The attack being mounted by Donald Trump on free trade is steadily dismantling much of the post-war architecture of international agreements that has supposedly led to mutually beneficial outcomes for most of the countries involved.
Trouble is, the disruption that Trump is mainly responding to is caused by globalisation, not free trade. The two are very different.
To give some idea of how they tend to get confused, about half of the so called trade deficit between China and America is actually American companies shipping products back up their own supply chains from their Chinese operations. For example, one of America's largest listed companies, Apple, has large manufacturing operations in China. When that product is shipped to America, it shows up as 'trade', but it is not.
The way globalisation works became clear to this writer when it was revealed by the chief executive of a large Swedish home appliances company. After pouring coffee for some nondescript visiting Australian journalists — something no Australian chief executive would ever do — he proceeded to explain how the company chooses to place its operations around the world.
It was an extremely complex matrix that took into account exchange rates, labour costs, the level of industrial harmony, the quality of supporting infrastructure, energy costs, geographical location, tax, legal regimes and other factors (we journalists were not allowed to note it down). Choices were made about where to place almost all the operations. The only thing that was not negotiable was that head office would remain in Sweden.
Such calculations are being made by all the world's largest corporations, the biggest of which are comparable in size to smaller nations. It has very little to do with trade policy or international trade law.
In the case of some of the large Asian car companies, for example, excess capacity is located around different countries in the region to create redundancy. When exchange rates move or other conditions change, the company simply reconfigures its operations.
"The participants have no interest in the nation — indeed they are brilliant at avoiding tax, which would mean giving something back to the countries in which they operate."
The Asian financial crisis in 1998, for example, was triggered by a weakening of the yen against the US dollar. The Japanese companies responded by closing their operations in Thailand because it was no longer cheap. 'Globalisiation is off with the yen 120 against the US dollar,' as one Japanese