Sunday, June 24, 2018

Trade war among G-7 and other countries inevitable

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In the beginning, it was called the G-6 or the Group of Six consisting of USA, UK, Germany, France, Japan, and Italy. One year later in 1976, Canada was included in this group.

That time, these countries were the wealthiest and powerful nations that had more than half of the world's GDP. Over the time, several other nations, such as China, India, and Brazil, have emerged as the wealthiest and economically powerful nations than some of the G-7 nations but not being included in this group.

President Trump argued at the G-7 Québec summit that he would like to see Russia reinstated in this group. The response to his proposal from Germany and Canada was clearly full of discontentment and displeasure, but Italy's new prime minister has backed Trump on re-admitting Russia into the group. In 1997, Russia was formally included in this group but later being ejected out due to its annexation of Crimea.

Any efforts to include Russia in this group will vehemently be opposed by 5 other countries of the group. It is highly unlikely that Russia will get out of Crimea in the foreseeable future to get admitted into the group; it will rather continue tightening its grip on Crimea.

This year's summit has been overshadowed by tariffs. This year's G-7 summit's nickname has been given G-6 plus One because all the G-6 countries got united on every burning issue, and on the contrary, Trump remains indifferent on every issue. It seems the G-6 countries' top leaders and Plus One differ on every point as if they lived in two different worlds on every burning issue.

In his election campaign, Trump promised with the folks who got him elected that he will do everything in his capacity to revive the sick industries. Trump launched into a long diatribe against all the countries with which his country has huge trade deficits before coming to Québec city and during the summit.

A deep division is getting intensified between G-6 and plus One is mainly on tariffs and climate change. Definitely, USA has great trade imbalances with its friends and foe alike, but it did not happen overnight. The USA has been stifled by previous administrations' inertia and trade imbalances grew wider over the time.

He expressed his anger saying EU, Canada, and Mexico treated his country unfairly. Of course, through discussions and dialogues, these trade imbalances could be minimized Some important agendas discussed in this summit were building a more peaceful and secure world, advancing gender equality and women's empowerment, climate change and its effect, and last not least, trade and tariffs.

But until the USA, world's largest economy on which many countries are dependent for their exports, takes part actively in these discussions, all attempts to improve these issues are likely to prove futile.

Suffice it say that a trade war can't be averted despite all the top leaders' gathering in the Canadian city of Québec to hash out agreements on tariffs and other issues. Canada and other countries of this group will fight tooth and nail during Trump administration in Washington DC to keep trade war continued.

President Trump and Canadian Prime Minister Trudeau and French president Macron sat for face to face meetings in the summit. Despite joining the summit 45 minutes late, he did not meet with other leaders separately and left Canada several hours early for Singapore to meet with Kim Jong-un.

It seems he took very little interest in this summit and will be facing America's traditional allies on Tweeter concerning to tariffs. The way the other leaders get ignored by Trump makes us think that during the time of Trump Administration, the G-7 summit will remain a lame duck and irrelevant organization or it does not need to exist anymore.

When cars from EU are imported to the USA, a paltry amount of tariffs are imposed on them; on the other hand, huge tariffs are imposed on American cars exported to the EU and other countries. The two ways trade between US and EU is more than a trillion; the trade imbalance against the US is huge.

So is with China and other industrialized countries. But Trump's arbitrary and unilateral imposition of huge tariffs on steel and aluminum products is inevitably going to hurt the commoners to companies involved in this trade war.

Canada and Mexico have already announced their retaliatory tariffs on American products. The EU member countries are angry about American huge tariffs on their products, specialty products concerning to steel and aluminum, and threatened to take retaliatory measures against USA's hefty tariffs.

The USA has its largest trade deficits with every industrialized nation, but several hours after the meeting at the G-7 summit, Trump vents his frustration and anger towards Justin Trudeau over the tweets, calling him "meek and mild" and "dishonest and weak," and targeting Canada's dairy and auto industries.

Trudeau hoped that all the seven leaders would come together to sign the joint declaration, but Trump tossed that instructing the US representative not to endorse the communiqué.

So it seems the G-7 is now in disarray following the Trump's tweets.  It seems as a businessman, Trump is trying to schmooze with non-traditional allies, for example, Russia and North Korea so that he could establish good trade ties with them and minimize the trade imbalances.

The writer, a Bangladeshi freethinker, is based in Toronto, Canada

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