It has been several decades since I first suggested the
creation of a global trading system that would have solved the problems America
and the world are facing today.
I repeated the suggestion on a number of occasions
subsequent to that time when things were getting contentious – as they often
did between the United States and someone else – but no one paid attention to
what I was saying. Well, things have gotten so dire now, I have the feeling
someone may finally be inclined to consider my proposal … and this is why I'm
repeating it here.
If you want to know how dire things have become in the world
of commerce, read an article that came under the title: “Reshaping world trade
after tariffs,” written by Peter Morici and published on June 27, 2018 in The
Washington Times. The one thing you'll notice throughout the article, is that
the writer has pursued the two themes of trade and security, intertwining them
as if they were inseparable like the two sides of a coin. And if you must
inscribe a moniker on that coin, it will have to be this: “Raise the flag of
war in the face of friends and foes.” And that's because Donald Trump is
screaming at them the fire and fury of fair trade.
Trump is angry at everyone, accusing them of sending goods
and services to America where they sell quickly because they meet with the
minimum of barriers. But when American businesses try to even out the balance
of trade by selling their goods and services in those countries, they meet all
kinds of barriers. This makes it impossible for American businesses to compete
against locally made products and other cheap imports, says Trump. He goes on
to explain that the imbalance of trade against America has risen to staggering
levels, which prompts him to describe the situation as foreigners stealing from
America.
Peter Morici embraces that point of view as well as Trump's
idea that America's allies are not contributing enough to NATO, the
organization that's important to their defense; they who are geographically
situated closer to Russia and China than does America. You realize how bitter
Morici has become at the NATO allies when you encounter a sentence that reads
as follows: “America should throw Britain a lifeline as it leaves the EU –– no
comprehensive, post-Brexit arrangement with a German-dominated dying continent
will work”.
Of course, America's friends and foes have arguments of
their own which they level against President Trump's accusations. In fact,
that's how all trade disputes unfold as long as they stay at the jaw-jaw level.
Unfortunately, however, what happens at times, is that something else replaces
the talk. It is the imposition of tariffs on imported goods and services, a
move that can start a trade war between the nations. The world has seen this
kind of development before and suffered a great deal as a result.
I believe that the way to avoid a trade war, is by
recognizing that at the basis of it, lies the suspicion that the other guy is
cheating. In fact, the suspicion turns out to be true in most cases for the
simple reason that when squeezed, a nation will do what's in the interest of
its people despite any agreement it may have with others. To eliminate that
problem, you give everyone the right to protect their vital industries up to a
certain level: I once suggested 30 percent of local consumption for each
protected industry, but that percentage can be negotiated.
The philosophy behind my proposal is that competition is
desirable because it forces people to improve their performance. However,
unfettered competition can injure or kill the weaker opponent, which is not a
desirable outcome. To have it both ways in the sense of reaping the benefit of
competition while avoiding its morbid outcome, you place a limit on how far
competition will be allowed to squeeze the other guy.
My proposal accomplishes as much by allowing a powerhouse in
a given industry to force the opponents to improve their performance, but not
squeeze them so much as to put them entirely out of business. The 30 percent
(or whatever negotiated level) backstop will be the limit to which a nation
will see a protected industry drop before it can legitimately impose the
protective measures it deems necessary to prevent it from falling further down.