Will The Rising Wave of Nationalism Ever Trump Globalisation?

Niren Menon

Globalisation, a concept that has underpinned our world economy ever since the collapse of the Berlin Wall, is now under threat due to right-wing leaders wanting to shift away from building international relations and organisations and instead preferring to address the sovereign rights of their respective countries. There is a new age of populism and nationalism emerging in Europe and North America, an ominous development that threatens the fabric of free trade and open markets. Trump’s surprise election and the unprecedented referendum result in the UK leading to the ‘Brexit’ has proved a political windfall and a gateway for far-right candidates in Europe—Le Pen in France, Wilders in the Netherlands, the Lega Nord in Italy and many more riding on the coattails of these two major upsets. Are we moving in the direction of a decreasingly globalised society? With the new world order that is coming into power, will globalisation have to make way for populism?

Donald Trump has acted as a voice for many angry working and middle-class voters disillusioned by globalisation. They have felt overlooked by Washington and no longer want to be dismissed. The continuing deindustrialisation of America—with manufacturing jobs being outsourced elsewhere due to cheaper labour costs—has led to growing public frustration amongst blue and white-collar workers as they are left with the impression that globalisation only fills the pockets of a select elite and large multinational corporations. Trump’s campaign rhetoric about “hiring American and buying American” and “putting America first” has signalled to the masses that he is intent on curbing the effect of globalisation in the US. He has rallied against the United States’ existing trade agreements, repeatedly berated China for dominating the manufacturing domain, threatened to slap taxes on U.S. companies investing overseas, introduced a border tax on imports, and last but not least, pledged to build a wall to keep out migrants. Apart from withdrawing from the Trans-Pacific Partnership Agreement, it is important to note that Trump has not followed through with any of the other anti-globalisation related promises made on the campaign trail. The retaliation from the rest of the world to such nationalistic policies would cause a backlash, even for a superpower like the US, as it would disrupt the current world order.

Similarly, Britain’s rejection of the EU can be seen as a protest against the economic model that has been in place for the past three decades. UKIP’s main point of argument was that with the free labour market within the Eurozone, the UK had become a haven for migrant workers at the cost of British workers. They argued that the cost of bailing out unstable economies such as Greece, Portugal and Italy could be better spent on bolstering the British economy, and this resonated well with their voters, who passed the Brexit referendum with 51.9% voting to leave the EU. Theresa May has promised a Great Repeal Bill to enshrine most existing EU rules into British law for continuity and has invoked Article 50 of the EU treaty, the legal clause that sets a two-year time limit for Brexit. Given that most of the talk that has surrounded Brexit has been procedural and not substantive, we are yet to see the definite economic implications that it will have on the state. With investment being held off in the UK, job security is an issue as companies are worried that they will have to bear the extra costs as a result of this exit.

While Wilders and Le Pen did not succeed in gaining power in government in the Netherlands and France respectively, it was not a complete loss for nationalism as they have normalised their views in the political scene. The ability to dictate their own fiscal policy, halting immigration and tightening their borders are the pillars of their policy. These pockets of nationalism emerging in Europe will not bring about the demise of globalisation for the rest of the world due to the sheer importance of Asia as a trading giant. The only reason globalisation is under threat is the explosion of economic inequality over several decades and the inability of successive governments to deal with this gap. There is a heavy reliance on trade deals between Europe, North America and South-East Asia and it will be difficult to “phase” them out. At the World Economic Forum in Davos, Chinese President Xi Jinping reaffirmed that open markets and rule-based trade are the best way to lift living standards and build prosperity worldwide. In the past, globalisation was to a great degree a one-way street—from the developed world to the developing world. Money and technology flowed from the U.S. and Europe into China, India and other low-income countries, drawing them into the global trading system.

Then, the giant populations of China, India and Indonesia were participating in the world economy mainly as workers; today, more than half of the global population resides in that part of the world, and Chinese and Indian consumers have become the most sought after in the world. General Motors, for instance, sells more cars in China than in America and hotels and travel agencies are now striving to accommodate Chinese and Indian tourists around the world. Emerging market economies are the fastest growing players in global economy and protectionist governments will not be able to avoid interacting with them due to their market size, investment capability, labour force and demand. Chinese companies have invested a record 145 billion dollars abroad in 2016, making China the second-highest foreign direct investor after the US. The Trans-Pacific Partnership—which Trump has withdrawn from via executive order—is being renegotiated with the possibility of new partners like China replacing the US.

Where does Australia tie into all of this? Pauline Hanson is being regarded by mainstream politicians as a pioneer of the populist wave in Australia. Whether we like her or not, the support for her party, One Nation, has leapt from 16% to 23% in her home state of Queensland and we have to face the very real possibility that she could become the premier of the state. Hanson resonates with areas of Australia that aren’t doing well economically, similar to Trump’s appeal in the Rust Belt states in the US. Sydney and Melbourne currently drive two-thirds of Australia’s economic growth; Western Australia and Queensland have been lagging behind in this domain since the mining boom came to an end. The current state of politics is another reason populism is gaining pace in the country. Just last year, Malcolm Turnbull almost lost the federal election that was supposed to give him the emphatic mandate to govern as he struggled to quell the surge of the political right. There has been 7 years of in-fighting and constant leadership changes and people feel that these politicians are power-hungry and are no longer governing for the people. While we don’t have to worry about Hanson gaining ultimate power over the country anytime soon, what is alarming is that she is winning important Senate seats and—similarly to Wilders and Le Pen—normalising her populist view in Australian politics.

That being said, globalisation is deepening, becoming more inclusive and balanced between different parts of the planet. While Trump, Brexit and this nationalistic wave have raised doubts about whether it can last, emerging economies that heavily rely on globalisation will fight to maintain its momentum. We live in a world where globalisation is key to a thriving economy. By opening up borders and economies, we can unite as one global society. Countries have flourished when united and with the advancement of technology and the emergence of the Internet, the world has become and likely will always be a connected place.