The new political divide and how shipping could bridge it

We already knew this, but the outcome of the first round of the French presidential elections has made one thing very clear: we have a new political divide. It is globalism versus nationalism, or: open versus closed that defines main political differences, no longer the traditional left-right dichotomy. The major enablers of economic globalisation – port-cities and maritime transport – play a key role in understanding and bridging that divide.

All kinds of analysts have tried to give meaning to the outcome of the elections in France. There is talk about an urban/rural divide, an east/west divide and a clash between generations. Remarkably absent from the debate is any consideration on what César Ducruet has coined “the frontline soldiers of globalisation”, that is: port-cities.

France has three large ports: Marseille, Le Havre and Dunkirk. Ports are the main nodes for global trade; the challenge for port-cities and their industrial hinterland is to make their citizens benefit from that nodal position. The election results show that the major port-cities (and their surroundings) have overwhelmingly voted for economic nationalism (as promoted by Le Pen and Mélenchon) instead of economic globalism (Macron and Fillon). The ratios are 49/40 for Marseille, 50/36 for Le Havre and 52/33 for Dunkirk. Compare that to Paris: 25/61 and consider this observation: the frontline soldiers of globalisation have not benefited from global trade, they are just confronted with the negative impacts, such as de-industrialisation and air pollution. A country has a real problem if its main entry points for global trade feel such resentment against it. France is certainly not the only country with this problem.

The second round of the French presidential elections is a competition between two conflicting world visions, but should also be an appeal to resolve this conflict. What could be a solution in a context of unease with globalisation and unease with the measures proposed to counter it, such as protectionism? Of course, we can talk about jobs of the future, the skills, the entrepreneurial climate and the tax system that would be needed; this is all important. However, I would like to point out here the fundamental and all too often overlooked role of shipping.

Global trade and outsourcing have taken such a flight because transport costs – in particular shipping costs – are incredibly low. Too low, because many costs related to shipping are covered by taxpayers. Costs such as: port, road and rail infrastructure; subsidies to shipping, shipbuilding and ship finance; congestion in port-cities, health costs related to air pollution. Incorporate all this in the price of shipping – “internalise externalities” in economist jargon – and global outsourcing might become much less interesting.

Ironically enough, France has been fairly active in attempts to “internalise externalities” in shipping. It has pushed for a stronger commitment of the shipping sector to decarbonisation and has recently proposed to introduce an emission control area in the Mediterranean Sea, that would bring down significantly the air pollution from ships. However, such efforts to come to a fair shipping need to be stepped up, applied categorically and backed by other countries. Internalising externalities from shipping might be the answer that protectionism obviously is not.

Additionally, more back-up should be given to the frontline soldiers, the port-cities. This requires ports that take local impacts systematically into account – and port-cities that have an interest and the instruments to develop port-related economic policies. In short, it might require decentralisation of the major ports and port-cities. A real revolution…