Protectionism & Free Trade Assignment
Added on - 21 Apr 2020
Running Head:PROTECTIONISM & FREE TRADEProtectionism and Free TradeStudent’s name:Name of the university:Author’s note:
1PROTECTIONISM & FREE TRADEIntroductionUS President Donald Trump has taken a pledge to abandon all trade negotiations, mainlymultilateral trade deals and he has solely negotiated bilateral trade agreements for his nation.However, it is not clear for Trump that bilateral trade agreements can produce far rich economicvalues than multilateral trade agreements. Donald Trump's administration has not equallyevaluated future and all current trade agreements based on their merits, however, they justconfine the US to trade agreements. In the previous occasion, Donald Trump took his office andhe had withdrawn all memorandums that the United States had with the Trans-PacificPartnership. After that, he subsequently took a pledge to nullify all multilateral negotiations withnations. In past, Trump proclaimed that bilateral trade agreements are beneficial than multilateraltrade agreements and he wanted to have bilateral trade agreements with the UK and Japan (Deal-making of Trump, Economist.com). Trump is trying to take protectionism trade policyrestraining trade between nations through economic methods. Free trade is a blessing that agovernment can offer to people and some think that Trump's protectionism is a fainthearteddecision that tries to protect the US from numerous competitors.Introduction to the US and its trade policiesUS economy has been growing with 3% annual rate in last quarter and Economists wereexpecting at least 2.5% economic growth. US have trade agreements with WTO and OECD andother countries that are both bilateral and multilateral. GDP of US was $18.55 trillion and GDPper capita of USA was $57,436. The US is one of the developed countries in the world andinflation rate of the USA is 0.4% in recent time (Deal-making of Trump, Economist.com).However, US President tries to cancelling all the trade agreements of US and that has beenshown in abandoning the ambitious 12-nations Trans-Pacific Partnership. President Trump ended
2PROTECTIONISM & FREE TRADEthe traditional trade policy and he put an end of multinational agreements of trade that can setglobal economics for many years. Trump wants to put an end to the concept that the previousgovernment’s orthodoxy in expanding global trade of US. Trump thought the trade rules withJapan, Chile, Canada and Australia are complex web and that Trump wanted to put a stop totrade agreement. Instead, Trump thought that American employees can be protected againstcompetition from low-wage countries like Malaysia and Vietnam. On the other side, China canfill the vacuum what the US is going to make in the global economy by cancelling all kinds oftrade agreements. Trump's withdrawing decision from the trade of Trans-Pacific Partnershipreversed a free-trade policy adopted by presidents of two parties in past during the Cold War.Trump thought that the multilateral and bilateral trade deals are like ridiculous agreements thatare taken employees from the US and taken the companies from the US, stopping the tradeagreements can make the situation reverse. Dealing North American Free Trade Agreement(NAFTA), Trump has scheduled meetings with diplomats and leaders of Mexico and Canada(Deal-making of Trump, Economist.com). NAFTA has always been a major factor in Americantrade policy and critics blamed this to lower wages and loss of jobs.US President’s decisions on cancelling bilateral and multilateral trade agreements infavour of a protectionist trade policyTrump's opinions about trade deals are zero-sum and adversarial. Trump opines that othercountries to which the US are dealing in trade are the spoils and they are not just the tradepartners. Trump puts the China's accession to WTO as a bad deal and it has destroyed the chanceof American supremacy in trade and it has been creating issues in American jobs. Americanpresident tries to spread the trade deficit issues around the world and not just the USA. Trumpfaces the threat from China and Chinese competition captured export orders from the US, they
3PROTECTIONISM & FREE TRADEalso try to encroach the domestic customers and the global market is filled with cheap productsimports (Irwin; p.56). Trump’s view on trade policy is ambiguous; however, his alarm is not onlythe foreign completion but also trade deals suspicion (Aggarwalet al.p.67). However, Trumpdoes not want to be radical in his decision of trade policy; however, he wants to see the cabinetchoices with making a transformative and seismic shift in trade policy. In Trade policy, he wantsto be US's most protectionists President and Protectionism around the globe is creeping up andthe recent trend can be turbo-charged. Trump imposed a tariff of 35%-45% on products comingfrom China and Mexico and these countries could go to WTO's court to intervene. Moreover, USmight face issues in exporting their products to China also a many of the products are sent toChina from the US as China is a potential market.Concept of bilateral trade agreementBilateral trade agreements can be defined as the treaties between two countries giving thecountries favour in trading status with each other (Lesteret al.p.56). The main aim of thebilateral agreement is to give the countries expanded access in each other’s countries in order toaccelerate the economic growth of both participants. In bilateral agreements, there are mainlyfive general parts in order to standardise the business. These five operations keep one participantaway from stealing the innovation, products and dumping the products at lower prices. Bothcountries in the bilateral agreement cannot do unfair subsidies in the prices they are offering(Cooper; p.45). These agreements clearly state the standardise regulations like environmentprotection, labour standards. This process needs to discuss eliminating the tariffs and trade taxes.In bilateral trade agreements, both the parties can easily negotiate in differences andmake the things clear. As compared to multilateral trade agreements, bilateral trade agreementsare easier to involve the two nations and to negotiate (Druryet al.p.67).