Wednesday, October 26, 2016

The Walloons have spoken

Last week a small region of Belgium, that European powerhouse, managed to effectively scupper the CETA.  It really is a sight to see.

The reaction from the movers and shakers on both sides of the Atlantic has been predictable.  I read one opinion piece stating that the very credibility of the EU is at stake and that they cannot be trusted any longer to negotiate any kind of deal.

Of course those who religiously support free trade have to blame the EU or the Walloons or Satan himself because to blame the concept of free trade itself would show an very big loss of faith.

What the supporters of free trade refuse to admit, even to themselves, is most of the Western democracies have seen free trade in action for almost four decades and an increasing number of those living in those democracies are not liking what they are seeing.  

The supporters of free trade have been exaggerating its benefits for decades, stating it would lower prices, create jobs and bring incalculable economic benefit to the economies involved in these free trade deals.  They admitted that there would be some losers but their numbers would be insignificant and goverments would be able to provide assistance to them to "adjust" to the free trade realities.

Of course none of this happened.  Prices still continue to rise, the number of good paying jobs that have fled from the rich western countries to the poor southern countries increases every year and the "adjustment" programs have been a token joke.  You see those who support free trade generally support smaller governments and reduced government spending so the promised adjustment programs never really amounted to much.

Further many are seeing threats in these free trade deals.  They are not just deals to allow the free flow of products and services between countries. There are clauses in them that would allow corporations to dictate policies that have been the perview of governments almost since governments existed, including, health, clean water, the environment, just to name a few.  Most citizens expect their governments to take care of these basic services and they are justified in being worried about any deal that might take away a government's ability to do so.

It should come as no surprise to free trade proponents that we are now seeing a backlash against free trade deals.  More and more people are saying enough.  The Walloons are just the latest.  Bernie Sanders was competitive in the Democratic primaries in the US while running on a platform that went completely against the free trade dogma.  He forced Hillary Clinton to step away from a full throated defence of the TPP.  As well, Donald Trump has promised to either scrap the NAFTA or renegotiate it, presumably to the point that it would be a free trade deal in name only.  Regardless of how the election turns out in the US I believe that there is more than a 50% chance that the TPP will die on the vine in the coming years. 

However, it is a surprise to them.  They just cannot see past their ideology to see that a growing number of people are not happy with the current situation.  So, they will keep pushing.  I suspect that the Walloons in particular and the Begian government in general will be brought onside with the CETA by means of the old carrot and stick approach.  

The free traders will win that battle but the cost will be high as the number of people who do not believe in free trade grows as a result and the opinions of those who already do not believe grows harder against free trade.  It is only a matter of time before that hits critical mass and some demogogue with more political smarts than Donald Trump comes along and galvanizes that critial mass into a true organized movement against free trade.

If free traders were not blinded by their ideology they would see the danger and take a break from pursuing more free trade deals to allow those opposed to catch up.  If they were also smart they would be supporting increased government spending on programs to assist those who have been losers as a result of free trade (and there are many).  Taking these two actions would go along way to countering the arguments of the anti-free traders.

However, free traders are neither smart nor open minded enough to do either of these actions so they will continue on the current path.  So, buckle up, the Walloons are just the beginning.  The backlash will continue and it will probably overwhelm the supporters of free trade soon enough.  

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