World Trade Tariff War and its impact on Sustainable Global Growth Public Policies - RL Vol. XII No. CCCXCV, MMXVIII

World Trade Tariff War and its impact on Sustainable Global Growth Public Policies - Public lecture series - RL Vol. XII No. CCCXCV, MMXVIII, Costantinos Berhutesfa Costantinos, PhD, Professor of Public Policy & Sustainable Institutional Reforms - https://addisababa.academia.edu/CostyCostantinos

Abstract

The reason why countries join WTO is that governments may be in the position to pursue what is known as beggar-thy-neighbour policies and that they will agree to sign international trade agreements as a way of mitigating the incentives to do so. The world economy became more interconnected towards the end of the millennium. No one should be surprised that there has been a backlash to globalisation, given the scale of disruption that has resulted from more interconnected economies. What is surprising is that it has arrived now. That is because globalisation, at least in the form we have known it, levelled off a decade ago. Moreover, that shows a crucial risk of the recent push to re-set the terms of the global economy — including tariffs on steel and aluminium and punitive actions against China that President Trump has introduced. It is coming after the major costs of globalisation have already been borne and it comes just as billions of people who have become integrated into the global economy over the last three decades are starting to become rich enough to become valuable consumers. Historically, the US has focused on staying out of trade wars. Not so under President Trump, who has announced plans to slap sweeping tariffs on steel and aluminium imports and asserted that trade wars are good and easy to win. The case the White House is making is that the tariffs necessary to protect vulnerable US industries and ultimately their effects will not be that big of a deal. Nevertheless, there is actually plenty of cause for concern. For the first time, the private sector has a recognised role in achieving the global development agenda. Indeed, in the Millennium Development Goals (MDGs), published in 2000, there was only a passing reference to the private sector, and that was to call on technology companies to enhance cell phone availability and internet penetration. With the private sector shackled by such trade wars, there will be little incentive to invest in human and sustainable development. In fact, now that traditional sources of development finance such as USAID and EU are also under threat from populist states that are trying to kill development aid for what it is worth. The Economist Intelligence Unit, says its analysis of a trade-war scenario between the US and China suggests that the US, and especially its consumers, would be amongst the biggest losers. Given globalised supply chains, however, the ramifications would be felt by producers and consumers far and wide. A global trade war could hurt consumers around the world by making it harder for all companies to operate, forcing them to push higher prices onto their customers.

Key words: trade war, trade deficit, protectionism, terms-of-trade, WTO sustainable growth,, public policies,

See lecture here or https://www.academia.edu/36893307/World_Trade_Tariff_War_and_its_impact_on_Sustainable_Global_Growth_Public_Policies