WTO Without USA

Trump’s foreign policy rests on three major premises: first, the center of the world system, which was for half a millennium located in Europe and then, in the North Atlantic, is quickly shifting from there to the Northern Pacific, and will be located now between the US and China. Respectively, China is quickly becoming the United States rival, while Europe is losing its military, political, and economic importance. All his other ideas are derived from this first one. Trump’s reasoning is further defined by the fact that he is a hard core political realist, for whom the issues of ideological closeness or moral considerations are insignificant. Respectively, Europe and other allies could be given guarantees, but only if it plays by the US rules and does not act as the US economic rival. The same is to some extent relevant to many other countries, including Canada and Mexico.

Second, Russia is viewed as the third in importance power in the China-US-Russia triangle. Viewing this situation from the realist perspective, Trump thinks that there are only two potential options: either Russia will be with the US against China or with China – against the US. Thus he is trying to repeat in a different configuration the 1972 trick of Richard Nixon - another realist – who made a deal with the Communist China against the USSR, forcing it to build the second line of nuclear defense in the Far East.

Third, and the most important one in this particular case: viewing China’s growth as the major threat to the US, Trump is skeptical about the Economic Globalization and the free trade system, built around the WTO.  Trump thinks that the WTO system, built in its present form by 1995 on the premise that the US economy is the world’s strongest and most efficient and the WTO model would enable it to expand the US exports by destroying other countries’ tariff barriers, ended up in what he views as a de facto “ Chinese model,” opening the doors for the Chinese manufactured goods and destroying the US economy's real sector. Therefore, it needs to be essentially destroyed and replaced with something new. The tariff ultimatums and the demands to cancel and renegotiate a number of major trade agreements, including NAFTA are only an “adjustment fire” in this trade war, and Trump is ready to make tactical sacrifices (like the counter tariffs in the countries affected and the increasing prices on consumer goods in the US) to achieve his strategic goals (NAFTA, ironically, was negotiated by George Bush Sr. Bill Clinton aggressively campaigned against in 1992, claiming that this agreement could hurt the American workers. Still, after his election as President, it was Clinton who immediately changed his mind and pushed the agreement through Congress, relying on primarily the Republican vote – thus even at the moment of its adoption, NAFTA was a controversial project even though systemically, it represents the most rudimentary Free Trade agreement). As with any agreement of this type, there are always winners and losers – for example, for the US, among the most visible negative consequences were the proliferation of outsourcing of American enterprises to Mexico and the increasing labor migration from that country. Meanwhile, the latter was to a large extent caused by the influx to Mexico of the cheap American grain and the consequent loss of the means of subsistence by a huge number of Mexican farmers and agricultural workers. Thus in general, the positive aspects of free trade (including, in this case, the demonopolization of some branches of the Mexican economy and the expansion of American exports to that country) are usually ignored, while the negative ones are exaggerated, especially because the victims of those processes were among the most enthusiastic Trump’s supporters—his victory was to a very large extent based on his ability to “steal” from the Democrats three traditional industrial and agricultural states – Michigan, Wisconsin, and Pennsylvania—whose real sector economies and, respectively, physical labor were severely hurt by the Free Trade impact. The same trends are visible in regard to the WTO and its impact on particular sectors of the US economy and labor force.

For Trump, at least in the short run, both the tariff wars and the termination of such trade agreements this is a dangerous game, as the introduction of steel tariffs and the consequent countermeasures  and the increasing costs in the US have shown. The long-term consequences are hard to predict yet – they will depend on Trump’s consistency and the length of his stay in office as well as on the impact of the proliferating tariff wars on stability of the world economic and financial systems. Meanwhile, the past year and a half indicate that Trump, in contrast to conventional politicians, is stubbornly fulfilling his electoral promises – the fact that may indicate the continuation of the anti-globalist policies to the end of his tenure. Considering the strength of the US in the military, economic, and political
sphere, their (increasingly treated as junior) partners in Europe and North America will have to accept the American pressure - any attempts to form alliances deliberately excluding the US at least at this point would be fruitless for them, whatever rhetoric is formally used.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.