It's the time to end the folly trade dispute

CGTN Published: 2018-10-10 16:20:20
Share this with Close
Messenger Messenger Pinterest LinkedIn

Editor's note: Professor Brad MacKay is the chair in Strategic Management at the University of St. Andrews. The article reflects the author's opinions, and not necessarily the views of CGTN.

The last few weeks have witnessed two momentous events in world trade.

The first has been the US government's move to impose further tariffs on Chinese goods amounting to date to around 250 billion US dollars.

[Photo: CGTN]

[Photo: CGTN]

The second is Canada's agreement to join a "renegotiated" North American Free Trade Treaty, to be renamed the USMCA (United States-Mexico-Canada Agreement). Both are connected in important ways and mark a further regression in the increasingly fragile international multilateral rules-based-order.

The US tariffs on China are aimed at rebalancing trade between two of the world's largest economies and addressing alleged currency manipulation of the yuan by China to make Chinese goods cheaper and protect intellectual property. China has countered by drawing up its own list of US products to be targeted with retaliatory tariffs.

Some economists point out that the impositions of tariffs on Chinese products are likely to hurt American companies and consumers. These unilateral actions heighten global tensions at a time when pressing global issues require dialogue and negotiation rather than brinkmanship.

The "renegotiated" USMCA between the United States, Mexico and Canada – commentators generally point out this was less a negotiation than extortion through modern economic gun-boat diplomacy – is significant for three reasons.

First, in the renegotiated agreement, one clause in particular goes beyond the normal compromises made in free trade agreements, toward what might be found in a customs union.

Second, it signifies a further shift in the "America First" doctrine toward a purely transactional approach to global affairs, one that is not so much guided by common values or principles between allies as it is by a neo-mercantilist worldview underpinned by naked self-interest.

Through the trade negotiations with Canada, the US president, and by extension, part of the US government, launched personal attacks on the Canadian prime minister and minister of foreign affairs and threatened the "ruination" of the Canadian economy.

Third, by binding Canada and Mexico to US foreign and trade policy in the way that it has, it moves the world away from a multilateral system underpinned by a rules-based order, and facilitates what political scientist Joseph Nye has referred to as "soft" power, to one underpinned by a principle of might-is-right, where the ability of a nation to impose its sovereign will on that of another through "hard" power – either economic or military – is the modus operandi.    

Today people are healthier, they are living longer, and they are more prosperous than at perhaps any time in human history. The liberal, multilateral, rules-based global order is chiefly responsible. But there are challenges that are both caused by this international system, and paradoxically, can likely only be solved by it.

One pressing challenge is that the benefits of such global prosperity are not being shared broadly enough. Wealth is concentrating in too few hands, and too many people are either not benefiting enough, or they perceive themselves not to be beneficiaries of recent progress.

Inequality in wealth distribution is one of the main reasons for the troubling rise of popularism and protectionism in India, the United States, the United Kingdom and Europe. China too will not be immune indefinitely, although it might manifest itself in different ways.

The benefits of globalization have to be distributed more widely by nations working together through international institutions.

Creating a more equally prosperous world, and one that doesn't compromise the natural systems that every person, nation and region depend on are within humanity's grasp.

But it requires a new commitment to the liberal, multi-lateral, rules-based order that has presided over impressive progress in so many of humanity's modern endeavors.

The escalation of economic and, increasingly, military tension between China and the United States, the two most important nations for the next phase of global development, is therefore folly.

China and the United States need to move toward ending this current trade dispute through compromise and dialogue, to put their differences behind them, and to work together to resolve critical issues that go far beyond trade for the benefit and future of humanity.

Related stories

Share this story on


LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.