Trump and G7 – what really happened to ‘global free trade’?
June 13, 2018: US President Donald Trump wrecked the furniture in the ‘global free trade’ shop at last week’s G7 meeting in Canada, making retaliatory tariffs by Canada, Europe and Mexico against US exports inevitable.
So far, the US has imposed tariffs on steel and aluminium exports from China and Japan, and now from Europe, Canada and Mexico. If these countries retaliate as promised, the US threatens to escalate the conflict, which will slow global trade and growth, with negative effects on all, including Australia.
All of these actions are aimed at specific changes in favour of US corporations. With China, Trump is demanding more access for US exports. With Japan, Trump wants a bilateral trade agreement, while Japan fears that such a deal would be worse for Japan than the Trans-Pacific Partnership. With Canada and Mexico, the US wants more favourable terms in NAFTA.
Despite Trump’s claims of the US as a victim of “unfair” trade, he is actually asserting the right of US corporations to make the global trading system more unfair to everyone else.
Under Trump, the Washington Consensus on global trade, forged under the Reagan administration in the 1980s which gave US corporations leadership of the global trade system through the World Bank, the International Monetary Fund and the World Trade Organisation, has been superseded by the “America First” slogan.
Underlying the profound shocks being administered by Trump is the drawn out economic stagnation since the 2008 Global Financial Crisis, with its political impacts in the United States, and in Europe. Trump is turning on longstanding US allies, as well as China, because he wants US corporations to make even greater gains in global markets than the current US-imposed rules have given. He believes that this will give him domestic political advantage in the mid-term Congressional elections due in November 2018.
We need fair trade rules as an alternative to both to Trump unilateralism and unfair deals like the TPP, which is not mainly about tariffs, but restrains governments from regulating corporations in the public interest. Such rules should apply to all countries and potentially restrain the market domination of the most powerful players. The WTO in its current form is not playing this role. We need to change the trade rules to ensure that they do not prevent governments from regulating to ensure human rights, labour rights and environmental sustainability.