CNN’s “Global Public Square” host Fareed Zakaria reports from Davos, where he says President Trump’s protectionist trade policies have become “normalized” as more and more countries follow the lead of the United States.
FAREED ZAKARIA, CNN: Welcome back to “GPS” coming to you now from Davos, the site this week of the 50th anniversary of the World Economic Forum. Let’s start with my take.
Donald Trump’s speech here went over relatively well. That’s partly because Davos is a conclave of businessmen and they like Trump’s pro-business message. But mostly, the president’s reception was a testament to the fact that he and what he represents are no longer unusual or exceptional. Look around the world and you will see, Trump and Trumpism have become normalized. Davos was once the place where countries clamored to demonstrate their commitment to opening up their economies and societies. After all, these forces were producing global growth and lifting hundreds of millions out of poverty.
Today, Davos feels very different. Despite the fact that across the world, growth remains solid and countries are moving ahead the tenor of the times have changed, where globalization was once the main topic, today it is the populist backlash to it. This is not simply atmospherics and rhetoric. Morgan Stanley investment management points out since 2008 we have entered a phase of deglobalization. Global trade, which rose almost uninterruptedly since the 1970s, has stagnated, while capital flows around the world have fallen. Net migration flows from poor countries to rich ones have also dropped.
The shift in approach can best be seen in the case of India. In 2018, Prime Minister Modi came to Davos to decry strongly the fact that many countries are becoming inward-focused and globalization is shrinking. Since then, his government has increased tariffs on hundreds of items and taken steps to shield India’s farmers, shop keepers, digital companies and many others from the supposed dangers of international competition. The Office of the U.S. Trade Representative recently called out India for having the highest tariffs of any major economy in the world.
“The Economist” notes that Europe, once one of the chief motors for openness in economics and politics is also rediscovering is state intervention to prop up domestic industries. And if you think the internet is exempt from these tendencies, think again. The European Center For International Political Economy tracks the number of protectionist measures put in place to “localize” the digital economy in 64 countries. That number has been surging for years, especially since 2008.
It’s important not to exaggerate the backlash to globalization. As a 2019 report by DHL demonstrates, globalization is so strong and by some measures continues to expand. People still do want to be connected to trade, travel, and transact across the world. But in government policy, where economic logic once trumped politics, today it’s often the reverse.
The cumulative result of all these measures, protecting local industries, subsidizing national champions, restricting immigration, is always to zap economic growth. This phase of deglobalization is being steered from the top. The world’s leading nations, as always, are the agenda setters.
The example of China, which has shielded some of its markets and still grown rapidly, has made a deep impression on much of the world. But probably deeper still is the example of the planet’s greatest champion of liberty and openness, the United States, that now has a president who constantly calls for managed trade, more limited immigration, and protectionist measures. At Davos, Donald Trump invited every nation to follow his example and more and more are complying.