Trump, Brexit, CETA: looking for the silver lining

In the same way there is no Paris without the Eiffel Tower, a new year cannot be started without first making some good resolutions. However, those good resolutions cannot be made without reflecting on what has been accomplished during the past year. Indeed, our past mistakes shape our ambitions.

Free trade needs strong support

Let’s get straight to the point: 2016 was not a good year for international trade. I am not talking about the Belgian trade figures – only a slight decrease for the nine first months compared to 2015 – but about the current climate around free trade. We always considered free trade as a one-way street: always more without the need to go back. Between an increasing number of countries, for a wider range of goods and services, through ever more encompassing agreements that go beyond the simple reduction of import duties. We were always dogmatic about free trade being a win-win situation for all.

Some of last year events cast doubt on those postulates. The British voted – although with a small majority – for Brexit and turned their back on the world’s biggest free trade market. By electing Trump, America opted for a partisan of mercantilism, who considers international trade as a zero sum game. At the same time, in Belgium, Paul Magnette set the cat amongst the pigeons when it came to CETA, the free trade agreement between the EU and Canada that had gone largely unnoticed until then.

International trade is the backbone of the Belgian economy
Geology and history may not have granted us with major natural resources or a big domestic market but our strategic location makes us a crossroads for trade in Europe and in the world. We compensate the lack of natural resources by a productive, qualified and multilingual population. Belgium’s business model looks apparently simple. Invest in education, research and development; then, implement this knowledge to the resources we import, allowing them to obtain a high added value; finally, export the finished products all around the world, benefitting of our central position. Little by little, according to Ricardo’s doctrine, some niches formed in which we specialized: biotechnology, smart logistics, food, chemistry, nanotechnology to name a few. This, in turn, attracted foreign companies to invest within our country and helped our economy to grow further. Nevertheless, this model is only viable if we keep the borders open: researchers should be able to travel and work abroad freely, goods should not be affected by high import taxes or by third countries’ divergent standards; companies can only grow through a larger market. What we experienced recently is not good news for Belgium Plc. Should we blame Donald Trump, Paul Magnette or the British leave camp for it? Not necessarily. World trade has obviously some weaknesses and not everyone turns out to be in a winning position. In a recent article, the Economist –always a strong believer in liberalism and free trade – pointed out that more attention should be paid to those countries and population groups that could suffer from free trade agreements. Also, small and medium-sized enterprises should have a bigger say in FTA talks. These agreements are too often tailor-made for well-organized multinationals.

Chambers of Commerce originate from the medieval guilds
Their mission was to defend the interests of their members, traders and craftsmen. Progressively, their role became to make trade an easier process, first between towns, then between states. Many centuries later, this is still one of the main missions of Chambers of Commerce, for open borders and more trade lead to both greater prosperity and peace. As a matter of fact, this belief led to the foundation of the International Chamber of Commerce, in 1919, by a group of traders who called themselves the “merchants of peace”. This is the reason why we cannot hail the recent evolutions and the increasing tendency to establish protectionist measures. They compromise the essence of what Chambers of Commerce fight for: a free, open and transparent world trade as a source for prosperity and a fairer distribution of international wealth. However, we are not to ignore the weaknesses of the current trading system. Free trade cannot only be focusing on protecting the interests of established stakeholders like big banks or multinationals, as the Harvard economist Dani Rodrik argues in its plea on smart globalization. If there is one positive outcome about last year’s events, it would be the fact that Magnette & co drew our attention to the free trade question. Together with our colleagues of EUROCHAMBRES and ICC, we must now ensure that this issue stays on top of the international agenda. For many years, EUROCHAMBRES has been a strong advocate of economic diplomacy and a greater involvement of SMEs in FTA negotiations. Thanks to the work accomplished within its commissions and to the numerous international standards, ICC is laying the foundations for a legally certain, honest and sustainable international economy. The United Nations’ decision to grant observer status to ICC gives a clear indication that it recognizes ICC’s important role to make international trade more sustainable and equitable.

This leads us to our good resolutions for 2017. After all the negative reports of the last months, international trade needs strong support, from people who can also highlight its positive aspects. This is the aim of this new website: together with ICC Belgium and the Belgian Chambers of Commerce, we want to show you the bright side of international entrepreneurship. Stay tuned.

Next: Benefits of trade agreements for SMEs