From global to regional

The coronavirus continues to set the pace for individuals, businesses, and governments, keeping us all connected and, in turn, rethinking logistics, free trade, and globalisation. In this new normal, it is necessary to value the establishment of shorter, more agile supply chains and the creation of trade flows that do not depend on destinations that are too far away.

Globalisation has shown its weakness and economic interdependence, even affecting public health. However, it is possible to combat its perverse effects and the inequalities it creates. We have reached the point of no return, witnessing the globalisation of data, education, knowledge, talent and ideas.

This health crisis makes it clear that companies must design their supply chains around the competitiveness of risk, rather than just cost.  "It makes no sense to open a battery plant thousands of kilometres away from the car production line". So said Luca de Meo, CEO of the Renault Group. 

The global sourcing model that once prevailed in low-cost product-driven value chains has diminished as new technologies and consumer demand patterns have evolved.

Globalisation has not been reversed this year, but it has been forced to take stock and change course, something that inevitably calls into question the existence of the current pattern of supply chains and trade flows around the world. Regionalisation emerges as a huge source of opportunity, especially when it reduces trade barriers and risks, while offering speed and cost-effectiveness. Regionalised trade flows will be essential. For this reason, it makes sense to strengthen regional trade blocs with a redesign of end-to-end logistics goods and services.

It may be time to rethink the EU-Mediterranean relationship and together push forward a project capable of competing globally with other regions such as RCEP, CPTPP or CFTA. In this context, the Mediterranean region could become a thriving north-south production frontier, as its geographical location allows for shortening logistical circuits between the EU and Africa and reducing the carbon footprint.

It is also essential to accelerate the Euro-Mediterranean integration process in order to promote the construction of a politically and economically stable, integrated and sustainable area. Geographical proximity makes it possible to develop the EU-Mediterranean-Africa regional chain. Europe has a historic opportunity in the development of this new alliance.

The current economic models have run out of steam due to the speed of change. New responses are needed.