The current discussion in Europe about de-risking trade tends to address the issue in general terms, even though various types of trade pose very different risks. A more nuanced approach would distinguish between inputs that the economy needs to function and those that are needed to build up future production capacity.
MILAN – Trade always implies mutual dependency: if both sides benefit from exchanging goods and services, both sides lose when transactions are suspended. Until relatively recently, policymakers focused on the benefits – the efficiencies and opportunities trade creates. But in an age of intensifying geopolitical conflict, the risks – particularly of supply disruptions – are increasingly taking center stage. European Commission President Ursula von der Leyen’s recently proposed strategy to “de-risk” trade is a case in point.
MILAN – Trade always implies mutual dependency: if both sides benefit from exchanging goods and services, both sides lose when transactions are suspended. Until relatively recently, policymakers focused on the benefits – the efficiencies and opportunities trade creates. But in an age of intensifying geopolitical conflict, the risks – particularly of supply disruptions – are increasingly taking center stage. European Commission President Ursula von der Leyen’s recently proposed strategy to “de-risk” trade is a case in point.