Wednesday, April 4, 2018

Why China could win the West’s stupid — and pointless — war over steel

The truth is, the world is leaving the Industrial Age and entering a Digital Age of equal significance. The steel mills and coal mines of the past will not shape our future. 

By Carl Bildt
March 21, 2018

Once upon a time, the politics of Europe was all about coal and steel.

The coal fields of England made the nation the world’s first industrial power. Rising Germany built its might in the steel furnaces of the Ruhr area. The symbol of Stalin’s Soviet Union was the steel town of Magnitogorsk. When Europeans came together after two devastating world wars, they set up the European Steel and Coal Community, the origin of today’s European Union.

But that was a long time ago. Magnitogorsk might have been built to rival and overtake Pittsburgh as a steel town, but Pittsburgh has moved on. It is now a center of knowledge, artificial intelligence and autonomous vehicles. Steel and coal have since long lost their hold on the geopolitics of Europe.

This month, President Trump tweeted, “If you don’t have steel, you don’t have a country!” Sounds great, but maybe he should try that line on his friend Benjamin Netanyahu, the Israeli prime minister. Israel doesn’t have any steel mills, but it certainly is a country, focused instead on developing the technologies of the future, not of the past.

The truth is, the world is leaving the Industrial Age and entering a Digital Age of equal significance. The steel mills and coal mines of the past will not shape our future. Instead, efforts to harness control of digital technologies will be the new global race — and one that the West simply can’t afford to lose.

Beijing will be receptive to demands to cut back China’s overcapacity in steel production, as this will benefit the Chinese as well. Producing excessive amounts of steel is costly.
But whether China will be ready to agree on the rules of the new global digital order is far more questionable — and far more important.

[The true cost of cutting back on steel production is unemployment. Unemployed steel workers do not easily move into the digital economy.]

On Tuesday, E.U. trade commissioner Cecilia Malmstrom traveled to Washington to see if a transatlantic trade row over steel could be avoided. Thursday evening, European heads of state will meet with E.U. government members in Brussels, and steel tariffs are expected to be on the agenda for their dinner meeting.

However, in an ideal world, the two sides of the Atlantic would come together to discuss shaping the coming digital global order. The United States and Europe would work out issues such as technology controls, data trade rules, free data flows and intellectual property rights. There are policy differences on some issues between America and Europe — notably privacy — but the two sides share much in the way of common interests and values. Yet, instead of trying to capture the future by agreeing on digital issues, there is a risk of the allies being trapped in a steel conflict, which bears virtually no relevance to the economic order of tomorrow. It’s all worse than stupid. It’s tragic, too.

The only likely victor in all of this is China. The more that the West divides itself on the issues of the past, the more China will gain leadership on the issues of the future.

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