Interview by Mariangela Pira
Originally published in Milano Finanza, 06/09/2014
Alberto Forchielli, founder of Mandarin Capital Partners, a private equity fund focused on investing in mid-market Italian businesses with plans to expand to China and Europe, respectively. He goes to Washington DC four times per year to share his vision regarding Asia with the US Congress. And he is one of the few Italians to have very high-level contacts in both China and the US.
Question. Is it true that the US is changing its attitude regarding many fundamental issues?
Answer. I see a growing anti-global sentiment. The suppression of the middle class and the resulting widening gap between the rich and poor has created a lot of pressure in the political world and on all globalizing initiatives. NAFTA, the free trade agreement between Mexico, Canada, and US, is being called into question because it didn’t bring the expected results; the recently signed free trade agreement with South Korea is being criticized; China’s entry into the WTO is being criticized; and there aren’t good hopes for the TTIP, the transatlantic pact between Europe and the US, or the TTP, the transpacific agreement between the US and Pacific Asian countries.
Q. Do you believe, therefore, that there won’t be any trade agreements between Europe and the US?
A. In reality, congress hasn’t conceded a delegate to Barack Obama to sign either agreement. And a president without a delegate is toothless. No country will ever risk making concessions that need to then pass through Congress, which is increasingly adversarial and unpredictable. We’re expending rivers of ink discussing the TTP and TTIP, but they will never be signed. There is no possibility for an agreement because the US political climate is very negative on the subject.
Q. Federica Mogherini will also work on this theme at the beginning of her work as the EU’s High Representative. Therefore, will her efforts be futile?
A. They’re having fun imagining things and talking amongst themselves, but practically… it’s already challenging to reach an agreement. When it ends up in the hands of 100 senators and 340 Congressional Representatives it’ll be crushed, and any agreement made will need to be renegotiated.
Q. Until when?
A. Until there is an American President with a precise Congressional delegate, if this ever happens at all. I think we can worry about other matters.
Q. Is the US, therefore, changing its economic strategy?
A. The following reasoning is catching on: innovation is inconvenient because at the end of the day, everything is produced overseas. For example, Apple invented the iPhone, iPod, and the iPad. But the majority of value added was created outside of the US. This creative economy creates a lot of smoke, but the contents are few. On the contrary, the agricultural sector is becoming increasingly important. It was always competitive, but now the demand for high-quality goods is growing strongly. Asia is hungry and wants protein. The most important voice of US exports to China is constituted by food, by agricultural goods. The agricultural component in the US is becoming a very important center of power, which models the relations toward the world. I see a future with more agriculture and less finance, with an eye toward technological innovation, which has not delocalized its production overseas.