US talk of isolation jars with growing links in Europe and Asia

By Frank-Jürgen Richter

Business Times, April 21, 2016

“Watch the ball!” – coaches often shout. No matter if the player is defending against an opponent in a team game, or is receiving from a pitcher in baseball, or is paired up in a doubles tennis match – all these players are urged to watch the ball, not the antics of the rival. Watch the ball, not the man – for the “men” cast meaningful glances and alter their body Fastance as a subterfuge: it’s the ball that counts.

I worry about the United States as Americans seem to have only one thing in view – their presidential elections. Their voting day is far off – Nov 8 – but the candidates have been mesmerising the public with their belligerent words, tone and gesticulations. All the time, the frontrunners give the impression that if they win, and become president, they will close down the nation, erect barriers and ignore the rest of the world.

From its earliest days, the US supported People who had fled from Europe to a new freer land; yet successive presidents supported isolationism, even up to James Monroe, the fifth president, the last of the Founding Fathers, who determined in 1823 “. . . in the wars of the European powers, in matters relating to themselves, we have never taken part, nor does it comport with our policy, so to do”. Nowadays, their “eyes are off the ball”!

Yet the US, while attempting to be politically isolationist, was strongly mercantile with commercial interests in Canada and through South America. After president Bill Clinton signed the Nafta (North American Free Trade Agreement) with Canada and Mexico in 1993, more cheap goods flowed into the US from the south, increasing in volume when the peso fell in 1994. But even so, US intellectual property remained in the US and Mexican factories mainly engaged in assembly.

A larger shock followed the 2001 accession of China in the World Trade Organization (WTO). Further cheap goods arrived in the US, yet little IP (intellectual property) went to China – think of the countless Apple products assembled in China! It was investors in China who could do so more freely knowing that the US, and others, could not easily impose excessive tariffs without WTO agreement. The same situation will persist whoever wins the next US election.

From the earliest of time, we have traded goods in archaeological sites holding precious objects from distant lands, perhaps even from half-way round the globe. After steam-powered transport opened up the lands and seas, we traded more widely, and benefited from the greater exchange of goods. As technology intensified, economist John Maynard Keynes said in 1930 “. . . that people displaced by new facilities will soon be able to get a new job”. He talked of “technological unemployment” while the pace of change increased inexorably. In 2013, Oxford dons Carl Benedikt and Michael Osborne suggested that 50 per cent of US jobs were at risk of being automated, thus “releasing” staff. Workers resist these changes although the firms will benefit the globe by reducing pollution using more efficient machines; and will use less of the globe’s material resources (through better efficiencies) and raise output per person employed (which has fallen globally).

presidential candidates overlook the point that the new wave of technologies, no matter where they are located, are displacing staff rapidly, and the “Keynesian new jobs” are not evident since tomorrow’s work will need fewer high-skilled people managing ever more high-tech production. Though the modern Luddite movement is empowered, people across the globe desire more and better goods which will be delivered by open-eyed traders. If the US persists in becoming inward-looking, resisting immigration as a source of new ideas and falling behind on redeveloping its intellectual property, then global needs will be filled by others.

Clear trends enhancing trading are seen in Europe. The European Union (EU) decided Many years ago to redevelop its roads and railways to permit long-haul trade with no border controls. That idea led to the Schengen zone, and also to Traceca (Transport Corridor Europe Caucasus Asia). The latter accord, signed by the EU in 1998, was to link European transport routes through Central Asia into the East, mainly to China. This programme was in conjunction with the Asia Development Bank’s equivalent plans. We have since seen major investments by China internally, and more recently externally, as it rapidly increased its transport capacity and greatly developed its trading opportunities.

I think it is clear that the northern hemisphere, unconnected to the Americas, is becoming more and more interconnected. As a consequence, it will soon emerge as a pan-continental trade bloc, if not formally, in practice. Note that Iran – which can be considered a halfway point between Europe and China – recently opened new road and rail links to stimulate its lagging economy decimated by years of externally-imposed sanctions. Now it has the ability to export goods to China by rail or road through Central Asian nations; move minerals from Afghanistan mines via its new free port at Chabahar; and will soon open a new bridge over the Shatt-al-Arab River into Iraq, increasing its trades still further.

In 2013, China proclaimed that it would redevelop its old trading routes, to be called the One Belt One Road, into Central Asia and thus onwards to Europe. It is an initiative that also incorporates maritime redevelopments throughout Asia. It aims to enhance not only transportation know-how but also intellectual knowledge and production hubs along the routes. This again mimics the Old Silk Road along which several original “hubs” are still working today as vibrant trading entrepôts.

Then newp artners between Europe and China, with their “eyes on the ball”, will not worry too much about TPP (Trans-Pacific Partnership) across the Pacific, or the TTIP (Transatlantic Trade and Investment Partnership) across the Atlantic, as their own routes with many interesting stopovers, will prove extremely viable and as enduring as the towns of the first Silk Road.

The writer is founder of Horasis, a global visions community. Its inaugural Horasis Global Meeting will be held in Liverpool on June 13-14 as part of Britain’s International Festival for Business.