US aims to make it easier to take retaliatory measures against its competitors
In order to win in its trade competition with China, the Trump administration is preparing to establish international trade and investment rules that favor the United States by building discriminatory trade blocs with its allies.
It wants to replace the World Trade Organization rules with trade rules of its own devising, and take advantage of trade terms that are in its favor to seize the high ground in its economic competition with China.
To this end, the US included “poison-pill” terms in the US-Mexico-Canada free trade Agreement, which was inked in September, to isolate certain nonmarket economies.
On Oct 16, the US Trade Representative Robert Lighthizer informed the Congress that he intends to accelerate the trade negotiations planned with the European Union, Japan and the United Kingdom.
The Trump administration’s inclusion of poison-pill terms in trade agreements has exposed the power politics and unilateralism of the US in the international trade field and has drawn widespread concern.
The poison-pill terms that the US is inserting into its trade agreements gives it the power to impose trade sanctions and other punitive measures against any of its partners acting against its wishes. The US, as the world’s largest economy, is using its market as leverage to force other parties to accept its foreign trade rules in order to maintain US economic interests.
The US has continually created global trade fictions over the past two decades by seeking to rewrite trade rules unfairly in its favor. The trade war launched by the Trump administration against China aims to force open the gates to China’s market while at the same time restricting access to its own.
The Trump administration wants to rewrite international trade rules to achieve maximum benefits for the US while minimizing those of China. Through its poison-pill terms, the US wants to shape the international trade order and compel its trade competitor, China, to submit.
The Trump administration is worried that China’s rise as a great power will undermine its advantages. The US is attempting to use the poison-pill terms in its trade agreements in order to prevail in what it sees as competition with a rival, and so control the rule-making power of foreign trade rules in the long term to sustain its preeminence.
Poison-pill terms are the strategic choice of the Trump administration. US President Donald Trump supports economic nationalism and trade protectionism. He is content to blame the problems of US workers on international trade, and particularly trade with China. He advocates anti-globalization because he is not satisfied with the gains globalization has brought to the US economy and employment.
By using poison-pill terms in its trade agreements, the US aims to consolidate its strategic alliances with its existing trade allies, as well as isolate and attack its trade competitors. The final goal of the Trump administration is to guarantee the continued dominance of the US in the global economy.
Once the Trump administration successfully inserts poison-pill terms in its agreements with its major trade partners, it will enable the US to adopt more effective retaliatory measures against its competitors using trade rules.
The poison-pill terms in the trade agreements advanced by the Trump administration will not only undermine China, an important trade partner of the US, but will destroy the existing global multilateral free trade system based on WTO rules.
The author is a researcher with the Chinese Academy of International Trade and Economic Cooperation. The views do not necessarily reflect those of China Daily.
(China Daily European Weekly 11/02/2018 page13)