If ever there were a reason to embrace global international trade, a wise American Nobel Laureate stated it in his memoirs, published way back in 1948.
“I saw that you could not separate the idea of commerce from the idea of war and peace,” wrote former U.S. Secretary of State Cordell Hull. “You could not have serious war anywhere in the world and expect commerce to go on as before. And I saw that wars were often caused by economic rivalry. I thereupon came to the belief that if we could increase commercial exchanges among nations or lower trade and tariff barriers and remove international obstacles to trade, we could go a long way toward eliminating war itself.”
At the 6th annual Canada-Korea Dialogue on Parliament Hill, retired Canadian Ambassador John M. Weekes contrasted that Hull quote with one from U.S. President Trump’s inaugural address: “From this day forward, it’s going to be only America First, America First… Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs.”
While others on the panel spoke much about the challenges North Korea’s bellicosity causes for Korea and the world; Weekes, who worked for the Canadian government on Canadian trade policy over a 28-year period and was NAFTA’s chief negotiator, spoke about the importance of international economic co-operation “in challenging times,” and focused particularly on how Trump’s policies will affect global traders such as Canada and Korea and what they can do about it.
“We are faced with the unique challenge of an American president who seems to be turning his back on traditional allies and partners with a seemingly indifferent, if not hostile, [approach] to global institutions and agreements of which the United States has been a leading architect,” Weekes told the group.
He noted that Cordell Hull was instrumental in achieving the two most fundamental reforms of U.S. trade policy. First, he lobbied for the adoption of the Tariff Act of 1922, which prescribed equal trade treatment for all countries; and second, he persuaded Congress to adopt the Reciprocal Trade Agreements Act of 1934, which abandoned autonomous tariffs and delegated the right to set tariffs and make trade policy to the president.
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Building on Hull’s successes, Weekes said a rules-based international economic system is essential and must be founded on international law.
“Modern trade agreements are a form of international law,” he said. “They recognize the complexity of international economic relationships in addressing not only trade in goods, services, investment, intellectual property, digital trade — among other subjects. And of course, the global economy is increasingly interconnected and interdependent.”
The numbers bear that out. According to the 2014 World Investment Report by the United Nations, sales by foreign affiliates of global companies accounted for 46 per cent of global GDP in 2013. The same year, exports of goods and services accounted for 31 per cent of global GDP.
“This data underlines the need to ensure that the economic well-being that is so critical to the world is supported by a system of sustainable internationally [agreed-upon] rules,” he said.
When it comes to what Canada and Korea — the first Asian country with which Canada struck a free-trade agreement — can do about it, he said both countries have a “major stake” in ensuring the rules-based international system not only survives, but is strengthened in its objective to sustain and promote prosperity and peace.
“While immediate progress at the [World Trade Organization] seems unlikely under the current circumstances,” he said, “now is the time to be laying the groundwork for new efforts in this direction and Canada and Korea should play a leadership role in making sure this happens.”
With the U.S. withdrawal from the TPP, other countries must play a more active role, he said. “Korea and Canada have an opportunity to help shape this future.”
He said the outcome of the renegotiation of NAFTA will matter to every country with which the U.S. has a free trade agreement, including Korea, and added that while it’s important to try and moderate the U.S. approach, it’s also important to be ready for a “further major recalibration” of U.S. policy under the next administration.