Trump\'s protectionist stance raises the spectre of trade war

Published: March 06, 2017 20:23:10 | Updated: October 22, 2017 06:53:36

---

In a recent report, the World Bank has sounded a note of warning that protectionism and threats to undo or rewrite trade agreements on global scale in the Trump era has already created total political uncertainty and slowed trade growth. The unorthodox views of the new US President Donald Trump have cast a lengthening shadow over the global economy.
The WTO, established in 1995 with total support from Washington, has now to deal with the new Trump-led US administration that is openly hostile to free trade. The current US policy marks a departure from the Obama administration's strict adherence to WTO compliance in its challenges to unfair foreign trade practices.
The re-elected chief of the World Trade Organisation (WTO) Roberto Azevedo, bravely announced last week that he would try to build on recent successes "despite the challenging time" confronting global free trade.
On the other hand, the most important global bodies, such as the International Monetary Fund (IMF), the World Bank and the Organisation for Economic Cooperation and Development (OECD) appear to be in two minds in pinpointing the issues.
For examples, the World Bank report has highlighted the fragile state of global trade, which has been historically accepted as an important engine of global economic growth.
But the other world bodies have recently upgraded their forecasts about global economic growth on the basis of the expected impact of the Trump administration's reported tax cuts, rising infrastructure spending and, of course, the promised multiple deregulation.
It's, however, not very clear how they have evaluated the possible adverse impact of the US administration's anti free trade policies on the emerging economies worldwide.
It has been widely reported that growth in the international trade has been recorded markedly below the historic trends for the past five years.
In 2016, global trade growth was recorded at 1.9 per cent, slowest since the 2009 collapse in commerce that followed the 2008 global financial crisis.
Now with Donald Trump's election as American President and his anti-free trade campaign before and after the election has created an overall global uncertainty - both political and economic.
US TRADE POLICY SEEKS TO BYPASS WTO: Reports quoting the new US administration sources say the new government is set to ignore any ruling that the WTO may issue as it considers it an 'affront to US sovereignty'. A Financial Times report says the US is determined to shake up its trade policy in order to confront what it describes as 'dysfunctional global system' that benefited China and other emerging economies at the cost of the US workers.
A policy paper prepared by the new US administration (which was leaked) says that since independence, the USA's basic principle was that its citizens are "only" subject to laws and regulations made by the US government - "not rulings made by foreign governments or international bodies." Thus, the Trump administration will "aggressively defend American sovereignty over matters of trade policy."
This clearly reflects Donald Trump's arrogance of attitude that frequently featured during the long campaign period preceding the US presidential election.
The US is facing several important WTO decisions concerning China. The most important one is the complaint that Beijing filed with the WTO in December last against the European Union (EU) and the US for blocking China's request to be treated as a "market economy" under WTO rules.
It is likely to take some time - may be years - but if the rules favour Beijing, and if the Trump administration's present mood is any guide, this may pave the way for a destructive trade war.
Trump's nominee for trade representative, Robert Lighthizer, was quoted by AFP as saying 'Washington could ignore WTO rules' that favour China. However, spokesman for US Commerce Secretary Wilbur Ross declined to make any comment.
Meanwhile, WTO's Trade Facilitation Agreement - the first-ever multilateral trade deal - has been ratified and has come into force. This may further provoke Trump's policy makers.
TRADE WAR BRINGS DISASTER AND NO WINNER: Since his re-election as WTO chief, Roberto Azevedo has been downplaying the widely debated subject of possible US-China economic conflict as well as the brewing tension between Washington and the European Union.
He said: "We should not be talking ourselves into a trade war….I hope we can avoid anything that even remotely resembles that."
Azevedo told German newspaper Bild on February 28: "…Without trade, America will never be 'great again'" - a reference to Trump's "Make America Great Again" campaign slogan. WTO spokesman Keith Rockwell, however, clarified that the quote was prompted by a request from Bild asking Azevedo to suggest a tweet he would like to send to Trump.
Chinese foreign ministry in a statement on March 02 supported the work of the WTO. China's foreign ministry spokesman Geng Shuang said: "Since China joined the WTO it has always proactively supported the WTO's work, and this position will not change."
Obviously, China is worried that its export-dependent industries will suffer and therefore, has repeatedly urged the global leaders to reject protectionism, which Trump has championed with his "America First" campaign.
[email protected]

Filter By Topic

More News