Home / Opinion / Views /  Today’s world is missing a champion of free trade

Last week, a dispute resolution panel of the World Trade Organization (WTO) said it had found import tariffs of 25% on steel and 10% on aluminium imposed by the US in 2018 to be inconsistent with global trade norms. The US had done this under its then President Donald Trump, who cited “national security" for what was plainly an effort to win votes by shielding an American ‘rust-belt’ from foreign competition. America later gave its free-trade partners Canada and Mexico a free pass, but the rumble of its drawbridges going up in those two heavy-tonnage markets nearly sounded off a trade war. Retaliatory duties by other countries, including India, were to follow. So also a clutch of protests filed at the WTO. While the Indian and Russian cases are still pending, suits by China, Norway, Switzerland and Turkey yielded Friday’s WTO advice asking the US to conform with its obligations under the General Agreement on Tariffs and Trade (GATT), 1994, as the panel had found no evidence that its actions were “taken in time of war or other emergency in international relations" to qualify for exemption under the pact’s Article 21(b)(iii). In response to what’s clearly a valid ruling, US officials made vague calls for WTO reforms, even as trade representative Adam Hodge reportedly stated that “the US will not cede decision-making over its essential security to WTO panels."

What the Trump administration began in the name of “America first" has not only continued brazenly under President Joe Biden, whose “America is back" evidently did not include reclaiming its role as a champion of free trade, it has enlarged its agenda to protect various high-tech industries, even deny stuff to geopolitical rivals that could someday put US advances in the shade. In true-blue Cold War tradition, the notion that China is a threat big enough to bend market logic to realpolitik now appears to have bipartisan backing in the US. Panicky books on China’s rise by analysts like Peter Navarro, a Trump advisor, may have fanned fears behind this retreat of both economic principle and seafaring sense, but it was not as if we have had no prior hints of it. In 2002, when George W. Bush sought to erect barriers around the US steel market, later ruled unfair by the WTO, it was clear that Washington would not live up to its rhetoric. Like those it berates, it could turn statist on a dime. While US steelmakers had cheered that move, just as they did 16 years on with makers of another metal joining in, claims of gains for the US economy have been dubious, at best. Users of the two metals have had to bear higher costs. Yet, the reality that free trade cheapens products all around and delivers net gains across the world stays largely ignored, globally.

Distorted trade flows not only keep everyone’s quality of life lower than it would otherwise be, the myth that trade is a zero-sum game traps countries in lose-lose contests of raising import hurdles. Many politicians take their policy cues from what the US does, and if they find that lobbies can be pandered to and poll support obtained by upping import duties, others would be tempted. Stopping such mutually harmful moves was why GATT was signed and the WTO set up. Lessons from last century’s hostilities, with mercantilist policies having led up to two horrid World Wars, also had a role to play. Today, though, we lack a loud and clear voice on what’s good for all of us. In theory as much as practice. And that’s a pity.

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