2017 Year in Review - International Economic Policy

By Yucai Yu

Picture: Globe License: Public Domain

A surge of revitalized unilateralism in international economic policy making:

European Union was facing increasing internal pressure on its unity as well as the original effort on globalization.

·       Brexit is on irreversible track. EU and UK formally started negotiations relating to Brexit arrangements, with early focuses on EU’s and UK’s citizens’ rights, future of Ireland/Northern Ireland border, and UK’s funding commitments. EU has appeared to gain an upper hand so far. The next phase of negotiation will deal with the more difficult issue of trade between EU and UK.

·       Elections in Europe showed a rise of protectionism and populism. In Netherlands, a leader favoring globalization successfully held on to his spot, yet over the challenge by a candidate against immigration. In France, voters were split between those who embrace globalization and those who feel left behind. The far-right anti-immigration party in Germany also made a historic breakthrough.

“Make America Great Again” with new international deals, or without deals.

·       President Trump initiated the renegotiation of the North American Free Trade Agreement, aiming to modernize the agreement, invigorate American manufacturing, eliminate certain dispute resolution mechanism, and raising labor standards.

·       President Trump also pulled US out of Trans-Pacific Partnership (TPP) Agreement in the first month of 2017. Negotiation of the Trans-Atlantic Trade and Investment Partnership (T-TIP) was put on hold.

·       US withheld its support for a new selection process for WTO Appellate Body Members, resulting in an impasse and possibly logjam.

While multilateralism held on certain grounds:

·       Despite US’ withdrawal, the rest eleven countries of the TPP continued negotiation and will likely sign it without US’ participation.

·       China continued to implement its $900 billion “One Belt, One Road” Initiative, aiming to lend as much as $8 trillion for infrastructure in 68 countries. While US seemed to be retreating from globalization, China seemed to catch up and act as a firm globalization supporter.

·       Latin America kept pushing globalization effort through regional organizations, including Pacific Alliance and Mercosur.

·       African countries were seeking to build a giant free-trade area.

These all happened in an era of technology development:

·       Bitcoin went bananas, which fueled development of other cryptocurrencies and block-chain-based technology. Countries reacted differently to this: China banned Bitcoin transactions and so-called Initial Coin Offering (ICO), while US and Europe actively imposed regulations.

·       FinTech had become a hot topic and continued to develop. With mobile payment replacing traditional payment methods in China, people started to see what a marriage between finance and technology can do.

·       Artificial intelligence (AI) continued to develop. People began to ponder more and more how it was going to reshape the landscape of employment and people’s life in general. AI even became a prioritized industry in China’s development plan.