EconoMatters, Global Pairings

America First — Or Against All?

To Trump, everything in politics – even at the global trade stage – is about him personally and how it affects his business interests.

Credit: danielfela Shutterstock.com

Takeaways


  • To Trump, everything in politics – even at the global trade stage – is about him personally and how it affects his business interests.
  • Trump’s message is that trading with the US has a price, set unilaterally by him. Who cares if that sets America on a collision course with friends and allies.
  • The Trumpians’ assumption had been that when the US pulled out the TPP would be doomed. Wrong. The determined efforts of Japan and Australia have led to the resurrection of the agreement.
  • Trump dislikes the EU due to environmental rules that slowed the construction of a golf course in Ireland, and the inability of the “very stable genius” to understand the functioning of VAT.

The court that traveled with President Trump to the snowy capital of globalization, Davos, at the end of January was determined to deliver one and only one message: America First does not mean America Alone.

Alas, the cooperative message delivered from script in Davos only held for a day or so. It has proven to be what the U.S. President always blames the media for: Fake News!

The core message delivered by Trump and his team is unmistakable: Trading with the United States has a price, set unilaterally by him and his team. Who cares if that sets America on a collision course against allies and friends alike.

The only potential “grace” in his approach is that the Trumpian message is applied uniformly across the globe, in the Western hemisphere, in Asia or across the Atlantic, not to mention what is otherwise known as Africa.

The U.S. exhorts…

Against that backdrop, it cannot surprise anyone that the current U.S. Secretary of State, supposedly a very skilled business diplomat from his times of leading Exxon Mobil, declared his belief in the Monroe Doctrine, “as relevant today as it was two centuries ago.”

That statement came on the eve of meetings with his colleagues in South and Central America. Mr. Tillerson could just as well have said that he was going to visit his backyard, or Washington’s colonies. The context of his intervention was to make plain his view that China has no right to deal with Latin American countries.

… while China charms

In the real world, that same China held a rather successful summit in Santiago with member countries of the CELAC (Community of Latin American and Caribbean States). Never one for “un-grand” designs, Beijing offered to extend its One Belt One Road initiative to the region.

China is ready to increase imports of commodities, develop exports of manufactured products and investments and cooperate in the fight against climate change. It has also recently modernized its free trade agreement with Chile.

Incredible shortsightedness

Unfazed, a Washington that, under Trump, is even more caught in its own universe than usual has resolved to take its trade battles right to the throat of its two closest neighbors (and biggest trading partners) after China.

The Trump team is determined to change the terms of the NAFTA free trade agreement. To this end, it is suggesting the institution of a USA minimum content requirement, that the terms of the treaty should expire every five years unless the parties agree to a prolongation and pursuing the transparent objective of limiting cross-border investment.

As if that weren’t enough, the administration did more of China’s diplomatic bidding in the region via two so-called safeguard actions against imports of washing machines and solar panels. This penalized Mexico and countries of Latin America and the Caribbean, even though the administrative body in charge of establishing the injury to the American industry had recommended that they be exempt from export restrictions.

In his infinite wisdom, the President decided otherwise. Little wonder that the Chilean minister of foreign affairs at the end of the China-CELA meeting stated: “This meeting represents a categorical repudiation of protectionism and unilateralism.” Score: Beijing 1 – Washington 0.

The Gang That Can’t Shoot Straight

Things get worse when it comes to the relationship with Asia. There, America’s team looks like the Gang That Can’t Shoot Straight. It is shooting himself in the foot at every turn.

Things started ominously with the exit from the Trans Pacific Partnership, three days after Trump’s inauguration. The TPP, a “continuing rape of our country,” so went the Trump mantra, in reality did little to weaken American trade barriers. Instead, it was a quite masterful attempt at promoting an American order in Southeast Asia, to balance China’s influence.

Vietnam is the best example. The country was ready to accept disciplines on its state-owned enterprises and non-state unions. This resolve came about less by sudden conversion to the virtues of a liberal economy than to distance itself from its mighty neighbor to the north.

A fundamental miscalculation

The Trumpians’ assumption had been that, when the United States pulled out, the TPP would be doomed. Wrong. The determined efforts of Japan and Australia have led to the resurrection of the agreement, minus the United States.

The new TPP is slightly modified (i.e., all the tougher disciplines, for example on intellectual property, that had been exacted by Washington have fallen by the wayside).

Which means that Japan, for its exports of manufactured products, and Australia and New Zealand, for their agricultural goods, will have an advantage over the United States.

Not even hitting China, but allies

It does not get better with the use of the safeguard clause on solar cells and panels, or residential washers. The solar safeguard is supposed to be all about China. There is just one little problem. China’s solar panel exports were hit by antidumping duties and its share of the U.S. market went down from 59% to 11% in the past 5 years.

So the countries that are worst hit today by the new restrictions are Malaysia, South Korea, Vietnam and Thailand. (The last two are also the primary target of the safeguard on residential washers, together with Korea whose companies, Samsung and LG are the two culprits). One could well understand that Koreans are asking themselves: “With friends like that, who needs enemies?”

Europe anyone?

Given the U.S. fiasco in Asia, one might think that the European Union would be viewed in Washington as a necessary ally to define better rules of the game that would take into account the rise of China.

That was indeed one of the ambitions of TTIP, the Transatlantic Partnership. However, it too disappeared from the agenda with the new administration.

The U.S. Secretary of Commerce, Wilbur Ross, did mention in Davos the possibility of a restart of the negotiations. However, that is not very likely considering the Buy American priorities of the Trump administration and the understandable insistence of European negotiators on access to the U.S. government procurement market.

Then, there is the mind of Trump himself. For his “thoughts” on the European Union, just look at the interview given to ITV, a British channel, by the Great Leader himself. It offers very revealing evidence of his inability to look at the bigger picture – and that, to Trump, everything in politics – even at the global trade stage — is about him personally and how it affects his business interests:

But I will tell you, representing the United States, it’s a very unfair situation. We cannot get our product in. It’s very, very tough. And yet they send their product to us — no taxes, very little taxes, it’s very unfair. I’ve had a lot of problems with the European Union, and it may morph into something very big from that standpoint, from a trade standpoint. The European Union has treated the United States very unfairly when it came to trade…and I think it’ll turn out to be very much to their detriment.

Beyond the mangled syntax and the poverty of the vocabulary, known hallmarks of the Trump way of speaking, one has to wonder what justifies this “analysis.”

It goes back to Trump’s old rancor against EU environmental rules that slowed down the construction of a Trump golf course in Ireland, as well as the inability of the self-acclaimed “very stable genius” to understand the functioning of the VAT. And that’s how he writes off another longstanding ally.

Not to be left behind, Mr. Ross is joining the choir. While claiming that the United States is not protectionist, seemingly unaware of the contradiction, he gloats that “Americans are coming to the rampart.” Further proof that it is all about “America first and alone — against all!”

Tags: , , , , , , , , ,

About Jean-Francois Boittin

Jean-Francois Boittin is a former French diplomat and Treasury official.

Responses to “America First — Or Against All?”