Phil Hogan's departure as EU trade commissioner weakens Ireland just as trade becomes a crucial issue in the changing geopolitics of global economics.
Hogan's success in helping deliver EU trade deals with Japan and Mercosur as EU agriculture commissioner from 2015, together with his skill as a political negotiator respected and feared by international counterparts, made him an obvious choice for the trade portfolio in this more avowedly geopolitical Commission. Since then, his role in US, China and Brexit negotiations and in initiating an overall review of EU trade policy underlined his first-rank status.
His downfall in a fit of hubris over Irish Covid-19 regulations is ironic given the pandemic’s forcing of change on the model of capitalist globalisation crafted since the 1990s. In that decade and the next, world trade grew twice as fast as economic growth – a rate that levelled off after the financial crisis from 2008 exposed its shortcomings.
This globalisation unusually separated politics and security from technology and economics as major manufacturing functions were offshored from the US, Europe and Japan to China, availing of cheap labour and scale efficiencies. Western policymakers assumed China's readiness to embrace their economic model would liberalise its politics; they have been shocked by Xi Xinping's reassertion of communist party control alongside his ruthless determination to make these flows instruments of autonomous development towards first world standards within the next 15 years.
The Covid crisis has accelerated and revealed changing trends in globalisation apparent before its outbreak. Long and thin supply chains overdependent on Chinese sourcing are most obvious in medical supplies and equipment. Putting that right will add more varied, robust and resilient sources of supply. Options range from Japan's China+1 formula of diversifying supply chains to the most radical "reshoring" policy of Donald Trump's hawkish China trade adviser Peter Navarro.
Decoupling
Such choices go far beyond Covid to embrace overall policy towards China. Complete decoupling of trade would be impossible and undesirable for many companies and countries, given the expertise, scale and market opportunities there. That is especially the case for China’s Asian trading and economic partners, however disenchanted they are with its more assertive and aggressive policies in the South China Sea, over fishing rights or on the Belt and Road Initiative. They, and the EU, support an engaged and inclusive but critical approach to China rather than the new cold war of Trump’s electoral rhetoric.
Political and security concerns thus converge on economic and trade policy in this new geopoliticised economics. The shape of global order is changing before our eyes. Trump’s reassertion of US primacy using regulatory, military and dollar diplomacy against China and other antagonists fragments the liberal west and stimulates other emerging states and regional blocs. There is a much fiercer competition on regulatory and trade policy. The EU’s naive and underdeveloped foreign and security policy is a clear weakness as it confronts US and Chinese competition. Its strongest resource is the vast experience of running a regional bloc in this more regionalising world.
Ireland is unusual among small developed states in its exposure to and participation in three of the rich world's cores: the European Union, the United Kingdom and the United States. During the last three globalising decades, Irish policymakers skilfully negotiated their way within and between them as a small open economy and polity dealing with all three. Large investment and trade flows from the US are linked to lower corporate taxation in the most open parts of the economy while the more sheltered domestic agriculture and smaller company sectors benefitted from EU funding and continuing access to UK markets.
Dramatic example
Convergent globalisation policies between the three cores benefitted Ireland; that picture changes as they diverge more in present conditions. Brexit is the most dramatic example; but for its supporters, departure from the EU is predicated on a deepening US-EU divide. Ireland could become the boundary between such divergent regulatory and trading regimes in a no-deal Brexit outcome. That would pile two more shocks on the Covid one, an unsustainable burden.
This is the real context in which to evaluate Hogan’s departure as EU trade commissioner. The job put him at the centre of negotiations between these three cores as an advocate of Irish interests and concerns. Wherever the faults lie, his going is “an enormous strategic loss for Ireland”, as Barry Andrews MEP puts it. Ireland is weaker in consequence – not least because Irish political and media decisions and commentary on him systematically underestimated this global dimension.