A fortnight ago it seemed like an entente between the US and China for containing their escalating trade frictions. Now, “the world’s largest economies remain on track to commence a $100 billion trade as early as this month," according to a Financial Times news report on 3 June.
Apparently, the third round of China-US trade negotiations in Beijing last week had failed to produce a breakthrough. That was to be expected after Washington reneged on its promise to put on hold tariffs on imports from China. The Trump administration announced on 29 May that tariffs on $50 billion of Chinese imports would be imposed after 15 June on grounds that China continues to steal technologies and violates intellectual property rights.
Meanwhile, on a separate track, the US pressed ahead with bellicose actions by slapping tariffs of 25% and 10% on imports of steel and aluminium, respectively, from the European Union (EU), Canada and Mexico on 31 May. That action was preceded by an investigation into whether imports of cars were a threat to America’s national security.
Against this backdrop, calls to defend multilateralism from a resurgent nationalism, be it Jeremy Corbyn on the left in Britain or Victor Orban on the right in Hungary, have become standard fare in recent days. The response has been to double down on support for “free trade".
Ironically, it has taken one of their own, a corporate entertainer-turned-US president, to upend this establishment response and force an acknowledgement that no one should be left behind. What is not acknowledged, however, is that the multilateral order of today is completely different from the managed globalization established at the end of World War II. That order was to guarantee full employment and social security in the North and deliver industrial development and increased productive investment in the South.
Nor is the establishment willing to own up to its own concerted efforts to dismantle the structures and practices of pragmatic multilateralism and replace it with a rules-based system designed to liberate big business and prevent governments, in both the North and South, from interfering with its “right" to make profits when, how and where it pleases. Doing so would, of course, mean accepting that President Trump is a symptom rather than a cause of the current crisis of multilateralism.
Brussels was in the vanguard of the assault on pragmatic multilateralism, after one of its former commissioners Peter Sutherland promulgating neo-liberal values in the embryonic World Trade Organization (WTO). He was later followed by Pascal Lamy, who offered a “Geneva Consensus" that promised “to make trade work for all", while promoting a free trade agenda that ensured it would not.
The EU’s trade commissioner Cecilia Malmstrom is the latest in this line of Brussels standard bearers whose trademark policy initiative has been the hugely unpopular and undemocratic Transatlantic Trade and Investment Partnership. However, unlike her predecessors, she is facing a real backlash against the inequities, insecurities and anti-democratic practices inherent in her “ordoglobalist" agenda, implying those neoliberals who do not believe in liberalization but in the encasement of markets.
In response, Malmstrom has taken to the road to persuade an increasingly sceptical public that opening up further to big business and finding new ways to “trickle down" the gains from increased trade is the best way to salvage the global order. Having found a receptive audience—barring the brazen indifference of the US trade representative —at OECD in Paris last week, her latest stop was, of all places, United Nations Conference on Trade and Development’s (UNCTAD’s) trade and development board in Geneva on 4 June. She acknowledged that development issues had been poorly handled in recent multilateral negotiations and accepted that the Doha Round was still alive (if not kicking).
She was at a loss to explain what was behind the current crisis, beyond blaming the Trump administration and China for not playing by “the rules". Her trickle-down agenda to move things forward offered little more than a combination of plurilateral negotiations involving two or more countries, which undermine multilateralism, to advance liberalization in new areas and aid for (LDC) trade. One frustrated trade envoy present at the meeting asked her pointedly how her solutions would solve the deep seated inequalities that had become a feature of the 21st century global economy.
More worrying still, her host, former Kenyan trade minister Mukhisa Kituyi, who now heads UNCTAD , backed up Malmstrom’s paean to an ordoglobal world. UNCTAD, which is supposed to be the trade union of developing countries for addressing the continued inequities in the global trading system, is now unabashedly prompting a digital agenda promoted by Jack Ma’s Alibaba. That developing countries could solve their myriad development challenges by facilitating more foreign investment, improving their customs practices and selling more stuff on the internet is a grotesque lie like asking impoverished people to eat cake if they can’t get bread.