Protectionism is bad for the international order in the current geopolitical climate

By Sumantra Maitra
0 Comment(s)Print E-mail, January 9, 2018
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Ant Financial [File photo]

The United States has blocked the $1.2 billion (£880m) sale of the money transfer firm Moneygram to China's Ant Financial, a subsidiary of Alibaba, citing geopolitical differences apparently arising in the years since the merger was announced. This is arguably the first salvo of direct protectionism from the American side, months after Alibaba announced job creation in the mainland United States. The obstruction is also a direct intervention by the U.S. government. The Moneygram firm was quoted by the British Broadcasting Corporation (BBC) as saying that regulators overseeing foreign investments in the United States refused to support the takeover. 

This isn't the only such example. The BBC gave a list of protectionist measures recently undertaken by the United States, including launching a formal review of China's intellectual property practices, blocking the $1.3 billion sale of American Lattice Semiconductor to Chinese-backed Canyon Bridge Capital Partners, and objecting to two other major acquisitions: China Oceanwide Holdings Group's $2.7 billion purchase of the U.S. life insurer Genworth Financial, as well as Chinese buyout firm Orient Hontai Capital's $1.4 billion acquisition of the U.S. mobile marketing firm AppLovin.

The trend also runs counter to the direction of EU-China relations. As per new reports, a massive overhaul of European tariff rules is in order, including how the EU counts duties on dumped imports. The overhaul comes in response to longstanding Chinese demand that China is given market economy status, marking an end to the prior EU premise that Chinese exporters get privilege from the government and work in non-ideal market conditions. 

These are unmistakably political moves. The EU is now offering China market status precisely as China and the EU are aligning against a protectionist United States. China and the EU have recently come closer together on Iran or North Korean relations, as well as on climate change. 

Despite structural concerns, trade seems to be the key factor bringing the EU and the West closer to China, with the United States retrenching. This comes after Donald Trump's dramatic stance during the APEC business conference, which entirely contradicted his earlier statements made while visiting Japan and China. Trump told the conference, "We are not going to let the United States be taken advantage of anymore." He also savaged the World Trade Organization, blaming them for the American trade deficit, and said that the U.S. preference for bilateral trade deals is important. He added that he wants to put America first. Trump confirmed his reluctance toward big trade agreements like NAFTA. and the TPP. 

Trump's statements starkly contrasted Chinese President Xi Jinping's full-throated defense of the modern trade system, in which he said it is essential to stay committed to open trade and an open economy, as protectionism would lead to being left behind. The Chinese president also highlighted the multilateral trading regime, as well as the idea of a free trade zone in the Asian Pacific. The United States, meanwhile, is giving mixed signals on trade deals and agreements, claiming to be essentially open to trade, but shunning multilateral agreements and instead focusing on bilateral agreements based on clear trading rules. 

Current realities, however, demand new practices. The comparative advantage of trade in the region has shifted away from the U.S. in favor of Asian countries – a change that will potentially have long term consequences. Recently it was debated in London whether a major power relation along the lines of the Concert of Europe needs to be arranged, with the European Union, United States and China being three trade blocks, and where the founding principles would be non-interference, zero-protectionism, and open trade, or what the Chinese side calls win-win cooperation. Amidst that, this renewed protectionism on the U.S. side risks a caustic battle which will benefit no one. The American anti-China mood appears to be bipartisan, reaching to the extremes of both major U.S. parties. Nevertheless, it must be corrected. A trade war in 2018 would be mutually destructive, given geopolitical volatility in both the EU and the U.S., and would jeopardize the budding cooperation with China that began in 2017. 

Sumantra Maitra is a columnist with For more information please visit:

Opinion articles reflect the views of their authors only, not necessarily those of

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