Trump closing a WTO loophole used by China
Donald Trump is gearing up for the 2020 election. Not only is he making the Democrats own the "Squad" and all their hateful anti-American rhetoric, but he's also forcing the Democrats to defend their oversight of the decay of much of urban America. At the same time, he is holding the declassification card over the heads of ringleaders of the coup against him.
Understandably, many people get engaged, even emotional, over these issues. But for better or worse, it is the health of the economy that moves the masses on election day. And the economy is the main arrow in the president's quiver, for what the Ragin' Cajun, James Carville, said back in 1992 is still true today: "It's the economy, Stupid."
On the economic front, here's one of the latest MAGA initiatives by Trump. This past Friday, the White House gave the World Trade Organization 90 days to close a loophole that has allowed China to game the world trading system and pick America's pocket in the process. Incredibly, the WTO, which was founded in 1995, still allows China to be classified as a "developing country." This is significant.
According to WTO rules, developing countries are supposedly not yet competitive with advanced economies like America's. As such, they get more time to open their markets, are given significant leeway to subsidize their export industries, and have certain procedural advantages in trade disputes. And how does a country acquire the designation as a "developing" one? Simple. Countries choose their own status. Yes, you read that right. Countries get to choose their own status. Others can challenge the claimed status, but the WTO's default designation is what the country itself has selected.
As Trump tweeted:
The WTO is BROKEN when the world’s RICHEST countries claim to be developing countries to avoid WTO rules and get special treatment. NO more!!! Today I directed the U.S. Trade Representative to take action so that countries stop CHEATING the system at the expense of the USA!— Donald J. Trump (@realDonaldTrump) July 26, 2019
China is not alone in gaming the trading system this way. There are 164 countries in the WTO organization, and nearly two thirds of them claim preferential treatment as "developing" counties. Among the very wealthy countries that claim a "developing" status are Singapore, South Korea, Brunei, and the United Arab Emirates. But given its size as the world's second largest economy and one that has been flooding the U.S. with its exports for many years, China is by far the most grievous.
A proclamation by the Trump administration says: "The United States has never accepted China's claim to developing status, and virtually every current economic indicator belies China's claim."
Never? This then raises the question: if the U.S. never accepted China's claim as a developing country, why has China been allowed to continue to be considered one for so long even as it hurt America? The answer, unfortunately, lies at the feet of Presidents Clinton, Bush, and Obama. Their eyes were on the world and not sufficiently on the good of their own country.
Had Hillary Clinton been elected in 2016, there's little doubt but that a blind eye would have continued to be turned to this situation. To disrupt the status quo as Trump is doing is contentious, which is the last thing our past bipartisan political leadership wanted even if it is for the national interest. Closing this WTO loophole will not improve the economy quickly like, say, the Republican tax cuts, cutting Obama regulations, or the pending interest rate cut. But it will over time. It will be one more step in Trump's MAGA agenda that will result in the return of wealth that has been allowed to flow out of America.