Trade: War By Other Means
12:00 AM, May 18, 2013 • By IRWIN M. STELZER
In response to China’s success, due in part to its policy of keeping its currency undervalued, more and more of its competitors have decided to fight fire with fire, or more precisely, currency manipulation with currency devaluation that will make their exports cheaper and imports more competitive. The G20 has chosen to look the other way, and to treat devaluations as by-products of monetary policy. Japanese Prime Minister Shinzo Abe and Federal Reserve Board chairman Ben Bernanke claim that they print money as part of monetary policies aimed at stimulating growth. If that printing has the, er, side effect of lowering the value of their currencies, well, so be it. If only they had currencies to devalue against a German deutschemark, the EU’s southern tier would follow Japan’s lead.
The trade scene is likely to become even more fraught now that Brazil’s Roberto Azevedo has been chosen to be the new director general of the World Trade Organisation. Azevedo, formerly his country’s ambassador to the WTO, made his reputation by getting the organisation to rule against America in disputes over cotton, orange juice, sugar and steel, and against Canada and Europe in several trade tiffs. He is well regarded by developing nations, but not much loved in richer, developed countries whose support he will need if he is to revive a moribund agency that presides over the Doha Round, a tariff cutting effort started twelve years ago and generally believed to be beyond saving.
The American trade team will certainly have less influence on trade policy at the WTO than in the past now that Azevedo’s lobbying for the director general’s post has paid off. But since former World Bank president Robert Zoellick was in charge of US trade policy emphasis has been on regional deals, some small, some as all-encompassing as the European and Asian deals that Obama hopes to complete, the latter before the year is out. He would like to have a triumph to announce during the November congressional elections to offset talk of Benghazi, tax collectors’ assault on conservative organisations, and Department of Justice’s seizure of Associated Press reporters’ telephone records.
Trade is more than an exchange of goods and services. It is politics, and war, by other means.
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