https://socialistaction.org/2018/09/03/inside-trumps-trade-bluster/
Inside Trump’s trade bluster
/ 18 hours ago
Sept. 2018 Trum Merkel 3
German Chancellor Angela Merkel faces off against Trump during trade
discussions at the June G-7 conference in Quebec.
By JEFF MACKLER
Analyzing President Donald Trump’s excoriating traditional U.S. trading
partners at the Group of Seven’s (G7) May meeting in Quebec, Marxist
economist Michael Roberts commented: “What all these Trumpist antics
revealed is that the period of the Great Moderation and globalization,
from the 1980s to 2007, when all major capitalist states worked together
to benefit capital in all countries (to varying degrees) is over. The
Great Recession of 2007-8 and the ensuing Long Depression since 2009 has
changed the economic picture.
“In a stagnating world capitalist economy, where productivity growth is
low, world trade growth has subsided and the profitability of capital
has not recovered, cooperation has been replaced by increasingly vicious
competition—the thieves have fallen out.”
The “thieves” here include the most powerful capitalist nations on
earth. German Chancellor Angela Merkel, Europe’s most influential leader
and representative of its most powerful economy, concluded similarly.
The New York Times summarized Merkel’s views as follows: “The United
States of President Trump is not the reliable partner her country and
the Continent have automatically depended on in the past. Clearly
disappointed with Mr. Trump’s positions on NATO, Russia, climate change
and trade, Ms. Merkel said that traditional alliances were no longer as
steadfast as they once were and that Europe should pay more attention to
its own interests ‘and really take our fate into our own hands.’”
We should note here that Merkel’s May 7, 2017, remarks were made a year
before Trump’s Quebec outburst, an indication that the June 2018 Quebec
G7 fireworks were far from a first in the ongoing tensions between
ever-competing world capitalist entities.
Merkel continued, “The times in which we could rely fully on others—they
are somewhat over.”
Two additional paragraphs from Robert’s assessment make the point that,
notwithstanding Trump’s disgusting reactionary hyperbole on an
ever-broadening range of issues, the antics of a “rogue” president are
subordinate to the reality of the deepening world capitalist crisis. The
margins for long-term resolution via the major international
institutions that previously served to at least partially mitigate major
disputes have narrowed.
U.S. elites in overall agreement with Trump
Trump’s seeming idiocies include withdrawal from the Iran nuclear
agreement, withdrawal from the nearly worthless 21 Paris climate
accords, his ultra-reactionary racist immigration policies—though
similar to Obama’s in separating detained/imprisoned parents from their
children—praise for the Supreme Court’s approval of the “constitutional”
right (freedom of religion?) of a baker to refuse to prepare a wedding
cake for an LGBTQI couple, a proposal/suggestion to his National
Security Council to increase the U.S. nuclear weapons stock “100
fold”—also similar to Obama’s proposals to “modernize” the U.S. nuclear
weapons stock—and his most recent order to establish a sixth arm of the
Pentagon( the “Space Force”) to militarily “defend” U.S. “interests” in
outer space. It can be demonstrated, however, that on virtually every
front, his twisted politics have a rational core—that is, to advance
what he perceives as the policies required to protect a weakened U.S.
capitalism from its competitors abroad, while advancing their interests
against U.S. workers at home.
Obviously, he is an embarrassment to the majority of the ruling-class
elite. Virtually every major corporate newspaper and media outlet in the
country daily pillories his too overtly right-wing tweets and
pronouncements, but the essence of his direction, as opposed to the
form, is not too dissimilar from mainstream ruling-class views.
Robert’s summary is quite apt: “At the [G7] meeting Trump slammed into
the other leaders, claiming that their governments were imposing
‘unfair’ trading rules on US products and they needed to reduce their
surpluses on trade with the US. The other leaders had already responded
to the US tariff measures with planned reciprocal tariffs on key US
exports and now they replied to Trump’s attacks with arguments and
evidence that, on the contrary, it was the US that restricted foreign
imported goods and services.”
Roberts concludes dramatically: “And thus the trade war has begun—a war
that the major capitalist economies have not engaged in since the 1930s
depression and which was supposed to be resolved by international
agreements like General Agreement on Tariffs and Trade (GATT), its
successor, the World Trade Organization (WTO) and the North American
Free Trade Agreement (NAFTA) in the post-war period. Trump has called
the WTO the worst possible trade deal and NAFTA the next worst (for
America).”
Rules governing the now fragile WTO
The WTO, established in 1995, today includes 164 nations. It was formed
to resolve trade disputes via a system of binding arbitration wherein a
seven-member panel, operating under established rules, has the final
word. Over the past two decades, the U.S. has brought more disputes to
the WTO than any other nation, winning, according to Trump
administration figures, more than the global average. This is Trump’s
way of stating that more often than not the U.S. has been the victim of
unfair practices of its competitors.
In truth, the founding rules of the WTO, as we shall see, operate to the
advantage of the U.S. and its previously associated great imperial
partners. Partners no more in a world based on ever-increasing
competition for ever-decreasing world markets, each player seeks to
impose its own rules to the advantage of its own capitalist class.
But there is a “Catch 22” in the WTO’s “rules,” that is, a series of
exceptions to this “free trade” agreement that allow for its violation
for claimed reasons including environmental protection, national
security. Today, Trump has repeatedly cited the WTO’s “national
security” exceptions to impose punitive tariffs on its leading competitors.
With this in mind, the WTO may be in danger of collapse. During this
month, September 2018, four of the seven arbitration panelists are
scheduled to be replaced, leaving but three—the bare minimum needed to
issue rulings on trade disputes. If the Trump administration continues
to refuse to reach agreement as to who will replace these termed-out
arbitrators, in just over a year’s time only one will be left, a number
insufficient, according to WTO rules, to operate.
Needless to say, the choice of arbitrators is crucial. In the
multi-billion dollar game of international trade agreements, there are
no neutrals. The top dogs want their “expert” arbitrators in place to
decide such disputes. A number of Trump’s internationally prominent
critics have not been silent on this matter. The Aug. 13, 2018, New York
Times made this clear as follows:
• Jennifer Hillman, professor at Georgetown Law Center: “It’s putting
tremendous stress on the system. There are those who would go so far to
say that the U.S. has almost effectively withdrawn from the WTO by
engaging in all the unilateral tariffs we’ve seen.”
• Rufus Yerxa, president of the National Foreign Trade Council and a
former deputy director general of the World Trade Organization: “If the
United States has rewritten the rules of the WTO system to say you can
do anything you want if it’s in your national security interests, be
prepared for every country in the world to come up with a new definition
of what is its critical national security interest.”
• Roberto Azevêdo, current WTO Director General, referring to the WTO
challenges to Trump’s aluminum and steel tariffs: “Whatever the
outcome—regardless of how objective, balanced and unbiased it
is—somebody is going to be very unhappy.”
• Marc Vanheukelen, European Union ambassador to the WTO, speaking to a
July meeting of the organization’s 164 members at its Geneva
headquarters: “In such a world, where power has replaced rules as the
basis for trade relations, it will be the smallest and poorest that will
be hurt the most.”
The Times noted that “Mr. Vanheukelen was among dozens of members who
stood to complain that the WTO was on the verge of becoming
dysfunctional. Many blame the Trump administration for encouraging other
countries to flout long-established rules of the game and introducing a
confrontational tone to an organization that has traditionally
functioned by consensus and good will.”
China and erosion of “trade consensus”
Today, in the context of a crisis-ridden world capitalist economy,
“consensus” and “good will” have been cast aside, with the ruling
classes of all declining nations, including the most powerful, finding
themselves ever more locked into the deadly competition for markets and
profits, ever maneuvering to stay afloat at the expense of their
capitalist adversaries and always at the expense of its own
workers.Workers are seen inside a Foxconn factory in the township of
Longhua in the southern Guangdong province
It is doubtful that any section of the U.S. ruling class involved in
steel and aluminum production objected to Trump’s imposing tariffs on
competitive foreign imports for these commodities, or, for that matter,
on any others where U.S. corporations lag behind foreign competitors.
What irked the anti-Trump wing of the U.S. ruling class was less Trump’s
defense of one or another key section of U.S. capital and qualitatively
more the fact that he failed to do so in the “civilized” framework of
the WTO, where they believe that the United States still retains the
upper hand.
But the relationship of forces in the world capitalist order, and thus
in the WTO, has undergone some important changes over the past decades.
China is a classic example. China’s WTO entry in 2001 was conditioned on
its respecting foreign corporations’ intellectual property rights—that
is, agreeing not to compete in the future when its own primitive
factories could, in time, be converted to state-of-the-art technologies,
which the U.S. today insists are protected by U.S. patents. These
“inviolable” intellectual property rights, as with the U.S.’s claimed
national security interests, are at the center of Trump’s steaming
rhetoric against Chinese exports to the U.S.
For close to two decades and to this date, the level of Chinese labor
productivity has lagged far behind that of most capitalist nations. But
this is rapidly changing. With regard to an increasing number of key
commodities traded on world markets, including major machine tools for
industrial production and high technology hardware, China’s productivity
levels are rapidly increasing—ever more closing the gap and thus posing
a threat to U.S. corporate interests.
In the imperialist mindset, any nation seeking to introduce modern and
competitive technology is considered a threat. Trump today, and the
broader sections of the U.S. elite for the past decades, had always
considered China the perfect solution to the growing incapacity of the
United States to effectively compete on world markets.
China offered a virtually unlimited supply of cheap labor for hire to
U.S. and foreign corporations more generally. Not too long ago, for
example, teenage women were housed permanently in dormitory factories
and paid six cents per hour. These labor conditions, as well as tax-free
guarantees and other perks sent profit-declining U.S. manufacturers
there to boost their prospects. Today, the average Chinese wage is
closer to $2.50 per hour, a labor price that has led some of the
capitalists to leave for lower wage nations like Vietnam, Indonesia, and
Thailand. The paradise of near-slave labor in China has given way today
to the Chinese ruling class’s effort to create its own “middle-class”
market to consume China’s cheap commodities, the same market that U.S.
capitalists hoped to dominate.
We need only add here for future edification that in the course of
creating this internal market, China’s income disparity has soared to be
among the greatest on earth, with the vast proportion of its new wealth
going to the capitalist elite and the new middle class of perhaps 300
million people, while the remaining 1.1 billion languish in overall
poverty or close to it.
Trump’s denunciation of China for “stealing” U.S. technology was
followed by his administration’s widely publicized list of proposed
tariffs on Chinese imports. The list includes 1102 categories of goods,
all focused on high-tech industries like nuclear reactors, aircraft
engine parts, ball bearings, bulldozers, motorcycles, and industrial and
agricultural machinery. These are precisely the categories in which
China has employed the advanced robotics and related super-modern
production technologies—that is, intellectual property rights.
Chinese capitalists long ago estimated that their agreement to
subordinate their economies to U.S. and world imperialist investment in
order to secure the necessary initial foreign investment was temporary
and would, in time, allow them to participate on world markets as
serious competitors. That time has come—hence the Trump countermeasure
tariffs aimed at perpetually keeping China as a second-rate player.
Obviously, neither China nor the European Union nations, nor any other
“self-respecting” big time capitalist entrepreneur, intend to remain
permanent second-rate players.
North American Free Trade Agreement
NAFTA is another example of how trade agreements are arrived at. It
emerged as the joint product of essentially the entire U.S. ruling
class. Both NAFTA and the U.S. congressional vote to admit China to the
WTO were accomplished under the aegis of the Bill Clinton Democratic
Party administration. But both were opposed, for the sake of appearances
only, by the then House majority Democrats, who (falsely) claimed to be
interested in protecting U.S. workers against cheap foreign labor.
Similarly, in the case of China’s admission to the WTO the vote in favor
included only 74 Democrats joined by 164 Republicans, the latter a
congressional minority at that time, but joining with the needed
Democrats to accomplish an overall ruling-class objective.
Despite its “free trade” imprimatur, NAFTA incorporated a myriad of
negotiated protectionist measures aimed at defending the weaker sections
of U.S. capital. It was the product, as with all such trade agreements,
of the broadest deliberations between U.S. capitalists on the one hand,
and similar negotiations with Mexican and Canadian elites on the other,
with the latter two compelled to make concessions to the stronger U.S.
capitalists in order to remain players—but lesser players to be sure.
Ruling class agrees with Trump’s policies
In truth, there are no fundamental disagreements among the U.S. elites
regarding trade. As a generalization, every sector has long become
accustomed to behind-the-scenes deals wherein its particular interests
are protected at the expense of foreign competitors. Undoubtedly, the
lines sometimes become blurred when the “foreign competitors” are in
reality U.S. corporations. But this too is usually factored in during
the course of the usual secretive dealing that marks top-level
decision-making.
There were near-zero objections, for example, when a bipartisan Congress
gifted $1.5 trillion in tax relief to the corporations and banks of the
ruling rich, a fact that in and of itself enabled bourgeois economic
analysts to post and predict some figures that indicated a modest, but
one-time uptick in otherwise stagnant GDP figures.
Similarly, there were few, if any, objections when Congress boosted
annual military spending by an unprecedented $80 billion, an amount
exceeding even Trump’s initial request. We note here in passing that the
$80 billion increase exceeds Russia’s total annual military budget of
$50 billion—as compared to the U.S.’s budgeted $1 trillion for overall
war purposes! On June 21, 2018, the U.S. Senate, by a vote of 85-15,
approved this military budget. The few “doves” that voted “no,” like
Bernie Sanders, Elizabeth Warren, and “libertarian” Rand Paul, did so
likely to preserve their future political “peace candidate” credentials.
Working people have no stake in trade wars
The recent joint statement by Socialist Action (U.S.) and our sister
party Socialist Action/Ligue pour l’action socialiste in the Canadian
state summarizes our views well:
“Global capitalist competition [including the current trade wars] is a
completely unavoidable aspect of the system of private profit. As
competition results in new innovation and automation temporarily
increases the rate of profit for the first innovators these gains are
soon offset again by the rapid adoption of even newer technologies by
competitors and the consequent resumption of the fall of profit rates.
“In their desperate struggle to fight the falling rate of profit, (or,
as Marx said, “the law of the tendency of the rate of profit to fall),
capitalists try to reduce costs by attacking trade unions and workers’
rights, by attacking wage and benefit levels, by attacking general
social benefits such as education, medical, and pension benefits, by
refusing to accept responsibility for the massive environmental damage
caused by cutthroat capitalist competition, and by transferring
production to low-wage, unregulated areas both within and outside their
own countries…
“The world’s working people have no interest in this potential world
conflagration. In the end, when capitalists win, workers lose—a
fundamental law of the capitalist system that has been verified time and
again over the past decades and centuries. The common interest of
workers lies in defending working people everywhere against all the
onslaughts of capital. This means international solidarity on every
front, from united worldwide efforts to organize workers into powerful
unions to united opposition to capitalist wars and the capitalist
destruction of the environment…
“There is no such thing as peaceful and/or regulated competition among
capitalist nations. No self-respecting capitalist is in business to be
the world’s “nice guy.” There are only winners and losers in this deadly
game of production for private profit. Donald Trump simply tore the mask
off the brute face of a predatory system in decline. Justin Trudeau
plays the same game as Trump on the world scene and makes sure that
everyone knows that Canadian capitalism can bare its own claws in the
profit game.”
The most serious representatives of the U.S. ruling class would much
prefer a more verbally tempered president, one like Obama, or even
Hillary Clinton, who would seek the counsel of the leading ruling-class
representatives—that is, of the traditional team of cabinet and other
“advisers” who are less blatant in guaranteeing the real interests of
the nation’s leading bankers, financiers, and corporate magnates.
That Trump has fired one after another of his advisors who are slightly
less noxious and more cautious in their rhetoric, after each has
counseled him to moderate his vitriol and embarrassing tone and tweets,
is subordinate to the fact that no section of the ruling class,
including their Democratic and Republican Party spokespersons, has
broken with Trump on fundamental policies that favor the rich over the
99 percent.
Working people have no interest in the outcome of the upcoming
“lesser-evil” electoral charade that is today being orchestrated to a
fever pitch by the corporate media. A break with ruling-class politics
is on the order of the day. The formation of an independent labor party
based on a reinvigorated, democratic, and fighting union movement, in
alliance with all the oppressed and exploited, would be a major step
forward in challenging capitalism’s current dominance in the political
and economic arenas.
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September 3, 2018 in Economy, Trump / U.S. Government.
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