EUROPEAN ECONOMY
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Trade

How backlash against cheap Chinese imports has propelled Europe’s new right-wing populism

The value of European imports from China more than tripled between 2001 and 2016, hitting local manufacturers and leading to job losses

PUBLISHED : Monday, 06 March, 2017, 10:40am
UPDATED : Monday, 06 March, 2017, 10:44pm

After decades of dismantling barriers, Europe is finding free trade comes with political tariffs.

For all the focus on the backlash against migrant workers, research by two academics shows the regions of Europe hit by cheaper imports and related job losses are fertile ground for groups that echo US President Donald Trump’s protectionist rhetoric. From the Netherlands, through eastern France, northern Italy and parts of Austria, support for populist parties that have transformed the political landscape is among the strongest. 

There is a significant link between how exposed regions are to Chinese imports and support for radical right parties
Italo Colantone, Bocconi University

“There is a significant link between how exposed regions are to Chinese imports and support for radical right parties,” said Italo Colantone, assistant professor of economics at Bocconi University in Milan and co-author of a paper looking at the impact of globalisation on European voting. “There’s an impression that Wall Street or the big companies benefit from free trade, but many people feel they are losing out.”

Across Europe, while sentiment toward globalisation remains broadly positive, opposition to free trade is growing in some countries, a Eurobarometer survey showed last year. It is influencing politics as opponents try to staunch rising support for nationalist agendas. 

In France, candidates in the presidential election are trying to check the momentum of far-right National Front leader Marine Le Pen, who calls free trade a disaster. Former Economy Minister Emmanuel Macron, who is leading in some polls, said he would introduce a “Buy European Act” to limit public contracts to companies with at least half their operations in Europe.

It follows the US campaign, where defeated Democrat candidate Hillary Clinton responded to Trump by backing away from the Trans-Atlantic Trade and Investment Partnership, a new accord between the US and Europe aimed at easing non-tariff barriers. 

Roberto Calletti is one former businessman who says Europe’s success in opening borders to free trade has failed him.

Calletti lost his family-run shoe-making firm near Lucca in Tuscany about 15 years ago after Italy removed tariffs on imports from emerging markets and prepared to adopt the euro. Now, he supports the anti-immigrant Northern League, which calls for Italy to ditch the single currency.

“I always thought that liberalisation would drive us against a wall,” said Calletti, 58. “We need to restore tariffs to give breath to local manufacturing. This in turn will create jobs in Italy and kick-start the economy.”

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In their report, published earlier this year, Colantone and co-writer Piero Stanig say a surge of imports from China hitting local manufacturers and subsequent job losses are among the key factors. The value of European imports from China more than tripled between 2001 and 2016.

Yet, for all that Le Pen and her fellow populists try to conjure up an image of “European carnage” across the continent along the lines evoked by Trump’s inauguration speech, the EU is unlikely to redraw the trade map.

“While we might see a slightly tougher tone with the Chinese, the EU has been built on a commitment to multilateral institutions,” said Kevin O’Rourke, professor of economic history at University of Oxford. “It could be the last man standing when it comes to free trade.”

The dissenting voice is just getting louder. In Austria’s northern industrial heartland once dominated by the steel industry, the nationalist Freedom Party is now the junior government partner in the region after doubling its support in 2015.

In the Netherlands, the historical home of free trade stretching back to the 17th century, polls show populist Geert Wilders among the front runners as the March 15 election approaches.

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Italy’s Northern League leader Matteo Salvini said he shares Trump’s protectionist agenda and praised his pledge to reinstate border tariffs. The party is competing with Forza Italia of former prime minister Silvio Berlusconi for leadership of a possible centre-right alliance in the next election, which could come as early as this year.

As Calletti, who now works as a consultant in the shoe business after legal issues related to his company’s bankruptcy, put it: “There’s nothing wrong in saying that our economy is different from Germany’s or China’s.”