Challenging global trading norms
Unilateralism is the key to White House policies now.
The post-war free and fair trade institution built by well-meaning countries, both developed and developing countries, first in the form of the General Agreement on Tariffs and Trade (GATT) that later morphed into the World Trade Organization (WTO) in 1995 now is in its existential crisis. It is not that the Doha Development Round launched in 2001 in the Qatari capital was for all practical purposes suspended in 2011 that lies at the root of the problem but because of the patently protectionist and defiant attitude being displayed by the hegemonic United States under its new President Donald Trump. Trump has not only trumped all well-laid plans for ushering in a global fair and free trade regime but also triumphed in pushing his country's return to a unilateralist and brazenly mercantilist mindset.
Late last month, President Trump reaffirmed his disdain for US trade agreements, particularly "these big quagmire deals that are a disaster" in explicit allusion to the Trans-Pacific Partnership, the mega-regional trade pact entailing a dozen nations in the Asia-Pacific region, but not China, from which the United States had pulled itself out. He has also shown his displeasure at the Middle Kingdom's ascendancy in the global economy by blaming most of the problems of his country on the dragon economy. President Trump dangled enough protectionist sticks against China including accusing China as a currency manipulator that ought to be chastised and chastened by higher import tariffs on its products that enter into the lucrative US markets.
To cap it all, his bravado, the new U.S Trade Policy unfurled by the Trump Administration on March 1 in Washington ingenuously conceded that "the overarching purpose of our trade policy—the guiding principle behind all our actions in this key area—will be to expand trade in a way that is freer and fairer for all Americans". So instead of the enlightened ideology of democratic capitalism that the US adopted in the post-war era for the weal of all humanity which was somewhat restricted by Washington Consensus of the 1990s in which market forces were allowed to determine the efficiency of resources is now parochially interpreted to benefit only "all Americans". The neophyte zeal and commitment with which liberal economic policies are turned topsy-turvy is but a gross and scurvy manifestation of nationalism in its crudest sense.
Amplifying the contention, the President Trade Policy Agenda of the Administration makes no bones about contending that "every action we take with respect to trade will be designed to increase our economic growth, promote job creation in the United States, promote reciprocity with our trading partners, strengthen our manufacturing base and our ability to defend ourselves, and expand our agricultural and services industry exports". In short what it fails to point out is that the extant machinery exemplified by the WTO and also bilateral mechanism do not adequately answer all the corking concerns being deeply experienced by the world's mighty power currently.
Accordingly, the primary objectives in global trade include, among others, defend U.S national sovereignty over trade policy, strictly enforce US trades laws, use all possible sources of leverage to encourage other countries to open their markets to US exports of goods and services and provide adequate and effective protection and enforcement of US intellectual property rights and negotiate new and better trade deals bilaterally with countries in key market around the world. Demonstrating further spunk, it said "the Trump administration would act aggressively as needed" reflecting trade remedies such as anti-dumping and countervailing measures would be deployed to sustain American interests.
In a candour that is uncharacteristic of a prosperous nation that had been policing the international economic order through its robust leadership in institutions like the United Nations, the World Bank and with Europeans in the IMF, it has now come to a pass to bemoan its real loss of strength and stamina. The unprecedented spurt in the US trade deficit, which reached 648 billion dollars in manufactured goods last year and the putative loss of five million jobs during the last sixteen years, the US maintains, justify its stands that multilateral, regional and even bilateral trade agreements with other countries had only wrought deindustrialisation and anemic, jobless growth. "Plainly the time has come for a major review of how we approach trade agreements", it has contended, stressing that "going forward, we will tend to focus on bilateral negotiations".
For India, the message is loud and clear that business as usual with the United States is no longer any easier with a strident Trump Administration evincing scarcely any extra zeal to be cuddly with the Modi Government here. It is sad that India's Commerce Ministry has no concrete plan to wade through the choppy waters of its biggest market, besides its legions of H-1B visa seekers who throng to the Silicon Valley to encash their software skills acquired from India's prestigious and premier higher educational institutions.
It is also disturbing to note that the London Financial Times in a recent news item reported that the Trump Administration was debating a new strategy—leveling unilateral US trade sanctions against China and other trading partners, bypassing the WTO Dispute Settlement Process (DSP). No doubt, the DSP in its relatively salutary track record took an impartial view on trade disputes without getting ruffled by the heft and clout of trade majors. Now to ignore this institutional mechanism in favour of its own method of arriving at a resolution of trade rows, the United States has only cocked a snook at the norms and guidelines established through painstaking efforts multilaterally and by consensus among all the members of the WTO.
In fact, the WTO dispute settlement system permitted nations to challenge each other through an explicit legal process that called for not only a rigorous presentation of evidence but also let the possibility of appeal. But this time-tested impartial dispute settlement body is being challenged unilaterally by the U.S. This does not augur well for global cooperation on issues impinging on development, trade and peace and prosperity for all. It is high time the rest of the world reacted plausibly to the new threat of might is right, and meekness is but weakness in a concerted manner.
(The views expressed are strictly personal.)