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No End in Sight for Trade Battles


by Alan Guebert

Published: Friday, November 30, 2018

The following is from Alan Guebert, a freelance agricultural journalist from Illinois.

Nov. 11 marked 100 years since the end of World War I, which U.S. President Woodrow Wilson called "the war to end all wars."

Wilson saw himself as a historic peacemaker; instead he became an ironic phrasemaker. The Great War never brought an end to war, or even an end to that war. The then-raging Russian civil war continued for three more bloody years.

Moreover, historians now estimate that more than 100 million military personnel, civilians and victims of genocide died in 20th century warfare that followed The Great War's "peace" in 1918.

Worse, all that horror occurred despite a century of new institutions—the League of Nations, the United Nations, NATO, SEATO, the European Union, the IMF, ASEAN, the G-20, the G-7, GATT the WTO, the World Bank, and the OAS to name but a few—designed to prevent war, promote peace and underwrite global prosperity.

Today, some of those same institutions are failing to prevent another age-old conflict: trade wars. For example, China and the U.S. are engaged in an epic trade battle that both continue to escalate. On Jan. 1, 2019, in fact, the current White House-imposed 10 percent tariffs on $200 billion of imported Chinese goods will rise to 25 percent.

How do you think China will respond?

But this trade fight, like most wars, isn't only bilateral. At the just-concluded Asia-Pacific Economic Cooperation meeting, a gathering of 21 nations that rim the Pacific Ocean, U.S. Vice President Mike Pence and Chinese President Xi Jinping hammered each other for their mutual trade intransigence.

The hostility, the New York Times reported, was "reminiscent of the uncompromising rhetoric heard during the Cold War." Peter O'Neill, prime minister of the meeting's host nation, Papua New Guinea, said Xi and Pence's words frightened all: "'The entire world is worried.'"

The picture is equally troubling off America's other coast. Presently, the European Union is looking at the twin barrels of a deadly trade fight with both Great Britain and the U.S. that, three short years ago, would have been seen as preposterous.

But, in June 2016, British voters narrowly approved "Brexit," a vote to leave the European Union and, five months later, U.S. voters elevated Donald J. Trump to the presidency.

Both results signaled a rise of populist nationalism and a setback for the "liberal world order," an international recognition by disparate nations to follow rules-based institutions (the UN, WTO, NATO ...) to foster political stability and economic peace.

Like American farmers and ranchers caught in the Trump-Xi trade fight, British farmers now face an uncertain future as Prime Minister Theresa May beseeches her deeply split fellow Conservatives in Parliament to approve a "leave" deal recently negotiated with the EU.

It's an uphill fight for the Prime Minister that may cost May her job whether she wins or loses. Her winning—leaving the EU, that is—will likely cost British farmers almost $4 billion in ag payments they receive each year under the European Union's Common Agricultural Policy.

American farmers and ranchers are also entering their own winter of discontent. Few market analysts or land-grant economists have measured the actual rural cost of White House trade actions against Mexico, Canada, the EU and China.

The U.S. Department of Agriculture, however, pegs the American tab at $12 billion, the money it authorized the Commodity Credit Corp. to borrow to "mitigate the trade damages sustained" by tariff-slowed markets.

More troublesome than even the cost, however, is that there is no end in sight to the fights. Tough talk and more digging in have replaced any olive branch or kind gesture.

As such, these nearly worldwide trade battles eerily resemble the stalemated trench warfare that was the deadly hallmark of World War I, the war that didn't end all wars.

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