European Sting: Confronting Neo-Mercantilism

Trade tensions run high, led in no small part by the US-China trade spat, Brexit negotiations and the need for World Trade Organization reforms. “Without agreed legal frameworks, the default becomes ‘might is right,’ where the most powerful countries leverage their positions to favour themselves over others,” explains Paul Rawlinson for the European Sting. “The unforeseen return of mercantilism … is based on the false premise that one country can only make economic gains at the expense of another. It holds that every deal has a winner and a loser, and nothing can be mutually beneficial.” Individual deficits are more or less meaningless, he explains, and disrupting regulatory frameworks and the multilateral approach built on fair rules while denying reciprocity would reduce prosperity at all. He concludes that an all-out global trade war could reduce the global trade activity by one-third. – YaleGlobal