G7, Trade Disputes, and the Decline of Liberal Internationalism

“What worries me most is the fact that the rules-based international order is being challenged — quite surprisingly not by the usual suspects, but by its main architect and guarantor, the U.S.,” - European Council President Donald Tusk.

"When does a feud become a separation? A separation a divorce? When do arguments, sharp-tongued put-downs and perceived betrayal among allies become the collapse of the Western-dominated order that has ruled the world, under U.S. leadership, for the past seven decades?" - Karen DeYoung, Washington Post.

Washington Post June 10 2018 (Photo Credit: AFP)

These are the headlines underlining (or undermining) the 2018 G7 Summit in Canada,  capped by President Trump's early departure from the G7 and decision to withdraw US support joint statement. At the center of this debate is the Trump administration's threat to the international trade architecture as President Trump threatens to slap tariffs on goods - steel, aluminum, and automobiles in particular - of our closest allies in the name of national security. These allies include Canada, Germany, and Japan. Although there might be some "nuggets of truth" to Trump's claims on trade, most analysts believe the US will bear a significant economic cost in a trade war, translating into the loss of millions of jobs.  I don't have the economics or math background to prove to what extent Trump's trade policies would help or hurt the US economy, but if there's anything I learned from my IPE class in graduate school, it's that international trade always carries winners and losers. Steel and aluminum producers in the US may get their jobs back as Trump rises tariffs on foreign imported metals. But what about all the US manufacturers who rely on lower cost materials to make their products? What about the US pork and dairy farmer who will face retaliatory tariffs in Europe. The Washington Post had a great feature story on a sausage-making manufacturer in Ohio who will potentially lose millions of dollars b/c of Trumps steel tariffs. Here's an excerpt:

Bill Adler was invited last year to bid on a contract to make commercial sausage stuffers for a company that wanted to replace its Chinese supplier. The customer had just one non­negotiable demand: Match China’s price.

Adler, owner of metal-parts maker Stripmatic Products, thought he could. But even as he readied his proposal, talk of President Trump’s steel tariffs sent the price of Stripmatic’s main raw material soaring.

In April, with prices up nearly 50 percent from October and the first wave of tariffs in place, Adler’s bid failed. His costs were too high.

Today, instead of taking business from China, Adler worries about hanging onto the work he has. He hopes that the president’s tariffs are just a negotiating tactic.

Washing machines are another product in which trade tariffs, initially put in place to reduce competition from foreign competitors such as LG and Samsung, have backfired as those companies have continuously moved production to avoid tariffs, and ultimately moving production to the United States itself, complete with tax breaks and subsidies while creating US jobs. Here's a PBS video exploring if trade tariffs actually help US workers.

A looming trade war with China also stands to have the US losing billions, particular among US farmers as demonstrated in this clip from Vice News.

This is not only about trade. The rift at the G7 has broader implications for the liberal international order. The Trump administration has battled its allies on other issues including climate change (the US pulled out of the Paris Accords);  non-prolilferation (the US pulled out of the Iran nuclear deal). Some questioned whether Trump was looking after US or Russian interests as Trump called on the G7 to reinstate Russia as part of the G8. Max Boot headlined an article stating the US turned the G7 into the G6 vs. the G1.

In his PostEverything colum, Dan Drezner is circumspect about the possible long term damage of Trump's "bad-cop/bad-cop" approach to global affairs. Perhaps the most likely pathway linking Trump to a longer US withdrawal from the liberal order is increasing polarization in the US which promotes Trump's nationalist/anti-liberal policies. He ends the piece by stating. "Trump could get reelected. if that happens, the tombstone for the current order can safely be planted."

If there's any optimism, though, we need to remind ourselves that America has faced worse, and has tended to rebound from tumultuous periods (i.e. Civil War in the 1860s, the 1930s depression, riots of the 1960s). There is always recourse to head back to the political center - or return to some consensus. 

Ethics and Global Governance

Two stories this weekend related to global governance which made me think about ethical issues and global politics. The first is an interview with World Bank president Jim Yong Kim. The second is a feature in the Washington Post Magazine about U.S. Ambassador to the United Nations Samantha Power.

President Kim was asked why the Bank withheld aid towards a health project in Uganda following passage of anti-gay legislation in that country. After all, the Bank's approach to aid is supposed to be apolitical. In response, Kim mentioned that the Bank has a commitment to non-discrimination. In this particular project geared towards human health, it was unclear whether the Ugandan government could ensure non-discriminatory practices in its health clinics. The decision to withhold aid was a management rather than a political-based decision. As such, the Bank can continue supporting other projects in Uganda such as those related to infrastructure which has little to do with discriminating against gay people. Likewise, the Bank will continue to support projects in Russia, despite Russia behaving badly in the Crimea. From the Bank's perspective, their programs in Russia are intended to protect the poor, improve business climate, and support growth. Apolitical development still raises a few ethical issues, however. For instance, should IGOs provide government assistance to regimes with poor human rights records (Kim cites N.Korea becoming a potential recepient country if it opens up) which might legitimate such regimes? Or if the goal is to improve the lives of people, can politics be cast aside so long as the Bank or IMF can ensure that governments will not misuse funds? The Bank adopts the latter position. But how can one credibly trust regimes if corruption, nepotism, and instability are the norm in a given polity? The Bank has their own mechanism to investigate whether and how governments are properly implementing projects and can always threaten to pull the plug. I supposed the Bank's approach to development is one of ethical pragmatism.

The second story is more pertinent to my research on ideas and foreign policy. Based on Samantha Power's pre-government opining, we now she's a passionate adovcate of human rights and humanitarian assistance. However, Power admits that once inside government the issues appear much more complex. Take for instance US refusal to sign the Convention to Ban Landmines in light of the need for such weapons in the DMZ between North and South Korea. As one official recalls Power stating, ‘I didn’t have any idea how complicated these things become once you’re in government . . . This is as far from a no-brainer as I’ve ever seen.” A study of Samantha Power shows how elite views become moderated once in government, something I argued in my book about the formation of an elite security consensus. Political constraints prevent leaders from implementing their own policy preferences. Also, through socialization processes, the views of elites within the foreign policy and security establishment begin to  converge. Real differences continue to exist (particularly within Congress), but in the bureacracies, positions move towards the middle making bipartisanship in foreign policy/security a bit easier.

North Korea and Israel

Dan Drezner's blog got a lot of comments about his comparison of N.Korea and Israel. I don't know why everyone got so worked up...it didn't seem like Drezner was implying that Israel's regime is like N.Korea. Drezner writes

The Obama administration has reacted to this incident in remarkably similar ways to China's reaction to the Cheonan incident -- with a call for more information.

I thought the focus was more on the response at the UN Security Council. For N.Korea, China is witholding judgment until more information is available. Ditto for the US on Israel, even as much of the rest of the world condemns Israel's actions.

By the way, here's a good overview by Nicole Finnemann of KEI of different countries' reactions to the Cheonan sinking.

The State and Global Governance

I assigned 3 articles related to global governance. Two are related to the nuclear security, and one on Europe’s loan package to Greece. Hopefully, students are beginning to pick up on some of the key questions of our times in international relations: cooperation under anarchy (to steal from Kenneth Oye's title). States remain the central actors in international politics. However, world leaders continue to increasingly rely on international institutions, supranational organizations, or world forums and conferences to tackle global issues. Does this suggest a) the decline of states in international politics b) a revamping of state power filtered through international institutions c) or a new form of global politics defined by international institutions and forums? I like answer “b” – but I won’t elaborate here.

On the point about forums, is it just me, or do we see more and more of these loose international forums on the rise. Recently, we have forums on climate change, financial regulation, and nuclear proliferation. Is this a sign that process is just as important as outcomes when devising solutions to world problems?