Setting trade agendas in an increasingly polarised world

Organisations such as the World Bank and the IMF need to be in step with sentiments

Policies should be understood, or seen as those things which governments actually do or say they intend to do. Activities include the steering of the production of goods and the rendering of services to probable future trends, securing long-term access to energy sources at a reasonable cost, or attaining a fair and equitable trade balance.

Achieving harmony between conflicting interests in, say, industrial and trade policies, is primarily the responsibility of national governments and/or their agencies.

But in cases of perceived non-coherence leading to trade distortions, national policy measures are open to be challenged internationally. Unimpeded access to foreign markets has been key to US trade policy for decades. And if a regional bloc was not prepared to open its protected single market to US interests in goods as diverse as bananas, hormone growth treated beef, and genetically modified organisms, it was to be all out litigation.

But the era of US-made steel’s pre-dominance and the city of Detroit as the heartbeat of the automotive industry has come to an end in an interdependent and competitive global trade configuration.

The eroding of US’s traditional strengths and leadership means a steadily changing of the global political economy.

But with President Donald Trump playing the protectionist card, economic bilateralism and multilateralism will nonetheless continue between established and rising global actors.

Not all of these will, however, focus on the traditional aspects of reducing or eliminating tariff and non-tariff barriers to crossborder trade.

Believing that liberal trade is still the best defence against protectionism, the European Union concluded comprehensive bilateral deals with Canada in 2016 and Japan in 2017. Conversely, the US pulled out from the North American Free Trade Agreement (Nafta) with Canada and Mexico, and discarded the negotiations for a Transatlantic Trade and Investment Partnership (TTIP).

Shaking things up, the America First rhetoric in action should not be seen or interpreted as a drive solely focused on rebalancing trade deficits.

Guiding role

Depending on how it is perceived, Donald Trump is making an attempt to reform obsolete, ill-functioning or biased international organisations. But by improving coordination between themselves and managing change in a manner compatible with the demands of diverse societies, organisations such as the International Monetary Fund (IMF), the World Bank and the World Trade Organisation must continue to play a guiding role in the process of economic globalisation.

But in open market economies, governments bear the responsibility to negotiate trade rules. The actual implementation of trade policies thus rests on companies and industries, in their roles as both providers and buyers.