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May 27, 2019

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We don’t see a fair go in US ‘fair trade’ call

“Fair trade” has been a frequently invoked theory by the United States in pressuring its trade partners, including China, for concessions — and a most deceptive one.

In a word, the US version of “fair trade” is just a thin, frail layer of paint to whitewash the headstrong pursuit of its “America First” policy.

The core of US “fair trade” is its so-called “reciprocal” opening, which demands that all countries apply identical tariff levels and offer identical market access with that provided by the United States.

This idea is, at best, simplistic, and at worst, perilously selfish and short-sighted.

This approach to trade ignores the different resources endowment, competitiveness and development stages of countries, and distorts the mutual-benefit principle advocated by the World Trade Organization.

It is unfair to demand absolute equality in tariffs between the United States and China, which remains a developing nation as its huge population dilutes its massive economic aggregate.

China’s GDP per capita was only around one-seventh that of the United States in 2017, according to World Bank data.

Differential and more favorable treatment for developing countries are in the long-term interests of all. The US-touted “fair trade” will only deprive developing economies of appropriate protection and sound economic growth, resulting in broader inequality and stagnation, and eventually prevent American businesses from expanding their international market.

The United States is not living up to its own standard of “reciprocal” opening. Its tariffs far exceed those levied by China on such goods as unshelled peanuts, on which China’s tariff is 15 percent, compared with 163.8 percent by the United States.

At its heart, “fair trade” is an excuse for the United States to cover up the real problems behind its huge trade deficits and pass the buck to its trade partners.

The imbalance in US-China trade is a natural outcome of factors including an unhealthy low savings rate in the United States, numerous bans on high-tech products exported to China, and the dollar’s pivotal role as a major global currency.

Rather than adopting painful but necessary reforms to balance its economy, the United States is turning to trade bullying, which is anything but fair.


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