A Change of Direction for Global Free Trade?
What is the future of global free trade in the light of a "hard" BREXIT and a new US trade policy under Donald Trump? At a roundtable event hosted by the International Management Institute at the SML, experts discussed how these changes might affect Switzerland as a trading center.
In 2016, the idea of global free trade met with strong opposition. At the same time, voters increasingly approved of protectionist concepts such as "America First." Even Credit Suisse talked about "the end of globalization as we know it" in early 2017, worrying about the future in a new study: "If 2016 is the year in which globalization failed, 2017 could be the year in which a new, more multipolar world is developing - and with it the danger of a collapse of global trade". This is supported by figures provided by the World Trade Organization (WTO) in Geneva, according to which 2016 had the lowest growth in cross-border trade since the outbreak of the financial crisis.
The International Management Institute (IMI) at the ZHAW School of Management and Law (SML) addressed the effects of these changes for Switzerland as a trading nation at a recent roundtable discussion with experts in trade diplomacy, administration, and think tanks. The event was chaired by Dr. Florian Keller, Head of the Center for European Business & Affairs. In addition to analyzing global trends, the roundtable also focused on the role of Swiss foreign trade policy and the possible development of free trade agreements.
The panel of experts highlighted the fact that in particular public campaigns - for example by non-governmental organizations - can have a major impact on how trade agreements are perceived. The lengthy negotiations preceding the signing of the EU free trade agreement (FTA) with Canada (Ceta) at the end of October 2016 are often interpreted as a weakness of EU trade policy in the public media. However, in the same year, the EU concluded an FTA with Vietnam without pomp and fanfare and hopes also to complete negotiations with Japan in 2017.
More Clarity After Hiatus
Another insight that evening was the realization that the non-ratification of the Trans Pacific Partnership (TPP) must not automatically mean a failure of the Transatlantic Trade and Investment Partnership (TTIP). If President Trump's comments can be believed inasfar as that he supposedly considers "fair, bilateral trade agreements" to be more valuable than the TPP involving 12 states, the transatlantic TTIP between the US and the EU could be said to follow this logic. In this regard, more clarity is not expected until after 2017, following the hiatus caused by elections in France (May), UK (June) and Germany (September).
BREXIT as a Challenge and an Opportunity
On March 29th, British Prime Minister Theresa May triggered Article 50, initiating the withdrawal process of the United Kingdom from the European Union. The two years of negotiations will continue to bring many uncertainties. A rapid agreement is generally not expected - too much is at stake for both sides. The relationship between Switzerland and the United Kingdom is not immune to these changes. A close convergence of the two countries could certainly have potential benefits in some industries, such as the financial sector. Other industries will have to keep a critical eye on the BREXIT negotiations, since agreements in that context could be of great importance for the Switzerland-EU relationship.
The roundtable events of the International Management Institute at the SML are a platform for exchange on current international and intercultural issues of corporate practice. In June 2016, the Center for European Business & Affairs already hosted a roundtable discussion on Scenarios for the Brexit Referendum. Two more roundtable events are scheduled for the coming two months:
May 2017: France and Germany - What Do the Two Heavyweights Want with the EU?
June 2017: Economic Sanctions Against Russia - For How Much Longer?