Davos 2018: multilateralism versus bilateralism

Employment and Social Affairs

Davos economic forum in 2018, for the second year in a row, was the stage of a conflict between two opposite visions to drive world economy: globalization and protectionism, the latest one embodied by Donald Trump “America first”. Indian prime minister Narendra Mody took the place of Chinese president Xi Jinping, that last year from the same of stage of the Swiss resort launched a robust defense of globalization and free trade. Modi mounted a defense of multilateralism and free trade, urging joint action also on climate change and economic cooperation . “Forces of protectionism are raising their heads against globalization, their intention is not only to avoid globalization themselves but they also want to reverse its natural flow,” he said. On the same position European leaders, that in Davos warned against a return to nationalism.    Those positions were sound enough, but not so different from the ones asserted in 2017 by Chinese president claiming that “countries should view their own interest in the broader context and refrain from pursuing their own interests at the expense of others”. According to him “no one will emerge as a winner from a trade war” and China would not seek to benefit from devaluation of its currency or a “currency war”.
It seems true to stress that Donald Trump election in 2017 turned the point of view upside down, making United States of America the opposite of what it was “the leading country of globalization” and leaving to China and India the role of the leader of multilateralism and free trade. And this radical change has arrived together with another shock for Europe: Brexit. In this sense EU leaders are much more worried from the aggressive protectionist and nationalistic rethoric.
On friday 26th of January in Davos was the turn of the US president. “There has never been a better time to hire, to build, to invest and to grow in the united States. America is open for business and we are competitive once again”, he said, claiming that he “lowered our corporate tax rate from 35 percent all the way down to 21 percent” and that this will bring positive consequences on the job market. “The world’s largest company, apple, announced it plans to bring $245 billion in overseas profits home to America”, he added. Trump also pledged “to eliminate two unnecessary regulations for everyone new regulation” in order to make it easy to do business in America. He has told global finance leaders he will always put the US first when it comes to trade, but “that does not mean America alone”. According to Trump, US is prepared to negotiate mutually beneficial, bilateral trade agreements with all countries.
This last point should be stressed in order to avoid a too simplistic analysis. In this sense it seems true that Washington does not want a complete isolation but it is just choosing bilateralism instead of multilateralism. For this reason is significant that India was one of the countries that in Davos appeared to be as the leader of globalization and multilateralism, while New Delhi indeed has a strong partnership with the US. The goal of increasing the annual trade between the US and India to USD 500 billion is not a “distant dream”, Indian Finance Minister Arun Jaitley has said recently. Jaitley said the relationship between India and the US had evolved into a very strong partnership in the last few years and goals like ‘Mission–500’ outline and re-emphasise the objective of the partnership. India has also a strong relationship even with Israel, a key partner of US and Donald Trump, as highlighted by prime minister Netanyahu visit to India from January 14 to 19.  For this reason is more right to highlight that Trump has radically changed the way of acting compared to Barack Obama, and doesn’t believe in multilateralism but in bilateral ties with few strong partners. Also the change of approach towards Iran is emblematic in this sense, with a clear choice toward relationship with Saudi Arabia. For international organizations like the EU the problem with Trump appears to be exactly his opposition to multilateralism, rather than just to globalization. To deal with this assertive approach from the US, the international organization should be strong enough to keep on cooperating when is possible while not refraining to reject all the actions that breaks the international rules and regulations.

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