International economies often seem to be shaped within the stately confines of grand hotels. Bretton Woods, nestled in the tranquil beauty of New Hampshire, was the location chosen to discuss the new post-WWII economic order. The aim was to lay a framework for restoring trade flow in a world marred by conflict. While the Bretton Woods system saw its closure in 1976, elements of its imprint can still be seen. The current worldwide economic order, unbranded but heavily influenced by the World Trade Organization, was intended to promote economic efficiency and manage trade policies of its 166 member countries. Yet, it was flawed and unsustainable. The key benefactor? China experienced significant growth, with its state-controlled businesses and five-year plans, while the United States grappled with the loss of industrial jobs and economic stability.
Change was on the horizon, and it was signaled at President Trump’s Turnberry resort on the Scottish coast. Joining him was European Commission President Ursula von der Leyen, and together they inked an historic agreement. This new arrangement prioritizes national interests over the vague ambitions of multilateral institutions, setting the stage for a fair, balanced global trading system.
The previous model disallowed tariffs as a practical policy tool, causing a detrimental effect on major sectors of U.S. industries, including manufacturing. Foreign markets were closed off to our goods, while other nations boosted exports to the United States, turning the US and few other economies into the consumer base for countries implementing poverty-centric economic policies.
Under this economic strategy, global manufacturing largely drifted to countries like China, Vietnam and Mexico where companies could take advantage of low-cost labor and significant state subsidies. Consequently, the United States experienced significant trade deficits, the highest in the world in absolute terms, and a decrease in industrial capabilities, employment, and a worrisome reliance on competing nations for crucial supply chains.
To reverse the tide and re-industrialize America is a challenge of a generation, one that we need to embrace sooner rather than later. Our response came on April 2, when President Trump announced tariffs aimed at addressing the trade deficit crisis. A series of intensive bilateral negotiations followed in various global locations, resulting in unprecedented interest from our trade partners to open their markets to U.S. goods and align their interests with ours.
In a matter of months, these negotiations saw the United States secure more foreign market access than it had achieved in years of fruitless discussions under the World Trade Organization. This was a notable shift in the global trading landscape, one that promised to right the wrongs inflicted by decades of flawed economic policy.
Reviving weakened manufacturing capacity and workforce presents its own set of challenges that span both the public and private sectors. But, maintaining the status quo would only hasten the worrying trajectory of industrial dismantling. We need to engage in a substantial project to re-industrialize America.
When announcing the historic U.S.-European Union Agreement, President von der Leyen reiterated the need to reshape how global trade operates in line with concrete financial and political realities. Countries such as Indonesia, South Korea, and Vietnam are beginning to lower their tariffs on imports from the United States, in addition to removing numerous non-tariff barriers.
These countries are also taking on commitments to enhance and better implement their labor regulations, to restore fairness for American workers and producers. This levels the playing field and marks significant progress towards the longstanding goal of eradicating global workforce exploitation.
Countries are also recognizing the need to enforce environmental laws more rigorously, especially in struggling sectors like illegal logging, illegal fishing and illegal wildlife transactions. Existing international trade systems should not place Americans in a disadvantageous position against nations using our responsible economic policies as a competitive edge.
The United States will ensure these agreements are not merely symbolic but actionable and enforceable. The Clinton-era method of drawn-out dispute settlements will give way to swift imposition of higher tariffs for non-compliance, typifying the new U.S. approach to trade.
One cannot bring about transformational changes to trade regulations within the World Trade Organization without unanimous agreement among nations. The last major attempt, known as the Doha Round, failed because protectionist countries resisted dismantling their trade impediments with the United States.
Most of the newly brokered deals carry significant commitments to invest in the U.S.’s manufacturing potential. This includes investments in the ballpark of $600 billion from the European Union and $350 billion from South Korea. These investments promise to expedite the process of re-industrializing America.
In addition to the investment commitments, there’s nearly a trillion dollars’ worth of purchase commitments for American goods across the spectrum of energy, agriculture, defense, and industrial sectors. This demand for American products and easy access to capital will pave the way for a resurgence in American manufacturing.
There is skepticism about the extensive use of tariffs, a policy tool not used at this scale in generations. Despite this, the evidence shows that not using tariffs or similar protections has led to an economy that propped up the finance industry but failed to create sustainable wealth. In treating this issue with the urgency it deserves, we can right this wrong and put U.S. economic health back on track.
The post Trump’s Bold Vision Spurs Global Trade Evolution appeared first on Real News Now.
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