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Raise a glass to ongoing globalization

By Harvey Morris (China Daily Europe) Updated: 2017-03-12 13:45

Far from being harmful, as opponents of free trade claim, open trade policies will enable the world's economies to thrive

One of Britain's top supermarket chains just became the first major retailer to start stocking Chinese wine, two years after the best English wines appeared on shelves in Beijing and Shanghai.

Who, until recently, even knew that China and England produced wine, let alone that they were shipping it off in both directions for the enjoyment of consumers half way around the world?

This small but apparently flourishing two-way trade provides a microcosm for the current debate over globalization and free trade that is affecting political outcomes in the West.

Globalization skeptics would argue that the English and Chinese might be better off drinking their own wine and maybe erecting barriers to discourage foreign competition.

Classic free-traders would counter that the trade offers consumer choice and an incentive for higher production and quality, along with lower prices for buyers at both ends of the chain. In other words, a win-win situation.

The pros and cons of trade have been debated from even before economists were invented.

The 19th century British historian Thomas Macaulay, reflecting on the political schisms over trade that had divided his own nation, once observed: "Free trade, one of the greatest blessings which a government can confer on a people, is in almost every country unpopular."

His statement was a recognition of the phenomenon whereby nations as a whole invariably benefit from trade, but individuals or groups of individuals can suffer. When a company buys foreign goods because they are cheaper, it and its customers benefit. But local producers and those they employ will lose sales.

The easy response from those who lose out, and from the politicians who seek to represent them, is to blame the foreigner. Donald Trump owes his election in part to the votes of redundant workers in the US Rust Belt who accepted his argument that China was to blame for undercutting local industries such as steel.

Similar arguments have been made, albeit less raucously, in Europe, where officials have toughened anti-dumping barriers to imports of Chinese steel that are blamed for depressing world prices and destroying European jobs.

The counter-argument is that erecting barriers merely damages other European industries that require steel at the best price and are dependent on fluid global supply chains.

Economists, who do not agree on much, tend broadly to accept that protectionism is not a panacea for those most exposed to the negative effects of globalization.

One of the most eminent of their number, the Nobel Prize winner Angus Deaton, has recently written of how the Emperor Zhu Di dismantled the world's largest fleet in the 15th century because his imperial elite feared the rise of a new wealthy merchant class.

This early act of protectionism contributed to centuries of economic decline in China as new powers such as England, Portugal and the Netherlands took to the high seas to exploit opportunities for trade.

That situation was only reversed in recent decades as China adopted its strategy of reform and opening-up that has lifted millions out of poverty. China now rivals the US as one of the world's largest economic powers and, in view of political developments in the West, as the most enthusiastic champion of globalization and free trade.

The challenge for Western governments is not to curb the expansion of world trade but to mitigate its impact on vulnerable sectors of their economies.

There will no doubt always be tensions and conflicts arising from trade relations that are perceived as unequal. Europe's top business lobby, the European Union Chamber of Commerce, this month raised objections to Beijing's Made in China 2025 plan to boost domestic industries. The plan could unfairly squeeze out foreign companies, the lobbyists complained.

The new Trump administration has meanwhile warned it will take aggressive action to ensure that US producers receive fair and reciprocal access to Chinese and other markets.

Resolving such disputes should not be beyond the wit of modern politicians.

In earlier times, nations went to war over trade. Perhaps these days they need to see each other more as partners than competitors and to gather around a table to resolve their disagreements rather than exchanging empty rhetoric.

Surely the British, the Chinese - and everybody else - can drink to that.

The writer is a senior media consultant for China Daily.

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