There is a great irony about this. The TPP was developed by the Obama administration with the support of eleven other countries as a strategic initiative to draw new rules in the trading order and have those twelve countries, led by the US and Japan, actively writing the next generation of trade rules, since it could not be done in the WTO where there was no success. And it was particularly targeted at China. That is to make sure that while China is rising and launching many initiatives, including its own free trade agreements, its own Belt and Road Initiative etc., that the US, Japan, and its allies would have a role in drafting a new set of rules. There was this competition among them.

It was also aimed at rebalancing somewhat the trade in Asia toward the U.S. because the trend over the last ten or fifteen years has been that trade flows and the division of labor has been centering more around China. There has been a decrease in the percentage of trade between Asia and the U.S. There were all of these considerations. Those considerations remain true in a sense for most companies and strategic thinkers in the U.S. and Japan. Those factors remain correct and in a way, it seems to be in the interests of the U.S.

What has happened meanwhile in the U.S. is that the division of gains from trade, not just from the TPP but trade in general, has not been fairly distributed. That is, the majority of the American public is not benefitting from globalization. There is a concentration of wealth and benefits. As a result of that, the majority of voters have turned against trade. The irony is that while the TPP itself was a strategic tool for the U.S. in a competition at the global level and was probably good for Japan and other countries that were a part of it, including Canada, it became embroiled in that battle about the future of globalization and global capitalism, and it became the battlefront. That is why Trump promised to move out. In fact, Hillary Clinton had also committed not to ratify it and Congress was already indicating its refusal to ratify it. So it is not just Trump there was a general movement and that was due to the political climate within the U.S.

But the problem with this model is that, to address rising inequality in the U.S. or to address the fact that the majority of the middle class—maybe seventy percent of the U.S. people—have seen their living standards go down over the last twenty years, the solution is not less trade the solution is better domestic public policy. You need better opportunities for public education, better public healthcare you need tax redistribution in many ways. Those are domestic tools, those are not dependent on trade. But because the Republican Party at the moment is ideologically against any redistribution and is trying to reduce taxes and wants more tax cuts, over the last twenty years they have been undoing the tools that would have allowed the distribution of the benefits of trade.

There is a combination here between the anger of the public and the ideological positions taken by the Republican majority in Congress, which makes it easier for them to turn away from the TPP than to address the real problems. That is something really ironic in a way about what is happening. That is why the other eleven countries want to move forward with the TPP right now. They are discussing whether to do it. They might be open to adding new countries like Korea, which is not part of the TPP right now, and in a sense, pressure on the U.S. to come back. So, the TPP may not be dead in the long term because that is a symptom of a larger problem, it is not the problem itself for the U.S. It just got caught up in this larger problem.


Q2. Since the start of the Trump administration in the U.S. and the Brexit referendum, it seems that global politics and economics are entering a new phase focused on ‘my country first.’ This contrasts from globalism and regionalism, which are largely based on ‘free trade,’ ‘rule of law,’ and ‘human rights.’ So do you think that liberalism is in crisis? What do you think the future of our world will be?

Those are deep questions about deep trends. It is true that we find a number of countries where the public has turned away from support for free trade and globalization. First of all, in the U.S., the election of Donald Trump was dramatic. The U.S. is critical because it created globalization. The U.S. created the global order and the WTO, the IMF, and all this. To have the creator turn away against its own creation is a dramatic moment in history. The public doesn’t fully understand what is happening. The anger is really more about domestic public policy and the way trade has been mediated and managed. But that fact is that they have turned away.

In Europe, Brexit is complicated but essentially the people that voted for Brexit are people who were also angry at the benefits from the economy and globalization. They felt that they were falling behind, and they blamed the EU. But there was a similar stock of anger. It is less intense than in the U.S., with a thin margin in some ways. But there is that stock of people who feel that they are falling behind.

We find a percentage of people who feel they are falling behind in most of Europe as well. In fact, in the French election, in the first round, fifty percent of voters voted together for extreme right or extreme left parties, all of which are opposed to globalization and the E.U. So there was a majority in the first round of the presidential election in France against globalization and the global liberal order. In the second round, because the electoral system forces people to converge on one candidate, then, of course, he got sixty-six percent and there was as a whole a preservation of support for the global order.

But what is happening behind all this is we are reaching a peak in globalization. So far the last thirty years have focused on expanding markets, expanding opportunities, creating growth, but the leaders worldwide have not focused on sharing that growth and creating opportunities. We find as a result, at least in Europe and the U.S., but it is also present in Korea and Japan, a growing number of people that are falling behind. Often it is rural areas as opposed to urban, younger people are falling behind relative to older ones, and in some areas by large percentages. It is getting urgent. To sustain the future of the global order and to keep the gains of common trade and common interaction, we need to address and support at the global level tools to help share and distribute better.

The problem is so many of those tools will be at the domestic level so it is very hard to push from above. It is not like we can have the G20 ordering the U.S. to raise taxes and help the poor, and yet that is what you need. If you do not help them, they are going to go against trade. The irony is the U.S. The U.S. is really at the center of that whole system. Donald Trump ran his campaign to listen to those people falling behind, but his current policies—the budget policy, the healthcare policy—are actually hurting his own supporters. He is making things worse by actually cutting taxes and taking away budget from food aid, taking away support for public schools, taking away healthcare for twenty-three million people. It is incredibly ironic that he is cheating the people who voted for him, which will make things worse in the long term, because they will get even angrier.

Then there is the China factor. China is an interesting player in all this because at one level China is part of the reason why there has been such a distributional effect. This is because China is so big and has grown so fast and has been so quickly integrated into world trade that it has had a fast, disruptive effect on the movement of labor and particularly jobs that did not require high skills. Low-skilled jobs have moved away from developed countries to China and now to other countries at a speed that was very fast. That speed also meant it was hard to adjust. At the same time, however, China has emerged as a big supporter of the global order.

Today the great irony is that you have the U.S., the creator of global capitalism, speaking against it, and China, the last big communist-Leninist country remaining on earth, defending global capitalism and supporting it. In any case, the effect from China today is relatively positive for the future of the global order. But to conclude, the global liberal order is in the midst of a great battle. Its future is unknown and highly disputed nowadays, and there are great tensions. To save it will require innovation in public policy and clever new ideas.

Q3. As you have seen the Brexit referendum, it seems to tell us that Europe’s solidarity might begin to crack. Will the European collapse or continue?

Here is a simpler answer: the E.U. will get over it, but it is costly. The E.U. will not collapse. The bigger threat to the E.U. is the Euro-crisis. Britain was always a superficial and unwilling member of the E.U. When the E.U. process started with Jean Monnet in 1950, Jean Monnet was very friendly with the U.K. and wanted Britain in. At the time, he spent more than half of his time negotiating with the U.K. as opposed to Germany, Italy, Belgium, and the others. In the end, Britain said no and did not join the first Steel and Coal Community in 1957. Then in the early 1960s, Europe started growing five percent a year and the U.K. three percent a year. By the mid-1960s Britain was falling behind Germany, France, and others and was desperate to join. At the time, General de Gaulle in France blocked the U.K. three times and said, “I will never allow Britain to join because they will never believe in the European project, they will never be team players, and they will only seek their own interest.” As soon as de Gaulle died, then the veto fell and finally in 1973 the U.K. did join. But as soon as it joined, by the late 1970s, it felt that it was unfair and wanted to renegotiate. It demanded its budget back and better conditions and Margaret Thatcher blocked the E.U. for four years in the early 1980s.

That is just an example. Then, of course, Britain did not join the Euro it did not join several other components. So in a sense, the U.K. was never a whole-hearted member, and so it was almost predictable that it would leave. The problem is that it will take three or four years of very intense negotiations, and, in the meantime, the E.U. cannot be as active globally. It is as costly and painful as a divorce process, but it will not cripple the E.U. completely.


Q4. Undoubtedly, Western values, such as liberalism, have dominated the global geopolitical landscape for such a long time. If we assume that they have come upon a critical period now, then will Russia, China, and other Asian-Pacific countries construct new values and take the lead in global politics? What do you think?

No. First, Russia is a different kind of country. Russia and China do not have much agreement. They do not have agreement on values, but they have agreement on interests. They have some common interests when they are both pushed or threatened by the U.S. Then they push back together. Or they have some common interests in oil or some particular economic interests. But, actually, when you do an opinion poll in China of what are the top five concerns or worries of Chinese in the world, number one is the U.S., number two is climate change, and number three or four is Russia. Because, in the past, Russia and China have had conflicts, so there is not a deep trust.

Will China try to set new values? Not so far. China is now developing many initiatives and strategies, such as the Belt and Road Initiative, the AIIB, free trade agreements, and launching all kinds of new ideas. But so far those ideas are not changing the dominant values. They fit within a liberal frame, but, if anything, they try to be a little less ideological about it, a bit more pragmatic. Because the Chinese experience has been that you should follow seventy percent of global liberalism and thirty percent you should adjust and do differently. The way they did it is they opened to trade, but they did not open fully to investment and finance, and then they go gradual. They go gradual, they go sequential, and they go experimental. The Chinese way is a gradual, sequential, pragmatic approach to globalism that adjusts to local circumstances. It does not yet amount to a new set of values. In a sense their general values are still robust.


Q5. Populism will remain a critical issue in domestic politics as well as world politics. If this will pose a serious challenge to democratic values, what would be a reasonable strategy to overcome it?

There are different kinds of populism it is like a spectrum. At one level, populism is about new parties and leaders that promise all kinds of things in the name of listening to the public. Usually, they are anti-establishment, they promise to act against the existing order, bureaucracy and parties. Then there is leftist or rightist populism. In the case of rightist populism, they also have a target, so they target foreigners, immigrants, and the anger is directed toward them. Whereas the leftist populists do not have that kind of foreign target, instead they target inequality and the rich class of the existing order. So, at some level, there have always been populist governments in history. The U.S. had a populist movement in the 1890s, almost 130 years ago. But sometimes populism goes very far and becomes radical and starts to believe that the goals of opposing foreigners or the goal of destroying the dominant order or elites or wealthy class justifies destroying some institutions.

We see some of that danger with Donald Trump. Donald Trump is not just trying to change the trading order or change the way Washington runs. He is also criticizing the rule of law, courts and judges. He is criticizing the press, which he says is an enemy, and has created a climate where we have a nearly elected Congressman, who was elected the next day, beating up a journalist. So that starts to erode the pillars of democracy. Democracy requires a fierce protection of a free press, rule of law, and a whole bunch of conditions. When those get eroded, then democracy is in danger. We are dancing at the limit right now. We have some populist movements and leaders, and especially Donald Trump, which go very far and cross the threshold.

Now, in the U.S., there is an intense pushback, too. Journalists are pushing back and the courts have turned down some of the orders that Donald Trump has advanced. So there is an intense battle. It could be that in the end the democratic institutions of the U.S. will hold and be resilient. But it is a matter of how far and long it goes on and whether there is an ultimate crisis. There could be another 9/11 or a major crisis, terrorism, for example, which could give justification for the president to go further and really start to erode liberties and institutions. Populism needs to be watched carefully. It is dangerous because it has fostered a sense of anger and breaking taboos, and if going further it could usher in some violence even.


Q6. Please briefly explain your opinion about the future of regionalism.

Regionalism goes through different phases. There was a phase, for example, in the E.U., at the time when globalization was less intense. It became a way to reduce intense tensions and reduce the risk of war, but it also prepared for economic integration at the global level. It was an intermediary step toward globalization. In many ways, we have had regionalism gradually coming into play as an intermediate step. In some cases, regionalism also solves security problems by creating habits of meeting. In a way, ASEAN started that way as a security community then it turned into economy and other things. It can be a place of dialogue.

But today, we are at a time of crisis for globalization. There are a lot of tensions, there are some countries turning against it, and suddenly regionalism could have a new role. If the global order is in danger, then the second layer under, the regional level, could be more resilient. Maybe it is easier to move forward at that level. We know already for trade that the WTO is not moving forward. It is very hard to have any global agreement, but we can have regional and bilateral agreements. The same could be true in other spheres, where gradually regionalism becomes an intermediary stepping stone while the global level is in crisis.

It depends ultimately on the willingness of key countries to work together. In the case of Asia, regionalism will be lively and innovative and usher in many solutions only if Japan and China overcome their tensions and work more closely with each other. It may be mediated by Korea. Korea has often played a key role as a place of dialogue. In fact, I am impressed here at Jeju. I find very high-quality dialogue between Japanese and Chinese because they are in a third country in-between. So, there is something interesting here. Each region has its own realities and its own power dynamics.


Q7. Any last words to our JejuTube viewers?

Jeju Forum is quite a treasure. I attend a lot of global summits. I organize some myself. I organized a big Vision 20 summit this year in Washington to prepare the G20. But there is no other place like the Jeju Forum where there is a sense both of intense dialogue, very frank dialogue. You see people from different countries say things to each other here that they do not say elsewhere. So, they are very frank and yet there is also a sense of idealism here. There is a clear sense of goals—peace, justice, prosperity, ecological progress—and it is a beautiful place, a very blessed island. In a way it nudges people to do something different and to find a new dialogue among each other. So, it is quite a treasure for Korea but also for the whole region and the world. I really enjoyed being here.