In a highly agonistic column at Financial Times Rana Faroohar concludes:
The global trade system as it stands isn’t working well. In his speech, Sullivan talked about the US maintaining its commitment to the WTO, while also recognising the key question of today: “How does trade fit into our international economic policy, and what problems is it seeking to solve?â€Â As I’ll argue further in future, it should start by seeking to solve the problem of concentration and competition.
Her complaints about the “global trade system” appear to be that
- Suppliers to Western companies in non-Western countries care little about the safety or well-being of their workers
- Income inequality in non-Western countries that do business with Western companies increases
- Suppliers to Western companies in non-Western countries care little about environmental degradation or global climate change
- The global supply chains are too fragile and subject to disruption
I would say that the system of global trade has worked very well, indeed, over the last 30 years, lifting more than a billion people out of extreme poverty, but that the global security system and political systems in many countries, possibly including our own, are failing. Complaining that the global trade system is “not working” because buildings in Bangladesh fall down sounds to me like blaming your smartphone because it doesn’t launder your clothes. You evaluate the performance of your smartphone based on how well it accomplishes the things it was designed to do not whether it does things it was never intended to do.
I would further assert that her complaints are part and parcel of the victimization narrative so common in developing countries. While I agree that the colonizers were cruel and self-serving, she might reflect on the possibility that political, social, and economic dysfunction is what allowed countries to be colonized in the first place.
As evidence that the global security system is failing I would submit the following examples:
- The U. S. invasion of Iraq
- Saudi Arabia’s war against Yemen
- The Russian invasion of Ukraine
- The ongoing low intensity war between China and India in the Himalayas
and that’s just the tip of the iceberg.
I also think that to fix the global security system the United States needs to
- Stop invading other countries or aiding aggressors
- Restore our productive capacity beginning with reducing our dependency on other countries for strategic goods.
- Restore a political and social consensus domestically.
Like it or not the global security system is dependent on U. S. might and U. S. military might is downstream from U. S. economic power and political stability.
“Sullivan talked about the US maintaining its commitment to the WTO”
Its kind of amusing because Biden has continued a policy of Trump, which is the neutering of the WTO.
The major difference between the WTO and its predecessor GATT was the WTO was empowered to issue binding rulings in trade disputes. Since Trump took action to prevent the issuing of WTO binding rulings, the WTO is essentially a negotiations only shop.
I get the reasoning — it was felt China was taking advantage of the rules; but US can’t proclaim it is are really committed to the WTO when it essentially shutdown the core function of the WTO and is demanding a drastic rewrite of the rules to its benefit.
Global trade has been about cheap labor and environmental issues. The idea that it has involved “comparative advantage” is nonsense.
(De-dollarization is a fantasy.)
Granted. I would phrase it a bit more harshly. Companies have been doing an end-run around U. S. and EU regulations by offshoring. That’s neither the fault of the companies nor the global trade system.
BTW I have never encountered a U. S. manager who understood comparative advantage. They do understand absolute advantage, though.
I agree with most of what you say here, Dave. Although this:
“Complaining that the global trade system is “not working†because buildings in Bangladesh fall down sounds to me like blaming your smartphone because it doesn’t launder your clothes.” was odd. Her four dot points are essentially correct.
I find that dot points 1 and 3 just point out the hypocrisy of people here. (That means you, electric vehicle people.) And dot point 2 matters little if, as you note, it lifts people out of poverty. And it does.
That it does not do so equally is more about envy than anything else.
Also, there is no reason China could not build its own factories for its own people to manufacture products to be purchased by its own people. They did not need to import goods from elsewhere.
In the case of natural resources and/or agriculture, there is a need for global trading. It makes sense to import food grown in naturally fertile soil instead of manufacturing fertilizer because the land is less fertile.
India created Bollywood, but the US still has Hollywood. Amazingly, they co-exist serving different, but somewhat overlapping, markets.
Yes, consumers will purchase the cheapest products. Smack addicts will purchase the cheapest heroin, but we outlaw opioids because a town full of junkies is a bad idea.
The first three wars you list were all started by the US, the first two as part of the US/Israeli war on Iran, and the third as part of the US war on Russia.
Global security does not depend on US military might. The US military is the problem. The US has used it military to completely wreck international peace. 251 invasions and interventions since the fall of the USSR, every one of which was an attack on a country at peace with us and our allies, that is our contribution to world security, berzerker violence and chaos. Clearly, world peace needs American disarmament, not an enhanced American military.
You have got to disabuse yourself of the lie that Americans are the good guys. We are not. We are the Evil Empire, aggressive, violent, expansionist colonizers. The marxist trope that the US, its economic and military power and wealth, was stolen from Latin America, Africa, and Asia is true.
Everywhere, Americans and America are hated. And all those countries are realigning with the Russia-China axis. If we are lucky, the realignment and American replacement will be more or less peaceful. If we are unlucky, he neocon Ruling Caste will choose the Sampson Option and destroy the world.
Curious: Arguably the U.S. conflict with WTO started under the Obama administration which started blocking appointments to the Appellate Body because it believed rulings exceeded their authority. My recollection was it was about the “national security” exemption to the WTO at least indirectly, particularly that the exemption is self-judging. A quick google isn’t clear to me, I sense that the WWW has been consumed by narratives that wish to construct the Trump era as a break in history, as opposed to a heightening. But Obama certainly started blocking some appointments.
PD, you are correct. I didn’t realize Obama had blocked some appointments.
Although Obama’s strategy was in nature like Senator using blue slips to control the composition of the judiciary — Trump’s was far more radical; about the same as the Senate refusing to approve any judges at all to disable the judiciary until a constitutional amendment was passed.