It is quite hard to think how the US, the most powerful country in the world, can claim of being unfairly treated when practically it sets the policy of the trade organizations and often imposes sanctions to any violator. The US, through these regional economic blocs, vigorously sought to enforce the “most favored nation clause” doctrine in international trade which provides that a country will extend to another country the lowest tariff rates it applies to any other country. All contracting parties are obligated to apply such treatment under Article I of the GATT, now WTO.
Following the conventional approach of bilateralism, the US was able to secure the most advantaged position. It sought to enforce compliance to trade agreements like prohibiting subsidy, dumping, countervailing, imposed restrictive quota on certain products, and imposed penalties to what is perceived as infringement of patents and international copyrights complained of as outside the scope of the WTO. The US also holds the record in seeking trade sanctions just as it also holds the same for defying many of the terms of the agreement.
According to Khor Martin, Executive Director of the South Center and author of a book, “How the South is Getting a Raw Deal at the WTO, “the WTO … has a systematic bias toward rich countries and multinational corporations, harming smaller countries which have less negotiation power,” like:
Rich countries are able to maintain high import duties and quotas in certain products, blocking imports from developing countries (e.g., clothing);
The use of non-tariff barriers, based on the amount and control of price levels has decreased significantly from 45 percent in 1994 to 15 percent in 2004, while use of other NTBs increased from 55 percent in 1994 to 85 percent in 2004. Anti-dumping measures was allowed against developing countries;
The maintenance of protection of agriculture in developed countries, while developing ones are pressed to open their markets;
Many developing countries do not have the capacity to negotiate and participate actively in the Doha Round; and
The Agreement on Trade-Related Aspects of Intellectual Property Rights agreement, which limits developing countries from utilizing technology that originates abroad in their local systems (including medicines and agricultural products).
Multilateralism has become irreversible. Aside from enjoying lower prices on imports, tariff has become more or less uniform although most regional economic blocs are racing for the complete elimination of tariff by their forging of free trade agreements. The US cannot now ignore this approach all for the baseless accusation that it has been unfairly treated or for the political slogan of “America first.” Economic analysts believe it would be disastrous for the US to negotiate trade on a one-and-one basis.
First, it is only through multilateral arrangements where countries could obtain a better price for their exports. Volume-wise, they could secure best their interest under this arrangement.
Second, the US no longer holds the distinction of being the biggest importer of minerals and exporter of agricultural products to allow it to dictate prices of specific products. China, the European Union, Japan and many of the newly developed states are now competing by offering better prices for their goods.
Third, the debilitating effect of maintaining a strong currency and resorting to various forms of manipulations and machinations like pressuring countries to devalue their currency or by resorting to “quantitative easing” by flooding financial institutions with money supply to increase lending and liquidity to lower interest rates.
Artificially maintaining the strength of the dollar against other currencies has eroded its own international market. Such policy sometime called “currency mercantilism” has become a jingoistic obsession. It is most debilitating to the economy which unrealistically force production cost and wages to increase much that the valuation of the currency determines inflation. That in turn increased budget deficit that has to be patched up by further borrowings.
This explains why President Trump’s slogan of “America first,” is seen as dangerous. It lays down the predicate that there is practically no room for others to negotiate with the US unless it is accorded preferential advantage. The US economic model has gone awry. Charles Derber, in the book, Hidden Power, said the US today has evolved to become one of corporatocracy, a system of government ruled by big corporations. Sovereignty no longer resides in the people but in big corporations and people could hardly distinguish the role of the State from that of big business. US democracy today is the truism of the General Motors’ slogan that “what is good for General Motors is good for America.”
China no longer follows the stereotype doctrine of regimented Marxism but prefers to call their model “socialism with Chinese characteristics,” or as one would put it conversely, “capitalism with Chinese characteristics.” There remains a system of central planning for the next five years, but the details are left to the people to sort out the best way to achieve it. Business is recognized as an integral component to development, but it remains under the control and guidance of the state to synchronize it with the economic development plan. This is attributed to what President Xi envisions of “building of a community of shared future.”
On the other hand, the US today is not the ideal model we were thought in school—one that is democratic and faithful to the system of free enterprise where everyone has a chance to climb his way to success. It is for this why bilateral trade agreements are most precarious much that countries will be dealing directly with the US which has already manifested its position to be on top which means lower prices for their exports they could otherwise sell at higher prices if channelled through the regional economic blocs. Besides, for the US to insist on bilateralism will wreck havoc to the time-honored principle of “most-favored nation clause” because countries are duty bound to offer the same prices for their exports under the WTO.
As stated, the world no longer looks at ideology as model to economic development. People are striving to improve themselves on the basis that “there is only one Earth in the universe and mankind has only one homeland.” Multilateralism today is carried out and economic cooperation remains the framework to achieve this endeavour.
As President Xi laid down China’s four commitment in his speech at Davos, Switzerland on June 18, 2017: First, China remains unchanged in its commitment to uphold world peace; Second, China remains unchanged in its commitment to pursue common development; Third, China remains unchanged in its commitment to foster partnership, and; Fourth, China remains unchanged in its commitment to multilateralism.
(rpkapunan@gmail.com)
