Tags

, , , , , , , , , ,

There were so many important points in President Trump’s speech today in Vietnam on trade and globalization that urgently needed to be made. What a shame, then, that they could well be undercut by massive contradictions in the president’s message. Two in particular stand out. The first concerns Mr. Trump’s critique of the current rules-based global trade system. The second concerns a key aspect of that critique and its relationship to his views on national sovereignty.

Mr. Trump was absolutely accurate in his description of the problems that have plagued the world trade system as it’s evolved to date, and especially its ostensible focus on organizing global economic activity according to universally accepted and followed rules and norms. Who, after all, can reasonably argue with his proposition that “Organizations like the WTO [the World Trade Organization] can only function properly when all members follow the rules and respect the sovereign rights of every member. We cannot achieve open markets if we do not ensure fair market access. In the end, unfair trade undermines us all.” In fact, it’s so uncontroversial that every one of Mr. Trump’s recent White House predecessors has made the same seminal point (including President Obama’s administration).

The Trump trade approach toward the WTO so far has differed from those of Presidents Clinton, George W. Bush, and Obama mainly in that it’s criticized the organization’s workings much more intently, and actually taken some actions to gum up its works.

But the President will be repeating their fundamental mistakes if he believes that the solution to today’s flawed rules-based system is constructing a better rules-based system. That goal faces so many insuperable obstacles. For example, few of the countries involved in the system accept Anglo-American rule of law principles in their own political and legal systems, or the economic practices that flow inexorably from them.

Mr. Trump praised governments represented in his audience in Vietnam today for pursuing “visions of justice and accountability, [promoting] private property and the rule of law, and [embracing] systems that value hard work and individual enterprise,” along with seeking partnerships “directed toward mutual gain.”

Yet anyone who knows anything about most East Asian economies know that this description is at best seriously misleading. Instead, the region’s recipe for impressive economic success was based largely on practices that the president highlighted just a few paragraphs later in his address. Not that they’ve been alone, but it’s been the Asian economies that have masterminded “product dumping, subsidized goods, currency manipulation, and predatory industrial policies.” It’s they who have so systematically “ignored the rules to gain advantage over those who followed the rules, causing enormous distortions in commerce and threatening the foundations of international trade itself.”

And just legally speaking, why would these same countries do an about-face and start treating foreign businesses more equitably than they treat their own people?

Even more bizarre, the President specified (correctly) that “Such practices, along with our collective failure to respond to them, hurt many people in our country and also in other countries. Jobs, factories, and industries were stripped out of the United States and out of many countries in addition. And many opportunities for mutually beneficial investments were lost because people could not trust the system.”

In principle, the United States can use its economic power – stemming from the overwhelming importance of its market to an Asian region and indeed entire world heavily dependent on growing by amassing trade surpluses – to convert other economies to its values and policies. But at least for the foreseeable future, this strategy would require the United States – not an international organization created to reflect a global consensus on appropriate economic behavior that clearly is nowhere to be seen – to enforce these rules energetically and continuously until genuine conversion takes place.

Further, that conversion seems a remote prospect. For as the President himself has repeatedly stated, just as he feels obliged “to put America First,” he expects other national leaders “to put your countries first” – a remark evidently applauded by his audience.

Moreover, leaving aside the enormous administrative challenge of this enforcement mission, the process would clash violently with the President’s promise to Asian countries to “respect your independence and your sovereignty. We want you to be strong, prosperous, and self-reliant, rooted in your history….”

Far more promising for President Trump to dispense entirely with the idea of rules-based trade systems, whether regional or global, and use the nation’s (still) unmatched economic leverage to lay down the rules of access to its market, enforce them unilaterally, and leave other economies free to accept them or seek prosperity without the privilege of doing business with the United States.

This approach would generate a major strategic benefit as well – the conceptual freedom to use trade and broader economic diplomacy to offer better deals (which would still benefit the domestic economy) with countries or regions of special importance, whether economic or geopolitical or both. One possible example – creating a genuine North American trade bloc capable of strengthening Mexico’s economy, society, and political system, and/or broader arrangements to enrich other close hemispheric neighbors whose problems often become America’s.

In fact, Mr. Trump’s trade speech sounds like it’s two dramatically different speeches stapled together – something like a famous address on U.S.-Soviet detente delivered by former President Jimmy Carter decades ago. Carter’s apparent refusal to make up his mind reinforced his image as a worrisomely confused leader. Unless President Trump understands that “to govern is to choose,” he could well suffer Carter’s one-term fate.