With President-elect Donald Trump’s inauguration on Friday, the United States will have a new administration to set the tone for America’s relationship with the world for the next four years.
The transition in Washington comes in the midst of a heated debate on pros and cons of globalisation, and in the backdrop of populist politics that saw Brexit and rise of the conservative right in Europe and rejection of the liberal policies that Barack Obama pursued in his two terms as president.
Analysts have called these developments a backlash against unbridled globalisation that had resulted in loss of jobs in Western countries, especially in rural America and traditional manufacturing hubs like Michigan, and also impacted lifestyles. The newer forms of globalisation like the internet, artificial intelligence and related IT and technological advances took away a lot of blue-collar jobs and now threaten even white-collar employment opportunities.
Concurrently, the world has seen a nervousness from a spate of developments and conflicts, like refugees influx into European countries, lingering conflicts in Syria, Yemen and Iraq, instability on the African continent, a failed policy to contain extremist violence, a much faster intercultural experience, and a tenuous world economic recovery from 2008 financial meltdown.
The background to the November 8, 2016, US election also includes Russia finding a foothold in the Middle East and asserting its role in Eastern Europe.
Another major development of the times is the rise of China as a global trade and economic player. Beijing’s ascendancy on the world stage may well be the defining development of our time in view of China’s influence extending to several regions.
A number of the political, economic and diplomatic developments around the world have been shaped by globalisation in recent decades, particularly since 2001, when Beijing joined the World Trade Organisation. China has never looked back since then and now the second largest economy of the world is in a position to be much bigger global player.
President-elect Donald Trump has made it clear that his priority would be to “Make America Great Again” and put “America First” in terms of its being a center of trade and manufacturing through a variety of steps including bringing back offshore jobs, levying high taxes on imports and cutting taxes for American businesses. His promises have elicited a robust response from American stock exchanges. Some companies have even shelved plans to establish factories overseas and instead create jobs at home.
But it is not clear what other things will the incoming Trump Administration do to stimulate a higher American growth.
For example, what kind of immigration policy will the new administration adopt? Trump has been specific about building a wall along Mexican border and introducing extreme vetting for visitors from countries having terrorism problems. While America has provided conducive conditions for innovation and creativity to immigrants, it has also enormously benefited from the unique skills that the best and brightest from around the world bring to its shores. Take the example of scientists, IT workers, medical doctors, scholars and academia that arrive in the United States every year and give it a huge edge over international competitors.
On the other hand, China has prospered with a consistent high economic growth, rarely seen in modern history, and has called for adhering to globalisation.
President Xi Jinping, in his address to the World Economic Forum, favored the idea of an “inclusive globalisation” in order to ensure “a human community with shared destiny”. He also warned against an isolationist approach and argued that global trade was not to blame for economic challenges.
While Vice President Joseph Biden made one last plea during his appearance at the WEF for maintaining the liberal world order, it is the eight years of Obama’s policies and before that George W Bush’s policies that left Americans frustrated with repercussions of globalisation at home.
In fact, Obama may have unwittingly contributed to the mood for American retreat from globalisation. His policies provided little relief to workers laid off by offshoring of manufacturing jobs. Secondly, critics point out that he pursued a foreign policy based on intellectualism, rather than pragmatism and hard ground realities. For example, Obama’s off-handed approach to the worsening Middle Eastern conflicts in Iraq and Syria early in his second term suggested the US was no longer interested in world leadership on hot button issues. His policy toward South Asia also failed to yield desired results as after more than 15 years of American engagement, Afghanistan still faces an uncertain future and instability.
Similarly, critics contend, he went for the trans-Pacific partnership for free trade with Asian countries as part of his Asia pivot, not to look after American worker’s interests.
Now, the incoming Trump Administration has a big responsibility. First of all, it must articulate dimensions of its relationship with the world because a sudden American retreat from an increasingly integrating world could pose serious risks to its long term security. Secondly, the administration must come clear on related issues like trade and immigration.
But dealing with globalisation is not the Trump Administration’s job alone. Political leaders and experts across the spectrum have a job at hand — a dispassionate analysis on how America deals with the unprecedented wave of globalisation. Is globalisation per se to blame for loss of jobs or lack of foresight in dealing with the process?
Jack Ma, founder and CEO of internet giant Alibabam, drew attention to some aspects of globalisation at the World Economic Forum when he argued that American companies had been benefiting from globalisation but the United States did not share the gains with its people.
“I believe globalisation is good, but it needs to be improved. It should be inclusive,” Ma said.
China’s vehement support for globalisation and Western weariness about its impact throws up a huge question: Are the West and China switching roles on globalisation? It was the West which practiced globalisation during much of the last century, and it was not long ago that China protected its economy.
After the US role in rebuilding economies in Asia and Europe in the wake of WWII devastation, Chinese investment in African and South American countries is also helping efforts to reduce poverty. The two largest economies are also interdependent and any shift or change in the ongoing policies would require close working between them for a better outcome.
But globalisation is not just a trade process alone — it is a package that includes economic, trade, investment, political, strategic, cultural and diplomatic engagement. Major powers can only maintain influence through certain tools with economy, trade and diplomacy considered among the most critical.
Since WWII, America has maintained its global influence through trade, investment and diplomacy. Retreat in a large way looks improbable given dangers of disengagement. Reform is a painful process that may take time. In the immediate context, rich countries may have to share their wealth and expertise with the less developed nations but in the long run expanded economic interdependence contributes to stability and security.
But then there is the reality that a large number of Americans and Europeans are disaffected by the pace and manner of globalisation.
Given domestic imperatives and international stakes, President-elect Donald Trump has both an opportunity and challenge to work with the international community and reform globalisation in a way that is mutually productive.