The author of today’s paper [Technically, more of a monograph] Dan Ciuriak has an axe, clearly. But he presents his argument well and given his many years at the coal-face of international economic policy making is worth taking the time to consider.
He pulls no punches, “Starting with the Trump Administration and continuing under the Biden Administration there has been an extraordinary sea change in America’s trade policy to a destructive isolationism that has materially weakened its position in the world economy and its geopolitical hand.”
It’s not just relations with China that have suffered. Mr. Ciuriak points out unnecessary bickering with Germany, a promised but undelivered post-Brexit arrangement with the U.K., the souring of relations with Asian partners occasioned by the pull out of the Trans Pacific Partnership and disputes with closer-to-home economic partners Mexico and Canada.
He calculates America has shot itself in the foot in this process to the tune or U$311bn annually, equal to an annual loss of GDP of 1.16%.
One can dispute the math, but two things are probably unarguable. First, America’s trade policy is costing it money. Second, the loss from the ineffective polices directed at China are probably costing the most.
This ‘destructive isolationism’ doesn’t have to continue and there’s a four point fix that’d largely reverse much of the blundering. Viz.
- America should rejoin the Trans Pacific Partnership. They’d still be the dominant player and, besides, harrumphing out of unsatisfactory trade arrangements isn’t a reliable way to improve your lot (Brexit anyone?).
- They should remove their blocks on staffing at the Appellate Body of the WTO. By gumming up this court they’re damaging legitimacy and hacking off smaller countries who really need the WTO to work.
- Rescind what he describes as the ‘WTO-illegal industrial tariffs’ against China. It’s been quite a job to get all the various measures in place but they could be removed at the stroke of a Presidential pen.
- Launch a new NAFTA. The author is Canadian and notes with disappointment that Canada has recently re-designated their Trade Minister ‘Minister for Trade Diversification’. Not helpful.
There’s more than money at stake. Mr. Ciuriak concludes “Proceeding down this [Isolationist] path risks fracturing the West, which would leave an immensely de-stabilizing power vacuum, raising the risk of conflict in the longer term..”
You can read the work for yourself via this link Destructive Isolationism.
Happy Sunday.