Globalization: Where do we stand? - Winners and losers in world trade | DW Documentary
Globalization. Once seen as the key to peace — by spreading prosperity, worldwide. But the idea of free and fair trade is losing ground as competition between the world’s economic powers grows. China’s trade ambitions were made clear with its giant "New Silk Road" infrastructure project. And the US continues to believe in "America first".
But it’s the world’s poor who are paying the price for this global competition. The German city of Duisburg has re-awoken from the ashes of its past — thanks to China. As a developing country, Peru sees few benefits from globalization.
And is engulfed in poverty. But somehow or other, we’ve got to understand that globalization works. But it has not reached more than 30% of the world's population. Very simple. Do we really make the most of trade opportunities in a globalized world? Some are questioning the World Trade Organization as the guardian of fair trade. And with it, globalization itself.
I don't even think you can block globalization. But we need to look carefully at, who are the winners and losers. Duisburg in Germany’s Ruhr river valley. Once a bastion of the German - and European - steel industry.
Duisburg was a center for steel and coal. In the late 70s, the Chinese dismantled an entire Krupp steel plant here, even the screws, and shipped 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 the industrial structures. The city’s "Duisport" is now Germany’s largest inland port. The logistics hub is run by the city and relies on the "just in time" principle: goods arrive just as clients 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 US with cheap steel, the economic giant has now emerged as Duisburg‘s saviour. In 2014, Chinese President Xi Jinping hailed Duisport as the final stop on the "New Silk Road." And as China‘s gateway to Europe. Duisburg was happy to enter the alliance — with its promise of dozens of freight trains every week — but negotiated carefully.
The city had been warned: China was luring countries along the route with cheap loans for the expansion of their infrastructure. And as a result of excessive 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, it’s very worrying what’s happening in other parts of the world along the New Silk Road.
Piraeus and Sri Lanka are not the only troubled ports with financing. But it’s fundamentally different here in Duisburg. All of the port infrastructure belongs to the port. Transport by ship would be cheaper.
Nevertheless, some 60 freight trains arrive from China every week. For the return journey, the wagons load up goods from all over Europe. About 70 employees are spread across the UK, China and Germany. We pick up e-commerce parcels with our own vehicles.
These have just come in from France today. We'll load them into containers and then they'll go to China by rail. They'll reach 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 tracks have become an increasingly common sight since Russia marched into Ukraine. Supply chains are vulnerable — a risk.
But Duisburg is preparing for the future. You can’t lean back and say, “We have 60 trains a week from China.” Who knows whether this will continue, and we have to consider alternatives. Duisburg has also invested in Trieste, for example, to build a site there that could be supplied via Turkey and southern Europe. Duisburg is already developing alternatives — without abandoning the concept behind this port. Duisburg's strategy in the global logistics and transport battle seems effective: forge alliances, but stay independent and flexible.
I think what the corona pandemic of the last two years has shown us, is that global trade is more intricate than we suspected. So I think we’ll now have to adjust to having several suppliers in several countries, to try to limit the geopolitical risk. One consequence will probably be more expensive products. Because what China is offering is very attractive. It’s a very technologically-advanced country. Chinese competition will increase in markets where it’s yet not being felt so clearly.
Unlike Duisburg, the American steel industry is having a hard time developing new markets, even though it’s been fighting cheap competition from overseas for 40 years. Follansbee, West Virginia. Coke for steel production is produced here. But now, this plant in the famed American “Rust Belt” is closing. You know, I'd love to sit here and say that the steel‘s gonna be here forever. But 20 years ago, 40 years ago, if you were in Pittsburgh, you didn’t think steel was going away forever.
But there's almost nothing left, there. Steel made the USA rich and powerful. The railroad, machine and automobile industries were the biggest customers.
288 people will now lose their jobs when the coke plant closes. And nearby, Weirton has seen the closure of several steel mills since the 1990s. I saw this happen at Weirton. Weirton used to be, basically, totally, on their own down there. They didn‘t have to depend on anything. They made their own cinder, and then they shut the coke plant down, they said well, you can buy coke cheaper on the open market.
And that was true, they could. But once they could no longer make those products, then the companies that were selling it had control over it, they started raising their prices. As early as 2002, global trade meant cheap steel for markets everywhere. To protect the US, President George W. Bush decided to impose import tariffs on foreign steel. The World Trade Organization, the WTO, the arbiter of free and fair trade, was caught in the crosshairs.
US unions backed the move. American steelworkers feel cheated. Other countries have become more competitive than the US — 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 arousing distrust. Of globalization, as well. It‘s a very globalist administration.
We were independent energy-wise, and we gave it up in a couple of years. And, all in the name of free markets and globalisation but that doesn’t sound free to me. And don’t get me wrong, that probably worked out for a lot of people and a lot of jobs in other parts of the world. But it cost some here, in this part of the world.
Globalization has lifted a billion people or more out of poverty. Now, that does not mean it's perfect. It’s not. There are obviously poor people in rich countries who have been left behind. And in those cases, their governments did not have the active labour market policies to provide solutions, where they lost jobs. You know, there was a point in the '80s, when National Steel was going to close Weirton Steel down — we were a division of National. And I was laid off for 18 months.
And not just me, the whole town was laid off for quite some time. Our town’s a survivor. You know, we’ll get through it. In Weirton, fewer than 1,000 jobs remained — 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. They turn instead to government subsidies. In 2018, in a trade dispute with China, President Trump initiated new tariffs on imported steel, winning plenty of support in Weirton. It ended up helping us immensely. Both times.
First when President Bush did it, then when President Trump did it. It helped our workers weather the cheap steel that was comin’ in. The Gurrera-Thompson family has lived off steel for generations.
But Karen recently became a widow after her husband Carl — a steelworker and staunch Trump supporter — died from Covid-19. If anything he was proud of, besides his children, it was to be a steelworker like his parents, and his grandparents. But when he worked in the mills, it was always pretty good. For us it was times of struggle and good times. Struggling times when the mill wasn’t going so good. Less than a thousand work there now and it’s from downsizing.
You know, getting rid of jobs, farming out the work, you know they gave it away and wasn’t going to pay top dollar when they could get it somewhere else a lot cheaper. I think we need to 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 armored plate to build tanks for another world war, if god forbid, that happens. I just watched it for years, I’m like, we’re never going to be able to protect ourselves, because we don’t have the manufacturing to do it. The way China conducts business with the rest of the world. It's the same thing, everybody is out for their national interests.
So once the globalization gets so big, it’s inevitably going to contract once people start feeling a little bit nervous about their neghbors growing too strong, growing too wealthy, then we’re going to start worrying about our own national interests. Our government betrayed America, betrayed the American steelworker. And they’ll do so agin today. We just had a bridge collapse in Pittsburgh. We can’t even get the steel to rebuild the bridge from America.
You have to go overseas, and China is one of the major culprits. They’ve built so many steel mills and they don’t have the same set of rules we have. They don’t care about their envirnment.
Environmentally, all countries ought to be required, all mills ought to be required to have a clean process. But China it's a filthy country, OK. And it's a dirty country, they don't care about their environment. They don't care about their people. So many countries are coming up.
Maybe some of them faster, some of them not so fast. So let's not exaggerate. But you know, China for sure. And some of these developments were not really thought through, so that the instruments we have, the rules we have.
Are a little bit outdated. They do not catch some of these developments, so that's absolutely right. I was a strong advocate to get out of WTO Trade Organization. Ultimately, you're not going to be able to do it by yourself.
OK, because there has to be exports. There has to be a system of trade, OK? On a global basis. But you can protect certain industries within that global economy. Steel should be one of them. But why subsidize a mass market product like steel when it has no chance on the global market? It’s time for a new approach. Enter into, especially in niche markets, is a direction — they kind of had that with the template that double reduced template they made years ago, it was the best in the world and that's what kept Weirton Steel afloat.
And even in hard times Weirton Steel could stay ahead of the other steel mills in this country because of their... their quality template that they put out. But it is a global market out there and to compete in the long run, that's just not selling your product within the the 50 states, we're going to have to be able to to go into that worldwide market and, whether you like them or not, yeah, the crossroads end up at the WTO. So, we‘ve got to be able to play the game as well as everybody else. Washington DC. Home to those responsible for subsidies and protectionist tariffs.
The people governing protect not just the steel industry, but the agricultural economy, as well. And then the hammer really came down when President Trump rewarded agriculture by giving, you know, 10s of billions of dollars to American farmers, essentially to offset their trade losses Trump somehow came up with a way of distributing subsidies to farmers without going through Congress. We just get checks in the mail, so to speak. 2011. Illinois. The farm of John and Aaron Phipps. Even then, America's farmers benefited from farm subsidies.
Agricultural subsidies to be morally irresponsible. And I mean there is simply no justification for it. I just get that for having a body temperature somewhere close to 98.6,
not because I do anything, not because I'm worth a while or or any deserving factors simply because I have those acres. I get $24.00 for every acre. Well, once you hand that $24.00 out that every farmer. Then the first thing he thinks of is: I know I can afford to spend $24.00 more to bid on this extra 200 acres and make my farm 200 acres larger.
'Cause that's what the what we're all doing. We're trying to trying to grow. Welcome US Farm report this weekend. I'm Tiny Morgan, and here's what's in store. Just moving from field to field is an ongoing constraint on machinery size... John Phipps is now retired.
He’s a commentator for U.S. Farm Report TV, a weekly TV show. Last week I began an answer to a viewer regarding carbon dioxide emissions. I have people who just can't stand me, and actually they're my favorite. And the other half are people who just got up early in the morning and it‘s generally on the stations early in the morning, and they're looking for something to watch and they've gotten hooked on what's happening in agriculture.
The farm receives well over $100,000 in subsidies every year. These include compensation for crop failures, tax relief and direct payments. In the 1980s, you know, Dad said, you know there were years that the government payments, 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 and got clothes on my back and got me to school and everything else. So, even during the lean years, classic of a child, I didn't really know. I had no clue. So it wasn't true poverty. Why we qualified for it? I'm not exactly sure, but money just poured out of the sky and unlike European subsidies, we are drifting away from having to perform any actions.
Any environmentally responsible actions or any quid pro quo. Through the Trump years, I was a net drain on the economy because I got more back from the federal government in subsidies and payments than I paid in taxes. And markedly so the Trump year monies were just — it was insane. In fact, farmers in general tend to be Republican in the United States. So Trump in order to not lose the political support of those farmers, transferred huge amounts of resources to farmers in the form of direct subsidies, income subsidies to compensate for the foregone export revenue that they lost. Former President Trump did very well. He knew who his base was.
He knew who voted for him, and his thought was as long as I can make amends for this group of people I will get re-elected. Agricultural subsidies distort markets. But there is hope that surplus food will stop being exported cheaply — or for free — to developing countries, where it destroys local agricultural markets. Export subsidies are virtually off the table. There are virtually no export subsidies anymore.
A bit of food aid, but export subsidies have been pretty much eliminated over the last 20 years. It's not to our advantage to have a third of the of the world in economic squalor. Because then we have no one. To sell our goods to.
The US agricultural surpluses have driven some South American countries deeper into economic misery. Peru is one such country. Economically downtrodden, with no real prospects in sight. Unlike the US, Peru has no money to subsidize its meagre economy. Corruption and mismanagement further weaken economic development. Hernando de Soto is a Peruvian economist who ran for the presidency in 2021, though he lost by a small margin.
Governments around the world seek his advice on economic issues. Even though official statistics say that Peru is probably at the end of the worst of all developing countries, the fact of the matter is, we're probably even worse than what 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 death rates in the world. The pandemic helped the “informal economy” expand even further. The country is rich in raw materials. But they are mined mainly by foreigners.
Particularly by the Chinese. We have been mining lithium in mines near Chile, in the south of the country, for many years. The product has great potential. Lots of countries are interested in it. China, for example, is the first country that wants to benefit from it. China is investing in all of Latin America, including in Peru. The Chinese want to build a port in the north, which will help them open up the Pacific.
Fishing is also crucial to the local economy. But so far, there has been very little foreign investment in major fishing companies. Not even from China. China is investing massively in mining and hydrocarbons, as well as in other sectors of the economy. But not yet in fishing. The small town of Chancay depends on fishing. And on a fishmeal factory. About ninety such plants can be found along Peru's more-than 2,000 kilometres of Pacific coast.
Miriam Arce and Juan Carlos Sueiro know the area best. Juan Carlos Sueiro is an economist and fisheries expert for Oceana, an international marine conservation organisation. Miriam Arce is fighting the construction of a mega-port. Industrial fishing is on a break.
The season won’t begin for another two weeks. The platforms are anchored in the seabed so that they do not move. They are connected underwater to the fishmeal factory.
This blue conveyor carries the fish directly to the factory for processing. We catch four to six million tons of anchovies a year. They are made into fishmeal and fish oil. 97 or 98% of the fishmeal is exported, 70% of it to China.
That means that China is one of the biggest buyers of fishmeal. China will make a grab for Peru's fish resources. It’s just a matter of time. Next to the town — and adjacent to a nature reserve — a new port is being built. Chinese investors are behind the "Megapuerto", or "megaport", under construction here.
The harbour will collapse...Never! Our beach is not for sale, we will defend it! "No" to the "Megaport"! The port’s construction has been the subject of debate for years. Ecological and economic arguments balance each other out. The new port is dividing the people of Chancay.
Worst of all, they want to steal our identity. And they're creating conflict between neighbors. It hurts me because I was born here. The location is great for the Chinese because they aren’t just exporting fishmeal. They can also export minerals to China and bring their goods directly from China to Peru.
The port will just be for them. The new port will also compete with the local fishery in Chancay. Chinese deep-sea trawlers will call there, and fish the coast. And the Chinese are already illegally tampering with Peru's fish stocks.
There is already a conflict: the Chinese fleet is fishing our giant squid, even though they do not have authorization for Peruvian territorial waters. The Chinese fishing fleet has grown massively. Within a decade it has become three times bigger.
The platform "Global Fishing Watch" shows the movement of the Chinese fleet very well. In July, the Chinese stay south of the Galapagos, then they go down the coast to Peru and Chile and even as far as Argentina. And that's part of this conflict, with China. Peru is a developing country.
Three quarters of Peruvians work off the books, on the gray market: without any state social net. No government has been able to create an orderly and sustainable labor market. The well-educated are leaving the country: Another blow to Peru's economy, as it struggles to profit from globalization.
No. Of course I cannot be satisfied with a system that's left 70% of the population behind. Well, what has changed is that we have, now, an awareness that globalization is not, and its virtues are not accessible to everybody in the world in the same way.
Remember that we always talked about the informal economy. The first being that that economy didn't have rules that were connected to the global system. They had local rules, but they didn't — they were not 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 very poor, no guarantee required — so-called "microloans". The informal economy is a major problem in Peru.
It is a consequence of migration, with many people coming to Lima from rural areas and the Andean region. That's why we started giving loans to the rural population. Helping people to help themselves, while integrating them into the national economy.
That was — and is — the goal of microloans. 2009. A visit to Julio Solis. His company makes gas stoves. A loan from Mibanco allowed Julio Solis to expand. I couldn't get anywhere because I didn't have any money. So I knocked on the doors of several banks, looking for financing.
But they refused, and gave me nothing. A lot of young people are looking for work in the factories. By hiring five or six people, I can help my country and give something back. That is my dream. 12 years later. Marleny Aparicio and her eldest son Franco take us to a cemetery near Lima.
Julio Solis died in December 2020, at the age of 47. He died a year ago. A lot of families have been affected by the pandemic in Peru. The virus took our father too. 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. I send him a kiss, in heaven. The small factory hasn’t moved. But now it’s twice as big.
15 men and women are permanently employment here. I want to tell you something. I was in a restaurant in Lima. They were cooking with our stoves. It's nice that they use our products to cook.
They are using them to prepare food for people. That makes me happy. My father wanted to sell our products on 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 sol, which is about 250 US dollars.
Lots of banks slammed the door in our faces back 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 microloans to fisherwomen.
The aim of Pro Mujer is to encourage women to improve their lives. We give them loans, based only on their word. My life has improved. I used to often lack money. Now I am happy because my children can go to school. I can help my family. 13 years later. Gloria has given up fish farming. The polluted waters of Lake Titicaca constantly killed her fish.
Her family now wants to go into tourism, with an island made of reeds. They’ve invested the money they earned from fish farming in the new project. A loan of about 100 US dollars is still making a difference today.
The organizations, the NGOs, that started the microcredit programs caught the attention of the big financial institutions. In the beginning, 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 one way of getting to the solution.
I mean, first of all it is that people do want credit and the fact that you adjust to help poor people is good. Microcredit is a step in the right direction. It alleviates, but it's not a final stop. Globalisation is in crisis. The world trade system has led to fewer and fewer winners. Protectionism and nationalism appear to succeed but it’s not the best who win, but the richest.
The geopolitical goals of the powerful mean that many poor people are the losers. Yet globalisation seems to be the only alternative. Globalization, in other words, is still a good thing.
Of course it is. It's the division of Labor. It is the the bringing together of humanity. Above nationalism above religions. It's a good thing. Those who are really globalized will continue to be stronger than those who are non-globalized.
How does trade contribute to the solution? Those are the right questions to be asking, not let's withdraw into ourselves and try and grow everything ourselves. Produce everything ourselves. You know manufacture everything ourselves, because that in itself is highly risky. Let us invest in multilateralism, in global cooperation in the multilateral trading system. It's a global, public good and we shouldn't underestimate our important details.