Wed, Nov 15, 2017 - Page 8 News List

Put national interests first in trade

By Eric Chiou 邱奕宏

In the world of fierce competition among nations, an open and free global trade system is not self-evident, but hinges on steadfast support from some great powers that benefit from it.

Hence, no country should naively believe that nations have a sacred obligation to shoulder the responsibility of global economic growth by sacrificing their national interests and enduring aggravating trade deficits that hollow out their economic foundation and national capabilities.

Thankfully, US President Donald Trump’s administration has bravely hit the nail on the head and confronted this challenge, at least verbally.

Despite the fact that Trump’s protectionist tone has been heavily criticized by liberal economists and foreign leaders, it is irrefutable that the US’ comprehensive economic power might soon be surpassed by China’s economic clout, if the present trend of global economic imbalance continues.

Unfortunately, that is not only bad for the US, but also an undesirable consequence for the free world.

At a joint press conference in Beijing last week, Trump, oddly enough, did not blame China for the US’ massive trade deficit.

“After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens? I give China great credit,” Trump said.

“In actuality, I blame past [US] administrations for allowing this out-of-control trade deficit to take place and to grow,” he added.

Indeed, according to US statistics, last year, the US trade deficit in goods reached US$736.7 billion, with China accounting for 47 percent with a surplus of US$347 billion.

Even worse, many economists forecast that the US trade deficit with China would reach nearly US$370 billion by the end of this year.

Hence, Trump said: “We must immediately address the unfair practices that drove [our trade] deficit along with barriers to market access.”

By highlighting his top priority of diminishing the US trade deficit and promoting fair trade, Trump’s trip to Asia has intensified the anxieties of many Asian nations that enjoy a trade surplus with the US.

Similarly, the development of multilateral trading systems in the Asia-Pacific is destined to slow down due to the absence of US leadership.

Many have criticized Trump for his parochial nationalism with his “America First” policy and unwisely surrendering US leadership to China. Nevertheless, no nation can bear the unceasing bleeding of its economic fundamentals by allowing ruthless assaults by foreign economic forces without taking action to defend its economic livelihood.

Moreover, no one should bet on a weakened economic giant that has neither the will nor the ability to support and protect the stability and freedom of the global order, in which most nations benefit without paying their reasonable dues.

A constantly swelling trade deficit is like a tumor in the US economy and there is no easy cure for this chronic disease. This grim reality debunks numerous myths that US liberal economists have misleadingly advocated and provide insightful implications for Taiwan.

The first widespread myth is that the manufacturing sector is no longer important and deserves little effort to preserve. This myth is built on the questionable assumption that the service sector will take a leading role in the US economy and generate more economic benefits for Americans.

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