US President Donald Trump recently threatened to withdraw from the World Trade Organization (WTO), claiming the organization was designed by foreign nations to harm the US. Now it seems Trump is about to start a trade war to justify his accusation. What a stunning spectacle for the world to see, the most developed country on the planet crying as if it were the victim of international trade.
As everybody knows, the US took the lead in forming the economic, trade, and financial systems following World War II. For decades, the nation had a firm grip in establishing rights to create and amend trade rules within the global arena as evidenced by the formation of the General Agreement on Tariffs and Trade, the establishment of the WTO, and the creation of the monetary and exchange rate management system known as the Bretton Woods Agreement.
The US has always been the source of economic and trade rules for the entire international community, and the leader of the global monetary system. It is hardly convincing when the US announces to the world that it is losing the very game that it created.
The US has never been conservative when it comes to national interests. In recent years, the US has repeatedly adjusted and upgraded international trade and investment rules to maintain its core competitiveness and first-mover advantage. The goal has always been to ensure US dominance over global economic governance. Rule makers are often the biggest beneficiaries, and the US knows this all too well.
The US was stronger after World War II and for a good reason. Since then, it has reaped the benefits from economic globalization and the redistribution of resources. By enhancing and consolidating its economic dominance, the US became globalization’s biggest winner within the framework of a multilateral trading system. Today, the Western nation is one of the strongest trading powers in the global marketplace.
In 2017, US trade volume reached $3.89 trillion, and its service trade volume hit $1.31 trillion, ranking at the top in both categories, respectively. In the financial sector, US currency accounted for 62 percent of all global foreign exchange reserves. That gave the US an advantage in collecting a "coinage tax" by issuing US dollars for their own economic benefit. In the energy sector, the country grew to become the world's largest natural gas producer in 2009, and four years later replaced Saudi Arabia as the world's largest oil producer.
American capital covers the world for rich returns. The US imports quality goods from developing nations at lower prices, which provides funding for their public welfare system. Meanwhile, US currency has been placed on reserve by other countries who passively share their inflation risks.
The US has generated excessive profit through their efforts on monopolizing global technology. American businesses enjoy a high-end presence and value-added links, within the global chain, earning significant dividend shares from economic globalization.
The US has always taken great advantage of globalization while at the same time claiming the multilateral trading system is unfair. In playing the victim card on international trade matters, US greed is exposed in their attempt at maximizing national interests and overall desire to take advantage of international exchange.
Even if the US has suffered a few losses from international trade, their focus should center on pinpointing the causes to determine whether other nations or the US itself, has hindered growth. The US is quick to blame other countries for disrespecting trade rules, while at the same time distorts market competition, impedes fair trade and establishes policies that damage the global industrial chain. Their actions and impromptu policies are the driving factors that have shattered the rule-based multilateral trading system.
Concerning market competition, the US provides subsidies to support its domestic industrial development, which creates overcapacity or monopolies in related fields. For external procurement, the US administration set up discriminatory conditions, obstructed the free circulation of quality products from foreign countries to the US market, and saw international businesses treated unfairly.
When discussing trade barriers, the US emphasizes its vast trade deficit with other countries and then implements stringent controls over exports. The US tightens investment review in the name of national security, hinders the free flow of investment factors, and damages investment facilitation. The US has always had greater access to pirated sites worldwide and has long ignored the loopholes when it comes to intellectual property protection.
The strategy behind launching this most recent trade war against a variety of countries goes far beyond playing the victim of international trade. Underneath US trade rhetoric exists much deeper motivations. Mainly, the US wants to build a “theoretical” foundation to justify their trade protectionist stance.
It is now time for the US to adjust their trade policies and stop trying to convince other nations with inaccurate statements they are the victim. White House hardliners would not serve the country’s best interests in global trade. The core value of international trade rules and fairness is in place, and a platform for multilateral dialogue is also available. The world will not tolerate a troublemaker, and the US will never benefit from aggressive trade protectionism.
Global trade is a constant flowing, well-connected ocean, rather than a cluster of isolated lakes or streams. Trade protectionism runs counter to historical trends, and Washington will not be able to turn back the clock. It is time the US went with the flow, and to stop acting like a victim of international trade.