How nationalism blinds us
I often have conservations with people about protectionism. One common complaint I hear is that America is a free trader that plays by the rules, whereas foreign countries are protectionist and don’t play by the rules. In fact, the exact opposite is more nearly true.
In a recent post, I pointed out that the US has the highest tariff rates in the entire world among developed nations. But what about “the rules”, don’t we at least play by the rules? Here’s The Economist:
In 2017, rejecting the idea that rules-based dispute settlement serves American interests, it began blocking appointments to the WTO’s appellate body. If the government thought another country was undermining its interests, it would decide unilaterally on suitable punishment. France received tariff threats after proposing to tax American tech giants
And it’s not just the Trump administration:
The Biden administration is chummier towards allies. But on China and the WTO, it is not much different from its predecessor. Enforcement of rules through the WTO does not seem to be part of its plan, so it continues to block appointments to the appellate body. Based on a narrow view of self-interest, this may seem to make sense, as it has no big offensive disputes to win, and faces defensive ones it might lose. (One example is China’s complaint about America’s tariffs, which the Trump administration sent into legal limbo by appealing against it last October.) There is a perception that European-minded lawyers in Geneva read more into rules than America wishes, and have been too eager to constrain its use of defensive trade remedies. “It’s not going to be a quick fix,” comments a USTR official.
Not only do we not play by the rules, we try to pressure other countries to join us in flouting the rules:
Elsewhere in the world, many see America and China brawling outside the WTO’s rule-based system, and braying to allies to join in support. . . . Moon Chung-in, a senior adviser to South Korea’s president, says American pressure on South Korean companies to move away from China would be an “outright violation of WTO norms and principles”.
The US no longer cares about WTO norms and principles, indeed we’ve sabotaged the WTO:
Many would prefer America to repair the WTO’s dispute-settlement system. Mr Moon says the WTO is “one of the greatest inventions of the human race, but we are destroying it.” Some 121 WTO members, including China, make monthly appeals to America to restore appointments to the appellate body. Damien O’Connor, New Zealand’s trade minister, calls this the only way to ensure fairness, and warns of a return to a lawlessness “that allowed the big countries to simply dominate and often destroy opportunities for others.”
Unfortunately, things are likely to get worse before they get better:
It also implies an inward turn. The “Buy America” laws that the Biden administration hopes to strengthen will further reduce foreign access to a massive public-procurement market.
So why do Americans have such a mistaken view of our role in the international trade regime? Why do so many Americans believe that we are the good guys, trading with a bunch of devious, rules-breaking protectionist foreign countries?
I blame nationalism, an ideology that advocates teaching people a sugarcoated and often false version of their country’s history. We need fewer nationalists and more patriots—more people who understand that telling the truth, even painful truths, is the best way to correct bad policies and move forward.