Policy Insight 123: Can we Have Pro-Worker AI?

For example, 20% of EU exports go to the US, 13% to the UK and 9% to China; while 41% of UK exports go to the EU, 21% to the US and 5% to China. [...] (2024) simulate the impact of a decoupling from China in a trade model with 43 countries and 56 sectors, in the form of a complete stop in trade between a ‘Friends’ bloc comprising the G7 countries, Spain, the Netherlands and an artificial country comprising the rest of the EU, and a ‘Rivals’ bloc including China and Russia, on the assumption that trade continues both within these blocs and with t. [...] The intuition behind this result is that the welfare costs of an end to trade integration between China and the ‘Friends’ group are mitigated by the fact that the Friends continue to trade with each other and with the ‘Neutrals’, and that these groups are sufficiently large and diverse to preserve most of the gains from trade. [...] At the same time, the combination of a heightened sense of the risks created by concentrated exposure to China and the structural slowing of the Chinese economy might push in the other direction. [...] 4 HOW TO DE-RISK As the outbreak of COVID-19 revealed dangerous vulnerabilities and called for a reassessment of the EU’s international economic relations, rising pressure from the US under the Trump presidency and the increasingly aggressive behaviour of the Chinese government focused the attention of European policymakers on the threat of economic coercion and prompted a redefinition of the tool.