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The world’s economic fragmentation continues

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The day before yesterday, we had Boris Johnson’s Brexit. Yesterday, we had the strengthening of American protectionism by Donald Trump, on behalf of the America First program.

Today, we have Shinzo Abe taking economic reprisals against South Korea, after the Seoul Supreme Court confirmed the decision to impose on Japanese companies compensation payments to the victims of forced labour during the Second World War.

On July 4, Japan imposed restrictions on the export to South Korea of three materials critical to the production of electronic chips and flat panel displays – markets in which Korean industry has become by far the world’s leading manufacturer.

The semi-embargo concerns, in particular, two products for which Japan is in a near-monopoly position: photosensitive resins dedicated to chip lithography, and fluorinated polyamide film used in the production of OLED (Organic Light-Emitting Diode) screens.

This highly symbolic measure is likely to have a serious impact on the Japanese economy, of which Korea is one of the main customers.

The Tokyo government, for its part, considers that the 1965 Japanese-Korean treaty had settled once and for all the compensation issues related to Japan’s occupation of Korea (1905-1945).

Korean civil society, bruised by the ignominy of the “comfort women”, blames Japan for never having offered a real apology to Korea for its behaviour during the war. In history, relations between Japanese and Koreans have never been simple. Not even in the modern era, when the two nations share the same American strategic ally.

But this is the first time since the war that the Japanese government has allowed the (traditionally stormy) political field to encroach on the (traditionally good) field of economic co-operation.

Shinzo Abe’s actions cannot be minimised. They send a signal that Japan is retreating into nationalism and becoming unnecessarily ‘Trumpian’.

In Asia, self-image, the national ego, now prevails over economic interests in the short and medium term.

Started in 2016 in the Anglo-Saxon world, the same world that once invented free trade, the world’s economic fragmentation continues. The abandonment of the TPP (Trans-Pacific Partnership agreement around trade in the region, excluding China) by America in 2017 is all the more surprising as it was the US that gave free trade a new life in October 1947, thanks to the GATT (General Agreement on Tariffs and Trade, precursor of the WTO).

In the Europe of the 1990s, which were the years of its reunification under the banner of Western-style liberal capitalism, free trade was a self-evident concept. This is no longer the case today. The idea has marshalled against it an ever-increasing number of militants of the three colours that are rising in elections: reds, greens, and browns.

The former Minister of the Macron liberal fortress, ecologist Nicolas Hulot, called on French MPs on July 21, 2019 not to ratify CETA, a free trade treaty signed between Canada and the European Union.

When he described, on 29 June, the EU-Mercosur Free Trade Agreement (the South American common market that includes Brazil, Argentina, Uruguay and Paraguay) as “the largest trade agreement ever concluded by the European Union”, did Jean-Claude Juncker suspect that it would provoke an unprecedented outcry across Europe?

The Greens are doubly opposed to it, seeing it as a risk to the environment in South America (deforestation of the Amazon, for example) and a threat to the maintenance of quality agriculture and livestock in European countries.

In Western democracies, free trade agreements are subject to parliamentary ratification. Will CETA and the EU/Mercosur agreement succeed in obtaining all the necessary ratifications (from national parliaments, but also from some regional parliaments)? Nothing could be less certain.

The Chinese dictatorship, for its part, has decided to retaliate, blow for blow, against the protectionist measures taken by its primary trading and financial partner – the USA.

Following the measures taken against Huawei in Washington in 2019, and the placing of the telecommunications giant on a blacklist, the Chinese authorities announced that they would start “punishing companies that behave badly”, without specifying the criteria to be used.

Fifteen years ago, liberal globalisation was still considered a blessing. How did Western societies come to hate it more and more?

Western workers perceive that the formation of a middle class in emerging countries to come at their own cost. They also refuse to be victims of financial crises caused by the social irresponsibility of globalised banks who behave as if they were above the rules – except when they are approaching bankruptcy and they then need to seek government help.

But these supporters of withdrawal from open trade lack a panoramic and historical perspective. They want to throw the baby out with the bathwater. The mistakes, even crimes, of financial speculative bankers and industrialists who murder the environment are real. But they do not in any way justify giving up on the need to organise world trade better.

Because we often forget that these free trade agreements can contain all the social and environmental clauses we would like to include.

Everyone out for himself always ends up in the law of the jungle.

This article was first published in Le Figaro.

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(We will process your data in accordance with our <span class="pp"><a href="https://radixuk.org/privacy-policy/">Privacy Policy</a></span>. You may withdraw this consent at any time by &lt;a href=&quot;"mailto:[email protected]"&quot;&gt;emailing us&lt;/a&gt; or clicking “unsubscribe” at the bottom of our emails).' id='choice_2_4_1' tabindex='75' /> <label for='choice_2_4_1' id='label_2_4_1'>Please keep me updated on new website content and Radix news. (We will process your data in accordance with our <span class="pp"><a href="https://radixuk.org/privacy-policy/">Privacy Policy</a></span>. 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<div class='gf_browser_unknown gform_wrapper' id='gform_wrapper_5' ><div id='gf_5' class='gform_anchor' tabindex='-1'></div><form method='post' enctype='multipart/form-data' target='gform_ajax_frame_5' id='gform_5' action='/opinion/the-worlds-economic-fragmentation-continues/#gf_5'> <div class='gform_body'><ul id='gform_fields_5' class='gform_fields top_label form_sublabel_below description_below'><li id='field_5_5' class='gfield gravity_head gfield_html gfield_html_formatted gfield_no_follows_desc field_sublabel_below field_description_below gfield_visibility_visible' ><h3>Get emails</h3></li><li id='field_5_1' class='gfield gfield_contains_required field_sublabel_hidden_label field_description_below hidden_label gfield_visibility_visible' ><label class='gfield_label gfield_label_before_complex' >Name<span class='gfield_required'>*</span></label><div class='ginput_complex ginput_container no_prefix has_first_name no_middle_name has_last_name no_suffix gf_name_has_2 ginput_container_name' id='input_5_1'> <span id='input_5_1_3_container' class='name_first' > <input type='text' name='input_1.3' id='input_5_1_3' value='' aria-label='First name' tabindex='65' aria-required="true" aria-invalid="false" placeholder='First Name*'/> <label for='input_5_1_3' class='hidden_sub_label screen-reader-text'>First</label> </span> <span id='input_5_1_6_container' class='name_last' > <input type='text' name='input_1.6' id='input_5_1_6' value='' aria-label='Last name' tabindex='67' aria-required="true" aria-invalid="false" placeholder='Last Name*'/> <label for='input_5_1_6' class='hidden_sub_label screen-reader-text'>Last</label> </span> </div></li><li id='field_5_2' class='gfield gfield_contains_required field_sublabel_below field_description_below hidden_label gfield_visibility_visible' ><label class='gfield_label' for='input_5_2' >Email<span class='gfield_required'>*</span></label><div class='ginput_container ginput_container_email'> <input name='input_2' id='input_5_2' type='email' value='' class='large' tabindex='69' placeholder='Email*' aria-required="true" aria-invalid="false" /> </div></li><li id='field_5_4' class='gfield gf-conf-check gfield_contains_required field_sublabel_below field_description_below hidden_label gfield_visibility_visible' ><label class='gfield_label' >Confirmation<span class='gfield_required'>*</span></label><div class='ginput_container ginput_container_checkbox'><ul class='gfield_checkbox' id='input_5_4'><li class='gchoice_5_4_1'> <input name='input_4.1' type='checkbox' value='Consent' id='choice_5_4_1' tabindex='70' /> <label for='choice_5_4_1' id='label_5_4_1'>Please keep me updated on new website content and Radix news. 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<div class='gf_browser_unknown gform_wrapper' id='gform_wrapper_6' ><div id='gf_6' class='gform_anchor' tabindex='-1'></div><form method='post' enctype='multipart/form-data' target='gform_ajax_frame_6' id='gform_6' action='/opinion/the-worlds-economic-fragmentation-continues/#gf_6'> <div class='gform_body'><ul id='gform_fields_6' class='gform_fields top_label form_sublabel_below description_below'><li id='field_6_5' class='gfield gravity_head gfield_html gfield_html_formatted gfield_no_follows_desc field_sublabel_below field_description_below gfield_visibility_visible' ><h3>Before you go!</h3> <p>Stay up to date with what's happening at Radix. 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