US President Donald Trump came to power riding on Nationalist and Protectionist wave. For decades, he has opposed the trade advantages given to China as developing country, and he campaigned on the same lines and won. Since then, Trump has imposed tariffs after tariffs on Chinese goods, and after the damage done due to Coronavirus, he is going to be harder on China.
Yesterday, in a daily press briefing at White House, Trump told reporters, “China has been unbelievably taken advantage of us and other countries. You know, for instance, they are considered a developing nation. I said well then make us a developing nation too.”
According to Trump, China has taken advantage of the United States through WTO, and its economy started booming after it joined World Trade Organization, and the companies started moving their factories. “If you look at the history of China, it was only since they went into the WTO that they became a rocket ship with their economy. They were flatlined for years and years,” Trump told reporters.
Trump is not wrong when he says that China grew exponentially after joined WTO in early 2000s. Even before that, it had observer status for more than a decade and was taking all benefits of developing nation as WTO member. In the last three decades, China grew at double digits, thanks to its status as ‘factory of the world’. China became an export powerhouse by capitalizing on relaxations awarded by WTO to developing nations in global trade.
Trump blamed previous regimes for allowing China to take advantage of the United States through WTO. “Frankly, for many, many decades. And it was only when they came into the WTO that they became a rocket ship because they took advantage of all — I’m not even blaming them. I’m saying how stupid were the people that stood here and allowed it to happen,” said Trump.
For decades, WTO used to set agenda for global trade. But with the rise of protectionist right wing regimes around the world, the significance of WTO has come down. Trump, who threatened to pull US out of the multilateral organization, has crippled WTO in the last three years of his presidency.
Globalization, for which free trade was an important element, is on decline. The rise of right-wing nationalist leaders like Trump, Boris Johnson, has disturbed the global order set up by multicultural elites.
Coronavirus outbreak will be the last nail in the coffin of globalization and multi-culturalism. The post-Corona world would have no place for free trade, and therefore the countries like China, which rose by exporting goods, will register a fall. The free trade of services, like software and cutting edge technology, will continue, as these cannot be developed by the nation, thus, putting India on the advantage in such system.
The coming decade will be driven by bi-lateral relations and trade. The multi-lateral trade deals, involving many countries or blocks is on decline. Trump has already pulled out of Transpacific Partnership trade deal and India pulled out of Regional Comprehensive Economic Partnership (RCEP).
But the countries are enthusiastic about bilateral trade deals if the leaders have good chemistry. For example, Trump is enthusiastic on India-US free trade deal; similarly Boris Johnson showed interest in pursuing FTA with India after Brexit.
These trade deals, coupled with decline of WTO which put all developing countries in one block, will give advantage to India. Earlier India was in developing countries block along with China and therefore has not been able to get advantage of its cheap labour, given first mover advantage of China.
But when the countries will be dealt on individual basis, not en-block, India will be at advantage, given a dynamic leader like PM Modi at the forefront and the good-will enjoyed by the country. Therefore, at this time, India is at the crossroads to become factory of the world, thanks to Trump’s dismantling of en-block treatment of countries by WTO.