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| Economy |
| A WTO without the US |
| 2018-03-13 |
| Automatic translation, but brushed up to make it readable. Of course the picture of Trump is negative, but also has a few words for China. What can Europe do when US President Donald Trump and the Chinese launch new trade wars? Pascal Lamy, former Secretary-General of the World Trade Organization WTO and EU Trade Commissioner, has a few ideas on this subject DIE ZEIT: Donald Trump is threatening trade wars all over the world, the Europeans are already threatening to retaliate, and the Chinese are also closing off many industries. How harmful is this new wave of protectionism? Pascal Lamy: Honestly, I don't see a serious protectionist wave yet... ZEIT: The research institute Global Trade Alert has been observing an increase in trade barriers worldwide for some time now. Lamy: I don't see it that dramatically, and I even think it's dangerous to shout "Wolf!" if there's no wolf at all. When the wolf really comes, people don't care. At the moment, world trade is becoming increasingly free, not restricted. ZEIT: How do you establish that? Lamy: Everywhere! Look at the lower tariffs on services and goods. Or the volume of world trade which is increasing. Of course, there are of course obstacles to free trade and, yes, a few new ones have been added. ZEIT: For example? Lamy: In many countries around the world, laws and regulations are now being enacted to protect consumers. If I am a rose grower from London, I may have zero taxes and restrictions on exports to Europe, Japan or the USA. But each of these regions has its own rules and bans on the use of pesticides. So I have to divide my rose production into different production lines: Roses for Europe, USA and Japan. That costs me something, and it also reduces my competitiveness compared to local rose-growers in these countries. But that is not protectionism! ZEIT: Why is that not protectionism? Lamy: First of all, it is not meant as protectionism; these regulations have other, structural reasons. People in these countries are getting richer, older and more afraid of risk. So the politicians pass corresponding protective laws. This can, however, also be abused, in which case it is protectionism. This is when such provisions are adopted to protect domestic producers from foreign competition. This is an old issue, and the WTO has long had mechanisms in place to deal with it. ZEIT: You don't worry about the trade threats from the White House? Lamy: Trump is a dog that barks more than it bites. His predecessor, Barack Obama, had not been as supportive of the WTO as it was in the past, and important personnel decisions were blocked, which made the work of the WTO bodies more difficult. But Trump, the dog, doesn't bite yet. So far! In the Trump government, however, a man has been made Trade Commissioner, Robert Lighthizer, who learned his trade in the Middle Ages, so to speak. Thirty years ago he was involved as a commercial lawyer on the American side when the USA accused Japan of artificially reducing the price of its steel. This man sees himself as an opponent of the WTO. He believes that everything was still fine before the North American Free Trade Agreement NAFTA existed, when Reagan was still in power. ZEIT: So this barking Trump has some biting reflexes after all. Lamy: Trump's biting reflex is: I want customs duties! His trading philosophy is very simple, and he has already explained it to Chancellor Merkel: The number of Chevrolet cars in Berlin will be the same as the number of Mercedes cars in Washington! He also says: "We have to levy duties on products from abroad in order to compensate for our disadvantages. That's total nonsense! ZEIT: Why is this nonsense? Lamy: Because international division of labour is efficient. If I do one thing better than you and you do another thing better than I do, then we should urgently trade with each other! But that is what the market should decide, not a politician. You can tell from the Chevrolets that they are not good enough for German consumers. Mercedes cars, however, are very well suited for consumers in Washington. That's how it works in the modern world. We are no longer in the world of the Pharaoh of Egypt and the King of Crete, who sign a treaty on who trades what at what price. Only Trump still lives in that time. ZEIT: Trump doesn't sound like he wants to change his worldview... Lamy: That's my concern. As long as people understand their reality to some extent, they may have different opinions, but these differences are moving within a reasonable zone. I know, of course, that many of Trump's own staff try to explain to him how the contexts really are. The U.S. Chamber of Commerce, for example, is in a state of shock because the NAFTA trade agreement could be abolished. But if you understand so few things as Trump, you may make big mistakes. ZEIT: You said he's just barking. Lamy: So far, he has waived duties on washing machines and solar panels. He may think that washing machines and solar panels were the spearhead of technology, and that the US is making these products efficiently. Sorry, it's not like that. The Japanese and Chinese can do better. ZEIT: Can't you understand Trump too? He sees that the Chinese, for their part, are not big free traders. Lamy: Absolutely right, China is still a relatively closed economy. It must also be seen, however, that it is more open than other emerging markets. In my opinion, rich countries need less protection than poor countries. Now, however, there is a huge debate about where China stands, i. e. whether it is still a classical emerging market country. The US believes that China is a rich country with many poor people living in it. The Chinese believe that they live in a poor country with many rich people. For me, China as a whole is not a rich country. ZEIT: Nevertheless, Americans and Europeans can rightly feel unfairly treated. The Chinese subsidize their export products, they even expand through direct investments and company acquisitions all over the world, but they seal off their own markets. Lamy: Yes, China is exploiting a number of weaknesses in the system, for example by subsidizing its domestic manufacturers. We have probably focused too much on barriers to market access at the WTO, i. e. tariffs and the like, but not enough on subsidy rules. This is where the WTO could work better. I also find it totally untenable that China has not opened up its market for public-sector purchases. We have been talking about this since 2001! ZEIT: The Chinese, like you, do not believe that all barriers should simply be dismantled and that the markets will then do everything efficiently. Lamy: But if Donald Trump wants to protect his own market from the Chinese by making imports more expensive, he is damaging his own economy. He has also not yet understood that production chains span the entire globe today. For example, if he levies 40 percent taxes on iPhones from China, the US economy will suffer four times as much as the Chinese economy. He doesn't realize that! ZEIT: Economic efficiency thinking is just a little out of style in the US, strategic and even military thinking is in. This is also apparent from the latest Washington announcements to impose fines on steel and aluminium imports. Lamy: Absolutely right. In the USA, such a military-strategic argumentation has been around steel and aluminium for a long time. According to the motto: "If we do not have the production of steel and aluminium in our hands, how can we wage war? The Obama administration had even made such an argument to stop Chinese investment in a sausage factory. They said: "Sausages are an important input for the army. Soldiers eat a lot of sausages." ZEIT: Between these big squabbling roosters USA and China, trapped in the middle, is small Europe.... Lamy: Excuse me, small Europe? Europe is not small. The European market is larger than the American or Chinese market. ZEIT: Okay, can big Europe influence Trumps America and Xi's China to remain fair players on the world market? Lamy: Europe must work with both sides. It must lead the US to put pressure on China and vice versa. ZEIT: How, for example? Lamy: Europe must lead the coalition of those who want to keep the US in the WTO. They must explain to the Americans that this is in their own interest and that the Americans must also abide by the rules. It is possible that the USA may want to demolish the entire system. ZEIT: Are European leaders at the moment as determinedly behind the WTO as you want it to be? Lamy: If that's what they want. We are currently having discussions, a common European line on foreign direct investment. France and Germany stand together, but 15 EU member states do not, because China puts pressure on them. ZEIT: Europe can easily be divided on such issues. Lamy: Of course! The advantage of Europe is that a federal system tends to be more reasonable. The disadvantage is that China or the USA can put pressure on the smaller states. At the moment, this is happening in a number of Central and Eastern European countries that are being told: we will invest in you if you support us politically in Brussels. "Divide and conquer" is the game of the Chinese and the Americans. I have been a long time Trade Commissioner in Brussels, I know what I am talking about. ZEIT: In Europe, the population no longer necessarily believes that free trade is a good thing. Lamy: Yes, that is true, but I do not expect any major protectionist reaction from the people of Europe either. Nobody expects that. ZEIT: But hardly any politician will be going out of his way for free trade at the moment. You can't win votes with that. Lamy: This is partly a cultural problem. In connection with all the migration debates, there is a general hostility towards everything that comes from outside. George W. Bush once said: "The problem with imports is that they come from abroad." That was a good point. There is also a socio-economic reality. Where social systems are strong, people are more in favor of free trade. These systems reduce social insecurity when jobs are suddenly relocated, skills requirements change, employment becomes more insecure and education or pension systems come under pressure. In the United States and Great Britain, the welfare state has been severely reduced in recent decades, and that is probably why we have Trump and Brexit. ZEIT: What is the next job for European politicians? What should they tell Trump, and what should they tell China? Lamy: The big issue for the meetings with the Chinese is the subsidies granted by the government to their producers. The big issue with the Americans is that they are causing too much damage to the WTO, that they are boycotting the proceedings there. On the other hand, European politicians should build alliances with Brazil, Indonesia, Japan, Switzerland, Norway, Australia and New Zealand. There are plenty of countries that want a sensible middle way and that all have a problem when the United States destabilizes the WTO. The USA can then be explained calmly: We have a plan B. ZEIT: A plan B? Lamy: Yes, a WTO without the USA. So think twice about it, Mr Trump, before you break up the World Trade Organization! Because if we have a WTO without the United States, you are out there in the cold. |
| Posted by:European Conservative |
| #9 Thank you for bringing us this translation, European Conservative. I think having a Plan B is wise — having the option to let go those who do not want to be part of tthe World Trade Organization, just as it would be wise to set free those who no longer wish to be part of the European Union. |
| Posted by: trailing wife 2018-03-13 19:45 |
| #8 Fuck froggie proggie Pascal Lamy. |
| Posted by: Raj 2018-03-13 14:09 |
| #7 BTW, who actually pays for the WTO? |
| Posted by: Procopius2k 2018-03-13 08:47 |
| #6 Yes, the success he has enjoyed in such a sshort time makes them look small and ineffective, which they are. |
| Posted by: Besoeker 2018-03-13 08:43 |
| #5 They don't get Trump. I becoming convinced that the only one who really gets Trump is Scott Adams. Trump is negotiating in a new way as the old way always seemed to wind up with the USA getting the short end, at least the USA workers. |
| Posted by: AlanC 2018-03-13 08:21 |
#4 For example, if he levies 40 percent taxes on iPhones from China, the US economy will suffer four times as much as the Chinese economy. He doesn't realize that! Because it's bullshit. |
| Posted by: Rob Crawford 2018-03-13 07:57 |
| #3 I guess being an Israeli (i.e. somebody whom these people proclaimed as not having a right to exist) prejudiced me against European elites - just a little bit. So, when Trump tells them "no more free meals" |
| Posted by: g(r)omgoru 2018-03-13 03:26 |
| #2 Lamy: Trump is a dog that barks more than it bites. So why the great concern ? |
| Posted by: Besoeker 2018-03-13 02:56 |
| #1 Yup. Confirms it again. These people can see nothing beyond: 1) Their own interests, which they retroactively fit rational-sounding explanations. 2) What they imagine American interests to be. The fact that we wish to benefit our people at the expense of everyone who has profited handsomely from trade seems like insanity to them. "But GDP will slightly decrease its rate of increase! Doing this is the worst thing anyone could ever do!" We know what we're doing, shithead. We're doing what's right for our people who have long been neglected under your system. It's going to come at your expense - just like you've been deliberately damaging us for decades. Now that the shoe's on the other foot, it's suddenly wrong and unfair that you don't get your way. |
| Posted by: Herb McCoy7309 2018-03-13 02:50 |