Bill Emmott

Fears of a protectionist backlash have proved unfounded on both sides of the Atlantic.

Those of us who support globalisation, who celebrate the way it has raised living standards and reduced poverty around the world, are forever worrying that there may soon be a backlash, a revival of protectionism and economic nationalism. We mutter angrily whenever politicians make nationalist noises. With Barack Obama emerging victorious as the Democratic

candidate for America’s November election, the muttering is going to resume — for against all his virtues, one of his vices is that he has been talking tough about trade. But on current evidence the muttering will be misplaced. The surprise is how nice he has been about trade, not how nasty.

A year ago, the prime candidate for a protectionist backlash was the fount of globalisation itself, the United States. If anyone had said then that in the midst of the American presidential

election the country would be suffering a recession caused by a financial crisis, most economists would have predicted a big upsurge in protectionism during the campaign. It is time to admit that this hasn’t happened. America is not becoming isolationist. In fact, globalisation is not under any serious threat at all, from either side of the Atlantic.

How can a free trader such as me make such a complacent statement? Don’t I know that during the Democratic party’s amazingly long and dramatic primary contest, both Obama and Hillary Clinton have made speeches attacking trade deals? Didn’t I notice that the US Congress

recently rejected a proposed bilateral trade deal with Colombia, and that other trade arrangements, including one with South Korea, also look under threat. Yes, I do and I did — and this is all to be regretted and criticised. But it is still not a serious threat to globalisation.

One piece of good news is Obama has won, and his anti-trade rhetoric has been less strident than his opponent’s. But the main reason for optimism is that virtually all the presidential candidates’ anti-trade language has been directed at America’s neighbours, Mexico and Canada. Very little has been directed at the country with which America has by far its largest bilateral trade deficit: China. That is a big surprise.

Of course, this could change. If unemployment were to rise sharply in the next few months, the pressure to make promises to protect jobs from “unfair” Chinese competition might increase. John McCain, the Republican candidate, is a firm advocate of free trade, so Obama might choose to sound protectionist in order to emphasise the difference between them. But that is unlikely; since McCain is a clear, lifelong free trader, Obama needs to sound only a little critical on trade to differentiate himself. That way, he will retain the maximum freedom of manoeuvre when he becomes (as he hopes) the next president. It seems much likelier that the economic debate between McCain and Obama will focus on issues such as healthcare, inequality and taxes, rather than trade.

The real arena for anti-globalisation rhetoric will be the Congressional elections, especially those held in areas that have lost a lot of manufacturing jobs. Given that the Democratic party is likely to increase its domination of Congress in these elections, and that the Democrats have in recent decades been more protectionist than the Republicans, that could be worrying for trade advocates. Yet, as the current session of Congress (under Democratic leadership) has shown, what that is likely to mean is only that new trade liberalisation deals will be blocked.

The lack of further progress, whether on bilateral trade or the World Trade Organisation’s Doha round of talks, is disappointing. But it does not imply any reversal in the gains that have already been made. All this is a far cry from 1999, when crowds of anti-globalisation protesters disrupted the WTO meeting in Seattle, or 2001, when the same occurred at the G8 summit in Genoa.

Such protests still occur, but are now much smaller and weaker. Politicians can still be found in Europe who complain about globalisation, notably Italy’s new finance minister, Giulio Tremonti, in his book Fear and Hope, published in the run-up to Italy’s general election in April. President Nicolas Sarkozy of France has also railed against foreign takeovers of French firms. But so what? Given that today many more cross-border takeovers occur than would have been considered politically possible 10, 20 or 30 years ago, the world can live with a bit of nationalist rhetoric and even a few blocked mergers.

Economic nationalism is regrettable and should be criticised whenever and wherever it occurs.

But what has been heard so far, on either side of the Atlantic, seems weak and unlikely to have much impact. With the world economy slowing and America entering a recession, you would expect economic nationalism, the language of fear, to get louder. But it will need to add a lot more decibels before it becomes any sort of true threat to globalisation.