Mon, Oct 09, 2017 - Page 6 News List

US protectionism is not working

By Eric Chiou 邱奕宏

This year has gradually revealed itself to be an exciting roller-coaster journey characterized by several astonishing ups and downs in the global economy.

The expected tsunami of trade protectionism, primarily stirred up by US President Donald Trump’s intriguing “America first” agenda and aggravated by the withdrawal of the UK from the EU — the so-called “Brexit” — has surprisingly not invoked broadly devastating effects on the global economy, nor has it undermined the solid direction of global free trade as many pundits expected.

Although Trump’s rhetoric of economic nationalism has not yet caused any conspicuous damage, compared with the remarkable progress of economic globalization in the past two decades, optimistic prospects for the world economy have been irrefutably overshadowed by a rising skepticism over globalization and the looming storm of trade protectionism, which has not been seen since the 1999 WTO protest in Seattle.

Trump’s “America first” agenda has mainly focused on job creation and a reduction of the trade deficit by encouraging manufacturing firms to shift their production back to the US and by renegotiating the terms of trade deals to be more favorable to the US, while wielding the stick of trade sanctions to accomplish the goal of boosting sales of US goods in overseas markets.

Although the volume of Trump’s protectionist rhetoric has been set extraordinarily loud, his actions have been relatively moderate and prudent. Except for his audacious abandonment of the Trans-Pacific Partnership (TPP) immediately after he took office, none of the hardline trade protectionist remarks of his presidential campaign have translated into real policy.

Trump, who vociferously threatened to impose Chinese imports with tariffs of up to 45 percent, has failed to fulfill his promise. Neither has his administration dared to list China as a currency-manipulating nation, as Trump had insisted.

The highly anticipated US-China Comprehensive Economic Dialogue, which was established by Trump and Chinese President Xi Jinping (習近平) during their first meeting in April and aimed to resolve US-China bilateral economic issues in 100 days, has also fallen short of expectations and ended up with few concrete achievements.

In August, the Trump administration formally declared that it was launching a Section 301 investigation into Chinese intellectual property rights theft. It seemed as though Washington had finally taken a tough stance with Beijing, but, given that the final determination might take more than a year, its current impact is more approximate to a symbolic warning than any actual harm to China.

Even so, Trump’s ostensibly harsh policy toward Beijing could kill two birds with one stone: Washington can soothe domestic discontent among US industries regarding China’s violations of international property rights while applying more pressure on Beijing for future trade negotiations. Nevertheless, this trade investigation by no means suggests that Washington is determined to wage a trade war with China.

Trump claimed that the North American Free Trade Agreement (NAFTA) is the worst trade pact ever, that it has led US manufacturing firms to move their factories to lower-wage Mexico and caused unemployment among US workers. Hence, the US should either get rid of it or renegotiate a better deal.

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