One big mistake by many economic analysts is that they think trade and investments are static. A big economy raises import tariffs and they think that world trade will be adversely affected. Like this article, https://asiatimes.com/2024/10/trump-win-potential-puts-asia-on-a-tariff-ied-edge/.
No. To be affected only will be companies in China exporting to the US. Companies in CN exporting to PH, TH, VN, SG etc won't be affected.
Trade diversion will likely happen and it'll be in favor of other countries. Like a CN company exporting laptops to US at $500 each. Plus long distance shipping plus high tariffs and sell low vol due to higher price.
That company would better export the same laptop to ASEAN countries, sell at $480 due to shorter shipping cost, low tariffs, and sell high volume due to lower price. Then consumers in ASEAN, etc will be better off with higher competition, higher volume of laptops in the market.
Trade is never static. Trade will flow less in countries with high tariff and non tariff barriers. Trade will flow more to countries with low trade barriers.
The Trans Pacific Partnership (TPP) that Trump killed it in his 1st week in office in January 2017 by making the US leave the partnership. The other countries were hoping that they could have easier access to US markets via TPP, they didn't pursue the TPP on their own despite all the praises they heaped on it. So it seems that Trump was correct in leaving the TPP.
Trade diversion, US buying from PH exports would rather buy VN or MY exports because they are members of TPP. I think Dr. Clarete of UPSE made a study about the threats of "trade diversion" that's why there were PH business lobby at the US embassy to invite the PH.
if TPP was indeed a good trade arrangement, the remaining members should have implemented it among themselves minus the US. But since most if not all of them want bigger access to US markets as primary motive, then the motivation was no longer there.
Comparing the Regional Comprehensive Econ. Partnership (RCEP) vs TPP,
1. RCEP has all 10 ASEAN countries as members, TPP only four -- VN, MY, SG, Brunei
2. RCEP has no Mexico, Chile and Canada, TPP has those 3.
3. RCEP has CN and KR, TPP no.
RCEP and TPP are 2 different alliances with few common countries
One of the funniest episodes in the G7 summit on June 2018, while people were attacking Trump as protectionist, he challenged all the 6 other leaders to -- zero tariff, zero barrier, zero (export) subsidy. https://funwithgovernment.blogspot.com/2018/06/free-trade-66-trumps-proposal-of-zero.html
The never Trumpers said he was just bluffing. Then the other 6 leaders, Presidents or Prime Ministers of UK, Germany, France, Italy, Canada, Japan, should have called his bluff. But they were all scared -- if not hypocrites -- in abandoning their own protectionism.
https://funwithgovernment.blogspot.com/2018/07/free-trade-67-us-eu-zero-tariff-zero.html.
Nonetheless, this didn't happen. EU bureaucrats too insecure to abandon all forms of trade regulations and protectionism, which can make many EU bureaucrats irrelevant and useless
-----------------
Free Trade 70, Free trade should be separate from war, July 05, 2022
Free Trade 71, Anti-Illicit Trade Conf in Manila, invstment liberalization in agri, September 09, 2022
No comments:
Post a Comment