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Mutually assured destruction isn’t just about nukes

November 2, 2016



Imagine a world in which national borders suddenly slam shut. International trade grinds to a halt. Perhaps because of war. Or because of a lethal epidemic that has caused your country to prohibit anyone from entering for fear that they might introduce the infection. Ports closed. Airports shut down. No imports and no exports.

Let’s suppose that this was not a temporary aberration – it was clear that for an indefinite period your country was going to have to rely on its own resources.

How would you cope? In Britain, a good proportion of our cars, trucks and trains would break down within five years for lack of spare parts. We would start growing large quantities of sugar beet to make up for the lack of cane products. We would have to go back to mining coal to keep our homes warm. Fracking would become a national necessity to keep the gas power stations running. The internet would shut down because some countries would be unable to maintain the nodes for the lack of chips and printed circuit boards. Doctors would have to revert to traditional diagnosis techniques because the scanners and all the other medical equipment on which we’ve come to rely would slowly degrade.

In the end, we would probably cope, provided civil order didn’t break down. And to prevent that, we would probably need a police state the likes of which we have never seen before. Everything we would need we would have to make, mine or grow.

It’s almost unthinkable, but let’s think about it anyway Would all the small countries of the world become mini Cubas and North Koreas, making do and mending, enduring periodic famines, and, deprived of the fruits of international cooperation, unable to deal with health crises and resource shortages? You’d reckon that  the United States would cope, with so many resources to be found within their borders. But what about China and Japan, with their high reliance of imported oil? What about France, so reliant on nuclear power? Where would it find the uranium to keep the power stations running? Where would just about every country reliant on computer technology find the lithium and the rare earths?

Of course, short of World War 3 or some horrendous epidemic, it isn’t going to happen. After all, trade across regions has been going on since the bronze age. But thinking about the consequences of a collapse in international trade makes you realise what a delicate ecosystem the world economy has become. And how, since the beginning of the 20th century, it has been getting ever more delicate.

Why this apocalyptic snapshot of a world without trade? Have I been reading too many Margaret Atwood novels, or gorging on Mad Max movies? Not lately, but there are plenty of other cues for dystopian musing if we care to look for them. Ebola and Zika. Donald Trump vomiting hyperbole about Hillary’s bloody emails. Russian warships passing by the cliffs of Dover on their way to pulverise Aleppo. Videos of tunnels full of ISIS flags and people choking on sulphur fumes.

For the benefit of  us foreigners who are following the US elections, just about every newspaper and TV station from London to Taiwan has sent a reporter to interview jobless white voters against the backdrop of dead factories, mines and steel mills. This report is an example. All the fault of the Chinese, the Mexicans and whoever else the “deplorables” can find to blame. Oh, and Hillary of course.

Actually, my train of thinking didn’t start with the blatherous walrus about to become President of the United States. It started in Denmark. My wife and I were on a visit to Copenhagen. As we wandered through the city centre, we happened on a procession snaking down the street on its way to the parliament building. A very Danish demonstration – young and old, people wheeling bicycles, singing songs, waving placards. Hardly a policeman in sight. If this was London, cops in full riot gear would have been formed up somewhere ahead in a Macedonian phalanx ready to repel the unruly mob. But not here. Being sensible Danes, they waited until the gap between the end of the working day and dinner time to make their protest. And the object of their very civilised ire? Two treaties. One signed the other day, and the other still grinding through the works after ten years of negotiation.

The first was the Comprehensive Economic and Trade Agreement – also known as CETA – between the EU and Canada. The other was the Transatlantic Trade and Investment Partnership – TTIP for short – between the United States and the European Union. Compared with TTIP, CETA, which was finally signed on Sunday after the objections of the Belgian Walloons were overcome, is like a pimple on the backside of an elephant.

TTIP is huge. So far there have been fifteen rounds of negotiations. There are twenty-seven separate subjects for negotiation, ranging from agricultural market access, e-commerce, energy and raw materials to dispute settlement, procurement and financial services. Each of the concluded set of sub-agreements must be ratified by each of the 28 (shortly to be 27) member states of the EU.

There are many reasons why the Danes and many others across the Union are getting aerated about it. The possible reduction of technical standards to lowest common denominator, the threat to national and local democracy, the unreciprocated ability of corporations to sue states. The anti-TTIP forces are also angry because at the insistence of the US, the negotiations are being held in secret (haven’t I heard a few rumblings about secret negotiations somewhere else recently? Oh yes, Brexit).

The whole deal was supposed to be agreed in principle by the end of this year. There’s not a chance of that. Maybe in ten years, some experts say. According to others, the whole thing is a dead duck.

And should Trump be elected US president in seven days’ time, that duck will plunge flapping and squeaking out of the sky in short order thereafter.

Should TTIP survive the slings and arrows heading in the direction of both parties in the next few years, it would involve 60% of the world economy. That’s one big duck.

What’s more, the US, not content with deploying a vast team of negotiators to eat hotdogs and drink schnapps with the Europeans, is pursuing a Trans-Pacific Partnership (TPP) with eleven other countries on the Pacific Rim, including Canada, Japan, Malaysia, Australia and New Zealand. That one’s a bit further down the track than TIPP, but since both Trump and Clinton propose to dump it, we can safely assume a further reduction in the duck population.

What of Russia and China? You would think that all the cozying up being contemplated would leave them seriously isolated. But they belong to the biggest and fattest duck of all – the World Trade Organisation. Just about every country in the world is either a member or applying to join (a notable exception being – guess who – North Korea). In other words, virtually everyone does their business according to a vast system of rules and conventions that prohibit independent actions that might be to the detriment of member states.

So it was those bleak images of rusting factories, along with Trump’s bombastications about American jobs for American workers that led me to speculate about how we got to here, and what would be the consequences if the whole global trade edifice came crashing down. And pretty dire those consequences might be. One could even suggest that a tradeless world – or at least a world with vastly restricted international trade – would be like a slow version of World War 3. The immediate extinction of half the world’s population in a single conflagration would be replaced by local and regional wars of competition for resources, starvation on a massive scale. Very Margaret Atwood, in fact.

I say that because nobody has everything, and nobody makes everything.

Go back to 1900, and that was far less the case. More or less everything that the United States needed in order to run its economy and its infrastructure could be found – and manufactured – within its borders. The factories were humming, the oil wells gushing and the forests crashing down. Other countries were not so lucky. But some, including the industrialised nations of western Europe, came close.

Fast forward to today. Not a single country in the world – not even Cuba or North Korea – doesn’t depend on imports of one kind or another, be it technology, raw materials or intellectual property. Whether we like it or not, we are locked into interdependence. And all Trump’s blustering will not change that. It would take the US several decades to rebuild the manufacturing capability needed to be self-sufficient in all the goods, services and amenities that Americans have come to expect. And very likely the process of adjusting to self-sufficiency would be so traumatic that the institutions and values the country recognises today would be blown away before it gets there.

Not only would America and other large nations have to start rebuilding their manufacturing capabilities, but the whole edifice and ethos of business would have to be recast. Banks would have to deal with the restricted flow of funds from one country and another. Large enterprises that long ago ceased to think of themselves as having any responsibility to one country or another would probably be carved up and nationalised. E-commerce beyond national borders would probably grind to a halt because because there would be few transactions to carry out.

Am I stating the obvious? Probably, yes. But stop for one moment and think. How many people go through their lives without the slightest consideration about where their phones come from, how the internet works, who makes their cars and where their food was produced. We take this stuff for granted.

You can argue until the cows come home about the benefits and drawbacks of globalisation, about threats to jobs, to democracy and to ways of life. You can put brakes on trade to protect national interests. You can stop China from dumping cheap steel. You can protect wages by banning immigration from low-wage countries. You can stop outsourcing to India, Taiwan and China. But each of these actions have consequences, and not necessarily those you might want. For example, the price of a living wage could be reduced exports, because your home-grown industries can’t compete with low-cost producers.

So the message to Americans who keenly await a new dawn under Donald Trump is that those wire factories and steel mills will never return unless he raises import tariffs so high that the end product becomes cheaper to buy from his own country rather than from abroad. And if he raises the tariffs, how much will it cost his manufacturers to buy the materials they need to create the next generation of computer chips, over which China has a near-stranglehold? Or the next generation of nukes, or just about anything else that it imports?

The bald reality is that every country in the world is addicted to foreign trade, because not a single one can survive as currently configured without it. Those demonstrators in Copenhagen were not arguing about the principle, only the detail. They have no more desire to stop exporting butter, cheese and bacon than to stop importing mobile phones and Japanese cars.

And just as it is more or less impossible to plan for life after World War 3, there is no Plan B to cope with the after-effects of a collapse in international trade. So it makes sense for all governments trying to get the edge in trade negotiations to stop posturing, get practical and start thinking beyond national noses. And that means you, Mr Trump. And you, Mrs May, along with your negotiating partners in the EU.

And we voters who think that we can solve all our problems by building walls along our borders should remind ourselves that interdependence is our best chance of living in peace. Because, as I said, nobody has everything, and nobody makes everything. Mutually assured destruction isn’t just about nukes – it’s about economics too.

If irresponsible politicians bring the whole edifice crashing down, the only Plan B is to start stockpiling – everything.

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