Are we bidding a long goodbye to globalisation?

EDITOR'S BLOG: Theresa May's Brexit plans are necessarily muddled, but unlike The Donald she doesn't see trade as a zero sum game.

by Matthew Gwyther
Last Updated: 17 Jan 2017

This is, indeed, a funny old world. At Davos today The Chinese Communist boss Xi Jinping launched one of the most passionate defences of globalisation ever heard by the assembled snow-dusted Fat Cats and Nawabs. Meanwhile over the other side of the water The Donald - who appears to have beginning a trade war as his first mission once in office - is threatening BMW with a 35% tariff to bring its cars into the United States. (The German Economy Minister Sigmar Gabriel retorted that if the Americans have problems with their auto industry then they should start by making better cars themselves.)

And, of course, over here we finally got to hear what our Prime Minister really has in mind for Brexit. She set out her twelve point strategy to clear up any doubt about remaining half in and half out of the EU. We’re out of the Single Market and even the Customs Union. (Except we might want to retain the better bits that would give us a competitive advantage.) My guess is that her speech will have increased the resolve of the remaining 27 to resist the UK and that her desire for frictionless access to European markets is a pipe dream. The others simply cannot grant this and continue to cohere themselves.

By putting a gun to the Europeans’ heads she seems confident they will fold and buckle. ‘No deal is better than a bad deal,’ she warns. We’ll withdraw access to the electronic breadcrumb trails of GCHQ. She implied the unemployed of Greece and Spain will blame their leaders if no deal is granted to us. (I’m still trying to get my head around the logic of that one.) ‘We will be free to set competitive tax rates’ and become an offshore Euro-Singapore to irritate our neighbours. But we all need to remember that the UK represents only 3% of EU exports. We export 13% of our goods and services to them. They know that agreeing to her demands means the beginning of the end for the EU and their Brussels sinecures. Who has the most to lose?

‘The country is coming together,’ May concluded confidently, as if the entire population is now in lock step behind her on her Mission Semi-Impossible (as in the Allied assault on Monte Cassino in WWII, there will be massive casualties on both sides whatever the final outcome). I can’t see that this is remotely true. Either she entirely lacks any imagination - a strong possibility - or she is just simply deluded.

Today the first concrete effects of Brexit became clear with inflation rising to 1.6%. When Brexit starts to hurt ordinary people hard in the pocket and we become poorer as a result that ‘unity’ will be sorely tested. Very few of those who voted Out last year knew even vaguely what it meant beyond an argument about lowering the numbers of immigrants. She is finally putting the words in the mouths of most Brexiteers who may be dismayed to see what is likely to happen next.

On one thing May is correct, however. She says that global trade is not a zero sum game. She knows this, so does Angela Merkel and so does Xi Jinping, who has emerged as an unlikely champion for the big cheeses at Davos. China’s leader knows he will have a fight on his hands if the country loses its status as the ‘factory of the world.’

The one individual who doesn’t seem to realise we can all benefit from trade is Trump. He sees it as a transactional fight in which only one side can be the victor - win/lose rather than win/win.

The way we’ve been doing things, he says, is ‘very unfair to the United States’ and transatlantic trade is ‘not a two-way street.’ NATO bugs the extreme patriot in him because he cannot conceive of collective security. You fight your own fights, jacket off and nose to nose with your enemy. So the ‘weak’ Europeans won’t pay their fair share of the costs of their own defense, getting the hard-pressed Americans to pick up the tab. The concept of relative, or even mutual, advantage appears utterly alien to him.

Those who set any store by the warm words in his Times interview about our post-Brexit chances and how we’ll be first in the queue for a trade deal should be very wary. He says the first thing that comes into a brain that is as small as his hands and the moment he’s denied another planning permission for his Scottish golf course we’ll be cast into the outer darkness. He is fickle, crass and presents the gravest threat to both world trade and peace that we’ve seen since the end of the Second World War.

Image source: BrokenSphere/Wikimedia


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