Globalization vs. Protectionism: Why not a little of both?
Years from now, society will say the problem with millennials was that they thought they could have everything. A job that changes that world and also makes them rich, avocado toast and a house, Yanny and Laurel, and so on.
I’m going to take this problem and bring it to a topic unfortunately very few millennial cares about: foreign policy. The current debate in foreign policy around the world is whether or not globalization will continue to be the dominant policy framework or will protectionism have its day?
The last 50 years have been defined by an unprecedented period of global cooperation and multilateral trade deals. It started with the General Agreements on Tariffs and Trade (GATT) after WWII, which in 1995 turned into the global trade referee now known as the World Trade Organization (WTO). Major trade agreements such as the North American Free Trade Agreement (NAFTA) and Trans-Pacific Partnership (TPP) have since been established, furthering the interconnection of huge global economies across every continent.
For better or for worse, the WTO’s authority on global trade is being challenged directly and indirectly by political leaders. President Trump has criticized the WTO about its possible lenient treatment of China. China has also been criticized for stealing the intellectual property of foreign companies by forcing them into joint ventures with state-funded enterprises when they want access to the Chinese market.
Multilateral trade agreements are also being challenged. In one of his first actions as President, Trump pulled the U.S. out of the TPP. The Trump administration has also always been a critic of NAFTA, and has long talked about renegotiating or pulling out of the agreement.
In Europe, right-wing populist parties that oppose the European Union and support protectionism are growing. For example, during the 2017 French presidential election, Marine Le Pen, the leader of the right-wing National Front party, was a legitimate candidate winning about 34 percent of the popular vote.
On the globalization front, there are still members of the EU that are fighting for free-trade. Scholars, economists, politicians and thought leaders in the U.S. have spoken up in support of globalization in response to President Trumps policy decisions.
The loudest voices in these types of debates are always the two extreme versions of the argument. In this case, robust multilateral agreements and free-flowing global trade versus limited, bilateral trade agreements and tariffs and quotas. But why not somewhere in between? No one seems to be asking whether or not the global trade architecture could be altered in a way that accepts both protectionist and globalist policies.
A logical response to this question would be that it doesn’t make sense for the system to contain two sets of policies that are antithetical to one another. Without conducting any sort of quantitative analysis I can’t say whether or not a system with a deliberate mixture of protectionist and globalist policies would be beneficial. I’m merely suggesting that it might be more productive for protectionists and globalists to consider the possibility of co-existence.
The often frustrating partisan gridlock that occurs within American politics is a small taste of what could result from a large-scale protectionism versus globalism battle. Except this debate could be far more consequential and impactful. 50 years of multilateral trade agreements and globalization has created an intricately connected global economy. It’s frightening to think what the effects might be if one-sided, rash decisions are made regarding a system that operates on a global scale.
The traditional trade toolkit: tariffs, quotas, regulation and agreements. Is it possible for an entirely new mechanism of trade regulation and foreign policy to emerge? I guess we’ll just have to wait and see.
