The Trade Trap As Bold and Brilliant Plan to Reshape Global Trade and Save Democracy

The Trade Trap is a provocative and visionary book by Mathias Döpfner, the CEO of Axel Springer, Europe’s largest digital media company. In this book, he exposes the dangers of doing business with autocratic regimes like China and Russia, and proposes a radical new approach to free trade based on values, not profits. He argues that the West must stop being naive and complacent, and form a new alliance of democracies that can stand up to the threats of dictatorship and defend our freedoms.

If you want to learn more about the trade trap, the costs of dependency, and the benefits of decoupling, read on. This book will challenge your assumptions, inspire your imagination, and empower your action.

Genres

Non-fiction, Business, Economics, Politics, History, International Relations, Human Rights, Sustainability, Leadership, Innovation

The Trade Trap is divided into three parts. In the first part, Döpfner traces the history and evolution of global trade, from the ancient Silk Road to the modern World Trade Organization. He shows how trade has been a force for good, but also a source of conflict and exploitation.

He analyzes the rise and fall of the liberal world order, and the emergence of new powers that challenge the West’s dominance and values. He focuses on China and Russia, two countries that have used trade as a weapon to advance their interests and influence, while violating human rights, undermining democracy, and threatening security.

He shares his personal experiences and encounters with leaders like Vladimir Putin, Recep Tayyip Erdogan, George W. Bush, Angela Merkel, Jack Ma, and others, to illustrate the complexities and contradictions of doing business with dictators.

In the second part, Döpfner exposes the trade trap, the dilemma that the West faces when it comes to trade with autocratic regimes. He argues that the West has been trapped by its own ideology of free trade, which assumes that trade will lead to political and social change in authoritarian countries.

He shows how this assumption has been proven wrong, and how trade has instead enabled and enriched dictatorships, while weakening and endangering democracies. He warns that the trade trap is not only a moral and ethical problem, but also a strategic and existential one.

He explains how the trade trap has eroded the West’s competitiveness, innovation, sovereignty, and security, and how it has created dependencies and vulnerabilities that could be exploited by hostile actors. He also explores the environmental and social costs of the trade trap, and how it has contributed to climate change, inequality, and injustice.

In the third part, Döpfner proposes a solution to the trade trap, a radical new approach to global trade that he calls the values-based alliance of democracies (VAD). He argues that the West must break free from the trade trap, and create a new world order of free trade that is based on values, not profits.

He outlines the principles and criteria of the VAD, which include the rule of law, human rights, and sustainability targets. He explains how the VAD would work, and how it would benefit its members and the world.

He also addresses the challenges and objections that the VAD might face, and how to overcome them. He concludes by calling for a bold and courageous leadership that can implement the VAD, and reshape global trade in a way that can strengthen democracy, safeguard freedom, and secure peace.

Review

The Trade Trap is a timely and important book that offers a fresh and original perspective on one of the most pressing issues of our time: global trade. Mathias Döpfner is not only a successful and influential business leader, but also a passionate and eloquent advocate for democracy and freedom.

He combines his extensive knowledge and experience with his personal insights and anecdotes, to create a compelling and convincing argument for a values-based trade policy. He challenges the conventional wisdom and the status quo, and presents a visionary and practical alternative that can transform the world for the better.

He writes with clarity, conviction, and courage, and engages the reader with his lively and accessible style. He does not shy away from the complexity and controversy of the topic, but rather embraces them and invites the reader to join him in a constructive and critical dialogue.

He does not offer easy answers or simple solutions, but rather realistic and innovative ones that require courage and commitment. He does not only inform and educate, but also inspire and empower. The Trade Trap is a book that will make you think, feel, and act differently about global trade and its impact on our lives and our future. It is a book that every citizen, leader, and decision-maker should read and heed. It is a book that could change the world.

Recommendation

In this page-turner, publishing titan Mathias Döpfner lays out a bleak view of the world. China and Russia have fully embraced totalitarianism, he notes, and they want to bring Europe and the United States into the autocratic abyss. Döpfner, head of global media giant Axel Springer, makes a compelling case that the West must choose between appeasing Vladimir Putin and Xi Jinping and stopping the strongmen. The West has already ostracized Russia, but China – factory to the world, crucial export market and major investor in US Treasury bonds – presents a far more difficult challenge.

Take-Aways

• Across the globe, democracy is losing ground.
• The West was wrong to deepen its ties with China.
• The rise of autocracy gives Europe a chance to reassert itself.
• Strongmen keep projecting strength, until someone stands up to them.
• Dictators have felt emboldened to crack down on press freedoms.
• Donald Trump has systematically attacked democracy.
• The legacy of Angela Merkel, a celebrated centrist, is under examination.
• China has adroitly mixed totalitarianism and capitalism.

Summary

Across the globe, democracy is losing ground.

Freedom House reports that democracy is in decline: Just 20% of humans live in nations that the think tank describes as “free,” while 40% dwell in states defined as “not free.” This trend has been heading in the wrong direction for years. Freedom House says the number of global democracies has declined for 17 years in a row, and it says the world has fallen into a “long freedom recession.”

“Free and open societies are facing a number of existential threats.”

The most obvious harbingers of democracy’s reversal are Russia and China. For a time, Westerners sincerely believed that by increasing economic ties with Moscow and Beijing, rulers there would embrace democratic values. Instead, both nations have grown more autocratic. The liberal world order is teetering, and autocrats sense weakness and press their advantage: Russia invaded Ukraine, and China has imprisoned Uyghurs in camps.

The West was wrong to deepen its ties with China.

The United States and Europe welcomed China into the World Trade Organization (WTO) in 2001, a move that has backfired spectacularly. In the two decades after China joined the WTO, its economic output as a share of global GDP soared, from less than 4% in 2001 to more than 18% in 2021. As China rose, the United States and Europe saw their output as a share of global GDP shrink.

“This blind faith in China gave the world a pandemic that has so far led to around seven million deaths.”

China has responded to the West’s embrace by running roughshod over the rest of the world. Its greenhouse gas emissions have skyrocketed. As of 2021, China was responsible for nearly one-third of global carbon emissions. China mishandled the outbreak of the COVID-19 pandemic, first by trying to hide it and then by responding too late – and with major infringements on individual rights. Meanwhile, the European Union showed why democracy can look so unappealing to the world’s autocrats. Whether the crisis has been an influx of refugees or a decision about how to distribute COVID-19 vaccines, the EU has proven sluggish and ineffective.

“Today, our world order feels dystopian.”

The Western style of consensus building is slow and often flaccid, but autocrats move decisively. Vladimir Putin annexed Crimea and, facing little in the way of repercussions, he next decided to take all of Ukraine. Western leaders were caught flat-footed, simply because they couldn’t fathom such a thing – the old days of shooting wars and ground invasions seemed long gone. Putin showed that despots still like to flex their muscles, and this made it clear that a Chinese invasion of Taiwan isn’t so far-fetched.

The rise of autocracy gives Europe a chance to reassert itself.

America has identified China as a global threat and has begun to distance itself. Europe, on the other hand, has been slower to embrace decoupling. These divergent responses to China’s growing autocracy open up the possibility that Putin and Xi Jinping could seek to further divide America. In this scenario, Europe could grow more reliant on China – and Europe would fade further in economic relevance, while also losing its important role as a political counterbalance to America’s populist gyrations.

“While the United States has decided to decouple from China, Europe is still hesitating and mulling things over.”

There is a second option: Europe could renew its transatlantic partnership with the United States. A strong alliance between the two pillars of democracy would isolate China and Russia while renewing Europe’s place as a seat of political freedom, as well as a model of economic prosperity and the rule of law. But on its current trajectory, Europe is in danger of becoming little more than a quaint example of what democracy and innovation used to look like. If Europe turns away from autocracy and toward democracy, the EU can re-emerge as a global destination, one that attracts talent and investment.

Strongmen keep projecting strength, until someone stands up to them.

Appeasing dictators doesn’t work; they can’t be negotiated with. The world saw this reality when British prime minister Neville Chamberlain kowtowed to Adolf Hitler, and again when Putin ran roughshod over Ukraine. Putin has always viewed the breakup of the Soviet Union through his own prism. While the West saw the collapse of the Iron Curtain as a triumph for freedom, Putin viewed it as an unnecessary surrender – and something to be undone. At the same time, Europe grew more reliant on Russian energy. In 2011, Germany imported 36% of its natural gas from Russia. By 2020, with Berlin rejecting nuclear sources of energy, that figure had climbed to 65%. Germany was moving away from nuclear energy, and it wasn’t especially concerned with who was supplying its electricity, as long as that power no longer came from nuclear plants.

“Europe has shown itself to be remarkably weak in the face of Putin’s experimentation over the last 20 years: through its military passivity, through its pacifist obsession with principles and especially through its decision to accelerate economic dependence on Russia.”

For two decades, Putin has poked and prodded to see what the West will tolerate. When he murders dissenters, manipulates foreign elections and seizes sovereign territory, Putin is essentially running an experiment: He wants to see how the West responds to his provocations. If the United States and Europe counter in a disjointed way, Putin interprets the reaction as a tacit approval. Then he moves on to his next audacious incursion, couched in his vision of returning Russia to its once and future glory.

“There is a growing realization around the world that when trade creates dependency, trouble will follow.”

With his war on Ukraine, Putin seemingly miscalculated. Just days after the start of the war in February 2022, Germany responded with a robust plan to support Ukraine. Putin’s bloody conflict in Ukraine fully exposed the strongman’s true nature. It has also underscored the reality of the awkward marriage that occurs when democracies become trading partners with dictatorships. If a democracy comes to rely on an autocracy, the dictator is likely to interpret the trading relationship as an endorsement of autocratic policies.

Dictators have felt emboldened to crack down on press freedoms.

Democracies are noteworthy for giving the media free rein, while autocracies are known for cracking down on the free press. In democracies, the media acts as an important check and balance – informed voters can decide whether to punish or reward a candidate’s actions. That option doesn’t exist in autocracies. Like democracy itself, the free press is under assault. Reporters Without Borders surveyed the media climate in 180 nations and determined the free press was imperiled in 73 countries.

“Restrictions on press freedom remain the clearest indicator of a country’s lack of freedom.”

A separate study by the Committee to Protect Journalists found that, as of late 2022, 363 journalists had been imprisoned worldwide. Iran accounted for 62 of the total, but China, Myanmar and Turkey also had large numbers of journalist inmates. In Russia, Wall Street Journal reporter Evan Gershkovich was imprisoned in 2023 on transparently trumped-up espionage charges. In 2021, the Belarusian military forced a Ryanair flight passing through its airspace to land so that an exiled journalist could be arrested. In another notorious case, Saudi authorities dispatched a goon squad to murder Jamal Khashoggi, a journalist who had criticized the Saudi regime.

“Freedom of expression and media freedom are in significant decline around the world.”

Turkey has similarly taken a brutal approach to press freedom. In 2017, Axel Springer reporter Deniz Yucel was among many journalists who reported on leaked emails of the nation’s energy minister, who also was the son-in-law of Turkish president Recep Erdogan. As a German-Turkish citizen, Yucel was vulnerable to state retaliation – and he was quickly arrested for spreading terrorist propaganda. Yucel was held in solitary confinement in a tiny cell. Only a personal appeal from German chancellor Angela Merkel secured Yucel’s release. He was held for 368 days for nothing more than reporting a news story. Contrast Erdogan’s approach with that of a democratic leader like former British prime minister Tony Blair. Döpfner met with him while Blair was in power. The prime minister complained about how the British media portrayed him – and then shrugged off the topic as an inevitable part of life in democracy.

Donald Trump has systematically attacked democracy.

Donald Trump is clearly an anti-democratic politician. Surveying a fractured electorate in 2015 and 2016, he opted not for unity but for further division. Once elected, Trump played up racial divisions, downplayed violence against Black Americans and labeled America’s critics as unpatriotic. And he lied – publicly, boldly, unapologetically – in a way reminiscent of Putin or any other autocrat. After Trump’s press secretary insisted that his 2017 inauguration was attended by record crowds, another adviser doubled down: Kellyanne Conway went on Meet the Press to make her infamous assertion about “alternative facts.” As ridiculous as her comments seemed, they were a watershed. The US political climate pivoted from one in which facts mattered to a place where inconvenient realities could be explained away in service of an ideological narrative.

“Hardly anyone has weakened democracy from within as much as the 45th president of the United States, Donald Trump.”

For Trump and his followers, belief overtakes reality. This fiction-over-fact mind-set reached its nadir on January 6, 2021. Though Trump had lost the 2020 election to Joe Biden, Trump refused to concede. Instead, he labeled the results as fraudulent. Enough of his followers bought the rhetoric that a group of them stormed the US Capitol in a coup attempt. From the moment he announced his candidacy, Trump had been stoking rage and undermining democracy. His success at getting his followers to believe his lies underscores the fragility of democracy, even in the United States. However, Trump did take some important pro-democratic steps: He distanced the United States from China, he pressured Europe to invest in NATO, and he pushed back against Big Tech.

The legacy of Angela Merkel, a celebrated centrist, is under examination.

Merkel’s 16-year stint as Germany’s chancellor won rave reviews. Time magazine named her “Person of the Year” in 2015. Germany, once a murderous autocracy, had embraced sanity, stability and centrism. In retrospect, though, Merkel’s policies don’t hold up well to scrutiny. Consider immigration: In the summer of 2015, Merkel welcomed Syrian refugees, even taking selfies with the arriving exiles. Yet she never did the hard work of crafting a sustainable immigration policy. Her welcome mat led to a flood of refugees to Europe and to fresh divisions within the continent. The refugee crisis was part of the reason that British voters opted for Brexit in 2016, and it fueled the rise of the populist right in Germany and Eastern Europe.

“She [Merkel] misjudged the way of the world, and the performance of her administration is under critical review.”

Merkel dropped the ball on other important matters, too. Under Merkel, Berlin willfully and routinely declined to invest 2% of its GDP in NATO, despite a 2006 agreement that all NATO members would do so. Merkel also was slow to embrace the modern economy. Despite its economic might, Germany’s internet access and cellphone coverage are mediocre. And Merkel miscalculated in 2011, when she decided to phase out nuclear energy. The impetus was the March 2011 failure of Japan’s Fukushima plant. Germany turned to Putin’s Russia for its energy needs, a move that strengthened an enemy of democracy.

China has adroitly mixed totalitarianism and capitalism.

Democratic societies embrace such messy traditions as human rights, the rule of law and free speech. China has no interest in democratic values, but it has taken on Western-style capitalism to spark the economic growth that makes it the envy of the world. On the global stage, Xi has pretended to be a normal democratic leader. When he spoke at the World Economic Forum at Davos in 2017, he seemed less the autocrat than America’s newly elected president. Alas, it was all a smokescreen. Xi is no less an autocrat than Mao Zedong, under whom tens of millions of Chinese died.

“It is simply incorrect that China is too pragmatic to launch military offensives.”

Xi is clear about his nation’s ambitions. The People’s Republic of China turns 100 in 2049, and Xi aims to bulk up China’s influence as much as possible in the coming decades. China spent nearly $300 billion on its military in 2021, a sixfold increase from 2006. Beijing also is moving aggressively into artificial intelligence. In 2020, by the metric of scholarly articles on AI, Chinese researchers outperformed American researchers. China also is flexing its muscles in the fields of biotechnology and genetic engineering.

“Democracies dependent on China won’t stay democracies for long. They will die in the trade trap.”

All this should serve as a warning to Western leaders. The more intertwined the West is with China, the more pressure the West will feel to adhere to Chinese policies. Beijing’s standards and practices are the polar opposite of those preached in Washington, DC, and Brussels. Continuing the deep relationship with China dooms the West to a gradual erosion of democracy, while also supporting the rise of a totalitarian superpower.

About the Author

Mathias Döpfner is chairman and CEO of Axel Springer SE, which is the largest digital publisher in Europe and owns Politico, Insider and Morning Brew. He also serves on the boards of Netflix and Warner Music Group.