Global Trends by Martin Khor

Monday 30 January 2017

Shockwaves from President Trump’s first days

His first days in office indicate that President Donald Trump intends to implement what he promised, with serious consequences for the future of the United Nations, trade, the environment and international cooperation.

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Those who hoped Donald Trump would become more statesman-like in style and middle-of-the-road in policy matters after his inauguration had their illusions dashed when the new United States President moved straight into action to fulfil his election pledges.

The world and the world order has to prepare for major shocks.  It will be far from business as usual.  And while other powerful countries can prepare tit-for-tat counter-moves when President Trump strikes, most developing countries won’t have the means, and may suffer the most.

Even close friends are not spared.  Last week, Trump signed an order fast-starting building a wall at the US border with Mexico. To add insult to injury, he asked that Mexico pay for the wall. Trump has also threatened to raise tariffs against Mexican products, and has dissuaded US companies from moving to Mexico.  

Responding to these blows, the Mexican President cancelled his planned trip to Washington.   Mexico has been one of America’s strongest allies. If it can be treated in this manner, is there hope for others to avoid being targeted? 

Very troubling is the news that the US is revamping its approach to international cooperation. Two executive orders are being prepared to reduce the US’ role in in the UN and other international organisations, according to a The New York Times report.

One calls for at least a 40% cut in US funding toward international organisations and terminating funds for any international body that doesn’t meet certain criteria. 

The second calls for a review of all current and pending treaties, including on which ones the US should leave.

The New York Times says that if Trump signs the orders, the cuts could severely curtail the work of UN agencies which rely on billions of dollars in annual US contributions. “Taken together, the orders suggest that Mr Trump intends to pursue his campaign promises of withdrawing the US from international organisations.”

The US has been the major creator of the post-Second World War system of international relations, with the United Nations at its centre.  The UN has served as a crucial universal forum for discussing the whole range of current affairs, and its agencies have supported global and national policy making and actions on health, food, the environment and children’s rights, and with positive effects on developing countries.

Of course the UN needs improving.  But denigrating its role and reducing funds for its operations would severely weaken international cooperation.    

Another problem is the Trump’s team quick actions to counter the US’ present environmental policies. Within a day, pages and references to climate change were removed from the White House website.

The media reported plans to get the Environmental Protection Agency to remove its webpage on climate change. Staff at the EPA were forbidden to talk to the media or issue new studies and research grants were suspended.

Two major projects cancelled during Obama’s presidency on environmental and social grounds (the Keystone XL pipeline and the Dakota access pipeline) are being revived.  

And all these even before assumption of office of the Trump’s nominee for the new EPA chief, the Oklahoma attorney general Scott Pruitt, who is well known for having sued  the EPA 14 times.  His selection by Trump was described by The New York Times as “signalling Mr Trump’s determination to dismantle President Obama’s efforts to counter climate change – and much of the EPA itself.”

This turnaround on the environment will negatively affect international efforts to combat the global environmental crisis.  The many years of work to get agreed action on climate change will be seriously impeded since the US is looked up to show an example and to provide financial assistance to developing countries. 

Trump’s move to withdraw the US from the Trans-Pacific Partnership agreement, although he had promised this, it still came as a shock.  Initially Australia tried to get the remaining 11 TPP countries to continue with the TPP to enter into force.  But this has not gained traction, with Japan and Canada viewing the TPP as meaningless without the US.

Thus, the TPP is effectively killed, at least for the foreseeable future. It would now be prudent for the TPP countries to suspend their national process of amending laws and policies to comply with the TPP, now that the TPP will not come into force.

Malaysia, for example, has been planning to alter 18 laws and regulations, as well as many other policy measures.

Many of these are in response to TPP provisions that most TPP developing countries were originally against but agreed to in the end (some of them in diluted versions, after negotiations) as the price to pay to obtain greater market access, especially to the US market.

They include provisions on intellectual property, investment rules, government procurement and state-owned enterprises.

Now that the positive aspects of market access will no longer be gained, the proposed changes in policies and laws should be looked at in new light, and those that are damaging or not inherently positive should not proceed. 

The Trump move on the TPP is a prelude to other possible trade measures that Trump has pledged, including higher tariffs on products from China and other countries, “border adjustment” taxes on US companies located abroad that export to the US, and negotiating bilateral trade agreements through which the US will maximise its own interests.

Whether the rules of the multilateral trading system will act to constrain the new US administration, or whether the US will challenge the World Trade Organisation itself (including threatening to pull out), remains to be seen.

Given that Trump ran on the promise to upend the establishment, and it looks as if he intends to keep to his word, leaders and people around the world should prepare themselves to respond to more and bigger shocks ahead.