World must remain on the globalization bandwagon

Not so long ago, in a land that is our backyard, lived a prospective trade environment. It was big and shiny and for all the world looked like it contained the best of what would be Canada’s future.

It was full of promise. Canada would be one of the biggest winners, an exporter to all and an importer from many. It could sell at a premium and buy at a discount.

But that world has changed a lot in four years.

In 2016, ahead of an American national election, improvements to global trade were springing up everywhere. Trade lawyers were filling their offshore accounts as the fires of free trade raged across the globe and everyone wanted an arrangement with the ever-elusive Chinese market.

Country-of-origin labelling for Canadian beef was deemed to be out of step with modern thinking, and the World Trade Organization ruled as much.

As the enforcer of international trade rules, the WTO has usually been of more assistance to smaller nations than larger ones. Despite its slow machinations, the trade body does demand relief from border bullies, as Canada and many other countries have learned.

That is why it is important to maintain the WTO as an authority, even as more nations ponder a more insular trade approach as a result of experiences during the pandemic.

COVID-19 has confounded proponents of free trade as western governments subsidize and prop up their own economies and the developing world is forced to let theirs tumble into free fall.

The cracks in our once robust global supply chains are fracturing as countries speak loudly of self-sufficiency. Governments may use the pandemic as an opportunity to create rules that restrict foreign investment and keep money at home.

But putting all of ones’ eggs in a single economic basket exacerbates risk rather than mitigating it.

Successful global recovery from COVID-19 will require nations to look beyond their borders. This week’s Canadian-hosted WTO meeting is an opportunity for that body to take a lead in developing new, modern rules for trade and create an economic tide that can help lift all boats.

If only the richest nations are allowed to recover quickly from the pandemic, they will eventually weaken as other nations struggle to reap the benefits of globalized trade.

The concept that commodities and services are all equal under trade law, provided they are of the same kind and quality, is under pressure from national legislators and central bankers. Japan’s COVID-19 recovery incentives involve corporate repatriation of manufacturing. The European Union is making plans to take equity positions in its citizen-companies, and the United Kingdom, like the United States, was already firmly fixing its economic gaze on its navel prior to the pandemic and recovery plans will likely be even more myopic.

The current round of WTO meetings is made up of a select group of trade ministers with the goal of modernizing the system, making it more attractive for all nations to participate in its rule making and later adhere to those rules, avoiding the need for WTO ruling and sanction.

In a post-pandemic or next-pandemic world, the need for global rules-based trade becomes critical for the future political stability of the planet. Interruptions in supply and unfed demand result in food price instability and insecurity. Price spikes after the 2008 economic crisis resulted in food riots around the planet and ultimately the Arab Spring, which continues to fuel the destabilization of the EU and helped to power Brexit.

Jumping off the globalization bandwagon will forfeit international advantages created by economies of scale, such as prairie agriculture, the advantages of the developing world in labour and manufacturing as well as incentives for international investment, which mitigate risk from all perils, including disease.

Karen Briere, Bruce Dyck, Barb Glen and Mike Raine collaborate in the writing of Western Producer editorials.

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