7 Dec 2016
What kind of free trade?
When I was a child, quite a long time ago, my mother, like many others, used to say “finish your dinner, think of the starving children in China.” That country had been through European occupations, warlords, the Japanese occupation and a civil war. Many were starving. Now, China has the world’s second-largest economy, produces or buys the food it needs and is a global power. Smaller but similar developments have happened in a number of countries in Asia, South America and Africa. Their citizens make more money and eat better food. Much of their wealth comes from selling products to richer nations. At a global level, this is a good trend. People are lifted out of poverty, and can live longer, healthier lives. This is a key part of sustainable development. But, the flip side is that many of the goods they produce are no longer made in the industrialized countries with their higher wages and production costs. Their citizens are unemployed or have lower-paying jobs.
The result is growing pushback in developed nations. It started with the one per cent movement and Occupy Wall Street in 2011. This year, it is the rejection of established politicians in different industrialized countries by citizens who feel that freer trade is costing them jobs and reducing their standard of living. One of the greatest challenges to politics in the richer nations is to find a level of free trade that will be acceptable to their citizens. Throwing up trade barriers risks driving poorer nations back towards more poverty. It will also launch a global trade war that will hurt every country, rich or poor, as happened when tariffs were raised during the Great Depression of the 1930s.