Writing on the Tata steel crisis in the Guardian, Miriam Gonzáles, who is a partner at the global specialist law firm, Dechert LLP, specialising in international trade, writes:
The Tata Steel sale has revived the battle between protectionists and free traders, a debate that became particularly acute in the run-up to the creation of the World Trade Organisation in 1995, which marked the success of “free traders” all around the world.
In the protectionist camp, there is now a wide range of political parties from the extreme left to the extreme right: from Syriza to Ukip, from the Front National to Podemos. The common element for all these parties is that they dream of returning to a time when “we were in control”; when we could easily open or close our borders; when the world was manageable and small and we did not have to compromise. That is why they want national rules rather than international ones; and that is also why ultimately most of them despise the EU, because it is based not on direct control but on compromise.
The problem with that notion is that such a cosy world does not exist any more. The new generations expect to talk, travel and trade with each other all over the world, no matter where they are. My children, for example, know more about startup products released for crowdfunding around the world than about what is sold in shops in our high street; they respond to fashions that are created thousands of miles away; and they expect products to reach them almost instantaneously, no matter where they are made.
You can read the full article here.
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11 Comments
Having read the full Guardian article, I’m still unclear what Miriam is trying to achieve, other than provide a very weak argument against single state (ie. BREXIT) protectionism
and for regional protectionism (ie. EU).
The impression left is that her final point that “free trade has won” is more ironic than triumphant.
The problem with free trade is it too often means “trade with anyone”. In the private sector I got rid of some clients who I felt lacked integrity and I didn’t want to work with them, whereas people like Tony Blair assist brutal dictators and justify it on the grounds of “nudging” them to becoming more liberal but really it often helps them maintain their iron grip.
From a PR perspective some people need not be worked with and it is the same with countries as companies. Of course real politik demands some engagement, but it should be limited.
A great article. We need to move beyond protectionism, statism, nationalisation, nationalism, socialsim and autarky and embrace global liberal values. The world is our marketplace, and we are all citizens of it. People should learn to see themselves as global citizens, rather than Welsh Steel workers. Once they adopt this mentality they can take what globalisation is offering, rather than making futile attempts to stop it (trade unionism, government intervention, closing borders, state aid).
Stimpson, that’s all true but you missed “fortress Europe” from your list of futile attempts to stop globalization.
I never understand why so many people think the EU, raising tariffs on the world as one big bloc, is about free trade… Or why the EU, protecting European goods over ‘Third World’ countries, is about fair trade either. It’s part of the reason why I don’t see the EU as liberal at all and will be taking the risk of a more liberal, democratic Europe by voting leave.
Eddie and Conor make sense above !
I shall vote to stay in the Eu with a duty only in preserving or taking an opportunity for future reform , not because I share any of our leaderships dewy eyed enthusiasm for it as it is or has ever been !
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The new generations who want to talk and travel won’t be able to do so if their level of income is so driven down by the action of the global market place that they won’t be able to buy food or afford a home.
Globalisation and free trade is not an inevitable process. It is like the fencing off of the commons in the 1600s. It is a process driven by the state and by business interests for profit and to the ultimate detriment of people like Welsh steel workers.
The linked article is very disappointing.
Right from the headline she asserts TINA but, in a complex world, there is ALWAYS an alternative even if it’s not a very good one. OTOH it’s sometimes much better. TINA is usually deployed as a way to shut down debate which hardly a liberal approach, or so I would hope.
She opens with “The Tata Steel sale has revived the battle between protectionists and free traders …” but later says, “That is the case with dumping, of which China has been accused by some in the case of UK steel. Companies that dump undercut free trade and it is only right that anti-dumping duties are imposed on them.” So which is it? An example of protectionism or of enforcing free trade rules?
Then there is this “most of [the protectionist camp … from the extreme left to the extreme right] despise the EU, because it is based not on direct control but on compromise. “ Blaming opposition on dislike of “compromise” is a straw man; creating a fake objection that’s easy to demolish. Opposition is overwhelmingly based on lived experience across the political spectrum that “free trade” as currently defined is reducing earnings and job security for the majority.
She more or less admits this in the closing paragraphs by admitting that the modern slavery bill has no teeth. Are we supposed to believe that the politicians simply forgot to include them or is there something darker at play here?
The question of free trade (so called) is shaping up to be one of the defining issues of our time – as seen in the US elections for example.
Tsar Nicholas; What is your alternative policy to free trade which would not involve high prices and the protection of inefficient industries and national institutions ? Enclosures created a more efficient way to grow food and feed the increased population. There had to be an incentive (profit) for the landowners.
We import very little steel from China but lots from the EU.
So the question for protectionists is which countries do you blame for Port Talbot steel’s demise?
nvelope2003 – I can’t speak for Tsar Nicholas but you ask an interesting and important question about alternatives to “free trade”.
If the alternative is “the protection of inefficient industries and national institutions” as you suggest then we are all going to be poorer – and rather quickly so on historical timescales. If we simply give up and import everything we will also be poorer, again rather quickly. That does in fact seem to be the cross-party consensus on how to proceed as shown by lack of any real thinking about this problem and also by the horrific and unsustainable current account deficit – recently around 7% of GDP AFAIK.
The solution has to be to change our approach, starting with government; there is any amount of low-hanging fruit it can’t reach/doesn’t want to reach because of the vested interests of its backers, the self-serving of key players and general cluelessness – like the City that majors on speculation and doesn’t really finance R&D or industry, like PPI deals with a lifetime cost of around 5x the govt-funded alternative, like Hinckley Point that will produce electricity at getting on for 3 x the current price, soon to be 4 x as solar lowers global energy costs.
All this suggests that “free trade” isn’t the answer (it isn’t “free” BTW but that’s another story). Nevertheless, all parties’ clutch at it like drowning man grabs a straw; it won’t work because it’s the wrong diagnosis.