Reglobalisation: States,legal geographies,and the challenges of the green transition

Abstract

This commentary responds to Ilias Alami's paper, ‘Foreign investment screening mechanisms and emergent geographies of (post)globalization’. It builds on Alami's contention that these mechanisms represent a clear indication of the continued role of the state in shaping new globalisation processes by suggesting that more attention could fruitfully be paid to the legal geographies involved and the challenges associated with the green transition. I argue that such an approach will require an interdisciplinary approach as the demands of the green transition unfold within an increasingly protectionist world economy.

Introduction

In his paper, ‘Foreign investment screening mechanisms’ (FISM), Alami (2026) asks if the growth of state screening of foreign investment points to the arrival of an ‘age of deglobalization, slowbalization, or globalization in reverse?’ Alami refutes such overarching narratives by suggesting that attending to the geographical, political, economic, and legal geographies that underplay them, FISM are better thought of as being activities that mark the latest incarnation of the role of the state within processes of neoliberal globalisation as states contend with the realities of an increasingly fraught geo-political world order.

In this short commentary, I offer a sympathetic critique of the arguments put forward by Alami. To be clear, the trend of the growth of FISM that he identifies is extremely important, and Alami is right to note that despite being an increasingly important component of a number of economic and political geographies, the processes and practices involved have not been widely studied within geographical research. His paper makes clear that attention in this area has partly grown as China's going-out strategy has seen it increasingly investing in large infrastructure projects in a range of locations (on which, see, e.g. Mohan and Power, 2009). Given that the wider geo-political landscape in which such investments are being made has turned increasingly protectionist in a number of locations, it seems likely that understanding the place of FISM at the intersection of the economics and politics of the world economy is only likely to become of more importance.

In this context, this piece identifies two areas in which there is scope to productively develop Alami's analysis further. The first is a conceptual point and relates to the intersection between work on the relationship between FISM, state capitalism, and legal geographies. Here, I think there is scope to push the argument a little further and use Alami's piece to think about the relationship between state capitalism, legal geographies, and economic geography more broadly.

Second, Alami makes much of the changing geopolitical landscape – and rightly so. It is clear that the world economy is demonstrating more protectionist tendencies in many ways. However, there is a further international geopolitical trend that is likely to be important in understanding the geographies of international investment, and that is the fact that debates about FSIM are increasingly taking place at precisely the same time as there is a growing discussion of how economies will make the transition to net zero and meet environmental challenges.

In what follows, I discuss each of these issues in turn before making some broader conclusions regarding how these together point to the value of considering processes of re-globalisation, rather than deglobalisation as initially set out by Alami.

FISM and legal geographies

Alami rightly argues that ‘the law plays an active role in structuring state activities and patterns of globalization’. He goes on to identify three ways in which the law renders states active within FISM practices: first, by positioning FISM as an exceptional form of law that places it within the legal structures of globalisation; second, by framing FISM as containing legal ambiguities which are used as a space that facilitates more flexibility for state actors in terms of how decisions are made regarding investment transactions; and third, understanding ‘FISM … as boundary-making practices which construct differentiated legal geographies of cross-border investment regulations’.

It is this third version that I think has the greatest scope to be developed into wider geographical work on finance-led capitalism. As Alami notes, economic geographers are beginning to explore the intersection between work on economic geography and legal geographies. For example, work has explored this by examining how legal structures have been used to reproduce the US-dominated global world economy power of World War II (Potts, 2020); the specific place of legal geographies in financial geography (Knuth and Potts, 2015) and the intersection between feminist geography and feminist legal geographies (Cuomo and Brickell, 2019).

However, there is still considerable scope to consider how legal systems and practices are used to designate certain spaces and organisations as investible, or not, in terms of Alami's analysis. Here, work in political geography that has used legal scholarship to consider how the law, as a set of practices, shapes particular territorial spaces is particularly valuable, and in so doing, how series of boundaries and borders are enacted in the process are formed, challenged, and reproduced would seem particular. For example, Christophers (2014: 755) argues that

Modern capitalism is constantly in the process of enacting territorial fixes: constituting, segmenting, differentiating, and extracting value from actively territorialized markets at a range of geographical scales.

This suggests that there is much value in considering the role of the law in a dynamic way, as categorising certain assets and companies as investable and others as not – this also suggests that such approach would be dynamic and changeable over time. Developing this further, there is then scope for economic geographers not only to be a net importer of ideas related to the place of the law in shaping contemporary economies but also to export to legal scholars a more nuanced understanding of how legal geographies matter – how boundaries between different economic categories are formed, how these change of time, and crucially, how the law can be understood as a verb – a set of legal geographies that is actively co-constitutive of the economy in which it circulates (for an example of such an approach in legal writing, see Barnard et al., 2024).

FSIM and the green transition

Turning to a more empirical set of issues, Alami rightly argues that FISM does not mark a shift to an era of deglobalisation but rather positions it as a key set of practices that helps underscore the key ‘themes of geopolitics and risks in economic geography, insofar as geopolitical tensions and rising nationalism are ostensibly leading forces in the ongoing restructuring of economic globalization’.

In addition to the legal and geo-political issues that are framing the contemporary restructuring of globalisation processes discussed by Alami, there is scope to more fully consider how the transition to net zero and the changing industrial practices that will entail will become entangled with the geo-political and legal issues covered by Alami. Indeed, in many ways, it is surprising that Alami doesn’t signal the links between his arguments and the changing industrial bases in several economies brought about by a policy drive to decarbonise energy production, for example.

The potential intersections become clear in the case of the Port Talbot steelworks in South Wales that attracted considerable domestic UK media attention in 2024. At first glance, the fate of a steel plant in Wales seems rather far removed from the macro-economic and political processes in play through FISM. However, the case clearly shows how questions of investment, politics, economics, and the green transition are likely to become more important in the future.

Port Talbot is home to the UK's largest steel plant, but in January 2024, the plant’s owner, the Indian multinational company Tata Steel stated that it would be temporarily closing the site. It set out plans to reopen the site 3 years later as an electric arc furnace. This type of furnace does not make so-called virgin steel made from raw materials as has been the case at the site. Rather it makes green steel made from discarded used steel. The plans were accompanied by estimates that around 2800 immediate jobs could be lost, but that figure would likely rise as the closure impacted the surrounding local supply chains. Traditional steelmaking ceased at the site in September 2024. Currently, the side processes imported steel rather than producing steel as the new electric arc furnace is constructed.

The financial difficulties at the plant date back to 2016 when Tata Steel threatened to withdraw from the site, stating that imports of cheaper Chinese steel, increased energy costs, and the associated high costs of production did not make the site economically viable. In an early indication of how elements of geopolitics as set out by Alami play into the story of Tata Steel in Port Talbot, further uncertainty was created following the UK's decision to leave the EU with potential bidders for the site reported to have been discouraged from continuing with their interest given the economic uncertainty that followed in terms of the terms by which the United Kingdom would trade with the EU post-Brexit (on which see UKICE, 2024).

The UK Government committed to a £500 million subsidy to Tata to support the development of the electric arc furnace in September 2023. This was partly legitimised by the ways in which it would allow the United Kingdom to reduce its carbon emissions given the carbon-intensive nature of traditional steel manufacturing. At that point, trade unions representing workers at the site raised concerns that the plans could result in job losses and argued that the old furnace should be kept operational until the new furnace came on stream. Tata ultimately rejected those calls and went ahead with the closure.

This case clearly shows the challenges of untangling economic geographies from their wider political framing in ways that echo Alami's arguments in that there has been intense debate concerning the extent to which Brexit caused a fall in UK steel exports, which ultimately led to the Indian multinational owner deciding to close the furnace. However, it also shows how these processes are likely to be increasingly wrapped up in questions of the green transition. On the back of large domestic subsidies, China is now the world's largest steel producer, and its rapid increase in steel exports has made UK producers far less competitive. In line with the EU, the United Kingdom introduced steel safeguards in 2018 to protect the UK market from diverted Chinese steel exports that were no longer selling into the US market after Donald Trump, the then-US president, introduced quotas on imports into the United States. Like the EU, the United Kingdom has extended these for 2 years until June 2026, but there are concerns that without a further extension, particularly following Trump's election to a second presidential term, British steel manufacturing could continue to struggle under the twin pressures of a more protectionist global trading environment alongside differential rates of policy implementation internationally surrounding the green credentials of steel which could make UK steel less competitive price-wise globally.

There are two implications of this case for the arguments put forward by Alami. First, it reminds us that FISM is only one mechanism by which states are reworking global flows of capital and goods within the world economy. The Port Talbot case shows the importance of subsidies and tariffs alongside FISM, a combination that would seem likely to grow in importance given that the trends towards protectionism noted by Alami seem likely to increase. And second, it shows that these processes are now increasingly working alongside the challenge of decarbonising energy production and moving towards net zero, again trends that several economies have committed to pursuing.

FISM, re-globalisation, and the green transition

Alami's analysis for FISM makes clear the ways in which questions of state action are integral to the contemporary reworking of global capital, labour, and financial flows in the world economy. Empirically, this is likely to grow in importance given the turn to more populist politics and associated protectionist economic policies that have continued since I completed writing the paper, notably the election of Trump to a second term in the US presidency. Building on these empirical trends, in this short commentary, I have explored two ways in which his arguments could be developed further by considering the legal and environmental entanglements of his analysis in more detail. In part, the value of such an approach lies in the ways in which it allows social scientists to respond in geographically sensitive ways to the complex set of issues that are in play in policy areas such as the future of carbon-intensive heavy industry in a more protectionist world order, as I’ve discussed through the case of steel manufacturing in Wales in this piece. However, I also hope that it might provide a set of fruitful debates in which geographers can engage in interdisciplinary dialogue regarding the political, economic, and environmental challenges currently facing the world economy. Given the scale of these issues as a more protectionist global trading environment confronts the challenges of delivering a green transition, it seems likely that such interdisciplinary dialogue that includes human geographers will be crucial.