In May, US President Joe Biden sharply increased tariffs on Chinese-made goods, claiming that the” Taiwanese government has cheated by pouring money into Foreign corporations… hurting opponents who play by the rules.” The tariffs are 25 % on steel and aluminum, 50 % on semiconductors and solar panels and 100 % on electric vehicles.
Under Biden’s president, the US has put together an ambitious plan to revive American high-tech companies and reduce its reliance on foreign exports, particularly from China.
In addition to this approach, the silicon and renewable energy sectors received sizable subsidies. Those who have followed US business and industrial policy over the years if n’t come as a surprise when they learn that these price increases are a part of this strategy.
But the double requirements of these policies, especially the new levies, need to be addressed. Democratic and Republican US administrations have worked to establish a multilateral trading system that restricts the use of mercantilist policies for years while promoting the benefits of free trade to the rest of the world.
The WTO’s establishment serves as a prime example of this. A small cluster of strong states led by the US and influenced by large US companies – used their power and influence to modify the guidelines of international business to their benefits during the years of negotiations that led to the formation of the WTO.
The system they built was widely touted as a form of” fair play” in the global economy that would benefit all of the participating nations.
But, in truth, WTO rules obviously made it easier for US- based corporations to develop their dominance in the world market. Limiting protectionism, mainly in developing nations, has enabled US- based companies to develop their control.
The income that US- based transnational corporations have collected from their foreign affiliates, measured as a share of their total worldwide net income, increased from 17 % in 1977 to 49 % in 2006. And in 2010, Walmart, one of the nation’s largest financial firms, ranked as China’s seventh- largest buying companion, ahead of the UK.
The US is home to the largest corporations in the world, even when the balances are somewhat more favourable now in favor of China.
Dangerous effects
The US has also used the WTO foundation to support the revenue of US-based pharmaceutical companies, preventing the production of life-saving vaccinations from reaching developing nations in the process. The most obvious illustration of this was the crisis.
There was a significant controversy between WTO associate states about whether Covid vaccine patents may be revoked in the first half of 2021. WTO regulations aim to encourage more creativity by protecting patents and trademarks everywhere.
Ironically, this rule does n’t support the flow of technological knowledge, which is in some ways contrary to the idea of free trade. The WTO operates in accordance with the rule, which protects the interests of US-based companies.
The way this works is easy. On report, WTO rules seek to protect one’s intellectual property. However, these regulations benefit large corporations in wealthy nations with excellent research and development facilities and de facto monopolies on intellectual property because development is highly skewed worldwide.
The justification for quashing the inventions was that it would be cruel and extortive to avoid developing nations from having access to the best vaccine recipes in case of a global pandemic.
What was the result of this discussion? The US, along with a couple more large- money countries, voted to stop the exemption on vaccine patents. This prevented many developing nations from having access to the vaccine formulas from companies like Pfizer.
Having early access to the recipes could have saved thousands of lives in these nations, especially in those with respectable vaccine production capacities like India.
In fact, a study published in 2023 found that more than 50 % of Covid deaths in low and middle-income nations could have been avoided if people had had the same access to vaccines as wealthy states.
The US is once more trying to bend and make changes to the rules of international trade work in its favor by raising tariffs on Chinese-made goods. The US is now turning around after tirelessly attempting to establish a system of free trade and has imposed some of the most severe tariffs a major economy has ever seen in recent years.
US trade policy has always been about protecting the interest of US- based corporations, so this should not come as a surprise. However, Biden’s administration’s hypocrisy must be exposed.
China has not entirely adhered to the rules in the current rules-based multilateral trading system. China has n’t attempted to alter the rules as much as the US has, though. So, who’s really cheating here?
Jostein Hauge is Assistant Professor in Development Studies, University of Cambridge
This article was republished from The Conversation under a Creative Commons license. Read the original article.