On opposite tracks

Malcolm Latarche
Malcolm Latarche

18 January 2017


President-elect Trump is not at the World Economic Forum in Davos this week but China’s president Xi Jinping is and was making one of the key speeches of the week. It was notable as the first ever made by a Chinese president but also for the fact that it would seem to signal a reversal of the directions that their respective countries have been on for years. Many believe that Trump will be the first president for many years to be protectionist and opposed to free trade while China seems to be taking on the role of free trade champion and protector of the climate. On his speech, Xi said China would keep its borders open, stressed that there would be no winners from a trade war, and urged that all countries continued to support the 2015 Paris climate change accord. On the face of it Xi may look to be taking the moral high ground but that is not necessarily the case and it ignores the fact the American people did have a choice in their election process and Trump is that choice. And while on that point it should also be recalled that Trump started out as just one of 17 major candidates fighting in the primaries for the chance to take on the Democrats and others in the final race. It is arguable if the US ever was a champion of globalisation and free trade or for that matter concerned overly much with climate change. In our industry we know only too well the protectionism that surrounds shipping in the form of the Jones Act and we also know that the US has never been slow to progress its own policies in other areas. We could for example agree that the ISPS Code, LRIT and the hi-jacking of AIS for security reasons were all US initiated. On the climate front, the US was never a signatory to the Kyoto Protocol and was almost alone in this regard. Of all US leaders since 1992, none have been enthusiastic about the climate change circus other than President Obama and it looks as if his legacy will be unravelled by Trump. Not least because some constitutional experts say that US Presidents cannot sign international agreements without the authority of congress and the senate. While XI’s speech was applauded by many, it can also be seen as taking an aggressive defensive stance. China has most to lose from Trump’s pledge to repatriate jobs and even if he succeeds only in bringing back the jobs of US corporations that now produce in China and SE Asia that will be sufficient to satisfy the US electorate but it will be a major loss for China. On the matter of the Paris Agreement, China secured itself a very good deal in that arena having free rein to expand emissions until 2030 and then to use that point as the base for reductions. Many in the US (and in Europe for that matter) see that as an unfair advantage allowing China to profit from fossil fuel use while the US, Europe and others have to try to match China’s output using inefficient renewables. Time will tell what the outcome of the two presidents’ visions will achieve but east and west have never been marching in harmony for long and this just looks like another change in direction between the two.