"This is gangsterism at its worst."
"This is gangsterism at its worst."
(Continued from Monday)
Despite the consistent trade deficit, US companies persisted in outsourcing their production to China. In fact, real wages for the last two decades have stagnated in the US. Some believe outsourcing is the culprit that led to the decline of trade unionism in the US. Despite these symptoms, the US never attempted to rectify by diversifying its imports because they see China as still the cheapest producer and manufacturer of goods affordable to US consumers.
The approach by the Trump administration to demand from China that it should be given the advantage in the trade negotiations because of its huge trade surplus is outlandish, not to say amounting to blackmail. First, the trade deficit is not the result of any political or economic pressure. Free trade means the US is free to scout from other countries willing to sell products possibly at lower cost than that offered by China. But to impose tariff to make prohibitive the entry of Chinese goods to the US is no longer guided by the law on economics but one of gangsterism. The US now stands as the biggest importer of Chinese-made products incurring the biggest trade deficit, and equally stands as the biggest debtor holding something like $1.3 trillion in US treasury bonds.
Second, the US cannot impose trade sanction outside the issue of trade deficit. The decision to ban China’s tech giants like Huawei, ZTE and DJI, drone manufacturer that now controls 80 percent of the US market, is contrary to the rules of trade because one cannot impose a penalty ahead of the trade negotiations.
Third, when one decides to ban a product, there has to be a specific offense like violation of patent or intellectual property right, for piracy or counterfeiting. In fact, violation cannot be the subject to any negotiations. Only the imposition of penalty is forthwith.
Fourth it is absurd, illegal and immoral for the US to encourage its allies to join in the banning of the use of Huawei or preventing them from entering into some kind of telecommunications agreement. It violates the basic principle of free trade to which the US has hypocritically sworn to uphold. But it seems the US has acted more like a gangster, imposing sanctions and embargo on countries like Syria, Cuba, Venezuela, Russia and now China without any resolution passed by the WTO or by the UN Security Council. This is gangsterism at this worst.
Fifth, the US cannot demand an advantage on the trade negotiations citing trade deficit as reason. For the US to insist that China can only negotiate less than that 50 percent of the given parameter or even lesser is like demanding an unconditional surrender. If indeed the US lost in trade, it cannot be counted in its favor because the deficit is not the result of cheating, theft or any machinations.