Trump vs The World
The Futile Fight Against Globalization
We will no longer surrender this country or its people to the false song of globalism.
— Donald J. Trump, President-elect of the United States
This weekend took place the Asia-Pacific Economic Cooperation (APEC) summit meeting in Lima, Peru. Many international leaders including Xi Jinping of China to Vladimir Putin of Russia, and Shinzo Abe of Japan with whom Trump met the past week all were at the meeting involving the 21-country group.
Before I go further, there is a difference between Globalism and Globalization. As defined by The Globalist:
Globalism… seeks to describe and explain… a world which is characterized by networks of connections that span multi-continental distances.
In contrast, globalization refers to the increase or decline in the degree of globalism. It focuses on the forces, the dynamism or speed of these changes.
The leaders at APEC expressed concern over the growing protectionism that President-elect Trump and other emerging figures have been touting throughout his/their campaigns. Probably the most prominent is the fate of the Trans Pacific Partnership (TPP) which, if Trump does as he promised to pull out of, will result in some prominent consequences for many countries. One thing is likely, and its that American jobs are not coming back just because we reject TPP.
The regional leaders of APEC responded to Trump’s rhetoric on Sunday, continuing to reaffirm their support with pushing forward TPP. But I’ll talk about TPP later. First, lets look into globalization first. As defined earlier, it focuses on the forces and speed of the changes in globalism. There is a great convergence occurring now, and its wistful thinking the same jobs Americans used to have will come back. For an example, we’ll look at two blocs in the world, the G7 and the E7.
The Group of Seven (G7) refers to the group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, as well as the European Union which is also represented within the G7. These countries are the seven major advanced economies as reported by the International Monetary Fund.
Meanwhile, the E7 refers to a group of seven countries (China, India, Brazil, Mexico, Russia, Indonesia, Turkey) with emerging economies but lacking any organization. One note of importance is that the E7 are predicted to have larger economies than the G7 countries by 2020. This trend can already be seen today.
From the Money Moves Markets journal, “The G7 and E7 aggregates are calculated from World Bank country data on industrial output in constant (2005) US dollars. On this measurement, E7 industrial output now exceeds the G7 level”.
We are facing a world where the emerging markets are, well, emerging. And they’re emerging fast. Many Americans went to the polls on November 8th on the hopes to ‘Make America Great Again’ but how can we exactly do that? America can’t be the same “greatness” it was before. The world is a different place with different players now. Globalization is not a punishment by the emerging countries on the advanced economies of the world. It is simply a force that will naturally occur, like gravity, as the world’s developing countries continue advancing.
If Trump follows through and pulls out of the TPP, that will not be good. The TPP was built with the United States at the center of gravity. One important thing the TPP would have brought would have been to connect “missing links” in the current global trade architecture, as major trading partners still lack bilateral Free Trade Agreements (FTAs). These gaps exist among developed nations (e.g., the U.S., EU, and Japan), large developing countries (e.g., Mexico, Brazil, China, and India), and between developed and developing countries (e.g., the US and Japan with China).
What happens if the US pulls out? Enter China.
China, which was not part of the TPP, has been pushing an alternative vision of free trade in Asia under the Regional Comprehensive Economic Partnership (RCEP), which does not (currently) include countries in the Americas. At APEC, Tan Jian, a senior member of China’s delegation at the summit, said more countries are now seeking to join its 16-member bloc, including Peru and Chile.
America needs to be very careful in the next few years. Not only will taking a protectionist stance not bring back jobs, it will also hurt the United States as a major world and economic player. We live in a different world. You can blame globalization or globalism all you want, but at a certain point we must accept this as an inevitable reality. I don’t have the answers and honestly neither do some top economists on what the US can do in this new world, but we need to find them quick, and we need to be smart. We should not reject globalization, and instead try to find ways to embrace this wave.
Thank you for reading.