His speech was like one normally expected of an American president.
Countries must resist the temptation to retreat into harbour, the world
leader said to a packed and admiring audience, but instead have the
courage to swim in the vast ocean of the global market.
This was the kind of paean to free trade that might have come from
John F Kennedy, George W Bush or Bill Clinton – all occupants of the
White House who saw it as the United States’s role to defend the open
international trading system set up at the end of the second world war.
This, though, was China’s president, Xi Jinping, in Davos last week, making it clear that he was prepared to fill the vacuum if Donald Trump went ahead with the sort of protectionist policies he had proposed in his election campaign.
The new US president has said he will renegotiate the Nafta free trade agreement
between the US, Canada and Mexico and slap duties on imports from
countries that don’t play by global trade rules. He also floated the
idea of a 35% tariff on goods from Mexico, a 45% tariff on goods from
China, and a border tax – which would impose a levy on imports but not
exports.
Those attending Davos reassured themselves that Trump would ditch all
these proposals once he was in office. But if he doesn’t, the
consequences are obvious: the world will be plunged into a trade war
that will bring the globalisation of the past quarter of a century to a
juddering halt.
This is a possibility that some are contemplating. One
breakfast in Davos, organised by law firm Clifford Chance, was entitled
“The end of globalisation: has the world reached a tipping point?”
And it is not just Trump. Alarm bells were set ringing by Britain’s vote for Brexit,
seen as a shout of rage from those who feel that globalisation has
brought them precious little. They will clang even louder if Marine Le Pen
wins the French presidency in May. One senior diplomat said that if Le
Pen pulled off yet another shock result, it would spell the end of the
European Union.
The received wisdom for Davos is that this isn’t a tipping point. Globalisation,
it was asserted, is really being driven by technological change over
which politicians have little control. Supply chains cross borders,
often many times over. Consumers care more about whether the goods they
can order online will be delivered the next day than where they are
sourced from. Douglas Flint, chairman of HSBC, cited the example of the
taxi app Uber as a disruptive technological change that was here to
stay.
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The polarised world of globalisation
