From Berlin, the Great and the Good issued a statement on Monday defending free trade. The signers were the WTO, IMF, World Bank, Organization for Economic Cooperation and Development, and the International Labor Organization-neoliberal bastions all. They were joined by this year’s G-20 chair, German Chancellor Angela Merkel.
President Donald Trump is not mentioned in the statement. None the less, the warning against “the danger of increasing protectionist tendencies” certainly includes him. Neoliberals hate protectionists like Trump. Protectionism means tariffs and other barriers to the international free flow of goods. Neoliberals want to eliminate all trade barriers. NAFTA, the TPP, the WTO and other free trade agreements mean to do just that.
Neoliberalism motivates the G-20 and both major US political parties. The North American Free Trade Agreement among the US, Mexico, and Canada was negotiated by the first President Bush and signed into law by President Bill Clinton. The Trans-Pacific Partnership (TPP), which was to have brought together 12 Pacific Rim nations, including the US, was pushed hard by President Barack Obama, but had yet to be ratified by the US Senate by the time Obama left office. As Secretary of State, Hillary Clinton repeatedly hailed the TPP as the “gold standard of trade agreements.” Her eleventh-hour conversion to TPP opponent, aping Senator Bernie Sanders’ popular attacks on the TPP, fooled no one.
Trump’s protectionism breaks with neoliberal orthodoxy. Trump made trade a major theme of his 2016 Presidential campaign. In common with his base of ageing, working class White males without college educations, Trump blames the loss of good-paying manufacturing jobs on “bad trade deals” like NAFTA the TPP. Wasting no time, Trump signed an executive order withdrawing the US from the TPP on his fourth day in office. Renegotiation of NAFTA has begun. (Obama had promised to renegotiate NAFTA, a promise Obama broke.)
Then, in March, Trump’s economic advisers (he does have some, and they are the best economic advisers) suggested that the US might disregard particular rulings of the WTO’s Dispute Settlement Body if they go against the US. The US routinely ignores international bodies when it suits us, but it is bad form for a US President to say so.
What WTO rulings does Trump have in mind? Trump has repeatedly accused China of unfair trade practices, including dumping below-cost products on the US market. In response, China brought a complaint before the WTO in December alleging that the US and EU impose unfair anti-dumping duties. (In addition to Sino-American tensions over trade, there is increased risk of an actual shooting war between China and the US in the South China Sea.)
No public statement on trade resulted from Trump’s summit with Chinese President Xi Jinping at Mar-a-Lago last Thursday and Friday, April 6-7. Then, on Tuesday, a Trump tweet raised that the possibility of trade concessions if China used its leverage to rein in North Korea’s nuclear ambitions. Trump and Xi spoke by phone the following day, April 11. We don’t yet know what, if anything, they decided. It doesn’t matter whether the US abandons TPP or revises NAFTA; Trump will not be able to bring departed manufacturing jobs back to the US.
Roberto Azevêdo, WTO Director-General, said Monday that global job losses result primarily from technological advances rather than from free trade agreements. Azevêdo meant advances in communications, transportation (e.g., container ships), and automation. While he did not mention them specifically, robots-not trade, China, or immigrants-may be the biggest threat to American jobs.
Mr. Azevêdo’s statement is self-serving, but correct. According to financial news service Dow Jones: The McKinsey Global Institute … estimates that only about 20% of the 5.8 million US manufacturing jobs lost between 2000 and 2010 were eliminated because they were moved abroad. The rest were lost through automation, weak demand and other factors.
If by some miracle (and Trump’s very existence defies the laws of probability) Trump brings manufacturing back to the US, this alone would not restore manufacturing workers to the prosperity they enjoyed in the 1950s and 60s. That would require a strong, revitalized labor movement and redistributive measures, including a sharply progressive income tax. Otherwise, gains from a reborn US manufacturing sector will all wind up in the pockets of the 1%.
David Macaray has argued, possibly tongue in cheek, that Trump might, just might, be pro-union (“Irony of Ironies: What If Trump Turned Out to Be Pro-Union?” CounterPunch, Mar. 31, 2017). Macaray bases this contrarian view on Trump’s admiration in his early years in business for ruthless old school union bosses. Most of the left, however, regards Trump as anti-union. Trump’s first pick for Secretary of Labor was Andy Puzder, the anti-union CEO of the Hardee’s fast food chain. Trump has resisted unionization in his hotels and casinos and his and his daughter Ivanka’s clothing lines are manufactured in Chinese sweat shops. Yes, even Trump’s signature “Make America Great Again” hats. This would embarrass anyone else, but not Trump.
As for introducing tax laws which would favor low- and middle-income Americans over the 1%, this would certainly burnish Trump’s populist cred. Yet Trump has said repeatedly that “America is one of the highest-taxed nations in the world” (hear that, Scandinavia?), and there is no evidence that Trump has janitors’ tax burden in mind. Redistributing wealth downward isn’t Trump’s thing. Upwards, yes. The late, unlamented American Health Care Act would have sent wealth shooting to the top of the economic pyramid. Like past Republican presidents, what Trump really likes are tax cuts for the wealthy, including eliminating the Social Security payroll tax (a move which is to be sold to the American public as a middle class tax cut).
It’s entertaining to watch rival gangs of capitalists (protectionists vs. neoliberals) tear into each other. We need to remember, though, that whenever either of these sets of maniacs wins, the rest of us lose. When elephants war, the ants get trampled. It’s up to us ants to organize against both protectionism and neoliberalism and construct a just international economic order which serves the mass of humanity rather than the 1%.