China-A veiw on alleged US Protectionism.
CHINA-VEIW ON BUY AMERICA POLICY.
This measure carried out by the US shows that it is seeking temporary relief regardless of the consequences. It is not financially sensible either, because global production and the division of labor have become integrated to an extent and cannot be separated. When one country protects its own trade, it seems like it is protecting its citizens. But in fact, it has disrupted the structure of the international division of labor by taking out some links in the chain, and will cause the whole world economy to develop in an incorrect and bad direction. If the US disrupts production and the division of labor mode of the entire world economy, the losses will outweigh the gains. In general, compared to other countries, it is hardest for the US to practice trade protectionism, because its economical production is distributed all over the world. The US is talking about US-made products, but there are few products actually made in the US. The US’ real products are software and knowledge. For this reason, in this case, it is useless for the US to carry out trade protectionism. Instead, protecting intellectual property rights is the correct thing to do.
Song: In a modern society where the economy has become globalized and communication technology is highly advanced, this US provision will certainly not be able to accomplish its expected goals. The premise of benefits obtained through trade protectionism policies is that one country carries out the policy, but other countries do not react and just wait to be killed. Once those countries do react however, the trade protectionism policy will produce just the opposite effects for the country that initially adopted it.
Ding: It will be difficult for the "Buy American" provision to realize its desired effects. According to statistics from the US’ Institute for International Economics, the "Buy American" provision can create 9,000 jobs at most. However, the reluctance of other countries to buy American goods may hold the US back from creating more jobs and benefits.
"Buy American" will only aggravate the world financial crisis
Question: Given the global economic crisis, what consequences may arise if the US does not follow the rules of trade liberalization?
Song: If a country, especially a large world power like the US, adopts trade protectionist measures, it will set a bad precedent and other countries may follow its lead. Worse still, if all other countries adopt trade protectionist measures as well, they will only aggravate the world financial crisis and cause more harm. This will also have extremely adverse effects on the integrity of existing global economic rules and order. As a result, it will shatter the public’s confidence in the rules of trade liberalization as well as in the multilateral trade economic system.
Li: We should treasure the great efforts and achievements made by the multilateral trade system to push trade liberalization forward. In addition, we should prevent the global trade environment from suffering the historical tragedy of "shifting troubles on to others" again.
During the Great Depression from the end of the 1920s to the beginning of the 1930s, tariff, trade, and currency wars were the economic fuses leading to World War II. Traumas caused during the war made some major countries involved in international trade at that time sign the General Agreement on Tariffs and Trade (GATT) in 1947. GATT led to the formation of a multilateral trade system and was dedicated to global trade liberalization for more than 60 years.
Ding: This approach will make other nations follow suit. The prevailing trade protectionism will trigger trade frictions and trade wars, seriously affecting the recovery of the world economy. The result will be that the US itself and all other countries will be victimized. For example, the US’ Smoot-Hawley Tariff Act in 1930 incurred retaliation from European countries, which caused world trade volume to drastically shrink to only one-third of the volume prior to the crisis. One erroneous policy became one of the arch-offenders causing the Great Depression.
: The US’ approach does not conform to its national context and violates its own fundamental interests. First of all, the US is already not suitable to develop the real economy due to its current circumstances including high labor costs. Secondly, reviving the real economy to revitalize the job market is not something that can be achieved in the short term. And lastly, the direction of economic development the US has chosen to restore its economy goes against economic development trends.
