Diplomacy & Crisis News

With Trump, Time to Reinvent European Trade Policy

Politique étrangère (IFRI) - mer, 30/12/2020 - 09:30

This article is the English version of : John Solal-Arouet and Denis Tersen, « Trump et l’avenir de la politique commerciale européenne », published in Politique étrangère, Vol. 82, Issue 1 , 2017.

“In general, if we want free trade, it is to alleviate the condition of the laboring class, but, surprisingly, the people, whose thus provided bread is cheap enough, is very ungrateful.”

Karl Marx, Speech on free trade, 1848.

The United States has chosen a protectionist and isolationist president. Of course, promises and programs do not automatically become policies once the election is past. But a candidate’s program that attacks China and Mexico, threatens to leave the World Trade Organization (WTO), denounces the North American Free Trade Agreement (NAFTA) and the Paris climate agreement, refuses to sign the Trans-Pacific Partnership Project (TPP) negotiated by his predecessor, becomes a commitment for the president.

And this all the more so since, while he cannot liberalize on his sole initiative without the consent of Congress, he can put in place border protection measures on his own, or block a treaty by refusing to submit it to the legislative power. On anti-globalization, the new US president shows some coherence: closing borders, for goods and services, as well as for people.

The first nominations do not negate his campaign rhetoric: Wilbur Ross, Secretary of Commerce; Peter Navarro, an “on the defensive but not protectionist” economist heading the newly created National Trade Council, and Robert Lighthizer, head of the US Trade Representative Office (USTR). They attracted attention through declarations critical of China, and by defending the interests of the “old” industries. Reagan administration veteran Robert Lighthizer, who will lead the trade negotiations, is a well-known anti-dumping lawyer.

In the Reagan period, the villain was Japan, the United States having obtained under pressure voluntary export restriction agreements from their “partner”. This was before the WTO, before the “global value chains” that allow US companies to split their production between countries, primarily China, and import or reassemble their products in the United States, and it was at the time of a Japanese market of which the level of closure to imports was far beyond that of China.

Trump’s tweets, these “chin butts” of the digital age, aimed at companies with investment intentions in Mexico, are also in line with the campaign. The president’s inaugural address on January 20 dispelled any doubts: “Protection will lead to great prosperity and strength.” The first announcements from the White House that evening called for the withdrawal of the TPP and the renegotiation of NAFTA. We have reached that point.

Donald Trump is not alone. Brexit came before, and populist movements are progressing all over Europe. CETA with “Ôsmall” Canada (0.6% of French foreign trade) nearly stopped at the signature stage, and its future is uncertain. One could meet these major developments with relative indifference, and consider that, by a trick of history, the populists will rid us of this dangerous free trade and bad agreements such as the TTIP. Moreover, as we have been taught, infrastructure – the material basis, the productive forces – precedes superstructure; world trade is progressing less rapidly than the world’s “wealth” and has even been declining over the past four years. Are we heading clearly and without regret toward the era of deglobalization? […]

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