No laughing matter

Friday, 28 September 2018 00:00 - - {{hitsCtrl.values.hits}}

US President Donald Trump’s speech before the United Nations General Assembly (UNGA) on Tuesday reinforced the view that his protectionist outlook would cause more upheaval in global trade and challenge developing countries, especially those like Sri Lanka, attempting to reform and reposition their economies.

It was perhaps the most aggressive speech ever delivered by a US president at the UN, an organisation whose founding document encouraged the nations of the world to seek peace, promote human rights and uphold international law.

But, amid the provocative language, the widely anticipated address also provided a clearer articulation of Trump’s emerging worldview. He envisions an international order in which each nation pursues its own self-interests — and cooperates only when those interests converge.

That philosophy has rankled NATO allies, upended trade deals and pulled the world’s second largest carbon polluter out of the Paris climate agreement.

But, at the United Nations, Trump wanted the other 192 members to know that, it’s not just ‘America First’, it’s every nation first.

It’s a remarkable reversal in tone from the opening of the general debate at the UN 364 days earlier, when President Barack Obama addressed the same world body with a theme of ‘cooperation and integration’.

When President Trump was first elected, the fervent hope of the rest of the world was that sense would eventually prevail. But, the laughter that met the start of Trump’s speech eventually gave way to stunned silence as leaders of the rest of the world heard confirmation that the US would continue to stay away from a rules-based trading system underpinned by growing global supply chains reliant on free trade that has been the bedrock of global development for decades.

Trump’s insistence of nationalism over a globalist outlook that would continue to define US policy at least for the next three years, if not longer, as the rest of the world would have to simply deal with the chaotic consequences, was sobering to the rest of the world. The fact that he then went on to cherry-pick countries to praise or blame simply underpinned the obvious isolationist strategy.

While Trump’s bragging list of accomplishments since he took power skirted around some facts, the US economy does appear to have enough steam to keep growing for the next 18 months to two years, according to analysts. Experts also agree that rising interest rates have resulted in capital flowing back to the US, and helped by the tax cuts companies could well invest more in the US, driving its economy forward. Billions of dollars in subsidies that have been announced for the agriculture sector is also likely to cushion possible impact from disrupted trade deals that would hit Trump’s core base of supporters. The UN address underlined the simple fact that global disruption simply did not matter to the US.

For a small, low-middle income country like Sri Lanka, effectively managing its competitive advantage and liberalising its economy to link with global supply chains will become even more challenging in this scenario. It will take careful planning, progressive policies and greater policy coherence to stand a chance of riding out the worsening global turbulence. Trump’s speech at the UN should put other political leaders on notice that their job is about to become a whole lot tougher.