Please download a copy of the PDF file (1.8 MB). I look forward to your comments, corrections and suggestions here in the comments on my website, or by email to peter at this domain.
It is always a mistake to suppose the period of our lives corresponds with some remarkable historical events or trends just because those events or trends loom for large in our own lives.
Still, there’s every reason to think that the period of peaceful world commerce that we have experienced since the 1950s was remarkable. Possibly unique.
The “pax Americana” — or the “US Hegemony” — that brought us the first and only multilateral system of trade treaties, fostered not only peace but détente and collaboration. Protection for industrial goods in the largest markets fell from levels of 40 percent or more to less than 5 percent. Eventually, even the most labor and land intensive industries (textiles, garments, broad-acre crops) were opened up to competition. Useful steps were taken to open commercial services markets and, in the process, to somewhat free-up foreign investment regulations.
Then, almost every country in the world signed up to the global standards of trade administration embodied in the WTO treaties. The accessible world market grew very rapidly thanks, especially, to the opening of China and the boom in Asian incomes and demographics. Most economies sought even deeper cross-border integration in a rush to form customs unions and free trade agreements. Average incomes everywhere rose and rose, pulled ahead by trade.
Trade disputes continued — even grew in number — but were isolated by the treaties from foreign and strategic policies. The conciliation and adjudication of disputes seemed to work well.
Now, however, there’s a sense that the wind may be swinging around again. In just two or three years dis-integration of markets, policy contention and new barriers have become more common.
Since the recovery from the 2009 global recession, the puff has gone out of world markets and the (relative) peace, too. International summits are marked by irritation and spats. Market integration, “outsourcing” and foreign investment are no longer getting positive press. UN data shows FDI was down by almost a quarter in 2017 (mostly due to lower cross-border M&A activity); FDI flows into emerging economies are stuck around 2010 levels; the rate of growth of international production is slowing.
Growth in the foreign-value-added of exports also peaked around 2010 levels; that is, global-value-chains that are the sinews of globalised markets are sagging.
Maybe this is a temporary trend. Maybe it’s a “reversion to mean”, a corrective to globalisation’s “excesses”. Maybe close integration is not always a sustainable benefit when the social or political costs are high. Maybe the slow-down only signals changes in the nature of international production (to ‘asset light’ forms overseas production).
I don’t know what the future holds (sorry!) and I assume that we will not repeat the past (that can never happen). But I am interested in how we got here and how governments and international business managed trade and economic relations before the “long peace” that started in the 1950s.
The pre-WWII world was when international business, as we conceive it, became possible. International businessmen (yes, only men in this part of the story) soon discovered, however, that they could not build business across a border unless governments were willing to collaborate on public policies.
Unfortunately, collaboration is precisely what governments failed to deliver in two decades after the Great War of 1914–18.
Ideas persist, but the plans and hopes detailed in this account were shattered. How and why is the subject of this first part of my history of the International Chamber of Commerce — “Two Terrible Decades”.
Please download a copy of the PDF file (1.8 MB). I look forward to your comments, corrections and suggestions here in the comments on my website, or by email to peter at this domain.
Warning: this is a fairly full account of ICC’s early history. You may prefer just to skim (there’s a linked table of contents). In the next day or so I’ll publish a full synopsis of the first part that might help you to decide what you wish to read.