The principle of national interest

by Myret Zaki, Chief Editor of the French-speaking Switzerland’s economic paper “Bilan”

For decades we have lived according to principles that are being questioned today. Free trade, globalisation, multilateral treaties, diplomatic and military alliances, and large economic blocks – these were the fundamental values of the world order.
Last November, a president denying these principles came to the head of the greatest power that upholds these principles:  the protectionist Donald Trump, who dislikes military alliances and multilateral treaties, who is a nationalist in economic matters and has a strong sense of identity. And this is why he was elected – at the same time as when the English came out in favour of leaving the EU.
Some facts have become obvious: large parts of the American and European populations no longer agree with the principles of economic liberalism, since they are the losers in this system. They are turning a deaf ear to free trade and the opening up of the borders, since they see themselves as victims also in this. They prefer protectionism because it promises the protection of their jobs, their wages, their culture, and it favours the national enterprises and interests.
By contrast, the elites of the United States and Europe still defend globalisation and free trade. Their masterminds regard protectionism as a term of abuse, for it is contrary to the order of the world which has officially prevailed since the Second World War. In reality, however, protectionism has been the rule among the economic powers for at least ten years now. Let me present some examples:
After the collapse of the Doha Round of the WTO, for eleven years now, a curtain has been drawn over the negotiations on the liberalisation of international trade. The volume of international trade has been stagnating since 2011, and the United Nations Conference on Trade and Development (UNCTAD) speaks of a decline in economic interrelations, a kind of de-globalisation that has just begun. The transpacific and transatlantic treaties have been dropped. Decisions over wars are usually made outside the multilateral organisations, since the UN does not have any real influence on geopolitics any more.
In addition, the major states are protecting their strategic areas: Many foreign companies’ acquisitions of important national industries have been blocked. For at least ten years, there has been no really significant takeover offer between large nations. China has closed its markets for Apple, Uber, WhatsApp and Tesla.
Switzerland, with its basically liberal tradition, is vulnerable in this respect. The Swiss National Bank (SNB) has refrained from tying the Swiss franc to the euro, and has accepted the fact that companies have to grapple with the too strong Swiss franc. Many of these companies – Swiss, Serono, Centerpulse, Synthes, Nobel Biocare, Syngenta, Vögele and many others – have in the past 15 years agreed to be taken over, so that jobs and know-how were lost for our country.
Being liberal when one is surrounded by protectionist states is a risk to national interests. Let us remember that the war against Swiss banking secrecy ended with the Anglo-Saxon and Asian financial centres being strengthened. They have been able to preserve their much better developed confidentiality practices, and in this way to gain access to the assets of the great estates.
Even if, in 2017, economic thinking continues to be dominated by classical and neoclassical schools, which are well-disposed towards free trade, the fact remains that their doctrine is mainly based on mercantilist ideas characteristic of the protectionist maritime powers of the seventeenth century. Switzerland must therefore protect its economy, promote local employment, and meet the demand for work mainly with local people from the applicant pool of the young, the unemployed, the elderly, under-employed women and people in the reintegration process. Shopping tourism will have to be reduced by tariffs, and wage dumping will have to be fought against. And why not consider certain top-of-the-line sectors as strategically important?

Source: Bilan from 12 June 2017

(Translation Current Concerns)