Monday, June 11, 2018

Living in a World Without Rules

The international order is beginning to feel like the League of Nations. Donald Trump wants a "might is right" world and his steel and aluminium tariffs are a ploy to create it.

These tariffs, whether by coincidence or design, continue President Trump’s ongoing efforts to undermine the legitimacy of the World Trade Organization (WTO) dispute settlement process. 
The tariffs were ostensibly levied on national security grounds, and the WTO allows for trade policy to protect industries relevant for national security. But this has been invoked so rarely and narrowly that there is little precedent as to what constitutes a legitimate national security concern. 
Indeed, the WTO will be wary of finding against a state that invokes national security concerns – it is not a politically sustainable position for an unelected international body to claim it understands a state’s national security needs better than the state’s own government, no matter how implausible the justification might be on its face. President Trump has already said he will withdraw the US from the WTO if they receive an unfavourable ruling, and such a ruling would provide a justifiable reason. 
Meanwhile, the Trump administration refuses to approve any new members of the WTO Appellate Body, which adjudicates disputes. This will leave it without a quorum to decide cases against the US, China or India when the next Appellate Body member’s term expires in September, and without the requisite three members to adjudicate any disputes by the end of 2019.

The Ugly American.
In a world where there are no internationally predictable rules, most countries faced with protectionist actions, crudely, have two options – retaliate or concede. If they choose to retaliate, the optimal strategy is to cause enough pain to the political leadership of the protectionist country that they will back down. This is the course of action that the EU and China have so far taken, with the hope that powerful political constituencies in the US will successfully lobby the administration to change course. 
However, this can only be effective for large economies that the US exports to significantly. For smaller countries without significant leverage, the alternative is to concede and try to negotiate a favourable settlement, which will still be asymmetrical. This course of action was taken by South Korea in response to the tariffs, which agreed to export quotas on steel in exchange for a permanent exemption.


Owen Gray said...

Jeb Bush accurately predicted that Trump would be the choas president, Mound. He leaves chaos in his wake -- and he does so proudly.

Anonymous said...

Trump is right on free-trade globalization. It's simply a scam that makes oligarchs on both sides of the transaction dangerously wealthy and powerful liquidating Western living standards and democratic institutions.

They said trade would make China more like the West. But it has made the West more like China. And China recently ditched all pretenses appointing Xi emperor for life.

Trump is right to stand up and say 'no more.' And what's surprising is how rare it is to see a leader who says he's going to represent the interest of the American working class – all Americans, not just the 'middle class' – and actually mean it.

Fake Politicians are so good at pretending their hands are tied, we came to accept that democratic government could be nothing more than a pretense. (The Grand Generation spins in their graves.)

Now someone has come along and taken tremendous action after 50 years of downward spiral.

Trump says this trade problem goes back 50 years to when Nixon went to China to create free-trade globalization. That's why he demands a SUNSET CLAUSE. To ensure that these trade deals have DEMOCRATIC OVERSIGHT. To ensure they don't spiral out of control all over again.

Why? Americans can't depend on someone man enough like Donald J. Trump to come along every 50 years and stop upper-crust raping and pillaging run amok.

It's better if it doesn't start in the first place.

(Art of the Deal.)

Karl Kolchak said...

Personally, I'd prefer a world in which every sovereign nation left all other sovereign nations alone to pursue their own destinies in peace, but pretty much ANYTHING would be preferable to the American-enforced neoliberal global empire we've endured since at least 9/11.

Anonymous said...

It's the time-proven strategy of "divide and conquer".
Trump doesn't play well in groups; he wants one-on-one meetings to turn allies against each other. Each of the smaller economies undercutting each other and working for the better deal with the USA.
And it works....

Anonymous said...

Trump is right: all trade deals should be one-on-one. (Worked well for Canada before: the Auto Pact!)

Trudeau wants to save NAFTA because he wants to export Canada's auto industry to Mexico. Canada's most esteemed Fake Economists say any government investment in the auto sector is a waste because soon it'll all be gone.

Of course, not if Donald J. Trump has anything to say about it!

Trump is right to force oligarchs to pay their workers more. That way there will be no trade imbalances. That way living standards go up and the population explosion will taper off.

Fair Trade is the sensible position. Fair Trade is the moral position. Fair Trade is the solution to probably every problem, considering green tariffs can also be implemented in this new international trading regime to force environmental freeloaders to clean up their act – especially China and its 3 resource colonies: Australia, New Zealand and Canada.

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics." FDR 1937

Jay Farquharson said...

As noted in The Atlantic :

"Another distillation of Trump’s doctrine came from a senior national security official: “permanent destabilization creates American advantage,” the official said, arguing that leaving everyone else on shaky ground makes America the sole strong power."

The Mound of Sound said...

I'm sorry, Anons (assuming there's more than one of you) but no matter how much lipstick you throw on that pig, Trump is a deviant, misogynist, sexual predator, racist, pathological liar and malignant narcissist. He's also a raging fascist. Your praise rings utterly hollow. I understand there is a segment of the population to whom those traits are qualities. Just not here. Go troll somewhere else. Please?

Jay Farquharson said...


"The across-the-board tariffs on steel and aluminum that Donald Trump announced last week would result in a net loss of 146,000 US jobs, even before the impact of any retaliatory tariffs from trading partners are figured in, according to a Washington, DC-based economic consulting group."

Anonymous said...

Does Trump not know that the tariffs he want placed upon Canadian goods are mostly American Companies? And, how the heck can 35 million people be out to get 380 million people? Anyong

Jay Farquharson said...

"Does Trump not know",

Fixed that for you.

Anonymous said...

3:11 what allows you to think you are correct? I was not quoting anyone.

Jay Farquharson said...

The list of things Treason Tribble Трамп does not know reaches towards infinity.

Trailblazer said...

Anon 1.57
Anonymous Anonymous said...
Trump is right on free-trade globalization.

You mistake knowledge and insight for throw shit at the fan until something sticks.


Trailblazer said...

Anon 1.27
Trudeau wants to save NAFTA because he wants to export Canada's auto industry to Mexico.

I must have missed that; just when was that said?


Trailblazer said...

Anonymous Anonymous said...
Does Trump not know that the tariffs he want placed upon Canadian goods are mostly American Companies? And, how the heck can 35 million people be out to get 380 million people? Anyong

2:56 PM, June 11, 2018

There lies the crux of the matter.
NAFTA gave the USA the opportunity, which they took, to purchase Canadian companies helped by the economies of scale.

And the Americans are not happy with that??
They demand more?
Holy shit Batman time to burn the Whitehouse again.


Deacon Jester said...

Whaddya reckon the decibel level would reach if the German and Japanese car makers with plants in the 3rd world states of the union (Kentucky, Alabama, Tennessee) announced they were beginning to formulate plans to move production out of the US if Trump wasn't going to let them sell their cars there.

I'd pay to watch the screaming Trump voters employed by Mercedes or Toyota or Volkswagen or Nissan realize they voted for this to happen to them. That would be worthy of Jonathon Swift.

Jay Farquharson said...

Steel dude interviewed by the FTFNYT on his 3rd Foundry Layoff still gives Treason Twitler an A+ grade and would vote for him again,

Even though the sanctions are shutting down his foundry, ( they import steel from Russia), although he did say, " when the sanctions hit the company you work for, it makes you kinda think."

"“The salient fact of American politics is that there are fifty to seventy million voters each of whom will volunteer to live, with his family, in a cardboard box under an overpass, and cook sparrows on an old curtain rod, if someone would only guarantee that the black, gay, Hispanic, liberal, whatever, in the next box over doesn’t even have a curtain rod, or a sparrow to put on it.”"

Anonymous said...

People who don't know jack-shit about economics would be better off shutting the ol' pie-hole than parroting corporate talking points.

Free-trade globalization means taking $50/hr auto jobs (wages, benefits, pensions) and shipping them to Mexico or some other undeveloped country and paying workers $3/hr.

Who pockets all these savings? The rich on both sides of the transaction. This ill-gotten wealth makes them more and more powerful. They capture democratic institutions by spreading money around to get the kind of government, news and academic doctrine that serves their own class self-interest: which is, MOAR free money!

Skyrocketing wealth and inequality of the gilded class also means skyrocketing debt for everyone else. It's basic accounting. Someone's exponentially-growing mountain of money ("Give me my rent, you moochers!") is everyone else's exponentially-growing mountain of debt. ("Rent for what, exactly? GFY!")

A trade war is necessary to produce a trade truce. Donald Trump didn't bring the trade war. These self-aggrandizing upper-crust moochers brought the trade war 50 years ago when Nixon went to China to begin free-trade globalization.

Trump is ending the war. He's ending upper-crust Deep State raping and pillaging of the globe. He's restoring sensible, centrist, post-war economic policies that created unprecedented prosperity and bringing them to the undeveloped world. (Which was a post-war failure.)

Trump is not doing everything right. But after 50 years of wrong, a whole lot of right is a lot better than MOAR and MOAR evil. Something to build on after 50 years of waste and destruction that has brought the Western economy to the point of collapse.

Purple library guy said...

I'm of two minds about all this. On one hand, the reason Trump is doing this stuff is that he's a stupid destructive narcissist pandering to a base which has swallowed a lot of really bad propaganda (somewhat distinct from, and cruder than, the really bad propaganda which much of the Clinton-type-people base has swallowed). And the specifics of his tariffs and the ostensible reasons for them are moronic and insulting. This is far from an intelligent tariff regime calculated to rebuild US industry (which would also require a range of other policies too complex for Trump to fathom).

On the other hand, the general effect--weakening the world's free trade regime--is one I can only applaud. And the fact that Trump's repeated bull-in-a-china-shop gauche, destructive behaviour is noticeably weakening the US hold on Europe, is something that also pleases me considerably. So I find it hard to be really upset about it all.