Guest post from Phil O’Reilly, member of ABAC New Zealand and Managing Director of Iron Duke Partners
These are testing times for trade liberalisation. There has been a lot of talk over the last year about the rise of protectionism and the risks of an all-out trade war. Whether this actually manifests in significant concrete action remains to be seen – but what should worry us is how hard it is to shift the dial on the public debate on trade. We cannot afford to be disengaged from this: our communities (and the most vulnerable groups in them) will be the losers if we see the erosion of a fifty-year consensus towards more open markets and freeing up flows of trade, investment and people.
I was in Toronto last week for a meeting of the APEC Business Advisory Council (ABAC), along with fellow senior business leaders from around the Asia-Pacific region. We spent a lot of time talking about how we can best support APEC Leaders to press ahead with the hard yards of trade liberalisation and keep the faith with our overarching vision for regional economic integration. The trade liberalisation goal does not seem to be perceived by everyone in the region as the clear imperative that it used to be. The rhetoric that has emerged in the last year in some quarters has swung worryingly in the other direction, with (admittedly boilerplate) statements about resisting protectionism being very deliberately removed from various international declarations, for example those from the G7, G20 and even APEC Trade Ministers. Despite some worrying trends in the messaging, the talk has not – so far – resulted in significant concrete action to raise trade barriers, beyond the ongoing blight of non-tariff barriers (which are of course highly prevalent in food, agriculture, manufacturing and services trade – although even there we have seen some signs of the largest economies stepping back somewhat from resorting to such measures in the last few months). But should the first few dominoes fall, it will become all too easy for governments to respond to special pleading by various domestic interest groups for new subsidies, raised tariffs, onerous regulatory requirements or curbs on the movement of skilled workers.
Should that concern us? The view of the Asia-Pacific business is a resounding “yes”. Trade and all that goes along with it has lifted millions out of poverty in our region – people today live indisputably better lives than previous generations. That is not to say we have got it completely right: governments still have a big task in ensuring that they have appropriate policies in place to allow workers, small business and wider communities to adjust as painlessly as possible to the rapidly-evolving economic environment, not least as the wave of digital transformation sweeps over us. But pressing ahead with regional economic integration, and avoiding a downwards spiral of tit-for-tat trade barriers, is critically important for the sustained prosperity of our region – not just for big corporates, but for small firms and smallholder farmers, for women entrepreneurs and our communities overall. It could be said that we have collectively dropped the ball in making the case to the public for more open trade, and in ensuring that we truly achieve “inclusive growth”. Business and governments have different but complementary roles when it comes to explaining trade and globalisation. Government has the key role, and the overall responsibility for communities, adjustment policies, welfare and all the rest. But business also has a role to explain trade to its stakeholders including employees, suppliers, customers and the communities that business serves. The ABAC view is that business needs to stay engaged, along with political leaders, to communicate more clearly about how trade can and should work for everyone.