Hopes run high for improving world trade environment

It’s time to get hopeful about the World Trade Organization and our ability to return to rules-based international trade.

It’s been a few years since it seemed sane to hope that rules-based trade could survive the onslaught of anti-trade rogues like U.S. president Donald Trump and president Xi Jinping’s China, as well as a growing resistance to rules-based trade from countries like India, and the willingness of entities like the European Union to play fast and loose with the spirit of agreements it signs.

But things can change, and maybe they already are beginning to. The protectionist winds that many of us feared would be blowing for a generation might just be a half-decade thing. Who knows?

We need to avoid being cynical and defeatist because there are many pieces in play now that could make things better.

What could those be?

New director-general for World Trade Organization

The WTO’s new boss, Ngozi Okonjo-Iweala, is a dynamic, vocal and ambitious leader. She appears to tackle issues head-on and isn’t afraid to call a spade a spade.

Okonjo-Iweala’s frankness on many trade issues is a welcome tonic to the sometimes muted public commentary from WTO players, who often shy away from pointing fingers.

With any luck she’ll retain her optimism and confidence and continue to use her bully pulpit to push for real gains in international trade and WTO revival. There are still plenty of players who are comfortable with the weakening of the rules-based system, so it’ll take a lot of effort to create some momentum in the opposite direction.

Departure of Trump

It’s hard to overstate how negative Trump’s nasty rhetoric was in terms of encouraging and giving licence to anti-trade forces around the world.

There have been lots of reasons to take China and the EU to task for their trade-cheat behaviours, but Trump’s insulting behaviour toward many trading partners, including Canada, didn’t achieve much other than undermine confidence in the U.S. as a trading partner and the lynchpin of the rules-based trading system.

When you can’t count on the U.S. to be an honest player in the rules-based system, you send the secondary players like us scrambling to cover our own butts, rather than building out and building up the international system.

With Trump at least temporarily departed to semi-retirement and fighting court cases, and banned from much social media, the amount of bad blood shed is being stanched.

Joe Biden is no free trade champion, but at least the guy doesn’t belittle and insult trading partners. Biden is pretty bland, and that’s something we could all use more of from the United States. Trade needs to be de-politicized as much as possible and a dull but diligent Biden administration might be just the thing to do it.

There are signs that the U.S. will support the revival of the WTO. Let’s hope it does.

World’s supply chains are straining and breaking

Protectionist games can seem like a great bit of domestic politics during non-inflationary times.

But those times may be ending. Already we’re facing short-term food inflation around the world as the pandemic’s shocks to the world trading system and the surge of late-pandemic recovery spending reveal widespread limitations in the world’s ability to supply itself.

If inflation lasts longer than an initial period of adjustment, there could be widespread political support for measures to keep price increases under control. Countries might grow warmer toward trade if the lack of it seems to be causing price increases that upset their populations. If food security and open trade can be connected, as they have been during the pandemic, then broad support to protect and improve it can be built.

New era of economic growth and good times

Many countries boomed for most of 2000-20. That included a lot of the “developing world,” and also Western Canada.

But it was a gruelling time in many ways for the world’s most advanced manufacturing nations like those in Europe, eastern Asia and the two-thirds of America that doesn’t grow crops or pump oil.

Those economies have stumbled for most of the past two decades, following a two-decade growth cycle from 1982-2001. Is it time for another secular growth cycle among the industrialized nations?

There’s a good chance it is, and a world economy in which the most powerful nations (other than China) are back into extended good times should lessen the negative spirits that drive protectionism. When people feel good about how their countries are doing, they tend to be confident about being open to trade, which is something we as an exporting nation dearly need to see.

It took a long period of economic woe to turn the industrialized world away from trade-friendliness, so it may take a long time to turn it back.

If it’s going to be a long turn, better get started soon.

I’m being hopeful here because I think we need more hope and less fear in the world right now, so why not be hopeful?

I can find an equal number of reasons to be pessimistic, but I think we owe the world a few months or a couple of years to show its post-pandemic face.

With any luck, that’ll be a face that smiles at rules-based trade and welcomes the products that western Canadian farmers produce so well.