and


made
it
clear
he
was
going
to
be


dominant
in
the
following
sectors
he
was


going
to
reduce
his
dependency
on
the


rest
of
the
world
and
increase
everybody


else's
dependency
on
China
the
the
game


was
over.

Actually,
this
leads
into
my


next
question,
which
is
we've
talked
a


lot
about
how,
you
know,
there
was
this


break
in
the
rules-based
liberal
trading


order.
Was
there
a
single
moment
where


you
went
like,
"Aha,
this
has


fundamentally
broken
instead
of
just


like
slowly
declining,
slowly
changing.


Was
there
something
that
sticks
out
to


you
about,
wow,
this
is
actually


changing
right
now?"

>> So,
I
I
think
that
Doha
moment
back
in


2009
was
one
of
them.
Um
uh
I
also
think


later
on
in
in
the
Obama
administration,


we
were
trying
to
negotiate
an
agreement


over
environmental
goods.
There
was
a


list
of
250
or
so
products
that
would


have
been,
you
know,
good
for
countries


to
buy
more
of
and
produce
more
of


because
it
was
good
for
the
environment,


for
climate
change
or
otherwise.
And
it


failed.
It
failed
over
bicycles.

that
between
China
and
the
EU,
the
EU


was
protecting
the
Polish
bicycle


industry.

The
China
wanted
to
put
bicycles
on
the


list
and
they
couldn't
agree
on
what
to


do
with
bicycles.
And
so
the
entire


agreement
fell
over
that
one
issue.
And


to
me,
it
sort
of
underscored,
okay,


we're
pretty
far
from
reaching
consensus


that
if
we
can't
reach
agreement
over


bicycles,

um,
we're
not
going
to
reach
agreement


over
things
that
are
much
more


meaningful.

>> Were
you
surprised
at
all?
I
want
to
we


start
to
move
a
little
bit
closer
to
the


present.
But
before
we
go
to
the


present,
was
it
inevitable
that
in
your


view
that
the
Biden
administration
ended


up
as
a
continuation
slashexpansion
of


some
of
the
Trump
restrictions?
Was


there
still
an
opportunity
to
turn


somewhere
closer
to
a
pre-Trump
path?
I

I
think
there
was
an
opportunity
to
make


some
changes
but
not
go
back
to
the
way


things
were
before.
The
the
Biden


administration,
for
example,
launched
a


review
of
the
China
tariffs.

And
I
think
in
many
respects,
the
B


administration
was
very
strategic
in
how


it
approached
export
controls
and


foreign
investment
constraints.
It
was


very
targeted.
The
tariffs,
they


launched
a
review
to
try
and
distinguish


between
strategic
and
non-strategic


tariffs.
Like
there's
a
case
to
be
made


for
tariffs
if
there's
unfair
trade


practices
or
if
it's
a
product
that
you


really
need
to
produce
here
in
the


United
States.
You
don't
want


dependency,
but
do
we
need
tariffs
on


t-shirts
and
underwear
and
socks?
Is


that
important
to
our
national
security?


Um,
and
they
never
got
themselves
to
the


position
of
reducing
those
tariffs.
And


to
me,
it's
not
a
necessarily
a


criticism
of
of
the
Biden


administration.
I
think
it
just
goes
to


show
that
tariffs
are
easy
to
put
on
and


hard
to
take
off
because
once
they're


on,
there
are
constituencies


of
that
are
supportive
of
them
and
any


movement
to
to
reduce
tariffs,


particularly
in
this
political
context,


is
seen
as
being
weak
on
China,
even
if


it
makes
pure
sense
from
a
economic


point
of
view.
You
know
who
who
is
hurt


most
by
tariffs
on
underwear,
t-shirts,


and
socks?
It
tends
to
be
low-income


Americans
who
spend
a
disproportionate


amount
of
their
disposable
income
on


imported
goods.
And
you
know,
we
could


afford
to
bring
in
those
products
from


China
without
questioning
our
national


security

without
losing
our
strategic
underwear


producing
capacity.
Although
I
think
the


US
military
does
actually
have
some


strategic

clothing.
There
are
restrictions
under


under
uh
uh
I
used
to
call
it
the


department
of
defense
uh
the
department


of
war
that
require
uniforms,
footwear


and
other
things
to
be
made
in
the


United
States.

>> Fun
fact,
how
would
you
actually


describe
the
current
state
of
the
global


trade
system?
Because
you
know
I'
I've


heard
people
say
there
are
shades
of


mercantalism,
protectionists,
that
sort


of
thing.
what
what's
your
description


of
where
we
are
right
now?

>> Well,
I
think
the
challenge
of
where
we


are
right
now
is
you
have
the
two


largest
economies
in
the
world
uh
the
US


and
China
basically
following
their
own


set
of
rules
rather
than
the


multilateral
rules-based
system
that
the


US
was
very
much
driving
the
creation


and
the
defense
of
over
all
these
um


over
all
these
years.
And
when
you
have


the
two
largest
economies
doing
that,


the
question
is
well
what's
what
are
the


other
economies
going
to
do?
Are
they


going
to
start
imitating
the
US
or


China?
Will
they
continue
to
abide
by


the
rules
if
nobody
else
does?
Uh
I


think
they're
all
sort
of
wrestling
with


that
question
because
for
for
some
of


them
like
the
European
Union,
European


Union
is
more
ideologically
in
favor
of


free
trade,
integration,
the
rules
based


system.
The
whole
notion
of
the
European


Union
is
based
on
that
of
bringing
the


European
countries
together,
let
alone


the
rest
of
the
world.
So,
it's
harder


for
them
to
make
this
leap
than
it
has


been
for
for
the
United
States.
But
I


think
the
reality
is
is
that
the
the


system
is
under
is
under
great
stress


and
we're
going
to
have
to
think
through


how
does
it
evolve?
What
are
the


elements
of
it
that
we
want
to
try
and


preserve
or
or
reconstitute?
Um,
and
how


does
it
need
to
change
to
take
into


account
not
only
the
lessons
of
the
last


80
years
prior
to
Trump,
but
the
lessons


of
the
Trump
administration,
you
know,


some
of
which
will
be
instructive.

[Music]

Let's
talk
more
about
some
of
the
paths


that
things
could
go
because
I'm


thinking
about
setting
aside
even
the


Europe
Europe
and
the
US
uh
you
know


there
was
the
bricks
uh
gathering


recently
these
are
there
are
a
lot
of


countries
whose
own
developmental


trajectory
could
be
undermined
by


China's
manufacturing
success.
Right?


And
yet
perhaps
because
of
the
actions


of
this
administration
etc.
they
don't


feel
that
there
is
a
sort
of
comfortable


home
or
friend
in
DC
and
that
maybe
it


makes
more
sense
for
them
even
given
the


uh
competitive
challenges
to
be
uh


friendlier
with
Beijing
etc.
What
is


your
view
on
that?
Do
you
believe
there


could
be
a
new
I
mean
one
thing
we've


heard
we
were
talking
to
uh
we
recently


interviewed
Robert
Kaplan
vice
chairman


over
at
Goldman
Sachs.
His
view
was


globalization
is
alive
and
well.
It's


just
that
the
US
isn't
really
part
of
it


and
that
we're
actually
reemerging
uh


sort
of
free
trade
etc
except
it's
with


China
at
the
helm.
Is
that
a
fair


characterization?
Like
what
is
happening


with
these
massive
other
countries
as


they
think
about
who
their
partners
and


friends
are?

So
first
of
all,
I
I
think


uh
I
think
globalization
is
not
over.


Other
countries
continue
to
move
ahead


to
integrate
their
economies.
European


Union
has
signed
additional
trade


agreements
with
with
Americaur.
They're


working
on
one
with
with
uh
India.


Africa
has
a
continentalwide
free
trade


agreement
signed
a
few
years
ago
that


they're
in
the
process
of
of


implementing.
So
I
think
uh
uh
Robert


Kaplan's
observation
that
it's
the
US


that
has
exempted
itself
is
to
a
certain


degree
correct.
I'm
not
sure
the
next


step
is
that
this
is
all
going
to
shift


to
China
and
it's
going
to
be
a
Chinaled


block
because
there's
no
country
that's


more
concerned
about
the
potential


adverse
impact
of
Chinese
exports
on


their
own
manufacturing
and
economic


aspirations
than
than
India.

India
and
you
could
add
Brazil,
you


could
add
Indonesia,
you
could
add
South


Africa.
They're
all
deeply
concerned


that
if
the
US
and
Europe
begin
to
close


their
markets,
all
that
excess
capacity


from
China
has
to
go
somewhere
and
it


could
well
get
dumped
in
their
markets


and
hurt
their
capacity
to
build
up


their
manufacturing
uh
base
as
well.
And


so
I
I've
been
of
the
view
that
you
know


we
we
had
this
the
the
cold
war
was


about
bipolarity,
US
Soviet
Union.


the
the
wall
came
down,
Soviet
Union
was


dismantled,
and
that
was
kind
of
a


unipolar
moment.
That's
over
now.
That


30-year
period
is
over.
What
we
have
now


isn't
multipolarity.
It's
not
like


you've
got
two
or
three
camps
that
do


everything
together.
A
China
camp,
a
US


camp,
some
other
camp.
I
think
it's


really
more
akin
to
like
polyamorous


life,
right?
Like
in
India
is
the


perfect

>> We
got
our
episode
title.

>> That's
right.

India
is
the
greatest
is
the
greatest


example
of
this.
India
loves
the
United


States
at
least
until
recently
for


technical
technological
cooperation
for


uh
civil
nuclear
cooperation
for


investment
for
the
relationship
between


the
Indian
diaspora
and
our
you
know


entrepreneurial
um
uh
ecosystem
here.


They
love
Russia
for
oil
for
arms.
They


love
Iran
for
oil.
They
love
and
they


hate
depending
on
the
day.
Um
they've


had
it's
one
of
the
countries
they've


gone
to
war
with,
you
know,
on
their


border.
They've
had
skirmishes.
People


have
died
in
armed
conflict
between


India
and
China.
But
then
as
you
saw


recently,
there
was
a
a
conference
in


China
where
you
had
uh
Modi,
she
and


Putin
holding
hands
uh
walking
down
the


red
carpet
together.
So
I
think
India
is


is
archetypal
example
of
trying
to
play


these
relationships.
They
always
were


during
the
Cold
War
too,
right?
They


were
they
were
nonaligned
country,


right?
I
mean,
it's
changed
now.
Then


they
were
non-aligned.
Now,
I
think


they're
multi-aligned.
So,
they'll
be


aligned
with
the
polyamorous.
And
but


you
you
could
use
the
same
analysis
to
I


think
cover
a
lot
of
other
countries,
a


lot
of
the
other
middle
countries.

>> That
makes
it
a
much
more
complicated


world.
You
know,
in
retrospect,
the
Cold


War
was
very
simple.
Was
black
and


white.
You
were
with
us.
You're
with
the


Soviet
Union,
you
know,
and
there
were


some
proxy
wars
in
between,
but
it
was


pretty
it
was
pretty
simple.
This
is


much
more
complicated
and
it
it
leads
to


the
the
view
that
you're
going
to
have


to
be
very
proactive
and
creative
in


creating
coalitions
of
the
willing


around
various
issues
because
sometimes


India
might
be
in
it,
sometimes
they


might
not,
sometimes
China
might
be
in


it,
sometimes
not.
And
and
I
think


that's
the
the
challenge
for
for
the


United
States
to
continue
to
exert


leadership
going
forward.

>> How
resilient
would
those
smaller


coalitions
of
the
willing
actually
be?


because
I
can
imagine
maybe
it's
easier


to
negotiate
with
a
smaller
group.
Maybe


you
don't
get
caught
up
in
debates
over


bicycles
and
things
like
that.
But
on


the
other
hand,
if
you
don't
have
like
a


big
trading
partner
who
is
necessarily


driving
the
agenda,
it
seems
like
it


might
be
a
little
bit
more
difficult
to


enforce.

I
think
you
need
a
combination
of


smaller
groups
of
like-minded
countries


but
it
does
to
your
point
Tracy
require


leadership

and
in
the
past
the
US
has
been
a
leader


of
it.
I
mean
you've
got
some
very


strong
examples
like
NATO

you
know
a
military
alliance
is
the


strongest
example
of
a
pluralateral


group
so
something
less
than
the
whole


world
but
of
like-minded
countries
that


have
agreed
to
do
certain
things


together
because
they
have
a
common


interest
to
do
so.
I'm
not
sure
it
would


exist
without
US
leadership
and
US


driving
it
going
forward.
That
was
true


of
the
Trans-Pacific
Partnership
uh
as


well.
I
think
it
could
be
true
of
of
a


number
of
these
other
things.
And
by
the


way,
China's
very
good
at
this.
I
mean,


the
the
conference,
the
Shanghai


Cooperation
Organization
Conference
that


they
recently
held
uh
where
where
Modi


and
others
were
present,
that's
a
good


example
of
them
pulling
together


coalitions.
Um
uh
bricks
is
another
good


example.
Now,
we
can
talk
about
the


strengths
and
the
weaknesses
of
bricks


and
where
the
countries
actually
have


common
interests
and
conflicting


interests,
but
it's
that
kind
of
drive


that
you
need
a
leader
and
you
need
a


group
of
like-minded
countries.

Let's
talk
a
little
bit
more
about
some
of


these
tensions
that
emerge
because


it
does
sound
like
you
know
bricks


bricks
is
a
nice
acronym
that
Jim
O'Neil


from
Goldman
Sachs
asset
management
came


up
with
in
2001
and
which
may
now
be
um


you
know
this
important
geo
uh


geopolitical
entity
we'll
see
we
don't


really
know
for
sure
yet
but
it
seems


like
one
possibility
is
that
okay
the
US


we
feel
that
we
need
to
have
in
key


strategic
sectors
there's
some
sort
of


you
know
capacity
to
build


semiconductors
or
maybe
capacity
to


build
batteries
at
least
there
was
a
big


push
under
that
under
the
Biden


administration
of
course
China
has
that


and
it's
growing
I
mean
when
people


think
about
the
economy
going
forward
is


there
a
risk
that
essentially
every


country
feels
they
have
to
make
that


decision
that
India
feels
it
has
to
have


its
own
battery
making
capacity
that


Germany
feels
it
has
to
make
its
own


battery
making
capacity
and
that
there


is
a
sort
of
domino
effect
and
we
just


wind
up
in
a
much
costlier,
less


efficient
world.

>> Well,
I
think
we
are
heading
towards
a


costlier,
less
efficient
world.
I'm
not


sure
that's
necessarily
a
bad
outcome.


Okay.

in
that
um
to
to
go
down
the
path


of
greatest
efficiency

could
be
to
at
least
in
the
short
run
to


become
utterly
dependent
on
China
for


all
of
this
product
because
they
can


produce
things
cheaper
not
not


not
always
because
it's
cheaper
labor


but
because
they
become
very
efficient


infrastructure
massive
scale

massive
scale
and
I
think
the
question


is
is
it
is
it
a
good
thing
I
mean
is
it


that
the
US
have
a
battery
industry
and


that
Europe
have
a
battery
industry
it's


probably
a
good
thing
it
may
not
be
as


efficient
as
relying
completely
on


China,
but
having
that
diversification


particularly
over
the
long
run
is
a


positive.
Rule
number
one
of
of
risk


management,
diversification.
And
yet
we


became
very
complacent
and
very
uh
we


became
very
complacent
over
the
years
of


just
relying
on
China
as
our


manufacturing
floor.
And
now
I
think


companies
have
come
to
the
conclusion


whether
it
was
because
of
natural


disasters,
COVID
or
political


intervention
as
we've
seen
with
with


China
that
it's
it's
to
their
benefit,


their
economic
benefit
even
over
the


longer
run
to
diversify
even
in
the


short
run
if
it's
more
expensive.

M
with
your
trade
representative
hat
on,
can


you
maybe
say
something
about
how
you


view
military
strategy
and
I
guess
trade


and
this
idea
of
well
maybe
we
want
to


be
independent,
maybe
we
want
to
have


independent
capacity
in
something
that's


strategically
important
like


semiconductors
or
I
don't
know
making


ballistic
missiles
or
something
like


that.
How
does
the
US
government


actually
think
about
the
relationship


between
trade
and
military
might?

So
I
think
over
time
uh
broadly
economics
and


national
security
have
converged
into


economic
security
and
we're
sorting


through
what
that
means
in
practice.
So


in
the
case
of
the
Biden
administration


they
talked
about
a
small
yard
and
a


high
fence.
So
take
a
limited
number
of


technologies
and
say
these
technologies


we
refuse
to
export
to
our
our


competitors
and
our
adversaries.
uh
we


refuse
to
uh
allow
them
to
buy
US


companies
that
specialize
in
those


technologies
and
refuse
our
companies
to


who
dominate
that
area
to
invest
in
in


China
and
give
them
their
capacity.
But


it
was
a
relatively
few
sectors


relatively
few
technologies.
The


question
is
is
is
there
a
inexraable
set


of
pressures
to
expand
that
yard
and
to


add
more
and
more
things
to
it
and
where


is
it
appropriate
and
and
where
is
it


not
appropriate
and
I
think
that's
what


we're
now
sort
of
of
wrestling
with.


We're
highly
dependent
on
China
for
all


the
ingredients
that
go
into
our


pharmaceuticals.
Do
we
feel
comfortable


with
that?
China's
done
nothing
to
say


they
would
cut
it
off
but
they
could.


And
we've
seen
recently
China
has
used


its
choke
point
capacity,
rare
earths,


magnets
to
demonstrate
that
it
has


leverage
too.
And
it
worked.
The
Trump


administration
raised
tariffs
to
145%
on


China.
China
restricted
the
export
of


certain
rare
earths
and
and
magnets.
And


suddenly
there
was
a
deescalation.


And
so
we
have
to
now
wrestle
with
that


and
decide
over
the
long
run
what


products
do
we
actually
need
to
be
made


in
the
United
States
because
they're
so


critical
to
national
security
or
our


sense
of
of
of
of
national
security
and


which
ones
and
this
is
where
there's


been
I
think
insufficient
attention.


Which
ones
can
we
rely
on
our
allies
and


partners?

Because
we
probably
can't
produce


everything
at
least
in
the
short
run
or


wouldn't
make
sense
to
produce


everything
ourselves.
But
can
we
rely
on


Canada
and
Europe
and
Japan
and
South


Korea
and
Mexico
for
some
of
this


production
uh
or
in
India?
And
how
do
we


differentiate
between
which
products
fit


in
what
group?
And
therefore
then
what


do
we
need
to
do
about
it
to
drive


production
here
where
necessary
and
to


develop
the
relationships
with
the


allies
and
partners
where
possible.
The


idea
of
friend
shoring
or
whatever
you


want
to
call
it
sounds
very
intuitive


and
it's
we
don't
need
to
build
a
ton
of


shipyards.
Maybe
we
could
get
the


Koreans
uh
to
do
that
for
us
or
I
don't


know
the
probably
the
Fins
are
good
at


it.
I'm
not
sure.
Uh
etc.
The
Fins
are