Source: East Asia Forum
Author: Editorial Board, ANU
Populism and anti-globalisation is gripping much of the West. The United States and the United Kingdom, for example, are conflicted in different ways over trade and globalisation.
President Trump’s ‘America first’ agenda has created much uncertainty about US leadership of the global economy and its commitment to the multilateral free trade system. And there seems to be no end in sight, as the Democrats are locking themselves into positions similar to those of Trump on trade and China as they battle it out for the left in the US primaries for the presidential election in 2020. The new British Prime Minister Boris Johnson is racing Brexit towards a no-deal divorce from the European Union in October.
The upheavals in the United States and the United Kingdom offer an important lesson for economic policymakers. Opening economies up to international commerce, ideas and migration has lifted billions out of poverty and brought prosperity to much of the world. But that success is conditional on getting domestic policies right.
The harsh lessons from the rise of populism are clear: those countries that managed to distribute the gains of globalisation across society, maintain full employment and ensure a high level of social security are not suffering the same backlash that’s evident in the United States.
The first line of defence for countries, therefore, is to get their own houses in order.
But what else do other countries need to do in the face of a United States that is actively applying WTO-illegal tariffs on imports from other countries and threatening to render the enforcement of global trade rules in the WTO ineffective? Brexit is a blow to the global economic system as well, but the United Kingdom is a much smaller part of the global economy, and doing its best to make itself even smaller.
What’s needed …continue reading