Increased interdependence has been dealt a blow by heightened commercial animosity. The US and China seem to be engaged in never-ending trade conflicts. With the trade strategies of most nations in disarray, there is an urgent need to end the current deadlock that is not good for any country.
What is also evident is the accompanying clash of ideologies, where the underlying idea of development
—free trade versus protectionism—is being hotly debated. Nations across the globe must deliberate on this crisis of the modern age. While the crisis is in the form of a stealthy conflict, the weapons deployed are in some ways more impactful than the ones used in conventional warfare.
Tariffs are
being used to stop other nations from emerging as viable competitors.With the establishment of international institutions, global governance norms were altered. These gave primacy to the free flow of goods and services marked by the context of the world where there was space-time compression. But this trade war is having a dramatic effect on the individual commodities industry now. One has to think of how to rebut the idea that trade leads to harm. Yes, in the process of exchange, the terms of benefits might not be the same. But a mere absence of parity does not mean we should end the entire drill.
Instead of the short-term policy of harming each other to secure the goals of national interest, one must think comprehensively—of strategic structural reforms. Today what is global is connected to the local. Therefore nations must accord primacy to trade policy and the parties can make it an electoral issue. There is a need for coordinated thinking and action on corporate tax reforms, for harmoniously gaining through global trade, rather than pulling out of it.
One can also not neglect the rising trade deficits and falling imports. It is important to add here that trade balances do not emerge out of ad-hoc measures, just as staunch nationalistic sentiments cannot serve the purpose of national security unless we look at the larger picture of immigration policies and reforms. Similarly, in the case of the trade war, as the heat is being felt by each country—from Taiwan’s semiconductor industry to Indian agricultural sector—one cannot ignore the inappropriate practices and have to address the problems.
With the backlash to globalisation, the trade crisis is moving into a new realm—a technology war. This will fundamentally change global relations and also demand open communication and coordination amongst various shareholders. Information theft and malicious hardware are the reasons cited in the battle where tech and 5G are radically redefining the domain of power, with data as the new currency. From developed to developing nations, all now aspire for a smart-cities model where there is an app for every problem. Cyberespionage has emerged as a non-traditional security dimension where the threat cuts across borders.
Huawei’s technical expertise enabled it to challenge Apple Inc. and others. Its grandiose vision of expansion finds support from China’s government and blue-chip firms. The US requesting that Canada arrest Wanzhou Meng, the chief financial officer of Huawei, is seen as an American declaration of war on China’s business community. It could very well lead the world towards another disaster.
No doubt accountability and transparency are needed in the corporate world. But it is clear that the US is going after Huawei due to the Chinese company’s success in marketing cutting-edge 5G technologies. Even in the past when Bank of America or Barclays busted the sanctions, the responsibility was fixed at the organisational level rather than the individual level. One cannot duck the issue that such incidents also derail trade talks.
With the rise of legal challenges in both the US and China, and tariffs for private-sector businesses and small-scale firms in the respective nations, the harsh truths are at odds with the purported gains sought from trade animosity.
The situation has a ripple effect with no timely payment of dues for workers and staff. US President Donald Trump and his Chinese counterpart Xi Jinping are witnessing a sharp downturn in their nations, and sadly efforts for a truce are far from being impactful. Amidst this upheaval due to the ongoing uncertainty, pharmaceutical to engineering corporations are attempting to relocate to areas with better returns and lesser risks.
The US-China bonhomie seen in Argentina during the G-20 meet is having little impact on the underlying conflict. With neither side a winner in the trade crisis, a lack of political will to solve it and the drain of economic resources of the nations involved—both actively and passively—the global polity, with individual and collective action, has to try to de-escalate the situation. It should use appropriate mechanisms to sort out global problems like poverty, inequality and climate change in the interests of all. We must keep in mind that in these realms, we sail and sink together.