The tectonic plates of the established global trading system are moving. BRUMP – the Brexit vote and the Trump presidency – have created two fault lines – one in North America and the other in Europe.
2016 therefore looks to have been the peak for trade liberalisation. Moves to create a Trans-Pacific Partnership (TPP) trade deal and a European equivalent – the Transatlantic Trade and Investment Partnership (TTIP) – have already been scuppered by the current US President. These initiatives, years in development, were cancelled with a stroke of a pen earlier this year. Meanwhile Trump’s administration is also seeking to dismantle the North American Free Trade Association (NAFTA).
The era of partnership looks set to be replaced by one of increased protectionism. Trump’s Make America Great Again puts America (and its economy) first. Last night’s (provisional) decision by the Department of Commerce to levy a 220% import tariff on aeroplanes from Canada provides an indication of Trump’s direction of travel. It also provides the context for those hoping to negotiate a favourable UK free trade deal with the US.
The Northern Ireland economy – particularly our exporters – is potentially facing an effective pincer movement from the US and Europe / BREXIT. In relation to the latter, Northern Ireland’s agri-food sector (notably beef and dairy) is vulnerable if Brexit involves a move towards adopting existing WTO (World Trade Organisation) tariffs.
Putting the economy first was Northern Ireland’s policy priority. But that was before the current political impasse. In the context of the current global trading environment, as economic and political challenges come in thick and fast to the inboxes of all administrations, Northern Ireland needs to move towards putting the economy first again.