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Italy’s minister of economy and finance Giancarlo Giorgetti argued that it may be time to rethink globalisation through the lens of economic security as he opened the Asian Development Bank’s annual meeting in Milan.
At the opening session of the multilateral event this week, Giorgetti echoed government officials from other ADB members by calling for international co-operation to mitigate the risks posed by today’s trade and geopolitical fragmentation.
However, he highlighted the shortcomings of today’s global frameworks in ensuring a level playing field across and within economies.
“It might be time to rethink globalisation as we know it,” he said. “While it might be true that the global economy has benefited from trade [liberalisation], it is also true that the fruits of this process have not always been evenly distributed among nations.”
Speaking to an audience dominated by Asian nations, which have been hit hardest by the US’s delayed reciprocal tariffs, Giorgetti acknowledged that “enhanced collaboration” and co-ordinated policymaking is needed to tackle rising geopolitical tensions and ensure a more predictable trading environment.
However he urged countries to do their “homework” on how best to address long-term challenges, given that the side-effects of globalisation pose “an objective risk in terms of economic security”.
His comments come as the EU tightens its focus on economic security to boost self-sufficiency in key industries by pursuing policies ranging from anti-coercion tools to increased scrutiny of inbound and outbound investment. This follows the US’s push into industrial and unilateral policymaking, as part a broader blowback to multilateralism.
Giorgetti described global economic frameworks as having “shown their limits” and urged attendees to “define new rules and forge a new path” to globalisation that ensures a level playing field across firms and countries. The EU’s pursuit of economic security coincides with a push by the bloc’s private sector to reindustrialise those parts of the region that have suffered due to offshoring to Asia and low-cost markets elsewhere, which they consider a downside of globalisation.
In response, an ADB spokesperson said that “open trade, technology and infrastructure have propelled Asia and the Pacific from low-income status to a diversified manufacturing hub” and that the region can “attract fresh investment by widening and modernising trade agreements [and] extending liberalisation to services”.
Protectionism pushback
The message of economic security interrupted otherwise strong support for increased global integration by other ADB members in the first days of the institution’s 58th annual meeting.
On the event sidelines on May 4, the Asean+3 bloc — consisting of the 10 Association of Southeast Asian Nations plus China, Japan and South Korea — issued a statement warning of the dangers of impeding open trade. “Escalating trade protectionism weighs on global trade, leading to economic fragmentation, affecting trade, investment and capital flows across the region,” they said.
During the ADB governors’ roundtable, senior government representatives made similar remarks, taking aim at the US administration’s tariffs without explicitly mentioning the country. Hong Kong’s financial secretary Paul Chan Mo-po said “unilateralism and protectionism are threatening the very foundations of global trade” and global trade disruptions threaten the “livelihood and aspirations of billions of people”.
Singapore’s representative said there is a “very real risk of the global economy fracturing” and that this called for “more multilateral co-operation, not less”. Adele Plummer, of New Zealand’s ministry of foreign affairs and trade, said that in the current climate ADB “has a critical role to play in supporting multilateralism”.
Representatives from non-Asian member states Switzerland, Austria and Luxembourg were among those urging the ADB to increase its co-operation with other multilateral institutions.
In his opening address, the ADB’s new president Masato Kanda announced that the bank’s support for strengthening food systems in Asia-Pacific will reach $40bn by 2030, declared an increase in its private sector financing fourfold to reach $13bn by the same year, and committed $10bn to an Asean-wide electricity grid.
This article first appeared in fDi Intelligence, a sister publication of The Banker
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