Rethinking protectionism( Hindu Summary-7th Feb 2018)

www.iasinsights.in; www.iasgyaan.com posts Hindu Summary-7th Feb 2018 about USA latest stand on protectionism.

Rethinking protectionism

http://www.thehindu.com/opinion/op-ed/rethinking-protectionism/article22670889.ece

Context: 

  • US President plans to revisit the Trans-Pacific Partnership that he had pulled out of last year.
  • Also started renegotiating North American Free Trade Agreement (NAFTA).
  •  The protectionist campaign is the action that Mr. Trump has initiated on China indirectly.

Why? 

  • There seems to be a realization of the risks to his globally disruptive agenda
  • So announced at the recent Davos World Economic Forum that “America first does not mean America alone.

Consequences after USA exit:

  • Apart from USA the other 11 nations of that original grouping will adopt in March 2018 the renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Challenges: 

  • Not sure whether Canada and Mexico could be arm-twisted to allow a large proportion of U.S. components in the manufacture of cars.
  •  USA threatened Beijing with 45% punitive tariffs in retaliation against a huge trade surplus.
  • Job loss looming in solar industry due to recent slap on safeguard tariffs on imports of solar cells.

What should not be done?

  • To alienate allies across the Atlantic would not seem strategic for a President eager to capitalize on Europe’s opposition to Beijing’s perceived unfair trade practices.

How USA doing protectionist measures?

  1. Launched two separate probes: one into illegal aluminium subsidies and into anti-dumping of Chinese aluminium exports.
  2. Another probe related to Beijing’s so-called intellectual property theft ordered last April into the effects of steel imports on U.S. national security.
  3. Launched the probe despite Beijing’s offer to cut excess capacity by 150 million tonnes by 2022.
  4. In January, the U.S., slapped safeguard tariffs on imports of solar cells and domestic washing machines.

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