Northwest Arkansas Democrat-Gazette
Europeans defend free trade
There is too much “national egoism” in the world, German Chancellor Angela Merkel said Wednesday at the World Economic Forum in Davos, Switzerland, as she called for cooperation, not isolationism. U.S. President Donald Trump is expected to arrive at the forum today.
DAVOS, Switzerland — European leaders came to the defense of free trade and global cooperation on Wednesday, laying out a vision meant to counterbalance what many perceive as a rise in the more brash, nationalistic policies of U.S. President Donald Trump.
Trump’s expected arrival today at the World Economic Forum in Davos overshadowed the event, and many government leaders rushed to take a stance in contrast to Trump’s policies, particularly his move to revise free-trade deals and drop out of a global climate-change pact.
“We believe that isolationism won’t take us forward,” German Chancellor Angela Merkel told the elite gathered in the snowy Alpine town. “We believe that we must cooperate, that protectionism is not the correct answer.”
Merkel stressed there is too much “national egoism” at the moment and that the World Economic Forum’s motto of “creating a shared future in a fractured world” was “exactly right” for 2018.
Concerns that the U.S. is turning its back on the globalization — which many credit with increasing wealth but also creating inequality — were accentuated this week, when Trump backed new tariffs on imported solar-energy components and large washing machines. His combative commerce secretary, Wilbur Ross, conceded Wednesday that China could respond by imposing its own tariffs on U.S. products.
“There’s always potential for retribution or retaliation, and that’s up to the Chinese to decide,” Ross told journalists as part of the largest-ever U.S. delegation to Davos. He warned that the U.S. itself could respond to any retaliation from Beijing.
The chorus of criticism of Trump’s commercial policies is unlikely to sway Trump, especially when recited by governments that often maintain more trade barriers than the United States.
Experts note that countries like China have higher barriers to trade than the U.S. Even the European Union has been accused of pursuing protectionist trade policies to defend its own interests, particularly in agriculture and in industry.
The “America first” view that underpins the Trump economic program has already seen the U.S. withdraw from the Trans-Pacific Partnership, a trade deal with 11 countries, and seek a renegotiation of the North American Free Trade Agreement with Canada and Mexico. Trump has also pulled the United States out of the Paris agreement on climate change, a move that reinforced fears that “America first” means that the U.S. turns inward and opts for a more isolationist approach.
While acknowledging that it is legitimate for each leader to say, “My country first,” Italian Prime Minister Paolo Gentiloni said trade was the means toward economic growth — and that protectionism runs counter to that.
The president, who was to depart Washington late Wednesday, is set to address the forum Friday. He is expected to showcase the booming U.S. economy and such measures as his recent tax overhaul, claiming that a thriving America benefits the world.
U.S. Treasury Secretary Steve Mnuchin brushed off concerns about a possibly tough reception, saying,“Our objective is to be here to interact with important counterparts.”
He insisted that the Trump administration believes in “free and fair trade” and was just making sure that “U.S. opportunities are equal to other people’s opportunities in the U.S.”
Mnuchin said Trump’s overriding priority is to boost U.S. growth and that “economic growth in the U.S. is obviously good for the rest of the world,” he said. “We are open for business.”
Trump is to hold meetings with political leaders, including British Prime Minister Theresa May and President Paul Kagame of Rwanda, as well as with business leaders, notably from some big European corporations. He is expected to trumpet his recent tax package, which saw corporate tax rates slashed in the U.S., to attract business into the U.S.
Those tax changes, Mnuchin said, have already reaped big dividends, with many U.S. businesses, including Apple, saying they will repatriate money back into the U.S., pay more taxes and hand out bonuses to employees.
Mnuchin also caused jitters in financial markets by saying, “A weaker dollar is good for us, is good as it relates to trade and opportunities”
The comment breaks with two decades in which treasury chiefs regularly backed a strong dollar. The U.S. currency has fallen sharply, hitting a three-year low against the euro.
Commerce Secretary Ross indicated that investors are overreacting to the treasury secretary’s comments on the greenback, saying his fellow Cabinet member in no way advocated for a shift in America’s long-standing strong-dollar policy.
“He wasn’t advocating anything. He was simply saying it’s not the world’s biggest concern to us right now,” Ross said on CNBC, noting that he was with Mnuchin when he spoke. “What he exactly said was the dollar, just like the Treasury bond market, is a huge market, a very liquid market, it’s not something we worry a lot about day by day.”