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Saturday, 29 April 2017

Collaborative Autarky: Trump Encounters Common Sense

In the last few days the world's media have latched onto Donald Trump's frank admission that he finds the job of being US President harder, and more demanding, than he expected. When confronted by facts he has followed the axiom set out by Lord Keynes, which can be rephrased: 'if the facts that I now recognise are not as they seemed previously, I must change my mind to fit the facts'. Thus NATO is no longer redundant, China is not a strategic enemy but the best hope for dealing with North Korea, it might not be a good idea to destroy the North American Free Trade area, and Britain is not now at the front of the queue - or in the queue at all - for a special trade deal with the United States. What Trump said on the campaign trail is rapidly being adapted to the realities of power.

Nevertheless, some of Donald Trump's fundamental beliefs will remain; and high among these is the mantra that the US must only consider the interests of the USA in forming its policies on tariffs and trade, and the movement of people into the USA. Economic policy based on looking after the national interest, above all other considerations [such as, supporting democratic regimes around the world], is known as autarky. The word was much-used in the early years of Hitler's Reich, as shorthand for the highly nationalistic economic policy that was pursued, before the utterly destructive imperialism that was implemented in Central and Eastern Europe brought in forces from the rest of the world that were ultimately sufficient to destroy the whole rotten structure.

Mr Trump is in the process of learning that it may be feasible to build a wall along the Mexican border, and contractors are entering their bids to become potential builders, but the cost and complexity of the task will almost certainly lead to its abandonment. This will be in line with a change of heart on the whole issue of borders within North America. The US birth rate is not sufficient to replenish the workforce, even in an era of robotisation. Not many Mexicans are Muslim: so there is less to fear about 'terrorism' in an immigrant population of Catholic neighbours than if refugees from the Middle East were admitted. So if modern, joint policing of drug manufacture and trading were adopted in Mexico and in the USA and in the lucrative market that is Canada, much more could be done to control the destructive trade without the cost of the wall.

Currently there is a spat between the USA and Canada about 'lumber': softwood. Canada grants its citizens access to the massive state forests on terms that appear to be more advantageous to Canadian logging firms than those that confront similar firms in the US, and the US government has imposed retaliatory sanctions against Canadian imports. No doubt the angry rhetoric will be followed by some compromise, and that compromise will be a step towards a more general agreement. The length of the border between the USA and Canada [obviously, including the border between Alaska and Canada] is 8,891 kilometers, and not even Trump can imagine a wall so long; so the question of how much it would cost - and who might pay for it - does not even arise. No policy other than a close political and economic alliance can make sense for either Americans or Canadians.

However, a Free Trade Area framed according to principles derived from academic Economics - such as has been in the minds of the progenitors of the North American Free Trade Area - is neither the only nor the best way forward. A form of mutual autarky can become the basis for a new type of trading community of states, where each recognises that the common good is greater than each nation's total freedom to act, but where each state has particular interests that must be accommodated [and, where necessary, the parties to the deal make exceptions to the general rule, either permanently or on a temporary basis].

Collaborative autarky will be a better solution than trade war in North America. And it is likely to be the only solution to current Brexit negotiations. Trump may become the inadvertent progenitor of a new model for international trade deals.

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