Protectionism goes against free trade
Economics textbooks advocate free trade to benefit all in the global trade regime on the basis that free trade will push the advantages of world economies to the full. Protectionism jeopardizes the welfare of the world as a whole.
But real world politics do not allow that principle to be implemented, as has been shown in some previous protectionist policies of the United States, a self-professed free-trade advocator.
World Trade Organization members agreed in 1994 that all quantitative restrictions on textiles trade, subject to the basic WTO principles of non-discrimination in the national origin of goods, be eliminated by the end of this year.
In the run-up to the expiration date, however, US textile manufacturers have filed a slew of requests for protection from imports of Chinese-made bras, woollen trousers, cotton shirts, blouses and dressing gowns that, they say, would disrupt the market.
As past experience shows, the US government is often willing to take protectionist measures to answer to domestic industrial demand.
This will disrupt the global trade order.
On the Chinese side, measures have been taken to ease world fears of a flood of Chinese-made textile and apparel products after the quotas are lifted.
On Sunday night, the Ministry of Commerce announced the country would slap a tax on some of its textile exports to encourage "high-end textiles."
Presumably, the new practice will be carried out by setting a minimum tax for each garment regardless of their costs. This would make low-end garments less profitable for domestic manufacturers, but have little effect on mid-range and luxury clothing.
The move signals the Chinese authorities' willingness to pay heed to calls from its trade partners on promoting a more harmonious global trade.
However, as the WTO has stipulated, export quotas constitute an obstacle to the WTO objective of reducing constraints on free world trade.
The US Government should seriously think over the impact of any protectionist trade policy on the global trade order and make the right move.
The WTO arrangements of trade are a double-edged sword for a specific economy as each country has its advantages and disadvantages in competition with others. China, for example, will see its farmers suffer greatly from cheaper imports after its full WTO accession.
The US side needs to re-evaluate its trade policy to live up to its
free-trade advocator trademark.
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