The Great Rebalancing will experience many wobbles. Data yesterday showed an unexpected 8 per cent narrowing in the US trade deficit. Much of the gap closed because of lower oil imports. But a weaker dollar also pushed exports to their highest level in a year, suggesting a 1 per cent contribution to growth in the fourth quarter, according to Capital Economics. Such a boost is welcome, but this is still no bonanza: imports and exports remain almost 20 per cent below last year's peaks.
Aside from the volatility that will come as trade patterns change, other rebalancing wobbles will be self-induced. This week China will start charging import duties on US and Russian flat-rolled electrical steel, the first time such anti-dumping and anti-subsidy measures have been imposed. Such a tit-for-tat measure was coming. Last year America slapped duties on Chinese tyres and pipes. These are worrying developments. The World Trade Organisation reported a 27 per cent increase in countries' anti-dumping investigations last year compared with 2007.
But the widespread fear that the global recession would herald a return to mercantilism is unfounded. Since the WTO's founding in 1995, its members have initiated on average 27 official disputes annually. Until November, there had been just 12 this year. That is down from 2008 and half the level two years ago. Around the turn of the millennium, 40 disputes a year was common. What is more, of all 400 disputes brought to the WTO, almost half were resolved bilaterally without the organisation's involvement.