Things aren’t looking good for globalism these days. With President Donald Trump signing the “Hong Kong Human Rights and Democracy Act of 2019,” any pretense of a trade deal being signed by the United States and China before Dec. 15 is out the window.
Trump’s recent statements all but confirmed that reality.
After being questioned at the NATO Summit, Trump warned that the trade war could go on past the 2020 election. That’s a high probability, given recent statements from China’s Vice President Wang Qishan about waiting until Trump is replaced.
But what if Trump wins reelection in 2020? Will a trade deal be worked out between China and the United States then?
In the meantime, trade volume isn’t just slowing down between the United States and China, but throughout the eurozone and in Japan, as well. On the plus side, the U.S. economy continues to do well. Overseas, business has grown in Vietnam and in other nations as they pick up China’s manufacturing losses.
Globalism Has Peaked
In retrospect, globalism more or less peaked under then-President Barack Obama with the variety of multilateral trade deals, climate agreements, and an unsigned but somehow legitimate nuclear accord with Iran.
For globalism to remain the dominant trend in the world, the United States must lead the way, and yet also cede the way to China. That curious, self-defeating dynamic, which began when the United States granted China most-favored-nation status in 2000, is no longer in play.
With the United States having adopted “America First” policies on trade and military alliances, it’s now absent those agreements. As a result, the grand, globalist assumptions underlying globalism—especially China-centric globalism—have less force and credibility.
Given that fact, it’s no stretch to say that the era of China free-riding the rest of the world is winding down. Or at least China-centric globalism is lessening in some critical parts of the world, i.e., the United States and Europe. China may well come to rely even more on its “One Belt, One Road” initiative (OBOR) to gain access to resources and markets.
What kind of global trade agreements can possibly emerge in a new, and a perhaps more fractured and riskier world?
It Was Never Just About Trade
The fact is, with China, the trade war was never just about trade imbalances. Trump, whatever his flaws may be, realized the threat that China posed not only to the U.S. economy, but to U.S. strategic interests as well.
His anti-China pronouncements and high tariffs highlighted the more sinister aspects of their adversarial trade policies, which include their plans to destroy the economies of the West. Sounds dramatic, but that’s an accurate assessment.
That’s why, whether Trump is in the White House in 2021 or not, the pre-Trump status quo is gone forever. The mystique of globalism has been shattered by China’s own hubris, trade behavior, and inhumanity. The CCP’s vast catalog of human rights abuses—from slave labor, mass imprisonment of minorities, and widespread police and paramilitary violence in Hong Kong and now the mainland—is now well known. Such behavior is disagreeable to the liberal democracies in North America and Europe, not to mention most of Asia as well.
Added to that dismal portrait are decades of technology theft, cyber-hacking, and an undisguised intent to tank the economies of Europe and the United States. Unlike in 1989, when the world overlooked the CCP’s atrocities at Tiananmen Square in favor of the cheap labor and the seduction of China’s billion-plus market, the bloom is off the China rose.
The bigger picture reveals the China-centric globalist picture as darker and much less benign than perhaps once imagined. Simply put, China is becoming much less alluring to Western economies than it has been in the past.
A Return to Risky Regionalism?
If globalism has peaked, what could replace it?
We will likely see a return, at least to some degree, of regional trading blocs and bilateral trade agreements. Regional trading blocs have existed for centuries, of course, but will likely play a larger role in trade going forward.
Of course, that doesn’t mean all aspects of global agreements on trade, the environment, and strategic alliances will simply go away. Those that are beneficial to all sides and are stabilizing influences, to one extent or another, will likely remain in place. Those agreements that are too one-sided will be less successful over the long term.
For example, the eurozone, NAFTA/USMCA, and China’s OBOR will all continue to function in one fashion or another. Other international agreements will likely continue, as well. But some, such as the Transpacific Partnership and the Paris Climate Accords, will lack the official approval and participation of the United States.
Going forward, new agreements will likely be renegotiated on not just a bilateral basis but on a security basis. That’s what the Trump administration is trying to accomplish with its trade agreements with Japan and the eurozone, as well as Eastern European countries such as Poland, Hungary, Ukraine, and others.
Trump’s spat with German Chancellor Angela Merkel regarding Germany buying Russian natural gas while the United States is paying for German security against Russia is a case in point. His promise to expand U.S.–UK trade after Brexit is another.
Would such agreements increase global trade or reduce it?
A good argument could be made either way, but certainly, it will alter some trade flows. That’s already happening.
History Lessons to Consider
From a strategic standpoint, however, regionalism tends to increase global instability. Regional hegemonic powers tend to reject “external” actors—other, competing nations—that threaten their positions. Access to resources such as oil, natural gas, or agricultural assets plays a huge policy role in nations that lack them and so must acquire them from outside suppliers.
The 1930s are a good historical example of this. As a rising power, resource-poor Japan chose foreign conquest in China and Oceania as a means of sustaining its dominant economic and military status in the Far East. That necessitated driving British, Dutch, and U.S. presences out of the region. It also, in their minds, made it necessary to attack the United States at Pearl Harbor.
But it’s certainly not the case that the world has only had either globalism or regionalism, or that either has prevented competition among nations. Globalism has predominated over the past several decades, but regionalism has existed forever, and will continue to do so.
James Gorrie is a writer and speaker based in Southern California. He is the author of “The China Crisis.”
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.