Trump’s Stunning Victory—Now What for Trade?

Companies hoping to remain competitive—and particularly those working in export markets—will have to work much harder now.  Absent trade preferences, firms are at a disadvantage relative to competitors in places like Asia or Europe.   The outsourcing that Trump has complained about is likely to accelerate.  Firms that want to take advantage of benefits conferred through deals like the Regional Comprehensive Economic Partnership (RCEP) in Asia will need to be located in Asia to provide goods and services to these faster growing, significant markets. 

The wider world certainly grasps the consequences of this election.  People of all sorts have been glued to their televisions in amazement. For American voters, knocking over the system and electing Donald Trump as President may have felt very good.  But the economic and trade consequences will be significant and the fallout felt far beyond Washington DC. 

Why Being Pro-Jobs and Anti-Trade Doesn’t Always Work

Start with the aerospace workers.  An interviewer went to a plant in California and talked to several employees who had struggled with keeping their jobs.  One had already been laid off for an 8 month period and all were worried about their positions being outsourced to Malaysia in the future.  All blamed trade for undermining their job opportunities. But this surely gets the situation exactly the wrong way round.  Most of the jobs in the aerospace sector are driven by markets outside the United States.  The interview did not specify exactly what products these workers produced, but the domestic demand for aerospace will never be as large as global demand.  Absent trade, there would be very little demand for whatever rolls off the assembly lines in California.  Without trade, there would be very few jobs of any kind in aerospace. 

Special Edition: Plan B for Canadian Trade Policy

Having narrowly survived the battle with CETA, Canadian leaders are understandably nervous about prospects for TPP which requires the United States and Japan to ratify the agreement. Canada needs to think seriously about a “Plan B” and take control of its own fate. The first step in doing so is for the country to get serious about trade. An effective, clear-eyed and focused trade strategy is no longer a luxury. Canada currently has 11 full foreign trade agreements.  This puts Canadian firms at a competitive disadvantage in Asia.

CETA Derailment: Fear of Canadian Cows, ISDS and More

Ultimately, the Wallonian rejection of CETA is not just about what one regional province does in Europe.  It is, perhaps, a symbol of the larger discontent with globalization.  Saying no and protesting against trade agreements has become the easiest outlet for venting fear and frustration. Especially at a time of slowing global growth, this is deeply troubling.  The inability of political leaders to articulate better reasons for moving ahead with trade deals is likely to have lasting consequences—for Wallonia, for Europe, for Canada, and, possibly, for us all.

Remaining Optimistic in the Face of Headwinds: An Update on TTIP Negotiations

Concerns over globalization are crystalizing in many developed economies in the form of opposition to trade agreements.  One of the largest, the Trans-Atlantic Trade and Investment Partnership (TTIP) between the European Union and the United States, is currently in the firing line.  Many commentators have now declared the entire exercise dead-on-arrival.  Such a dismissal is perhaps too hasty.  In spite of strong headwinds, trade officials have continued to press ahead, hoping to lock in as much progress as possible in 2016.  As an earlier blog post noted, TTIP is perhaps the most difficult trade agreement attempted.  Given relatively open levels of trade between the two parties, both sides are attempting to address thorny sensitive issues that have not been previously tackled and to try to sort out tough new areas of conflicting standards and regulations.