While defending his tariff policy on several imported products such as steel and aluminum, President Trump argues that: “We’ve lost, over a fairly short period of time, 60,000 factories in our country — closed, shuttered, gone. Six million jobs, at least, gone. And now they’re starting to come back.” Many economists and politicians compare his trade policy as a march towards another “Great Depression” similar to the one, in the 1930s when President Hoover signed the Smoot-Hawley Act. However it seems that the general masses love Trump’s idea. A steel worker who lost his job when the factory closed due to the invasion of cheap foreign steel and aluminum will certainly be happy to re-elect President Trump for a second term.
The policies of President Trump are a clear example of economic nationalism. If a country as big as the US now needs economic nationalism to salvage its industries then why would a smaller country that is fast losing its own industries not need it? In my opinion, Brexit too is an example of economic nationalism and UK’s bid to save its own borders from the invasion of cheap foreign products.
Although, US’s trade war will hit them because they export a substantial number of products to countries such as China and Canada. However, we as a nation don’t export even half of what we import from other countries. Therefore, the possibility that we could suffer from raising the tariff on imported products in order to encourage the local industries does not stands a chance. What Pakistan needs to do is follow President Trump’s policy and adopt a more nationalistic economy so as to revive the local industries that are either opting to quit, under the pressure of cheap foreign goods or moving their manufacturing elsewhere. Though, the policy makers don’t take such industrial roll backs seriously, no such move is ever appreciated elsewhere, take for example the possible takeover of Qualcomm Inc — the US Chip making giant — by the Singapore based Broadcom Inc.
The US Treasury department has resisted the takeover bid fearing that if Broadcom would gain the de facto control of Qualcomm, they could fire and hire executives at will and may set new goals for Qualcomm Inc. including closing it down altogether. Qualcomm Inc. is America’s leading technological manufacturer in developing a 5G wireless internet standard. If Broadcom curtails Qualcomm Inc., the Chinese telecom giant Huawei would set the global 5G standard and US companies would have little choice but to buy Huawei technology.
On one hand, the world is protecting its own assets so aggressively and on the other hand we are happy with trading our industries such as Pakistan Steel Mill and Pakistan International Airlines for only a few billion rupees. We need a nationalist driven economic policy for many reasons.
Firstly, with this approach we can ensure a steady stream of raw materials that our local industries such as Pakistan Steel Mill produce for manufacturing weaponry necessary for large-scale war. Not supporting our local industries and relying on imported raw materials for manufacturing especially security related products can land us in trouble one day.
Not supporting our local industries and relying on imported raw materials for manufacturing, especially security related products, can land us in trouble one day. Having an indigenous industrial strength is of utmost importance for thwarting any misadventure from our hostile neighbors such as Afghanistan and India. Having industries that can adapt to the military’s needs are a necessity for our nuclear state
Having an indigenous industrial strength is of utmost importance for thwarting any misadventure from our hostile neighbors such as Afghanistan and India. The industries that can adapt to the military needs are a necessity for our nuclear state.
Secondly, a high reliance on foreign goods at the cost of rolling back our own industries is fast pushing the middle-class into oblivion. We now either have the very rich people or those people that are living below the poverty line. The ever so shrinking middle-class is either fast moving out of this country or is losing its buying power to remain in the middle-class. Another argument in support of economic nationalism is to provide a nurturing space to local entrepreneurs and industrialists. In today’s environment, when our imports don’t match our exports, it is difficult to convince anyone to invest in Pakistan.
Also read: National Internal Security Policy 2018-2023 — a critical assessment
Large scale industrial growth has almost halted in this country. Small manufacturers might be growing, however they don’t provide enough jobs to the local workforce thus reducing the incentives for them to get any technical education. What more, we have even been importing entertainment from Bollywood, Hollywood and now from Turkey. Every other television channel is either broadcasting Urdu-dubbed foreign soaps or shooting in locations outside Pakistan due to the lack of developed facilities here.
We, as a nation must not be scared of the possibility that competition will decrease in the absence of foreign goods. In this regard we must look at the economics of China, India and the United Sates, where preference towards local goods has not fossilised their industrial strength; instead it has enhanced their growth and technical capabilities. At first the economic nationalism might seem ludicrous and it may prompt a debate on the sanity of the proposition, however it would be an attempt at reviving our industries and finding an alternative to imported d goods that are only strengthening the countries who export to us, while scraping our own industrial strength. The Supreme Court of Pakistan must review the free trade agreements that the Pakistani government has pledged in the past or is in the process of signing with other countries.
The writer is an Assistant Professor
Published in Daily Times, August 2nd 2018.