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Rethinking protectionism

Summary:
Should we have boycotted the World Cup in Qatar? Probably not. Since we have always accepted to participate in sports competitions with regimes far removed from social and electoral democracy, starting with China (2008 Olympic Games) and Russia (2018 World Cup), the boycott of Qatar would have been interpreted as a new mark of the hypocrisy of Westerners, always ready to give lessons to a few small countries when it suits them, while continuing to do business with all those who bring them enough money. Even if we choose not to boycott, his does not mean however that we should not do anything. On the contrary: we must act on the commercial lever, which is far more effective than the sporting lever. It is time for each country to redefine the conditions of trade with other territories,

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Should we have boycotted the World Cup in Qatar? Probably not. Since we have always accepted to participate in sports competitions with regimes far removed from social and electoral democracy, starting with China (2008 Olympic Games) and Russia (2018 World Cup), the boycott of Qatar would have been interpreted as a new mark of the hypocrisy of Westerners, always ready to give lessons to a few small countries when it suits them, while continuing to do business with all those who bring them enough money.

Even if we choose not to boycott, his does not mean however that we should not do anything. On the contrary: we must act on the commercial lever, which is far more effective than the sporting lever. It is time for each country to redefine the conditions of trade with other territories, according to universal criteria of justice that apply equally to all. In the case of Qatar, the violations of fundamental rights have been proven, whether it be women’s rights, the rights of sexual minorities or social and trade union rights. Should customs duties of 10%, 30%, 50% be introduced, should sanctions be concentrated on certain goods or on capital transfers, so that it is above all the wealthy and ruling classes that pay the price? It is not up to me to decide here: it is up to democratic deliberation to do so and to place the cursor at the right level.

What is certain is that the argument that we will never be able to agree, and therefore we should do nothing and just apply absolute free trade to everyone, is incredibly hypocritical, nihilistic and anti-democratic. Out of fear of democracy, we end up sacralising free trade and the free movement of capital without limits, without even trying to subject these rules to any collective objective. When the Chinese regime destroyed electoral pluralism in Hong Kong before our eyes in 2019, the EU’s only reaction was to propose a new liberalisation of investment flows to Beijing.

The second reason for redefining the trade regime is obviously the environmental crisis. In 2022, we will continue to trade with China and the rest of the world without even trying to apply customs duties corresponding to the carbon emissions linked to the transport and production of these goods, in flagrant contradiction with the climate objectives. The same applies to fiscal and social dumping: if a country exports goods without respecting a common minimum base, then it is not only legitimate but essential to impose tariffs to restore the balance.

The third reason is linked to the fact that each country has the right to choose a productive specialisation and to protect the sectors that it considers strategic. The best example today is that of batteries and electric cars. After having done the same for solar panels, China is massively subsidising its companies to take control of the sector. The United States has followed suit. Only Europe is lagging behind, as in the case of the French bonus of 6,000 euros for the purchase of an electric vehicle, which applies regardless of where it is produced, whereas the US bonus of $7,500 is reserved for batteries and vehicles produced in the United States.

Faced with this predicted social and industrial collapse, what can a country like France do? The only solution is for each country to set its own conditions for further economic and trade integration, in terms of respect for fundamental rights, the fight against climate and tax dumping, and the protection of strategic sectors. These conditions must include tariffs and subsidies depending on the place of production

Some people will be startled by this: if France unilaterally adopts such rules, is this not a clear violation of the European treaties signed in the past? The answer is more complex. In parallel to any unilateral action, ambitious proposals for collective measures are needed, including a new form of social federalism. Europe must be at the service of the social betterment: countries that wish to do so must be able to adopt together the additional trade, social and fiscal policies that seem appropriate to them, but this must not prevent each country from adopting its own measures.

With regard to unilateral protective measures, European law is more ambivalent than it appears. Article 3 of the Lisbon Treaty states that the EU’s objectives are democracy, social progress and environmental protection. How does destroying industrial jobs by importing all the equipment from China, without any consideration of the social damage and carbon emissions involved, serve these objectives? Some will argue that our prosperity depends on free trade, forgetting that it is not thanks to China that European purchasing power has increased tenfold over the last century (Chinese trade only accounts for a few per cent of this increase at best). In any case, the debate should be political, not legal. The fact that past governments signed treaties constitutionalising free trade, at a time when sovereignty was feared in Europe and current issues were ignored, cannot lead to the hands of future generations being tied indefinitely. More than ever, the law must be a tool for emancipation and not for the preservation of positions of power. It is by rethinking federalism and protectionism that the current crisis can be overcome.

Thomas Piketty
Thomas Piketty (7 May 1971) is a French economist who works on wealth and income inequality. He is a professor (directeur d'études) at the École des hautes études en sciences sociales (EHESS), associate chair at the Paris School of Economics and Centennial professor at the London School of Economics new International Inequalities Institute.

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