A #TradeWar Epidemic ?
----------------------------------
Not everyone agrees but there are unmistakeable
symptoms
For differing reasons, all countries want to #export
more and #import less
Emerging countries believe that an export-led economic
growth could raise per capita income of its poor citizens and create jobs for
millions of their #unemployed youth .
They think their own domestic consumers just don’t
have enough money to consume more of locally produced goods
Then there is USA , which believes that , in order to
correct the #trade-imbalances , other countries must :
# buy more from USA
# export less to USA
#DonaldTrump also believes that local Industries – and
jobs within those industries – can be saved from getting decimated by imposing
high #import-duties on imports into USA
By imposing 25 % duty on Steel / 10 % duty on Aluminum
/ 70 % duty on Solar Panels , he thinks he can save 170,000 American jobs
But some economists think , this step will destroy
450,000 jobs in the US automotive industry , since input costs will push up
selling prices, which in turn , will reduce the demand ( local + export )
At the same time, Trump has agreed to exempt Canada /
Mexico from these revised duties
Other major steel-exporting countries ( to USA ) , are
asking similar exemptions !
Some ( like EU ) are even threatening counter measures
on US exports to them !
As of yesterday , US has slapped a “ #AntiDumping Duty “ on stainless steel flanges
imported from India , claiming these are priced 18 % to 145 % below their fair
value !
Not leaving things at this, last week US has lodged a
complaint with #WTO against India !
US wants India to stop all #ExportSubsidy to its exporters , as mandated by #WTO clause
{ Since, India’s per capita #GDP exceeded $ 1,000 per year for 3 years in a
row }
"These #Eexport-Subsidy programs harm American
workers by creating an uneven playing field on which they must compete,"
said US Trade Representative Robert Lighthizer.
I believe India’s Export Subsidies , add up to $ 7 billion per year
No doubt , Commerce Minister Nirmala Sitharaman and
Commerce Secretary Rita Teaotia , will defend India’s position at #WTO
They may even succeed in getting extension of a few
years for India to phase out / dismantle its current practice
But, at the most , they may succeed in “ postponing
the evil day “ !
As FIEO , Director General , Ajay Sahai told PTI :
"It is a huge
concern for export sector and the industry feels that the so
called export subsidies should be eliminated gradually
"
We , in India , must
realize the following :
·
Trade wars will intensify with all countries
trying to protect local jobs / industries
·
In this “ dog eat dog “ world, WTO cannot
continue to provide much protection, where large importing countries want to “
balance their trade surpluses / deficits “
·
#Multilateralism will gradually give way to
#Bilateralism
·
Bilateral Trade Agreements will be a matter of “
trade off / give and take “
·
In this war there will be neither permanent
friends nor permanent enemies
·
Even an enemy of your enemy, may not count as
your friend !
·
Only way to survive, will be by ensuring
that we turn India into a :
#LOW-COST-ECONOMY,
where we can compete with
the rest of the world ( for our share of the World trade ), on the basis of a BETTER QUALITY / LOWER PRICE / FASTER DELIVERY , of our products and
services
We must immediately
implement #REFORMS which will help our
companies lower their costs of :
#
Manpower ( Salaries /
Wages )
#
Materials
( Raw materials / Components / Sub Assys )
#
Money
( Funds / Finance / Capital )
#
Space
( Constructed factories / offices / homes )
#
Management ( Manufacturing and
Marketing Overheads )
#
Compliance ( Forms /
Reports to be filled / filed )
#
Corruption (
Bribes to be paid to Govt Agencies / IT dept )
#
Non-Governance ( MPs – MLAs fail their responsibility )
As far as enabling Indian
companies to lower their costs is concerned , ( - thereby ,
effectively making them more
competitive in export market ), there is an urgent need for our governments ( both at the Centre and
at the States ) , to :
Speed up
the pace of #REFORMS already initiated during past 4 years
Initiate
NEW REFORMS
During the past 4
YEARS , I have sent many suggestions to our Policy Makers
It is not possible to list all of these here
But , readers interested to know , may look up a few
of these at :
Agenda
for Reforms [ 01
Oct 2015 ]
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