The media is dominated by the protectionist measures Trump took upon
taking office, China's response, and Europe's hesitation on the subject.---- Protectionism and Free Trade ---- In fact, protectionism has never
stopped. According to liberal doctrine, protectionism is bad. According
to the official narrative, we have emerged from protectionism thanks to
the widespread adoption of the WTO (World Trade Organization). In
reality, economists define two types of protectionism: tariff
protectionism, or old-style protectionism, or Trump-style protectionism,
and non-tariff protectionism. If I impose a standard globally, this will
benefit my companies. For example, some countries use 110 volts and
others use 220 volts. A country using 110 volts that wants to export
electrical appliances to a country using 220 volts will have to adapt
them; it will be a little more expensive, and this will hamper its
competitiveness. Hence the whole issue surrounding industrial standards,
IT standards, etc. Europe's main activity is to harmonize standards, and
the main lobbying activity is to obtain a standard that is advantageous
for its group. This is why the WTO generally prohibits health and
environmental protection laws, describing them as covert protectionism.
Of course, when global giants, preferably American ones, impose their
standards, then, apparently, it is no longer protectionism. If a country
wants to protect the health of its population, it is.
That was non-tariff protectionism. Tariff protectionism is as old as
world trade; it involves imposing customs duties, generally import
taxes. In the official narrative, we were heading towards the widespread
disappearance of this type of protectionism-glory to liberalism-and we
were attacking non-tariff protectionism. Total free trade (which has
never existed) is when there are neither customs duties nor regulations.
So, for example, no transparency on products, because requiring the
mention of origin or composition on a label is already a regulation. And
some free trade agreements initially planned to prohibit it. I remind
you that imposing the labeling of GMOs when there are any was a battle.
So, why is free trade good? First, because it's free. Liberals love
freedom (except when it concerns people, but then we no longer say
freedom, we say chaos). Second, because it promotes global trade, and
liberals love global trade. They have a religion according to which
trade promotes peace. Free trade gradually became established starting
in the 19th century, and it seems to me that there have been no fewer
wars or less bloodshed since then than before... And yes, global trade
also became established through wars (the Opium War in China, for example).
In fact, it was England that imposed free trade on a global scale, both
practically and theoretically (the first and greatest liberal economists
were English). Indeed, at the time, it dominated the seas and finance,
and its industry was the most advanced, so it had an interest in
removing all external protective rules in order to better establish its
global dominance. The initial idea behind this theory was to lower the
price of wheat through imports, which allowed for lower wages (as
workers mainly consumed bread). Well, incidentally, it ruined
agriculture, but you can't make an omelet without breaking eggs, right?
Liberals promoted protectionism if development was to be desired,
meaning they believed that a country had no chance of creating an
industry if it did not protect itself from global competition. One could
fill several libraries with liberal controversies on the question of to
what degree and for how long a little protectionism is beneficial. The
main proponents of protectionism in the 19th century were German
economists, because Germany industrialized later than other developed
countries.
How do Trump's measures represent a turning point?
Overall, it can be said that major economic powers have generally
imposed free trade within their sphere of influence to better establish
their economic dominance. In particular, the IMF and the World Bank have
always made their loans conditional on this, in order to better keep
Third World countries in the clutches of global capitalism. So, in fact,
the question is why the leader of the world's greatest power wants to
return to protectionism, and to good old protectionism, the complicated
one, tariff protectionism, when usually it's rather the opposite.
Before attempting to answer this question, we must recall two
peculiarities of the United States. The trade deficit is very old. A
trade deficit occurs when we import more than we export. The origin of
this deficit is the global expansion of American multinationals. When
Apple has its computers and phones manufactured all over the world, each
computer or phone sale in the United States results in an import by a US
subsidiary of Apple from various subsidiaries around the world. When US
multinationals increase their profits through offshoring, they widen the
US trade deficit. When China was used as the "world's workshop," the
trade deficit of developed countries was inevitably widened. Obviously,
this poses a small monetary problem. Companies can pay, since it brings
them profit, but in what currency? The state in question must accumulate
foreign currency to pay. This posed a monetary problem for all states,
except... the United States. Indeed, it was their national currency that
served as the global currency. So, no limit, if they need dollars, they
just have to manufacture them.
It's also important to remember why we prefer to use the term
globalization rather than globalization today. Global trade routes are
as old as humanity. What has changed since the 19th century, and even
since the 1960s, is the interconnectedness of this trade. In traditional
globalization, we exported the products we manufactured and imported
those we needed, becoming increasingly specialized. With imperialism,
there was a shift; we imported raw materials to export finished
products, which brought in much more revenue. Today, there are virtually
no national industrial production processes. All production is
fragmented and integrated into global trade. We saw this clearly with
COVID. We certainly have a powerful pharmaceutical industry (SANOFI is
the third largest in the world), but when transportation stops, we run
out of aspirin. We're a nuclear power, but our uranium is enriched in
Siberia. It's estimated that a pair of jeans travels approximately
65,000 km between the various stages of production. This reality has
contributed greatly to the disappearance of tariff protectionism. If I
tax a product, it's difficult to predict what the knock-on effects will
be, especially for multinationals.
Trump may be a brute who doesn't understand anything, or maybe not, but
still. What's wrong with him? Several interpretations are possible.
The first possibility is that he's a businessman, accustomed to a world
where negotiations are tough and entirely based on the balance of power.
We start by banging our fists on the table and making threats, then we
follow through with a few to make it clear to our opponent that this
isn't a bluff, and that's how we get the conditions we want. If we're
powerful enough, it generally works. These threats can have an economic
or geopolitical purpose. As he did with Colombia to get it to agree to
the expulsion of its citizens. He's powerful enough to make it work on
the American continent and with Europe. It doesn't seem that he's really
succeeded in intimidating China so far.
The second possibility is that it's a sign of weakness. American
dominance over the world is faltering, and we must protect its currency
and its economy. China is no longer just the world's workshop. It has
retained its workshop but has progressed technologically and is now in
direct competition with American multinationals. Just look at its recent
move with low-cost AI. And what's more, it owns the workshop. However,
the American policy of sanctions on everything and nothing (Ukraine,
Uighurs, Iran, etc.) has had at least one result. More and more
countries are thinking about how to do without the dollar in global
trade to escape possible sanctions. From this point of view, Ukraine has
had an accelerator effect, bringing old rivals (Russia, China, India,
Brazil, South Africa) around the same table. It won't happen in 15 days,
but it's a trend. These countries represent more than a third of the
world's population, half of the world's wealth, some have nuclear
weapons, and two are permanent members of the UN Security Council. They
won't unite to form a single power, but they can unite to shake American
power. And Trump's calculation may be to threaten his "partners" in
order to have a single, united and obedient continent (America) behind
him and obtain the complete submission of a second continent (Europe) to
regain power against his designated main adversary, China. With a
colonial agenda in mind, this combines protectionism from the metropolis
with free trade imposed on the colonies. Obviously, for us in Europe,
this doesn't bode well for a bright future. Who do you prefer as a
"protector," Putin, Trump, or Xi Jinping? Personally, between the three,
I don't really care.
A third possible explanation is an evolution of capitalism that can be
likened to a change in nature. This is what some call the capitalism of
finitude. Capitalism has always relied on economic growth. And the
virtue of free trade is to increase this growth. Except that now, we may
have reached the limits of this growth. The entire planet is subject to
capital; there are no more new spaces to conquer, and the
commodification of society is also very advanced. If the pie is no
longer growing, we must carve out the best pieces at the expense of
others. And then, the protectionism of the most powerful is justified.
The idea is to reclaim the essentials and leave only crumbs to others,
while we still have the power. Others speak of techno-feudalism to
describe the power of GAFAM and characterize the rise of Elon Musk and
Mark Zuckerberg. Techno-feudalism, among other things, because it is our
lives they are becoming the owners of. And feudalism is not freedom,
especially not freedom of trade.
What will the consequences be?
It's complicated to say.
In the United States, it will start by reviving inflation, of course.
Beyond that, everything depends on what will be taxed. If these are
finished products, it will benefit companies present in their territory
and will have negative repercussions for the former exporting countries.
But the deficit linked to the relocation of production will not be
reduced. If everything is taxed, it will cause widespread inflation and
penalize the global competitiveness of the territory's companies. If he
taxes champagne, it will penalize Bernard Arnault, although it is not
certain that American billionaires are very price-conscious when it
comes to their luxury consumption. If he taxes glass, it will penalize
all bottled alcohols. As for the effect on the American territory,
everything depends on their glass production and the state of their
bottling plants. And it risks penalizing the export of Californian
wines. To assess the consequences, one would need detailed knowledge of
the American production system, which I do not have. And if the idea is
to relocate production, it cannot be done in 15 days or even in 3
months. And this will not be without impact on their competitiveness
(companies haven't relocated just for the sake of it). However, it's
important to remember that the United States is already a relatively
self-sufficient country. Its dependence on global trade has increased
significantly since the 1970s, rising from 10% to 25%. For comparison,
it's 60% for France-but only 15% for the European Union (thus
eliminating intra-European trade).
The United States is a major market for the rest of the world; it
remains the world's largest importer and the European Union's largest
customer. The most affected country would be Ireland (46% of its exports
outside the EU), while France ranks only 7th (16% of our exports outside
the EU). Obviously, the American continent's dependence is much greater:
83% of Mexico's exports, but only 12% of Brazilian exports, and 76% of
Canadian exports. Initially, the countries will be unequally affected.
Here again, to analyze the real consequences, one would need a detailed
understanding of the production systems, which I don't have, and I
highly doubt is available on a global scale. However, global trade will
likely shrink, and given the level of globalization, this will have
negative consequences for all countries.
Beyond that, if Trump carries out his threats, the consequence will
likely be a reorganization of global trade. This is where we will find
geopolitics. Trump's goal is clearly to further subjugate his allies.
But we have seen with the war in Ukraine that an alternative is
emerging, not to capitalism, alas, but to the economic, political, and
military power of the United States. Countries that can do so
economically and politically will try to create an economic hub rivaling
the United States. This will take a long time. It indeed requires a
reorganization of the production system to loosen dependence on American
technologies and to produce certain components. In short, a
despecialization, running counter to economic developments over the past
several centuries.
And where does China fit into all this? First, it's important to
remember that China has never presented itself as a champion of
liberalism; that's not its ideology. It has even long supported a form
of protectionism, that is, the right of developing countries to
appropriate Western technology. And it continues to do so. The Chinese
are good traders and diplomats, pragmatic. This explains their accession
to the WTO, when they deemed it useful. Their history has taught them
painfully that free trade is based on a balance of power. They know that
the United States is their adversary, and they too are accumulating
their strength (Silk Road, etc.) and weaving their spider's web. That
said, they have serious competitors on the Asian continent (India,
Japan), and if Western powers are losing ground in Africa, it's as much
in favor of Russia as it is of China. In short, just because China is
demonized by Trump doesn't mean we should necessarily follow that path.
Especially since there is a particular geopolitical issue at stake:
China has long hoped (and therefore tried to encourage) that Europe
would establish itself as a rival power to the United States. For the
moment, this goal seems far from being achieved. And China's takeover of
certain sectors, which provokes outcries, is more like the tip of the
iceberg of our American dependence.
So, to summarize: No, the state of world trade is not going to improve;
yes, there will be negative repercussions for us; no, we don't yet know
what they will be. Yes, the balance of power is becoming tense between
the world's major powers, yes, we are approaching a state of war, but we
are already seeing this with Ukraine and Palestine, and it's not a
question of protectionism. Protectionism is simply one tool of
domination among the wide range of tools used by the major powers.
Sylvie
http://oclibertaire.lautre.net/spip.php?article4391
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