Globalization: Winners and losers in world trade (1/2) | DW Documentary

Globalization. It was once seen as the key to peace: by spreading prosperity around the

world

. But the idea of ​​free and fair

trade

is losing ground as competition between the

world

's economic powers grows. China's

trade

ambitions became clear with its mammoth "New Silk Road" infrastructure project. And America continues to believe in "America First." But it is the world's poor who are paying the price of this global competition. The German city of Duisburg has reawakened from the ashes of its past, thanks to China. As a developing country, Peru sees few benefits from

globalization

. And he is mired in poverty.

But one way or another we have to understand that

globalization

works. But it has not reached more than 30% of the world's population. Very simple. Are we really making the most of business opportunities in a globalized world? Some question the World Trade Organization as the guardian of fair trade. And with it, globalization itself. I don't even believe that globalization can be blocked. But we must look carefully at who the

winners

and

losers

are. Duisburg in the Ruhr river valley in Germany. It was once a bastion of the German and European steel industry. Duisburg was a center of steel and coal production.

In the late 1970s, the Chinese dismantled an entire Krupp steel plant here, including screws, and sent it to China. And that was the end of 10,000 jobs, or even more. There was high unemployment and an urgent need to change industrial structures. The city's "Duisport" is now the largest inland port in Germany. The logistics center is managed by the city and is based on the "just-in-time" principle: products arrive just when customers need them, reducing the need for costly logistics and storage. China is the port's most important trading partner. Ironically, after flooding Europe and the United States with cheap steel, the economic giant has now emerged as Duisburg's savior.

In 2014, Chinese President Xi Jinping praised Duisport as the last stop on the "New Silk Road." And as a gateway from China to Europe. Duisburg was happy to join the alliance – with its promise of dozens of freight trains each week – but negotiated carefully. The city had been warned: China was luring countries along the route with cheap loans for its infrastructure expansion. And as a consequence of excess debt, the ports of Piraeus in Greece and Hambantota in Sri Lanka are now in the hands of Chinese operators. From our point of view, it is very worrying. Or, from my point of view, what is happening in other parts of the world along the New Silk Road is very worrying.

Piraeus and Sri Lanka are not the only ports with financing problems. But here in Duisburg the situation is fundamentally different. All port infrastructure belongs to the port. Shipping by ship would be cheaper. However, about 60 freight trains arrive from China every week. For the return journey, the wagons load goods from all over Europe. Around 70 employees are spread across the UK, China and Germany. We pick up e-commerce packages with our own vehicles. These just arrived today from France. We will load them into containers and then they will go to China by rail. They will arrive in China in 2 weeks.

In 2 to 3 weeks. It's very fast at the moment. The Chinese know Duisburg. When you arrive here from Beijing, you don't even see Berlin. You see Duisburg as the center of Europe. Empty roads have become increasingly common since Russia invaded Ukraine. Supply chains are vulnerable: a risk. But Duisburg is preparing for the future. You can't sit back and say, "We have 60 trains a week from China." Who knows if this will continue and we have to consider alternatives. Duisburg has also invested, for example, in Trieste to build facilities there that can be supplied through Turkey and southern Europe.

Duisburg is already developing alternatives, without abandoning the concept of this port. Duisburg's strategy in the global logistics and transportation battle seems effective: forge alliances, but remain independent and flexible. I think what the coronavirus pandemic of the last two years has shown us is that global trade is more complex than we suspected. So I think we will now have to adapt to having multiple suppliers in multiple countries to try to limit geopolitical risk. A consequence will probably be the increase in the price of products. Because what China offers is very attractive. It is a very technologically advanced country.

Chinese competition will increase in markets where it is not yet felt so clearly. Unlike Duisburg, the American steel industry is having a hard time developing new markets, even though it has been fighting cheap competition from abroad for 40 years. Follansbee, West Virginia. Coke is produced here for the production of steel. But now, this plant in the famous American “Rust Belt” is closing. You know, I would love to sit here and say that steel will be here forever. But 20 years ago, 40 years ago, if you were in Pittsburgh, you didn't think that steel was going to disappear forever. But there is almost nothing left there.

Steel made America rich and powerful. The main customers were the railway, mechanical and automobile industries. 288 people will lose their jobs when the coke plant closes. And nearby, Weirton has seen several steelworks close since the 1990s. I saw this happen in Weirton. Weirton used to be, basically, all alone down there. They didn't have to depend on anything. They made their own ash and then they closed the coke plant, they said, well, you can buy coke cheaper on the open market. And that was true, they could do it. But once they could no longer manufacture those products, the companies that sold them gained control over them and began raising their prices.

Back in 2002, global trade meant cheap steel for markets around the world. To protect the United States, President George W. Bush decided to impose tariffs on foreign steel imports. The World Trade Organization, the WTO, the arbiter of free and fair trade, was caught in the crosshairs. American unions backed the measure. American steelworkers feel cheated. Other countries have become more competitive than the United States, but at what cost? President Trump also imposed punitive tariffs. Now, Joe Biden's promise to allow European steel access to the US market is generating distrust. Of globalization too. It is a very globalist administration.

We were energy independent and left it in a couple of years. And all in the name of the free market and globalization, but that doesn't seem free to me. And don't get me wrong, that probably worked for a lot of people and a lot of jobs in other parts of the world. But here, in this part of the world, it cost something. Globalization has lifted a billion or more people out of poverty. Now, that doesn't mean it's perfect. It's not. It is evident that in rich countries there are poor people who have been left behind. And in those cases, their governments did not have the active labor market policies to provide solutions, where they lost jobs.

You know, there was a time in the '80s when National Steel was going to close Weirton Steel; we were a division of National. And I was laid off for 18 months. And not just me, the whole city was unemployed for quite some time. Our people are survivors. You know, we'll get through it. In Weirton, fewer than 1,000 jobs remained (out of 14,000). There is room for new industries. But the "America First" approach casts a long shadow: Instead of acting globally, people here act nationally. Steel companies are reluctant to take advantage of the opportunities offered by multilateral trade. Instead, they turn to government subsidies.

In 2018, in a trade dispute with China, President Trump initiated new tariffs on imported steel, gaining much support in Weirton. He ended up helping us immensely. Both times. First, when President Bush did it, then when President Trump did it. He helped our workers endure the cheap steel that was coming. The Gurrera-Thompson family has made a living from steel for generations. But Karen was recently widowed after her husband Carl, a steelworker and strong Trump supporter, died from Covid-19. If he was proud of anything, besides her children, it was being a steelworker like his parents and his grandparents. But when he worked in the factories, he was always pretty good.

For us there were times of struggle and good times. Difficult times when the mill was not going so well. Less than a thousand work there now and this is due to staff reduction. You know, getting rid of the jobs, spreading out the work, you know they gave it away and they weren't going to pay a lot of money when they could get it somewhere else much cheaper. I think we should be able to take care of ourselves, not just our country, every country should be self-sufficient because I don't see China selling us armor plates to build tanks for another world war, if God forbid that happens.

I saw it for years and thought: we will never be able to protect ourselves because we don't have the manufacturing to do so. The way China does business with the rest of the world. It's the same, everyone defends their national interests. So once globalization grows so much, it will inevitably contract, once people start to feel a little nervous about their neighbors becoming too strong, too rich, then we will start to worry about our own national interests. Our government betrayed America, betrayed the American steelworker. And they will do it again today. We just collapsed a bridge in Pittsburgh.

We can't even get the steel to rebuild the bridge from the United States. You have to go abroad and China is one of the main culprits. They've built so many steel mills and they don't have the same set of rules as us. They don't care about their surroundings. From an environmental point of view, all countries and all factories should be required to have a clean process. But China is a disgusting country, okay. And it's a dirty country, they don't care about their environment. They don't care about their people. Many countries are emerging. Maybe some of them are faster, others not so fast.

So let's not exaggerate. But you know, China for sure. And some of these developments were not really thought out, so the instruments that we have, the rules that we have. They are a little outdated. They don't capture some of these developments, so that's absolutely fine. I was a strong advocate of leaving the WTO Trade Organization. In the end, you won't be able to do it alone. Okay, because there have to be exports. There has to be a trading system, okay? Worldwide. But certain industries within that global economy can be protected. Steel should be one of them.

But why subsidize a mass-market product like steel when it has no chance in the global market? It's time to take a new approach. Entering, especially into niche markets, is one direction - they kind of had that with the double downsizing workforce they made years ago, it was the best in the world and that's what kept Weirton Steel afloat. And even in tough times, Weirton Steel could stay ahead of the other steel mills in this country thanks to its quality model. But there is a global market and to compete long term, that simply does not mean selling your product within the 50 states, we are going to have to be able to enter that global market and whether you like them or not, yes, the crossroads ends at WTO.

Therefore, we have to be able to play as well as everyone else. Washington DC. Home of those responsible for subsidies and protective tariffs. The rulers protect not only the steel industry, but also the agricultural economy. And then the hammer really fell when President Trump rewarded agriculture by giving, you know, tens of billions of dollars to American farmers, essentially to offset their business losses. Trump somehow devised a way to distribute subsidies to farmers without going through Congress. We just get checks in the mail, so to speak. 2011. Illinois. John and Aaron Phipps Farm. Even then, American farmers benefited from agricultural subsidies.

Agricultural subsidies are morally irresponsible. And I mean there's just no justification for it. I only understand it for having a body temperature close to 98.6, not because I do anything, not because I'm worth a time or some factor that's worth it just because I have those acres. I receive $24.00 for each acre. Well, once you give that $24.00 to each farmer. So your first thought is: I know I can afford to spend $24.00 more to bid on this additional 200 acres and enlarge my farm by 200 acres. Because that's what we're all doing. We are trying to try to grow. Welcome to this weekend's US agriculture report.

I'm Tiny Morgan and this is what awaits us. The simple fact of moving from one field to another places a constant limitation on the size of themachinery... John Phipps is now retired. He is a commentator for U.S. Farm Report TV, a weekly television programme. Last week I started a response to a viewer about carbon dioxide emissions. I have people who just can't stand me and, in fact, they are my favorites. And the other half are people who just got up early in the morning and are usually at the stations early in the morning, and they're looking for something to see and they've gotten hooked on what's happening in agriculture.

The farm receives more than $100,000 in subsidies each year. These include compensation for poor harvests, tax relief and direct payments. In the 1980s, you know, Dad said, you know, there were years when the government paid, that's what the family lived on. You know, the farm broke even at best, and that was the money that, you know, put food on the table and clothes for me and took me to school and everything else. So even during the lean years, typical for a child, I didn't really know. I had no idea. So it wasn't true poverty. Why do we qualify for it?

I'm not exactly sure, but money has just fallen from the sky and, unlike European subsidies, we are moving away from having to take any action. Any environmentally responsible action or any counterpart. During the Trump years, I was a net loss to the economy because he received more from the federal government in subsidies and payments than he paid in taxes. And notably, the Trump year money was just crazy. In fact, farmers in general tend to be Republicans in the United States. So, in order not to lose the political support of those farmers, Trump transferred huge amounts of resources to farmers in the form of direct subsidies, income subsidies to make up for the export income they lost.

Former President Trump did very well. He knew who his base was. He knew who voted for him and his thinking was that as long as I can make amends to this group of people, I will be re-elected. Agricultural subsidies distort markets. But there is hope that surplus food will stop being exported cheaply (or free) to developing countries, where it destroys local agricultural markets. Export subsidies are practically ruled out. There are practically no export subsidies anymore. Some food aid, but export subsidies have been virtually eliminated in the last 20 years. It is not convenient for us to have a third of the world in economic misery.

Because then we have no one. To sell our products. American agricultural surpluses have plunged some South American countries into further economic misery. Peru is one of those countries. Economically oppressed, with no real prospects in sight. Unlike the United States, Peru has no money to subsidize its meager economy. Corruption and mismanagement further weaken economic development. Hernando de Soto is a Peruvian economist who ran for president in 2021, although he lost by a small margin. Governments around the world seek his advice on economic issues. Although official statistics say that Peru is probably at the bottom of the worst of all developing countries, the fact is that we are probably even worse off than the statistics say.

Between 2016 and today we have had four presidents. 4 presidents and 1-2-3 parliaments. Because the system has collapsed. Peru has one of the highest Covid-19 mortality rates in the world. The pandemic helped the “informal economy” expand even further. The country is rich in raw materials. But they are mainly mined by foreigners. Especially by the Chinese. We have been extracting lithium for many years in mines near Chile, in the south of the country. The product has great potential. Many countries are interested in it. China, for example, is the first country that wants to benefit from it. China is investing throughout Latin America, including Peru.

The Chinese want to build a port in the north, which will help them open the Pacific. Fishing is also crucial to the local economy. But until now there has been very little foreign investment in the main fishing companies. Not even from China. China is investing massively in mining and hydrocarbons, as well as other sectors of the economy. But not yet in fishing. The small town of Chancay depends on fishing. And in a fishmeal factory. Around ninety plants of this type can be found along the more than 2,000 kilometers of Peru's Pacific coast. Miriam Arce and Juan Carlos Sueiro are the ones who know the area best.

Juan Carlos Sueiro is an economist and fisheries expert at Oceana, an international marine conservation organization. Miriam Arce fights for the construction of a megaport. Industrial fishing is on pause. The season won't start for two weeks. The platforms are anchored to the seabed so that they do not move. They are connected underwater to the fishmeal factory. This blue conveyor takes the fish directly to the factory for processing. We fish between four and six million tons of anchovies a year. They are converted into fish meal and oil. 97 or 98% of fishmeal is exported, 70% to China. That means China is one of the largest buyers of fishmeal.

China will take over Peru's fishing resources. It's just a matter of time. Next to the city (and next to a nature reserve) a new port is being built. Chinese investors are behind the "Megaport" being built here. The port will collapse... Never! Our beach is not for sale, we will defend it! "No" to the "Megaport"! The construction of the port has been the subject of debate for years. The ecological and economic arguments balance each other. The new port is dividing the inhabitants of Chancay. The worst of all is that they want to steal our identity. And they are creating conflicts between neighbors.

It hurts me because I was born here. The location is great for the Chinese because they don't just export fishmeal. They can also export minerals to China and bring their products directly from China to Peru. The port will be only for them. The new port will also compete with the local Chancay fishery. Chinese deep-sea trawlers will stop there and fish off the coast. And the Chinese are already illegally manipulating Peru's fish stocks. There is already a conflict: the Chinese fleet is fishing for our giant squid, even though they do not have authorization for Peruvian territorial waters.

The Chinese fishing fleet has grown enormously. In a decade it has tripled. The "Global Fishing Watch" platform shows the movement of the Chinese fleet very well. In July, the Chinese stay south of the Galapagos, then down the coast to Peru and Chile and even to Argentina. And that is part of this conflict, with China. Peru is a developing country. Three quarters of Peruvians work informally, in the gray market: without any state social network. No government has been able to create an orderly and sustainable labor market. Well-educated people are leaving the country: another blow to the Peruvian economy, which is struggling to profit from globalization.

No. Of course I cannot be satisfied with a system that has left 70% of the population behind. Well, what has changed is that we are now aware that globalization is not globalization and its virtues are not accessible to everyone in the world in the same way. Remember that we always talk about the informal economy. The first is that this economy did not have rules connected to the global system. They had local rules, but they didn't: they weren't connected to global rules. However, Peru has achieved some small successes in the fight against poverty. In 2000, "Mibanco" was the first bank in Peru to grant loans to the poorest, without the need for collateral: the so-called "microloans." The informal economy is a major problem in Peru.

It is a consequence of migration, since many people come to Lima from rural areas and the Andean region. That is why we started giving loans to the rural population. Help people help themselves, while integrating them into the national economy. That was (and is) the objective of microcredits. 2009. A visit to Julio Solís. His company manufactures gas stoves. A loan from Mibanco allowed Julio Solís to expand. He couldn't get anywhere because he had no money. So I knocked on the doors of several banks looking for financing. But they refused and gave me nothing. Many young people are looking for work in factories.

By hiring five or six people I can help my country and give something back. This is my dream. 12 years later. Marleny Aparicio and her eldest son Franco take us to a cemetery near Lima. Julio Solís died in December 2020, at the age of 47. He died a year ago. Many families have been affected by the pandemic in Peru. The virus also took our father. We will continue his work. He was a man of integrity who was determined to make a difference. He did everything for his family, for his children. His family was always the most important thing to him.

He sent her a kiss, in heaven. The small factory has not moved. But now it's double. 15 men and women work here permanently. I want to tell you something. He was in a restaurant in Lima. They were cooking with our stoves. It is good that they use our products for cooking. They are using them to prepare food for people. That makes me happy. My father wanted to sell our products in the international market. His goals were Chile and Bolivia. We want to make his idea a reality. Me, my mother, my brothers and sisters. We all want to try.

It was our first loan. Just a small amount, about 1000 Peruvian soles, which is about 250 US dollars. Many banks closed the door in our faces then. Now they keep knocking on our door wanting to give us a loan. But we don't need a loan now. The region around Puno is one of the poorest in Peru. In 2009, Pro Mujer, a development organization, offered microcredit to fisherwomen. The goal of Pro Mujer is to encourage women to improve their lives. We give them loans, based solely on their word. My life has improved. I was often short of money. Now I am happy because my children can go to school.

I can help my family. 13 years later. Gloria has left fish farming. The polluted waters of Lake Titicaca constantly killed the fish in it. Her family now wants to dedicate themselves to tourism, with an island made of reeds. They have invested the money they earned from fish farming in the new project. A loan of about 100 US dollars still makes a difference today. The organizations, the NGOs, that started the microcredit programs attracted the attention of large financial institutions. At first they took big risks. This is a very good example of the need for innovation to promote development and improve the living conditions of the most vulnerable populations.

What I like about microcredit is that it is a way to reach a solution. I mean, first of all, people want credit and the fact that you adapt to help the poor is good. Microcredit is a step in the right direction. It relieves, but it is not a definitive stop. Globalization is in crisis. The global trading system has led to fewer and fewer

winners

. Protectionism and nationalism seem to be successful, but it is not the best who win, but the richest. The geopolitical objectives of the powerful mean that many poor people are the

losers

. However, globalization seems to be the only alternative.

In other words, globalization is still a good thing. Of course it is. It is the division of labor. It is the union of humanity. Above nationalism, above religions. It's something good. Those who are truly globalized will continue to be stronger than those who are not. How does commerce contribute to the solution? Those are the right questions to ask ourselves, let's not close in on ourselves and try to grow everything ourselves. Produce everything ourselves. You already know how to make everything ourselves, because that in itself is very risky. Let us invest in multilateralism, in global cooperation in the multilateral trading system.

It is a global public good and we should not underestimate its important details.