In Buenos Aires, from where I write this piece, Bertolt Brecht´s Mother Courage and her Children was restaged. This is the story of a woman with three children, who makes a living trading in the middle of a war... sometimes with great success. As the plot develops, the audience understands that all that war gives, war also takes away. 

Drawing a parallel between this plot and the current situation in world trade is an exaggeration. However, I cannot refrain from thinking of these final words anytime I hear people trying to take advantage of current international trade tensions. Any gain will be temporary, and the most harmed will be the weaker countries.

Similarly, in an environment characterized by uncertainty and the contraction of world trade and investments, the most affected are small and medium-sized enterprises. Unlike multinationals, they are incapable of redirecting exports to alternative markets and are not equipped with back offices to deal with new regulations.

Building an open global economy with strong multilateral institutions is in everyone’s best interest, especially less developed and developing countries.

On the one hand, the benefits of free trade are indisputable. Countries grow when they increase productivity; free exchange is the way to channel resources toward the most productive activities. On the other, institutions are needed to guarantee that so-called free trade is conducted according to the rules of the game that countries have agreed upon. 

Free trade and institutions go hand in hand: free trade without clear and fair rules is no other than the law of the jungle, where only the strongest survive. Therein lies the importance of multilateral institutions since they allow relatively weaker countries to join forces to set up rules that would be hard to frame unilaterally.

But if free trade and the institutions that come along with it are so good, why is it that protectionist and isolationist ideologies are on the rise? One common explanation is that the expected benefits derived from the free flow of goods, services and resources were not as expected. It is true that there are sectors that did not benefit from it directly. Let´s remember, for example, workers from developed countries who were previously working in industries that moved their factories to countries with lower salaries or cost of production. Let´s also remember the impact on developing countries that saw local inefficient industries challenged by cheap imports. 

It is also true that institutions that should have regulated the flow of goods did not perform as expected. Take, for example, the time needed to solve a commercial dispute or the struggle weak countries face when dealing with no-tariff barriers in their export markets. 

A falling tree makes more noise than a growing forest. This discontent works as a breeding ground, used by left- and right-wing politicians to hold power by offering simple solutions to complex problems. This narrative is becoming omnipresent in public discussions and, in some cases, it is even set as an example of the best course of action. This kind of proposals will very unlikely contribute to solving anything.

In this context, we all have challenges ahead: 

Governments should provide their economies with flexibility so as to be able to adapt to the vertiginous changes faced by open and global integrated societies. At the same time, they have to build safety nets so that temporary losers can be swiftly reincorporated into social and productive activities. 

The challenge (and responsibility) of great powers, is to ensure that deals are real win-win situations as they state them to be. Of course, relatively weak countries cannot demand great powers to protect their interests. But as today’s societies are more empowered than ever before, more actors have the power to veto; yet nobody is single-handedly capable of imposing long-term conditions on anybody. Without inclusive growth, we will be bogged down. 

Lastly, the role of individuals… that is to say, us. We have the challenge of keeping an open attitude to change, to competition and to continuous learning. If we do not maintain this philosophy, I think it won’t be possible to successfully surf the waves of change that characterize our times. By the way, this change has just started... as an example, every time I go to the supermarket and see the lines of cashiers manually scanning products, I think that soon, their jobs, as well as many others, will be gone. And we cannot blame any country or company for that; it is none other than creative destruction, boosted by the incredible technological progress of our time. 

Perhaps the major medium- and long-term consequence of the trade war is not only the uncertainty and combative narrative used by populist politicians from the entire political spectrum which divide us, but also all the great developments that we are missing out on. I am referring to the opportunity for great powers of this century to pool their resources and face, through fair competition or direct cooperation, the serious challenges we face as a global society: climate change, new jobs, progress and stability of marginalized regions, the agenda on women, children and the elderly, among others. 

We are at a point where we need to strengthen the message of openness, integration and fair competition that will take us to a shared prosperity. 

As humans grow, they leave behind the anxiety of teenage years, and the quest for power of young adulthood. In general, when reaching maturity, they become aware that the goal in life is to be happy, in equilibrium with themselves and their surroundings. 

As we evolve as a global society, we should follow the same path.

Guillermo Santa Cruz is director of the Chinese Investment Monitor of the Argentina-China Chamber of Commerce, and a member of the Argentine Council for International Relations.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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