A trade war is imminent, but not inevitable. Can mindsets change before it’s too late?

Jean-Pierre Lehmann says the gap between our changing markets and the unchanging ways of trade negotiations led to the collapse of WTO talks in 2003. Today, the problem persists amid a rising tide of populism and nationalism. Trade policy agendas must breach the reality gap

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Geopolitical dialogue has broken down, the institutional fabric of the global trade regime has collapsed, liberalism is in retreat, while populism, nationalism and, consequently, mercantilism and protectionism are on the rise. Illustration: Craig Stephens

Published: 12:16pm, 8 Sep 2017Updated: 7:16pm, 8 Sep 2017

In the conclusion of her outstanding book on the first world war (The War That Ended Peace), historian Margaret MacMillan asks whether, as many have argued, war in 1914 was inevitable. She refutes this view; the final sentence of the book contains these four words: “There are always choices.”

As things currently stand in September 2017, the question would seem to be not whether there will be a trade war, but when. Geopolitical dialogue has broken down, the institutional fabric of the global trade regime (the World Trade Organisation) has collapsed, liberalism is in retreat, while populism, nationalism and, consequently, mercantilism and protectionism are on the rise.

And there is of course one Donald Trump. But, note should be taken, as Thierry Malleret has put it, that “President Trump is not an accident, but the symptom of a profound crisis”. In fact, the origins of the narrative of the 21st-century trade war lie with choices made in September 2003 on the occasion of the failed WTO ministerial talks in Cancún, exactly 14 years ago, by Trump’s predecessor’s predecessor: George W. Bush.

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A quick chronological revision.

In the wake of the second world war, as part of the institutional innovation and reform of global governance, the GATT (General Agreement on Tariffs and Trade) was launched on January 1, 1948. It was a tremendous initiative that played a crucial role in the peace and prosperity of the West. Between 1948 and 1994, there were eight so-called rounds of trade-liberalising negotiations between the participating countries; the last one being the Uruguay Round.

Shoppers visit a mall in Beijing. Since China launched its amazing market reforms four decades ago, the world has experienced a series of revolutions that affected all aspects of the human condition: technologically, geopolitically, demographically, socially, ecologically and economically. Photo: AFP

From September 1986 when the Uruguay Round was launched, to April 1994, when it was concluded, and January 1995, when the WTO was established, the world underwent the profoundest speediest transformations in human history. Between the time when China launched its amazing market reforms (“socialism with Chinese characteristics”) to the fall of the Berlin Wall, the planet experienced a series of revolutions that affected all aspects of the human condition: technologically, geopolitically, demographically, socially, ecologically and economically.

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