By Choi Sung-jin
The growing sentiment against globalization in some industrial countries, symbolized by Trumpism and Brexit, will lead to increased trade protectionism, a report says.
In the report titled “Deepening shadows of globalization and growth of trade protectionism,” LG Economic Research Institute said, “Globalization, which has become a dominant global trend over the past generation, is now facing a huge challenge in the very birthplace of industrial countries.”
It pointed out that anti-globalization attitudes are spreading from advanced trading powers, such as the United States and the United Kingdom.
Although globalization has sharply improved the “inequity among countries,” namely between developed and developing nations, it has widened “inequity within countries,” as the opening of markets put working people in industrialized countries in direct competition with workers in industrializing nations, pulling down the income of the former, the report said.
The integration of the global economy and the rise of emerging economies have put downward pressure on economic players in advanced countries. The cross-border movements of commodities, capital, technology and labor have drastically increased, expanding the scope of competition and resulting in the bankruptcies of companies in advanced countries with relative competitive disadvantages and have reduced the wages of their workers.
“The problem is, the discontent of economic players in industrial countries grows in the face of job losses and lower income, and their disgruntlement is reflected in their countries’ policies and politics through votes,” the report said. “As seen in the case of ‘Brexit,’ these countries can adopt policies that are harmful to the national economy by the choice of the voters.”
Actually trade protectionist measures are rapidly being enacted in industrial countries, led by the United States, particularly targeting manufacturing powerhouses, including Korea, China and Taiwan, which aim to join the ranks of advanced countries.
The U.S. Commerce Department recently slapped antidumping duties ranging from 38 percent to 65 percent on cold-rolled steel plates imported from Korea. Besides, four made-in-Korea export items have been on the list of U.S. import regulations in the first half of this year, the same number for all of last year, indicating how the blade of the U.S. protectionist sword has become sharpened.
In the lead-up to the U.S. presidential elections in November, both the Republicans and Democrats have included tougher trade-regulating measures in their platforms, causing concerns abroad.
The Republican Party will make clear its “Put America First” principle in the conclusion of free trade agreements with foreign countries, and nullify the agreement if cooperation from the other side is unsatisfactory. The Democratic Party, which has recently been more favorable toward free trade, has also regressed into protectionism, promising it would put its first priority on U.S. workers’ rights and interests.
The report noted that at a steel industry conference in June, some U.S. speakers who represented America’s steelmakers openly called for protecting U.S. markets, saying, “Protected trade is fair trade.” Corporate America, once the preacher of free trade, is now putting forth a new normal, it said.
Pointing out that the United States is harshly criticizing China, whose people are also displeased with their country’s economic slowdown, the report said, “That could result in a reaction stronger than necessary from China, spreading protectionism to emerging economies.”
For example, the U.S. recently took issue with the Chinese government’s illegal subsidies, currency policy and regulations on U.S. businesses, the report pointed out. These moves may help sway American voters to change their minds but give the impression to the Chinese people that Washington has declared a trade war, the report added.
“Possibilities are not high that the ongoing anti-globalization trends would go as far as reversing the flow of globalization itself,” said Kim Hyung-joo, a fellow at the private think tank. “It is certain, however, it would increase the uncertainty in the global economic and political environment, as has been the case of Brexit.”