End of free trade with China for the United States


In the summer of 1915, in the first year of the First World War, a British official from the Home Office moved to Switzerland. Objective: To conclude a transaction from neutral territory, the Germans, in other words, would provide the enemy with a military telescope that the British did not have. London, sending rubber from the tropics, the Germans – those with a few colonies – were in disbelief.

It is certain that the treaty has been discussed – whether it was granted or not – historians differ on it. But Germany was ready to provide an audience that could effectively target themselves with artillery, and wanted to make German production of car tires possible for British military equipment, pointing out enemies if necessary. Are willing to trade enough. Mutual struggle and mutual dependence occurred here simultaneously. Trade has lost its moral elements – bringing peace between nations – and has become completely barter. So: rubber in exchange for glass optics. Give a little, take a little.

World War I marked the start of a period in which globalization deteriorated dramatically. After 1945, under the leadership of the United States, the recovery of world trade began. But now, for two decades in the 21st century, it has echoed since 1915. The new rivals in the global economy, the United States and China, are now in a similar situation. Tensions are mounting, including in the army. At the same time, however, there was still so much dependence on each other to sever economic ties.

After eight months of reflection, the White House concluded this week: Trade policy towards China is largely Trumpian.

What happens: Mutual imports and exports are often transactional. The primary role of trade as a vehicle for mutual understanding, peace and greater prosperity for all has disappeared.

Wrestling and pro

This week, the tensions between the mutual struggle and pro-American relations became clear. The Biden administration presented a comprehensive review of its trade policy on China, which was overturned by former President Trump. Eight months discussed in the White House: Trade policy towards China has been largely Trumpian. General tariffs on Chinese goods imported by Trump will remain the same for now. At the same time, Trump’s efforts to export more American goods to China continue.

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Almost two-thirds of Chinese exports to the United States continue to suffer – almost zero before Trump. From onions to vacuum cleaners, steel to nickel, Chinese goods entering the United States are subject to an average import tax of 19% under Python (before Trump it was 3%). Chinese counter-import tariffs against the United States are also in effect.

At the same time, Biden’s management continues to strive for maximum export earnings in the Chinese market. In early 2020, the Trump administration signed a trade policy agreement with the Chinese. ‘Phase 1’ Was invited. The Chinese have promised to buy more American products, including soybeans and planes. Mutual import taxes reduced by a fraction. Biden wants to make the most of this deal from his predecessors.

Fragile balance

After a White House review led by Trade Ambassador Katherine Toy, it is now clear: the Trump era is not a breakthrough, but the start of a new weaker balance between the two powers.

The 21st century trade policy in Washington and Beijing is not based on the goal of global free trade, but on a new business: the idea of ​​trade as a means of maximizing one’s own economic and political profits. This partly consists of penalizing the export of another (with taxation) and of forcing one’s own export at the same time (with “Phase 1” contracts). WTO rules for free trade are very limited.

Also listen to this podcast: What will change in international trade policy with President Biden?

The “new nature” of the US-China relationship is based on “tougher competition” and at the same time “deep mutual independence”. Recently wrote the American think tank Brookings. You can see this tension in recent statements from members of the Biden administration. Trade Ambassador Tai handed one to China this week Discussion of CSIS, another think tank, traditionally “sees” trade from state capitalist countriesZero sumDynamic, where the gain of one represents the loss of the other. “Unfair” Chinese competition is said to have destroyed 40% of US jobs in the steel industry, while US production of solar cells has lagged behind, as has the semiconductor industry.

Hard break with the Chinese? No, not even that. At CSIS, Toy opposed the idea of ​​the United States’ “disintegration” of the Chinese economy. In the global economy, it is not “realistic” for two countries to “stop trading with each other”. On the contrary, a “reconnection” is necessary, as are the “strong positions” of US companies in supply chains.

The Minister of Trade and Fitness, Gina Raimondo, recently also rejected the idea of ​​“decoupling”: “We want to access their economy, they want to access our economy”. Tai and Raymondo both urged China to keep its promise to buy additional US goods. Figures from the economic company PIIE show that China is far behind in concluding the “Phase 1” agreements. This year, China has so far imported $ 89.4 billion worth of US goods, up from the agreed $ 130 billion. Raimondo recently complained that there were unsold Boeing planes in China. Chinese airlines prefer, but “the Chinese government is on the way.”

President Xi Jinping’s new line has helped capitalism and free trade take hold of the West while now increasing the country’s wealth.

The economy at the service of the party

But now the boss Animal spirits Back in their cage: The economy ultimately serves the party. This system is increasingly controlled not only in business, but for example, you see it in the treatment of dominance of wealthy individuals and large private technology companies. Look at the fortune of Jack Ma, China’s richest man, who disappeared for several months last year and is now in short supply. Its Alibaba, along with the financial institution Ant, is monitored. As well as an equally powerful fresh competitor, Tencent. Countless other companies, including taxi company Didi and China Uber, are expected to start sharing customer data with government agencies.

In this brutal world of competition and government intervention, companies are under increasing pressure to help with free trade after the war.

In the new state capitalism under Xi, the Chinese government is behind every institution. Thus, both the economic demands so far and the power of the party are integrated. Such managed capitalism also includes guided commerce, which is largely not about companies, but the government that decides what exports and imports Boeing and others now face.

In this brutal world of economic and political competition and increased government intervention, companies are under pressure to help free trade after WWII. Heir to the WTO, the GATT (which was partly created on the initiative of the United States)General Agreement on Fees and Trade Since 1947), vandalized by Trump. He blocked the appointment of “judges” to the WTO, which severely hampered the key trade dispute resolution process in the Geneva system. Trump, meanwhile, has imposed tariffs on China (and Europe) outside the WTO for “national security” reasons. According to Trump, the WTO has given China, which joined the organization in 2001, an opportunity to unfairly compete with the United States.

Initially, the West wanted China to integrate into a liberal world economic order through the WTO. That hope is now completely shattered in Washington. Now the question is: what is Joe Biden doing with the WTO? The US delegation in Geneva recently confirmed that it will respect Trump’s seat. The WTO said this week that it would play a “very, very important role” in the US-China trade relationship. In fact, the post-war rules-based international trade body is now rapidly paving the way for a power-based system.

Europe already has a long list of geopolitical subjects where it must determine a new independent position in the field of forces between China and the United States. From this week, international trade could include security, technology, climate issues and energy policy.


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