Globalisation backlash due to lost jobs, security fears
After Britain’s shock vote to quit the EU, Donald Trump’s victory is a powerful sign of a popular backlash against the drive for globalisation and more free trade.
The maverick Republican tycoon propelled himself into the presidency of the world’s largest economy with an anti-free trade message to undo the harm such pacts had caused American workers.
It resonated with many US voters who might not have benefited from the start of a pickup in the US economy, as did Trump’s promise to renegotiate the trade deals and win back jobs.
His victory comes at a key time for several free trade deals, including the sweeping Transatlantic Trade and Investment Partnership (TTIP) between the US and EU.
“The global economy is struggling. Those who are suffering are left with impressions that globalization is to blame,” senior economist at Dai-ichi Life Research Institute in Tokyo, Seiji Katsurahata, said.
French economist Thomas Piketty, who shot to prominence with a book arguing that wealth inequality was growing as investors gained better returns than overall economic growth, has a similar view.
“Working classes in particular believe that they are paying the costs of globalisation,” he said.
The disillusionment may have been reinforced by trade deals being negotiated behind closed doors, leaving people feeling vulnerable and sending thousands onto European streets to protest.
“I think that there is the perception, and I think it’s correct, that these trade agreements were basically designed for and by corporate interest,” Nobel award-winning economist Joseph Stiglitz said during a recent visit to Paris.
The international push to increasingly tear down barriers to free trade has exasperated many in industrial countries as they lose their jobs or see their wages stagnate.
To the surprise of many political leaders, anger over immigration and other facets of globalization prompted British voters in June to opt to leave the European Union.
But, with the expansion of free trade seen as a key driver of global economic growth since the end of World War 2, the International Monetary Fund last month urged world leaders to make the case for continued globalisation.
“We know that globalisation has worked over the years, that it has delivered great benefits to many people,” IMF chief Christine Lagarde said.
“We don’t think it’s time to push against it.” However, US voters did pushback. Democratic presidential candidate Hillary Clinton had even tried to ride the wave of popular anger against globalisation by coming out against the Trans-Pacific Partnership (TPP) free trade deal, she had previously supported.
Trump’s victory comes at a critical moment for that trade deal between12 Asia-Pacific countries, which has been signed but not yet ratified by politicians in the US.
It also pulls the rug from under the TTIP negotiations. “TPP and TTIP are dead,” one economist said.
Trump has also pledged to renegotiate Nafta, the free trade deal between the US, Canada and Mexico.
The anti-free trade wave could next crash on France and Germany, where voters go to the polls next year.
Paris sent a series of proposals to make trade deals more democratic and transparent to Berlin on Tuesday.
“There will be no European future if there is not extremely robust demo c r a c y. Europe is threatened today by very dangerous internal temptations and tendencies,” an economist said in reference to far right movements in several countries that have tapped into anger over the deep scars left on many European economies as industries shut and move elsewhere.