America shows her Hand
https://www.politico.com/news/2022/05/08/biden-trade-policy-russia-ukraine-00025321
“Now, Congress is rushing to pass tax credits for American-made computer chips, considering new investment rules for companies in China and, potentially, making a push for broader manufacturing incentives soon.“
This looks like normal. A country going after her own interests. Nothing to see here then?
It gets better. much better:
“the biggest applause line came when the president pledged to rebuild domestic manufacturing to decrease American reliance on China, Russia and other adversarial regimes.“
Now we get more specific. It is not that America is rebuilding her manufacture. She must harm China, Russia and Iran in doing that.
So far so good.
“But there’s no denying that history is giving Biden an opening to change the paradigm on free trade. Trump’s election in 2016 transformed a pro-globalization GOP and shocked Democrats into refocusing on working class voters hurt by trade deals. Then, shortages of masks and medical gear early in the Covid pandemic revealed the danger of America’s reliance on China.“
Now the problem gets a little bit bigger that Russia and China. America has no proper trade deals like NAFTA, the European Union or Mercosur with Russia and China. She has deals at different levels with her allies. Suddenly those deals got bad?
“The White House insists those officials are all on board with the president’s agenda to promote more domestic manufacturing at home and push for higher labor and environmental standards in other nations — a platform they like to call “worker-centered” trade.“
Now America shows her hand. The idea is not reshoring manufaturing, it is preventing development in any country that “chooses” to have a deal with America. It is by doing this that America will bring back home a manufacturing base.
““But the U.S. government just doesn’t have — nor should it have — the same leverage over our private sector that Beijing has over their quasi-private sector. … So I think we are really looking for new ideas and new models of how the U.S. government can partner with the private sector.”“
This is utter BS. Around 20 years ago one could believe that American big business operated independently from the White House. At this point believing so is pure derangement. It was a lie 20 years ago, right now is a gargantuan lie.
“That perspective reflected the unchallenged primacy of American-style capitalism and democracy at the end of the Cold War — the “end of history” that Francis Fukuyama outlined in his 1992 book. Under that belief, capitalism and democracy not only went hand in hand, but reflected the almost inevitable pinnacle of human development, unchallenged by the nationalism and class conflicts of centuries before.“
This theme has been explored many times here. Around 1980, the beginning of the Reagan/Thatcher revolution, America ceased to prosper at home, but still allowed some prosperity in her colonies.
By the late 80s America stopped accepting prosperity not only in Europe and Japan but Latin America and forced neoliberal reforms that benefitted American companies, making her stock exchange outperform any other, and concentrating prosperity in the US.
The average american worker may deny this and say he himself ceased to see any prosperity around 1980. But he misses the point. If America wasn´t draining the world for the past 40 years, his own living standards would be even lower.
“In the run-up to the election, public opposition to trade deals led the Democratic nominee, Hillary Clinton, to disavow the Trans-Pacific Partnership — a pact she touted as Obama’s secretary of State — and helped propel Trump to the Republican nomination“
Trump was kind of contradictory. The TPP, if implemented, would certainly harm US workers for the benefit of big US business. But that would make isolating China economically much easier. Right now America is doing exactly that, destroying the living standards domestically, just not as much as in her European and Asiatic colonies, at a much higher cost, to harm China and Russia.
The cost would be much lower had the TPP been implemented.
“To this day, Tai tells her colleagues that TPP is a key reason why Clinton lost to Trump in 2016, and the failure of the trade pact still influences her thinking today.“
She may be right but here we have the same paradox as of Trump as the reverse NIxon. In his chaotic way Trump knew to easy way out was to go to Moscow and make an alliance with Russia against China. So a reverse Nixon.
The deep state hates Russia so much for reasons to be listed later that they prevented that.
This meant a much greater cost, that may as well be beyond America´s current capabilities, of facing both China and Russia.
The practical consequence was giving 4 full years to Russia and China to prepare for the hammer that was sure to fall on them the moment Trump left the White House.
Trump had the right idea here, but the deep state in preventing him gave 4 years for China and Russia to prepare.
“The administration’s “more nuanced” approach would come to be called “worker-centered” trade and include three key elements: rebuilding domestic manufacturing lost to decades of globalization, aligning allies to apply economic pressure to China and rewriting global trade rules to encourage higher wages and more environmental protection.“
Here it is, America´s hand for the world to see. At this point the industrial harm being made is entirely on America´s allies, Germany and to a lesser extent Japan. America is trying to bring those countries manufaturing base home using Russian perfidy as an excuse.
For countries like Brazil an India, accepeting America´s standards, laws and procedures means forgetting about economic development. At most they will keep current standards of living.
“Quite intentionally, that approach doesn’t prioritize lowering costs for American businesses and consumers — a value that had been a central tenet of American economic policy since the early 1980s. That belief forms the foundation of what political theorists call the neoliberal paradigm of economics — that the government should seek, above all, to promote a good business climate that will spur economic growth and lower consumer costs.“
the costs of production are greater in the US than Asia, and Germany also. There could a soluction by which America lowers her costs. But that means reforming laws, banning wokeism, cotas and diversity so this is a bridge too far. America must force costs to increase everywhere else.
“Key to that agenda is rebuilding an industrial base in the U.S. economy — lost to generations of American policies that encouraged firms to find cheaper labor overseas to deliver cheaper goods to consumers.“
The word here is “overseas”. Even anglo countries like Australia will not be allowed to manufature. But Canada and mexico, being toothless and clawless neighbours entirely obedient to the White House will be allowed to have some prosperity.
A North American empire, joining the 3 nations, is certainly on the cards, a generation from now if America is able to dcastrate Russia and China now.
“They see the U.S.-Mexico-Canada deal — the renegotiated NAFTA that Tai herself shepherded through the House as a Ways and Means Committee staffer — as a model. And in some of Tai’s first actions under the deal, she moved to support unionization campaigns at three auto part factories, a novel use of trade enforcement to protect the right to organize in a foreign country.“
As I wrote above, Canada and Mexico will have privileges not allowed overseas. German and Japanese manufature should move to the NAFTA countries.
Probably Colombia will joing NAFTA a few years down the line.
“If the White House ever ends its self-enforced moratorium on new trade negotiations, Biden’s team wants to use the principles of the USMCA to build a network of like-minded nations that agree to support higher wages, tougher climate and environmental rules, and digital economy rules.“
Never again another China. The current economic order must be frozen forever. But not before the manufacturing base of Germany and Japan is moved into NAFTA.
““If [a sanction] is going to be meaningful, it has to apply to the Chinese, who could be major suppliers to the Russians, or indirect suppliers to the Russians,” said Derek Scissors, a fellow at AEI and member of the U.S.-China Economic and Security Review Commission. “So we may be hitting or threatening the Chinese with serious sanctions.”“
At this point it is obvious why America must prevent China from becoming the hegemon. What is doubtfull is why should countries like Germany and Brazil and India, and the whole of Africa, join this effort. A bipolar world in which NATO counterbalances China and Russia and Germany is a swing state looks really nice for Germans and Brazilians. Access to Russian resources and Chinese markets is an integral part of German prosperity. A prosperous China is also fundamental for Brazilian exports. More than that, Chinese industrial base offer us Brazilians the cheapest consumer goods on Earth. Why should we pay twice as more to import the same stuff from Mexico?
““If you’re going to fundamentally decouple [from China] I think you’re going to have significantly lower economic growth for the coming decades.”
Sadek Wabha, founder of the infrastructure investment firm I Squared Capital“
One couldn´t conclude it with better words.