Pro­tec­tion­ism won’t lead Trump any­where

China Daily (Hong Kong) - - VIEWS -

US Pres­i­dent Don­ald Trump has changed the United States’ trade pol­icy to re­sort to trade pro­tec­tion­ism, which goes against glob­al­iza­tion and trade lib­er­al­iza­tion. Trump has pulled the US out of the Trans-Pa­cific Part­ner­ship agree­ment be­cause he be­lieves it could un­der­mine the in­ter­ests of Amer­i­can work­ers. The US pres­i­dent also wants to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment and has threat­ened to with­draw his coun­try from the World Trade Or­ga­ni­za­tion.

The Trump ad­min­is­tra­tion’s ac­tions can be at­trib­uted to the pres­i­dent’s be­lief that glob­al­iza­tion is re­spon­si­ble for the ris­ing un­em­ploy­ment in the US and the de­cline of the do­mes­tic man­u­fac­tur­ing in­dus­try. Trump also be­lieves that only trade pro­tec­tion­ist poli­cies can help the US mid­dle class flour­ish.

To re­duce the US’ trade deficit, espe­cially against China, the Trump ad­min­is­tra­tion has adopted a se­ries of trade rem­edy mea­sures vis-à-vis its trade part­ners. And it aims to re­duce the US’ trade deficit with China by also tak­ing trade pro­tec­tion­ist mea­sures against other Chi­nese im­ports.

The Trump ad­min­is­tra­tion uses the US’ do­mes­tic stan­dards to judge the global trade sys­tem, which, in a way, is a man­i­fes­ta­tion of the uni­lat­eral trade pol­icy the US has been us­ing for a long time. As such, Trump’s pro­tec­tion­ist mea­sures may in­ten­sify the trade fric­tions be­tween China and the US in the short term.

Ac­cord­ing to data from the US In­ter­na­tional Trade Com­mis­sion, from Jan­uary to April this year, the US’ trade deficit in terms of im­ports from China was $106.48 bil­lion. That means the US’ trade deficit against China is the high­est and ac­counts for 44.39 per­cent of its to­tal trade deficit. The Jan­uary-to-April data show that among the top 10 com­modi­ties im­ported by the US which re­sulted in trade deficits for the coun­try, six were from China. This sug­gests the Trump ad­min­is­tra­tion is likely to build more trade bar­ri­ers against China.

The US econ­omy has been re­cov­er­ing, so US vot- ers now care more about im­prov­ing their liveli­hoods and eco­nomic sta­tus and less about whether Trump is a leader with strate­gic in­sight. Per­haps that’s why the Trump ad­min­is­tra­tion has con­tin­ued to an­nounce anti-trade lib­er­al­iza­tion poli­cies.

That the US is re­sort­ing to pro­tec­tion­ism af­ter its eco­nomic re­cov­ery is cause for global con­cern. The Trump ad­min­is­tra­tion’s trade poli­cies can also be seen as a com­pro­mise be­tween the US Con­gress and var­i­ous in­ter­est groups.

The trade rem­edy mea­sures the Trump ad­min­is­tra­tion has im­ple­mented re­cently show the po­lit­i­cal power the in­ter­est groups ex­er­cise in the US. The US’ la­bor unions and or­ga­ni­za­tions lobby the pres­i­dent and Con­gress mem­bers to seek po­lit­i­cal so­lu­tions for do­mes­tic un­em­ploy­ment and trade deficit prob­lems.

And when po­lit­i­cal forces pro­mote trade poli­cies and leg­is­la­tion that fa­vor pro­tec­tion­ism, the in­ter­est groups can use var­i­ous trade rem­edy mea­sures to take on trade part­ners legally to pro­tect US in­dus­tries and cre­ate job op­por­tu­ni­ties.

But the Trump ad­min­is­tra­tion should re­al­ize that pro­tec­tion­ism can never “make Amer­ica Great Again”. The fun­da­men­tal rea­son why the US man­u­fac­tur­ing in­dus­try has been suf­fer­ing is the de­cline in la­bor ef­fi­ciency, due partly to the in­creas­ing use of au­to­ma­tion. It was eas­ier to trans­fer la­bor-in­ten­sive in­dus­tries from the US to de­vel­op­ing coun­tries be­fore the rapid devel­op­ment of Sino-US trade. And the huge trade deficit be­tween China and the US is mainly be­cause of Wash­ing­ton’s re­fusal to ex­port ad­vanced tech­nolo­gies and tech­no­log­i­cal prod­ucts to Bei­jing.

Free global trade has the po­ten­tial to op­ti­mize re­source distribution through the in­ter­na­tional di­vi­sion of la­bor and con­nec­tiv­ity, which is ben­e­fi­cial to ex­porters and im­porters alike. Till now the Sino-US trade re­la­tion­ship has been mu­tu­ally ben­e­fi­cial. And to fur­ther con­sol­i­date this re­la­tion­ship, both sides have to re­duce their trade fric­tions.

But the Trump ad­min­is­tra­tion should re­al­ize that pro­tec­tion­ism can never “make Amer­ica Great Again”. The fun­da­men­tal rea­son why the US man­u­fac­tur­ing in­dus­try has been suf­fer­ing is the de­cline in la­bor ef­fi­ciency, due partly to the in­creas­ing use of au­to­ma­tion.

The author is a re­searcher with Chi­nese Acad­emy of In­ter­na­tional Trade and Eco­nomic Co­op­er­a­tion.

MA XUEJING / CHINA DAILY

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