A day after Prime Minister Narendra Modi spoke about the growing threat of protectionism with a new layer of tariff and non tariff barriers being erected, US Treasury Secretary Steve Mnuchin has said that the US believes in free trade and “ are fans of bilateral trading agreements”.
There is concern about US under President Donald Trump pursuing America first policies, which could lead to trade wars. Modi had on Tuesday at the World Economic Forum (WEF) said that the “forces of protectionism are rearing their heads again” which many who are here to attend the annual meeting saw as being directed specially at the US. The US response to such fears of a trade war breaking out was reflected in the Treasury Secretary’s remarks at a media briefing on Wednesday when he said that “anyone who wants to do trade with us on a reciprocal basis is free to do”.
The US was absolutely committed to free and fair trade and that there was no inconsistency with President Donald Trump’s America First policy approach. Mnuchin said that America’s protectionist policies are not a “race to the bottom”. “We want the US to be able to compete fairly.” The Treasury Secretary also said that a weak dollar would benefit the country.
US Trade Minister Wilbur Ross said that protection is essential to having markets operate properly and to have “everyone play by the rules”. He indicated that the administration’s next focus will be on protecting the rights of US firms in the steel and aluminum sectors. When introduced, these could impact Chinese firms. President Trump has 90 days to act on reports on these two sectors, he said.
Mnuchin said that the US continues to look good as an attractive place to invest especially after the tax cuts by the Trump administration. More US companies and banks have said that they will look to invest more and create more jobs, following the tax cuts. The optimism is reflected in soaring equities with many economists and analysts saying that 2018 could be another good year for the US and the global economy — with growth at a decadal high after the 2008 financial crisis. The US is expected to grow at over 3 per cent this year. Mnuchin said that the US was looking to increase its exports. Asked about the US kicking off a trade war, Wilbur Ross said that trade wars are fought every single day. Rather, he sought to pin the blame on other nations. “Unfortunately, every single day there are various parties violating the rules and taking advantage. There have always been trade wars. The difference now is that US troops are now coming to the ramparts.”
The Treasury Secretary said that Trump’s visit to Davos was to interact with other global leaders and to ensure that they understand his agenda. The President would speak on his economic programme and the impact on the global economy. “What we know is that the economy that is good for the US is good for the rest of the world,” he said. Shortly after the US Treasury Secretary and Trade Minister’s comments on trade, German Chancellor Angela Merkel said at the WEF that multilateral collaboration is essential for the world’s future. “We think that shutting ourselves off, isolating ourselves will not lead us into a good future. Protectionism is not the answer,” she said.
There were other voices too supporting free trade. Alibaba founder and executive chairman Jack Ma said that no one can stop globalisation. “No one can stop trade. If trade stops, the world stops. Trade is the way to dissolve the war not cause the war,” he said at one of the sessions in the WEF. Google, Facebook, Amazon and Alibaba are the luckiest firms according to him. But they have a responsibility to “have a good heart and do something good,” he said. Modi’s views on rising protectionism, was also echoed by French President Emmanuel Macron, who said that the world was moving towards greater protectionism, “a fragmentation of what the WTO has done in the past”. “We are undoing what globalisation has been able to achieve,” he said .