Zedillo’s perspectives, which very much reflect my assessment of America’s role in global commerce, are documented in his writings as well as his interview by YaleNews, presented in their February 19th release. For those who believe in erecting walls, discouraging and preventing immigration, closing the United States out from as much global interchange as possible thus “avoiding involvement in the troubles of others,” and dictating treaty (trade and otherwise) terms based on personal relationships (good and bad) between leaders, the very existence of the pandemic – an involuntary import – suggests that isolation is both untenable and impossible.
Trump’s America achieved general derision among our traditional allies, and our traditional foes – particularly Russia, China, North Korea and Iran – both failed to succumb to our unilateral pressures and, what’s worse, at varying degrees of success, played hob with our election, hacked our most sensitive information and supported and sponsored surrogates around the world dedicated to policies and actions most antithetical to American interests. Our allies, who would normally rally to our aid, were amazingly passive (perhaps with smug “I told you so” smiles) at most of these intrusions and incursions on our sovereignty. While sanctions and boycotts have long been diplomatic tools, less than a military response, the past administration made such economic weapons (including threats to involve them) a routine part of most trade relationships, even with allies.
Zedillo: “Our general impression is that the Trump administration didn’t believe in a rules-based system, and that its aim was to unilaterally impose whatever it wanted to do concerning trade. And that presented an existential threat to the entire trading system that the United States was instrumental in establishing. What makes the situation even more interesting is that one analysis after another shows that the Trump trade policies were against the country’s own interests…
“The very first concrete example was the withdrawal from the Trans-Pacific Partnership, or TPP, which, as we claim in the book, is probably the most advantageous trade agreement the United States has ever negotiated. And yet, soon after taking office, President Trump withdrew the United States from the agreement, probably without asking what the deal contains.
“Another example is the renegotiation of NAFTA, which resulted in a revised deal that, in my view, diminishes the global competitiveness of the North American economies… And of course, there is Trump’s trade war with China. There are important issues with China that pertain to trade policy, but the Trump administration’s aggressive approach was not warranted by the analysis or by strategic thinking. And the proof is in the pudding. What are the results of that strategy? It achieved zero. Now the new administration has a distorted and complicated situation to address in terms of trade with China.” Americans tend to believe that changes in global trade have uniquely disadvantaged the United States as the largest economy on earth. But all advanced economies have experienced the same trade dynamics.
One of the biggest issues for the United States is the degree to which we, unlike our Canadian and European allies, have generally not prepared or covered our own people, under a notion of deregulation plus a notion of individual over group responsibility (“smaller government” that prioritizes wealth over personal safety) for the impact of changing times and global realities: “First, it is not true that there is widespread opposition to free trade. Of course, trade has never been popular with many special interests that believe that they have something to gain from protectionism. Although globalization is not as widely accepted as it was 15 or 20 years ago in the United States, opinion surveys as recently as last year show a bipartisan consensus among Americans in support of international trade. There are good reasons for that.
“Well, for one thing, trade drives economic growth and innovation. U.S. consumers directly benefit from being able to choose from a wider selection of higher-quality goods at lower prices. A lot of people in the United States benefit from the presence of American products in global markets.
“Of course, all advanced economies have lost manufacturing jobs. There are localities, communities, and certainly individuals that have been affected by the change in the composition of trade. The question is whether we should sacrifice the interests of the majority by adopting protectionist policies or implement policy interventions that would protect those who are negatively affected by trade.
“Part of the problem is that the general economic and social policies of countries like the United States are not designed to strengthen the social safety net, which leaves many people vulnerable. The consequences of these policy failures are frequently attributed to trade policies when, in fact, the political system is failing to provide everyone a fair opportunity to participate in the modern economy. I think that’s very important to emphasize. Politicians tend to blame scapegoats for their own failures and shortcomings.”
The big picture is that the United States, far more than its major democratic allies, has embraced mythology and factual distortion to assess blame and to structure what economists know are unworkable solutions to restore American competitiveness. Effectively, the reconfigured Republican Party, once a fortress in support of “free trade” has embraced Trumpist isolationism and blame as its axiomatic platform. There is, however, some overlap to the new administration.
Biden does not appear anxious to unravel Trump’s harsh tariffs and economic restrictions on China and Chinese companies any time soon. Indeed, it does seem that the cornerstone of China’s allowing foreigners to do business inside the PRC is horribly biased toward local companies and gives the PRC unfair access to proprietary intellectual property, especially patents. Its egregious human rights violations, evident with Uighurs and against Hong Kong protestors, don’t make trade rapprochement any easier. But as the world’s second largest economy – and growing – China is a trade reality that cannot be ignored. Serious renegotiations are inevitable.
But that bigger picture, with Trump era U.S. go-it-alone trade agreements, requires a massive, ground-up restructuring. If we do not reverse course, rejoin a world that is multilateral and global no matter what we believe, our economy will remain disadvantaged… and the rest of the world will continue their efforts to create workarounds to counter any such distorted American perspectives. The dollar may lose some or all of its force as the world’s major reserve currency, our financial institutions will be eroded, multinational trade agreements will continue create trade structures that specially exclude the United States, and Americans will pay more for imports and will find barriers to our exports. Time to rejoin the world.
I’m Peter Dekom, and it is alarming to listen to so many Americans argue that we can still force the world to do our bidding… without looking at how the rest of the world is reacting.
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