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16 OPINION TUESDAY 10 JANUARY 2017
CITYAM.COM
FORUM
EDITED BY HARRIET GREEN
Trump’s America First policy won’t
threaten the Special Relationship
DONALD Trump’s bellicose
stance on trade during his
presidential campaign
focused on putting
America first at all costs.
He hinted at the unilateral
imposition of tariffs on goods,
imposing a border tax on imports
and even leaving the World Trade
Organisation (WTO).
Whether he will actually do any of
these things following his inauguration
later this month is uncertain –
there is a long tradition of US
Presidents-elect making ominous
statements before taking office only
to relent later. Still, the appointment
of the protectionist-leaning
Robert Lighthizer as his chief trade
negotiator along with Peter
Navarro, an outspoken critic of
China, to lead the new National
Trade Council, suggests that Trump
intends to take his “America First”
trade policy seriously. This is not
necessarily a bad thing, nor are
these policies which should worry
the UK.
It must be remembered that the
focus of much of Trump’s invective
has been on China. In many respects
fighting back against China, the
country with which the US has its
largest trade deficit (almost $400bn
in 2016) more so even than the misdeeds
of Hillary Clinton, was the
centrepiece of his election platform.
According to Trump (and many
would agree), China is a currency
manipulator, illegally subsidises its
exports and harms the US economy
through dumped goods.
IREAD Theresa May’s article about
the “shared society” – assuming it
was she who wrote it, and not her
shadowy acolytes – with interest.
It is always good to know what
underlies our politicians’ thinking.
But it is a disappointing read, a
virtue-signalling undergraduate
essay. It begins with the assertion,
shared with most commentators,
that the Brexit vote was about something
deeper than the simple question
asked about leaving the
European Union. Possibly – but it’s
debatable, when you look at who
voted, and where they voted, that this
was a revolt by “those who feel the
system has been stacked against
them for too long”. Still less that it
was a protest against “burning injustices”
such as the treatment of black
people in the criminal justice system,
about poor people dying younger
than they should, and bad schools.
Yet at the same time it’s apparently
about people who don’t necessarily
suffer from these things, but are “just
getting by”.
Our society, like every society that
has ever been or ever will be, is imper-
But there is every indication that
the US is going to use the WTO’s dispute
settlement system aggressively
to address these issues rather than
doing so unilaterally, notwithstanding
Lighthizer’s well-documented
criticism of the WTO courts.
If Trump is right about China’s
illegal trade practices, then Chinese
goods deserve higher tariffs. If he is
wrong, then we must hope that the
US will adhere to WTO rules and let
the chips fall where they may.
Economists tell us that breaking
WTO rules is self-defeating and
Trump’s team will learn this quickly
if they put up trade barriers which
are undeserved. China is well
equipped to retaliate if the US takes
action against it illegally. While an
era of US led trade wars seems
imminent, we should have faith
that, under the WTO system, unfair
trade will be punished and the good
guys will win.
A US departure from the WTO is
much less likely. Pulling out of the
Trans Pacific Partnership is feasible
because the agreement has not
been ratified, but the US has been
one of the WTO’s main supporters
since the 1940s. WTO rules are
enacted into US domestic laws and
this cannot be unravelled overnight.
It would be years before the US
could effectively disentangle itself
from its WTO obligations.
With China (and to a lesser extent
Mexico) as the main targets of the
new US administration’s trade policy,
the UK has little to fear and every
reason to be cautiously optimistic.
fect. There are remediable wrongs,
but some things that will always present
problems. David Cameron also
wanted to row back from Margaret
Thatcher’s quoted-out-of-context
remark that there is no such thing as
society. In the event, he did little
about it, but at least his “Big Society”
vision invoked Burkean ideas of the
“little platoons” of civil society. He
accepted that the state shouldn’t, and
couldn’t, do everything. May, though,
says it is the job of government “to
correct the injustice and unfairness
that divides us wherever it is found”.
Fine words. But there is no understanding
in May’s piece that injustice
and unfairness are inevitably contested
notions: “the privileged few” are
easy to denounce, more difficult to
define. Government assistance to one
group is often at the expense of
another. Interventions to “cure” one
set of problems produce unintended
consequences, and fresh problems
elsewhere. Government spending on
fine abstractions, such as foreign aid,
end up as money in dictators’ Swiss
bank accounts or financing
Ethiopian girl bands.
David
Collins
We should have faith
that, under the WTO
system, unfair trade
will be punished
The UK is not a currency manipulator,
nor have there been any allegations
that it engages in unfair trade
practices like dumping or subsidisation.
As a WTO member in its own
right (once free from the EU), the UK
will have access to the concessions
the US has made to the rest of the
world, as well as the protection of
the WTO’s dispute settlement system
in the event that Trump’s trade
team gets trigger happy.
Encouragingly, Trump has indicated
that the UK will be among his top
priorities when signing new trade
agreements and we know that
Prime Minister Theresa May has
been invited to meet with him in
Washington “very soon”.
As its seventh largest trading partner,
the US exports more than
$50bn worth of goods to the UK per
year and Trump is not likely to jeopardise
this relationship any time
soon, particularly now that the
need for anti-globalisation
posturing has abated following his
election victory.
It is not 2016 anymore. While
Trump has shown himself to be a
master of anti-trade rhetoric on the
campaign trail, at heart he is a pragmatic
deal-maker. We can expect
that he will pursue trade negotiations
which are of mutual benefit to
the US and the UK when it departs
from the EU in the second half of
his first term.
£ David Collins is professor of
International Economic Law in the City
Law School. @davidcollinslaw
Theresa May’s “shared society” slogan:
Another excuse for more state, less Brexit
Len
Shackleton
The first fruit of May’s new
approach – her call for a “revolution
in child mental health care” – is yet
another top-down initiative, with
extra spending on “crisis cafes”, “digital
therapy” and other expensive geegaws
plus yet tighter
anti-discrimination laws and that allpurpose
fall-back, more “training” for
anyone who goes near children. Is
there any evidence that this stuff will
have any real impact on what is in
any case a very ill-defined issue?
I have no idea of the real scale or
nature of the problem of child mental
health, and I’m fairly sure I’m not
alone in this. Did people who voted
for Brexit have this concern in mind?
I do know that there are worthy mental
health charities with a singleminded,
spend-more agenda, and
clever civil servants and paid wonks
who can rustle up an action plan at a
few weeks’ notice. May has willed it,
and it must happen. In what sense,
though, is this really “the right
response to those who voted for
change back in June”?
It looks more like displacement
activity, however worthy the cause.
Like the renewed emphasis on industrial
strategy, the shared society idea
may help brand the May prime ministership.
It might make sense in the
run-up to a general election.
But for now, our accidental Prime
Minister has a more important task,
which is to devote her energies to
organising a rapid and sensible exit
from the European Union. Brexit
means Brexit, not a demand to
expand yet further the role of the
state.
£ Len Shackleton is professor of
economics at the University of
Buckingham and editorial and research
fellow at the Institute of Economic
Affairs.
DEBATE
Q: With China
warning Donald
Trump of
revenge over
Taiwan, should
we rule out a US-
China trade war?
Andy
Rothman
YES
Donald Trump is very unlikely to
implement the 45 per cent across-theboard
tariff on imports from China that he
proposed in an interview last year. US law
permits the President to make only an
emergency declaration of 15 per cent tariffs
for up to five months, and I imagine that
many chief executives have been calling
Trump to advise him of the negative
consequences of such a move for their
firms. More than 900,000 American jobs are
supported by US exports of goods and
services to China, with 40 per cent of those
jobs created between 2009 and 2015. I also
imagine Trump will be advised that a tariff
hike would have a significant impact on
consumer prices in the US, pushing up
prices for goods sold at places such as
Walmart. That would hurt the spending
power of his working-class political base.
These factors are likely to lead the
President-elect to take a more targeted
approach, raising import tariffs on a limited
number of goods, probably those which
are not destined directly for American
consumers, such as steel.
£ Andy Rothman is investment strategist at
Matthews Asia.
Marianne
Petsinger
NO
On the campaign trail, Donald Trump
blamed China for stealing US
manufacturing jobs and lowering wages. To
remedy this, he vowed to impose tariffs on
Chinese imports, to bring trade cases for
“unfair subsidy behaviour” and to label the
country a currency manipulator. Given how
central the anti-trade rhetoric was to
Trump’s platform, he will likely try to deliver
on his promise. While it is improbable that
Trump will follow through on his proposal
to impose 45 per cent tariffs on Chinese
goods, he might impose tariffs between 5-
15 per cent – which would be enough to
spark a trade spat. The US President has
the power to impose tariffs under certain
circumstances without congressional
approval. In addition, Trump’s recent
nominations for United States trade
representative, treasury secretary and head
of the newly-created National Trade
Council, are long-time critics of China’s
trade practices. While this does not make a
US-China trade war inevitable, the
potential risk is non-negligible.
£ Marianne Petsinger is geoeconomics
fellow of the US and the Americas
Programme at Chatham House.