Ugly dance of global hegemon, source of concern and confusion
Published in SUNS #8419 dated 10 March 2017

Geneva, 9 Mar (D. Ravi Kanth) -- The ugly dance of the global hegemon remains a source of concern as well as confusion. It wants to regenerate industrialization by bringing back all those manufacturing industries that left its shores.

More important, it seems determined to re-jig its trade policy by opting for bilateral free trade agreements and by asserting its sovereign trade policy decisions in contingency measures such as anti-dumping, countervailing
(anti-subsidy) measures, and safeguard actions - regardless of the multilateral rules it had framed since 1948.

On the face of it, the global hegemon is determined to pursue an aggressive version of the "open door" policy that was first implemented in 1898. That policy began under the dubious slogan of saving Cuba from the clutches of the Spanish rule.

Several years after the Cuban war, the American Bureau of Foreign Commerce of the Department of Commerce said: "The Spanish-American war was but an incident of a general movement of expansion which had its roots in the changed environment of an industrial capacity far beyond our domestic powers of consumption.... It was seen to be necessary for us not only to find foreign purchasers for our goods, but to provide the means of making access to foreign markets easy, economical and safe," as quoted by the historian Howard Zinn in his book - "A People's History of the United States,"- page 306.

The long journey of the "open door" policy continued to manifest under different masks but beneath the surface there remained continuity, regardless of the destruction and violence it had caused in various countries. It wore, for example, a reformist mask since the setting up of the United Nations, the Bretton Wood institutions of the International Monetary Fund and World Bank, and followed by the General Agreement on Tariffs and Trade in January 1948.

During the last seven decades, the United States, the most powerful nation in history, went on to refine/perfect the "open door" policy in ways that suited its overall trade/economic interests and strategic considerations, including its immediate military and trade priorities, according to several studies by historians and economists.

The creation of the World Trade Organization following the Uruguay Round of Trade Negotiations in 1995 is an apogee of that onward march which began almost a century ago. Although the Uruguay Round started during the reign of the Republican administration in 1986, it was concluded by the Democratic President at the official level in December 1993.

Unsurprisingly, there is always an underlying chain of continuity in the economic and trade policies followed by the global hegemon since the late 19th century. The US control over these so-called multilateral trade institutions is pervasive in almost all aspects. Barring some minor hiccups here and there, Washington ensured a brutal grip on decisions taken at the IMF, the World Bank, and the WTO.

Little wonder then that before one enters the WTO director general's office, one has to cross the room of a deputy director general which remained permanently occupied by successive US nominees. Indeed, every small and big decision at the WTO has to be vetted by that deputy director general who is the link between the US embassy in Geneva and the director general's office, according to several past and present trade envoys.

Against this backdrop of continued influence and control over the WTO by the world's sole superpower, it appears somewhat bizarre to assume the US under the leadership of Donald Trump will turn the multilateral trade body upside down despite its latest Trade Policy Agenda issued on 1 March.

"The Trump Administration will aggressively defend American sovereignty over matters of trade policy," the new policy says, insisting that the "overarching purpose of our trade policy - the guiding principle behind all our actions in this key area [global trade] - will be to expand trade in a way that is freer and fairer for all Americans [only]."

"Every action we take with respect to trade will be designed to increase our economic growth, promote job creation in the United States, promote reciprocity with our trading partners, strengthen our manufacturing base and our ability to defend ourselves, and expand our agricultural and services industry exports," it has argued.

The four major goals to achieve its objectives in global trade, according to the document submitted to the Congress, are "(1) defend US National sovereignty over trade policy; (2) strictly enforce US Trade laws; (3) use all possible sources of leverage [basically bullying] to encourage other countries to open their markets to US exports of goods and services, and provide adequate and effective protection and enforcement of US intellectual property rights; and (4) negotiate new and better trade deals [bilaterally] with countries in key markets around the world."

It goes on to say that "the Trump Administration will act aggressively as needed" suggesting that trade remedies such as anti-dumping and countervailing measures will be implemented as per the American interests.

The US, which is a major user of the WTO's Dispute Settlement Body, accused the panels and the Appellate Body for issuing rulings that went far beyond their remit.

Without naming the countries, it says the US was cheated by its counterparts through unfair trade practices like currency manipulation and non-implementation of decisions. Effectively, whether it is China or its trans-Atlantic partner Germany that denied market access to American goods and services through currency manipulation.

Peter Navarro, the top trade advisor to President Trump, has accused Germany of using a "grossly undervalued" euro to "exploit" the US, and its EU partners, according to the Financial Times of March 7. Navarro wants Germany to enter into bilateral negotiations to reduce the US trade deficit.

Therefore, the continued ballooning of the US trade deficit which touched US$648 billion in manufactured goods last year and the loss of 5 million jobs during the last 16 years, according to the report issued by the Trump administration, demonstrates that multilateral, regional, and even bilateral trade agreements with Korea and others, have only brought deindustrialization and destruction.

In short, the US is suggesting that its ever increasing trade deficits are an offshoot of the manner in which it was duped, cheated, and deceived by its trade partners who refused to play by the rules governing the so-called "fair and free trade."

The declining exports due to unfair trade practices and policies adopted by its trading partners, including the growing subsidies, have stemmed from continued rule-breaking by the counterpart country and facilitated by the WTO. It drew up a long list of trade crimes committed by its major trading partners under the surveillance of the WTO.

"Plainly, the time has come for a major review of how we approach trade agreements", it has argued, emphasizing that "going forward, we will tend to focus on bilateral negotiations."

Washington has also subtly indicated that it would resort to the crowbar policies of the Super 201 and Special 301 measures. It speaks incessantly about "sovereignty" in the report to the Congress but doesn't quite say it would not abide by WTO rules or rulings it doesn't like. It has charged that several WTO rulings have crossed their remit.

A cursory look into the litany of the so-called trade crimes perpetrated by the US at the WTO indicate that it is Washington which consistently followed a practice of not implementing adverse WTO rulings, since 1995.

Barring a couple of decisions involving the European Union, the US largely frustrated the developing and the poorest countries in a variety of trade remedy disputes by not fully implementing the Dispute Settlement Body recommendations.

Indeed, the US created a mega industry for imposing illegal anti-dumping and countervailing measures, including the infamous Byrd amendment, over the past 20 years. A simple glance at the number of disputes it won and lost prove that what Washington is saying about being conned or cheated would be tantamount to "fake news". So far, the US has launched more than 100 trade disputes against other WTO members while facing more than 125 disputes against its allegedly unfair trade practices.

Every month, the US is criticized for not implementing rulings in a half dozen cases for over 10 years. Moreover, US's measures in a range of trade-distorting cases were condemned by the Appellate Body. The US ranks first among countries for not implementing the WTO's rulings, by bringing its laws and regulations into compliance, and thereby, causing "systemic" shocks with "chilling" effects.

About the US track record in trade disputes concerning its anti-dumping, subsidies and countervailing measures, and safeguard actions, the less said the better - as the US' anti-dumping actions are based on the unfair/dubious zeroing methodology.

According to this practice, which is condemned time and time again in every dispute by the AB, since the India bed linen dispute against the EU in 2001, negative dumping margins arising from higher export price as compared with normal value are either excluded from the calculation of the weighted average, or included with a value of zero, by the US anti-dumping investigating authorities.

The US deserves kudos for having created "lawlessness" for failing to implement rules it had crafted during the Uruguay Round. Besides, the US is the major subsidiser for agriculture and even hi-tech exports. About the incessant complaints about it trade deficits, the US knows full well that no one enters into a trade agreement unless it guarantees a trade surplus.

Successive US administrations have criticized the panels and the Appellate Body whenever they lost trade disputes. Last year, the US even blocked a second term for a sitting Appellate Body member Seung Wha Chang on diabolical grounds that his rulings went beyond the WTO's covered agreements. It is easy for the US to claim that every deal it did till now is a dog. But Washington also succeeded in imposing unilateral trade deals for more than a century.

But the WTO director general Robert Azevedo is ready to appease and acquiesce to the new US administration's threats to ignore the Dispute Settlement Body decisions. "It is clear that the United States has a variety of trade concerns, including about the WTO dispute settlement system," Azevedo said on 28 February, after securing a second term for four years. "I am ready to sit down and discuss these concerns and any others with the trade team in the US whenever they are ready to do so," he said.

Indeed, it is shocking that the WTO's director general is ready to discuss about the Dispute Settlement Body rulings with the new trade administration in Washington, said a trade envoy, who asked not to be quoted.

"Instead of maintaining distance from the independent and impartial Dispute Settlement Body mechanism, the director general is signalling that he is ready to address Washington's concerns," the envoy said.

However, given his track record of ensuring that the American trade demands became a reality such as the Trade Facilitation Agreement or the continued use of trade-distorting export credits for farm products and food aid, it would not be a surprise if Azevedo chose to prostrate before the US trade administration, according to another trade envoy.

Significantly, the new billionaire US commerce secretary Wilbur Ross made it clear that despite the criticism levied against the multilateral trade body, the WTO "in some ways" is necessary as an arbitrator of global trade.

Effectively, the Trump administration would use the WTO's Dispute Settlement Body because of the rules it had framed during the previous Uruguay Round while turning its back to any future change in the multilateral trade rules.

In conclusion, the trade policy missiles being fired by President Trump will continue to form part of the arsenal built by successive American administrations since President William McKinley, the 25th President in 1897.

The only difference is that President Trump appears somewhat like the notorious Robespierre of the French Revolution who had followed a policy of "we must smother the internal and external enemies of the Republic or perish with them."

But, that has all along been the dharma and cardinal framework of Uncle Sam since 1779! +