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The Future of Asia 2018

Trump's attack on globalization will not go unchecked, experts say

Trade tensions seen as 'just the beginning' of US-China rivalry

From left: Tomo Kinoshita, chief market economist at Nomura Securities and panel moderator; David Parker, New Zealand's minister for trade and export growth; Ildefonso Guajardo, Mexico's secretary of economy; Li Xiangyang, senior research fellow and director at the National Institute of International Strategy, Chinese Academy of Social Sciences; and Amy Searight, senior adviser and director of the Southeast Asia Program at the Center for Strategic and International Studies. (Photo by Maho Obata)

TOKYO -- U.S. President Donald Trump's attacks on the global trade system and rules-based order will not go unchallenged, but nations will have to fight to keep globalization alive, an international panel of experts at Nikkei's Future of Asia conference said on Monday.

Trump's protectionist approach, from imposing tariffs against some allies to belittling the World Trade Organization-based trade system, "does harm the effectiveness of the global market network mechanism and may reverse globalization," warned Li Xiangyang, senior research fellow and director of the National Institute of International Strategy at the Chinese Academy of Social Sciences. "In this sense, globalization has indeed reached the crossroads."

The three other members of the panel were all in agreement with Li, with Ildefonso Guajardo, Mexico's secretary of economy, noting that the challenge is "not happening only in the multilateral system," such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, or the North American Free Trade Agreement, but it is "being reproduced with every U.S. trade bargain."

"We have a lot to lose if we give up on the fight to keep multilateralism alive," Guajardo said.

In order to keep the flame of multilateral trade burning, David Parker, New Zealand's minister for trade and export growth, said the world has to "stand up for the rules-based system and fight very hard" to maintain the appellate body to make the WTO rules enforceable. Parker struck an optimistic tone, however, saying that the world is already developing alternatives to the WTO-based system, like the CPTPP, also known as the TPP-11.

"In the face of [Trump's] threat, plurilateral agreements become more important," he said. "I wouldn't be surprised that if the WTO continues to be becalmed, that CPTPP becomes more and more important by the year because it includes very good rules, and it is designed in a way that is intended to be welcoming of other countries who want to pursue their points of comparative advantage."

Li added that China's Belt and Road Initiative, despite often being labelled as Beijing's tool to rewrite global trade rules to its liking, "in a way complements" the global trade system, and will "inject new impetus into globalization."

Despite agreeing on Trump's actions on multilateral international trade, the trade experts from the West acknowledged his administration's concern about certain Chinese trade practices, such as the role of Chinese state-owned enterprises in the global market, as well as the theft of intellectual property.

There is a growing consensus in the U.S. "to really focus on the long-term economic challenge that the U.S. has with China based on a very mercantilist, predatory set of economic policies that are designed to take intellectual properties in various ways," said Amy Searight, director of the Southeast Asia program at the Center for Strategic and International Studies. "Now with this 'Made in China 2025' plan, there is a lot of concern that this is going to get a lot worse."

The issue of intellectual property is a major sticking point in Sino-U.S. relations, but Li said the basis of the friction between the two sides stems from the fact that China is now defined as a clear rival to the U.S.

"The current trade war reflected the strategic competition between the emerging major country and established major country," he said. "So trade war and disputes [between the U.S. and China] will become the new normal. It is just beginning."

Nikkei staff writers Keijiro Ohata, Nana Shibata, Chiaki Kameda and Arisa Kamei contributed to this article.

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