Friend-shoring.
Secretary Yellen’s remarks of April 13, 2022 spoke of “friend-shoring” – a commitment to work with countries that “have strong adherence to a set of norms and values about how to operate in the global economy and about how to run the global economic system.”
Friend-shoring is not new. A 2021 White House Report on “supply chain resilience” forecast resiliency strategies for semiconductors, large capacity batteries, critical minerals, and pharmaceuticals. To develop resiliency, the United States must “deepen” its economic ties with friendly, “like-minded” countries and develop “open” plurilateral agreements to foster “high standards with respect to labor, the environment, privacy protections, [and] digital [services].” For the White House, making “friends” is necessary due to the realization that it has become “increasingly difficult to separate economic issues from broader considerations of national interest, including national security.” Preserving globalization entails trust of geopolitical partners. Edward Alden describes how the White House presents “America First” 2.0 – an upgrade from the Trump administration that establishes “friendly relations” in trade and investment between Washington, Brussels, and Tokyo.
The implication is that in the globalized economy, the United States has “unfriended” China. The underlying logic of “friend-shoring” is that friends shall not harm United States national security interests. China’s trade and investment practices are seen to do exactly that: “unfairly damage” U.S. economic security. The United States’ consideration of friend-shoring may disqualify other countries’ efforts to develop equally resilient supply chains. Other countries risk the label of “unfriendly” based on their political and economic choices, making the discourse even more about the “bipolarity in the world”, thereby complicating more substantial consideration of the sustainability of globalization altogether.
Two elements build the supply chain resilience for the United States. First, is the effort to “modernize” trade multilateralism for free but secure trade. Considering one is the exception of the other (and nothing is free), this is already a puzzle. Second, the modernized trading system must be built not from multilateralism but “a network of plurilateral trade arrangements” that address topics especially important to the United States. This could be a reference to the ongoing work of the WTO, but there is no added detail to know whether the United States will seek to develop its policies through preferential trade or not. If the ambition is preferential, then Desiree LeClercq cautions that the United States needs to be careful about how to inject international rights law into trade agreements.
In contemplating a “new Bretton Woods” it also bears consideration how international institutions entangle aspirations of friendship and international trade. The post-WW2 International Trade Organization (not, in fact, negotiated at Bretton Woods) sought to universalize the commitment to friendship among its fifty or so signatories. In his memoirs, Secretary of State Cordell Hull remarks that “fair and friendly relations” were the opposite of “the injurious results and dangerous possibilities of economic warfare.” (1948: 82). The language of friendship was cited in preambles or primary provisions of many post-WW2 bilateral treaties of amity to set the right tone for the governance of trade and navigation. As Gerry Simpson aptly observes “international law is already a law of friendship albeit a thin friendship of merely living together.” A deeper and more problematic use of the language of friendship, Simpson observes, “is there to beef up the ethical underpinnings of empire.” (2021: 167). Thus, it is simplistic to suggest “friendship” automatically connotes an evenness of competitive opportunities between contracting states, or equality of economic relations. In many cases, these post-WW2 treaties were not signed by equal partners at all – for example, the US-Ethiopia treaty of amity and economic relations, entered into force October 8, 1953 (4 UST 2134).
The United States’ seeming rejection of a “bipolar” global economy raises questions – is the United States seeking unipolarity, or multi-polarity? A return to Bretton Woods speaks to a time of unipolar power, for the United States. What about other countries seeking development? Is the problem that the rules failed in our ability to achieve equal competition across borders, or that we are at different positions on global threats? Who decides which governments earn greater policy space? Is the United States suggesting a world government? Why not consider how institutions can help the United States compete with China, such as reforming rules on state-owned enterprises and industrial policies?
Perhaps this is not about unwinding bipolar centres of economic power but strengthening the US pole. Is the United States seeking to develop (or perhaps regain) control over the globalized economy by competing with China’s Belt and Road Initiative with its own “friendly” version? What happens if the European Union’s economic power outpaces the United States? Will the friendly relationship sour? As Hugh Grant’s Prime Minister told Billy Bob Thornton’s US President in Love Actually: the word relationship covers all manner of sins.
