Tag Archives: NAFTA

Saying Goodbye to American Hegemony – What’s next?

Display of the American Declaration of Independence reading "We the People..."

The U.S. is restraining from accepting and carrying out the position of global leader. Thus far, this new administration is continuing a line begun by the previous Obama administration, albeit for quite different ideological reasons. The common denominator, though, is the adverse reaction of a significant part of the American population toward continued leadership, including the acceptance of the necessary costs . The dominant narrative is one of failed attempts at nation building (Afghanistan, Iraq, Syria, Libya); of the detrimental effects of transborder trade, especially for domestic manufacturing jobs; and of the adverse effects of taking climate change seriously.

It is not likely that these perceptions will change any time soon. This leaves the world with a question: Where to go from here?

It would be easy to assume that China will take over in one way or another. But this is not likely from an economic point of view, and it has imposing domestic tasks to be addressed. Additionally, from a Western perspective, China would not be a liberal leader .

The EU doesn’t look like it is ready and available for a leadership role. Germany alone is not strong enough. So the world seems poised to move toward a multi- or even nonpolar structure.

What can we expect from this?

– Klaus Segbers

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To trade or not to trade?

 

To engage in exchanging goods and services is one of the oldest human activities, some even say – the oldest. In the last three or so years, trade has acquired an additional feature becoming a hot topic of global politics. Populists especially, maintain that the positive or negative balance of a nation’s trade reflect that nation’s strength – a hotly debated topic (without much support) in science, and an even hotter issue in politics.

After President Trump’s victory in the US (and even before), trade was one of those topics that served as a rallying cry for political agitators and angry people. Allegedly, trans-border trade was (also) responsible for the loss of millions of manufacturing jobs. As a result, TPP and TTIP were trashed by the US government after TTIP also fell prey to liberal and leftist suspicions while NAFTA is to be re-negotiated. All this is supposed to ‘bring our jobs back’, where the tricky issue is what ‘our’ stands for.

Following some of the most respected economists, like David Ricardo, there are not many more useful activities a nation can do other than trade. This leads to an equilibrium between strengths and weaknesses of national capabilities, and, on balance, increases wealth across the board. Things have been getting more complicated by the increasing effects of transnationalization of trade where it has become quite difficult to attribute certain features of a product to one country. Most specialists agree that while globalisation, liberalisation and technological developments have contributed to significant losses of (no longer competitive) jobs, they have also added millions of new jobs.

So how should responsible governments react to the current debate and rising expectations from ‘below’? Keep trading and foster innovation, no matter where? Or limit and control transborder trade?

– Klaus Segbers

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