Sun, Apr 15, 2018 - Page 6 News List

Lamy on Taiwan, Trump and trade

By Victoria Tsai 蔡靜怡 and Alexander Martin

While markets, investors, and governments around the world were anxiously awaiting US President Donald Trump’s next move in his country’s escalating trade dispute with China, one man who from 2005 to 2013 stood at the head of the WTO sought to remind observers of the stakes involved.

“Trade wars are something for media people,” former WTO director-general Pascal Lamy said. “What really matters are real wars, wars that kill people. And if trade wars lead to real wars, we have a big problem.”

Lamy, who recently visited Taipei to address a major APEC-affiliated conference on “smart” cities and trade, has enjoyed a distinguished career, having served as head of the cabinet of former European Commission president Jacques Delors and then as European commissioner for trade, during which period he helped drive some of the EU’s most significant policy moves toward tighter integration.

Now, Lamy sees in Trump a threat to the multilateral consensus he helped develop.

“He seems to be after wrecking the system in order to move back to bilateralism. This is a totally different ballgame,” he said.

For many observers, it might be tempting to lump Trump’s tariff announcements together with Brexit as symptoms of a turn toward nationalism, but in trade terms, Lamy regards Trump as an altogether more dangerous disease.

“Twenty years from now, the UK will still have more than 50 percent of its trade with the EU, whatever technicalities are behind that,” he said. “The Trump offensive is a much bigger issue because it is a clear attack on a system which has been built for 70 years.”

For Lamy, our modern multilateral trading system, established in 1947 under the General Agreement on Tariffs and Trade (GATT) and developed under the WTO, emerged from the belief that “trade integration has benefits which accrue from rules-based operation.”

In his view, these rules not only inaugurated a prolonged period of unprecedented prosperity, but they also served as a bulwark against a return of the protectionism that fueled international conflict for centuries up through World War II.

Now, Trump is challenging that consensus, using tariffs to reduce the US’ trade deficit while calling the WTO “unfair” to the US.

“Moving back to the concept of trade as a win-lose game is basically moving back to the Middle Ages. That [concept] had a name, which was ‘mercantilism,’” Lamy said.

Mercantilism, under which a nation uses its economy to bolster its political and military might at the expense of other nations, relies on the now-debunked premise that wealth is finite and that advantage is absolute.

“In the 21st century, with an international economy which is as integrated as the one we have today, the notion that imports are bad and exports are good simply does not make sense. This is what is dangerous,” Lamy said.

Will the WTO and its multilateral order underpinning today’s world economy prove resilient enough to stand up to Trump’s attacks? Lamy sounded an ominous warning.

“If WTO members believe — which I do, but I’m not speaking for them — if they believe that this collective insurance against protectionism, against nationalism, against power-based trade relationships needs to be protected, they will have to take the necessary steps to protect it,” he said.

Conversation turned to APEC, which, despite the ongoing spat between the US and China, has made significant headway on its long-term goals of reducing tariffs and facilitating market access among its members in the Asia-Pacific region. However, as the marginal benefits of tariff reduction dwindle and commerce increasingly moves online, how can APEC remain a relevant force in driving regional integration?

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