Thread by @geoffreygertz

There’s a global rush to reconfigure supply chains to reassert national autonomy and resilience. A brief thread on why, ironically*, this shift from globalism to sovereign autonomy may demand more int’l coordination, not less. 1/

*plz don’t @ me over definition of irony

First, for all the focus on Donald Trump’s economic nationalism, worth noting that other world powers are also acting to reconfigure supply chains. 2/

For instance, in a speech earlier today, EU Trade Commissioner Phil Hogan spoke on the need to ensure the EU’s ‘strategic autonomy’, including ‘building resilient supply chains, based on diversification’ 3/
ec.europa.eu/commission/com…

More notably, last week Japan announced $2 billion in funding to subsidize Japanese firms moving production out of China. 4/
scmp.com/news/asia/east…

China, for its part, has been seeking to bring more production under its own immediate control for years – eg, the ‘Made in China 2025’ program. This is both an economic development strategy but also effort to promote economic security & not be dependent on outsider actors. 5/

(Short aside, but it strikes me that, in part probably because China is such a dominant global exporter, people tend to underemphasize the fundamental import substitution nature of its industrial policy. @Brad_Setser has been very good making this point…) 6/

Add in whatever the US ultimately ends up doing here, and that’s a lot of big internationalized economies all seeking to reconfigure their supply chains at the same time. 7/

How is this going to work out? Some production will come back “onshore”, but this won’t be feasible for most manufacturing. The push to get out of China and/or increase resiliency isn’t the same as embracing autarky. 8/

One option (perhaps most likely) is that every gov’t will make it up themselves as they go, and we end up with everyone tripping over themselves trying to set up factories in Vietnam. This will in turn introduce new vulnerabilities, that will be revealed in the next crisis. 9/

I would argue instead that “managing global supply chains” is a new(ish) substantive issue area in need of greater international coordination, and (perhaps) a new forum/institution where gov’ts can exchange information, develop shared expectations, coordinate plans, etc. 10/

As US assesses vulnerabilities in its supply chains, and develops plans to improve resiliency, it would be very helpful to know what steps Japan and EU are taking to relocate their own production. And vice versa. 11/

This wouldn’t be about tying hands through binding international treaties with specific legal obligations that serve to constrain states’ policy space. Instead about informal mechanisms that allow for better coordination on planning. 12/

In a world where states didn’t worry about the structure of their supply chains, they didn’t need to coordinate on their plans for intervening to shape them in specific ways. But more intervention in global markets will require more coordination. 13/

Ultimately, this is the most promising model for post-neoliberal global economic governance: a middle ground between everyone-for-themselves economic nationalism vs a hands off approach where states delegate more power and decision making authority to IOs. 14/

The reassertion of state power in global economy creates demand for new/better forums for gov’ts to communicate and coordinate with each other, even as they reclaim authority and responsibility to intervene independently in markets. 15/end.