A #TradeWar
Epidemic ?
Not everyone agrees but there are unmistakeable
symptoms
For differing reasons, all countries want to #export
more and #import less
Emerging countries believe that an export-led economic
growth could raise per capita income of its poor citizens and create jobs for
millions of their #unemployed youth .
They think their own domestic consumers just don’t have
enough money to consume more of locally produced goods
Then there is USA , which believes that , in order to
correct the #trade-imbalances , other countries must :
# buy more from
USA
# export less to
USA
#DonaldTrump also believes that local Industries – and
jobs within those industries – can be saved from getting decimated by imposing
high #import-duties on imports into USA
By imposing 25 % duty on Steel / 10 % duty on Aluminum
/ 70 % duty on Solar Panels , he thinks he can save 170,000 American jobs
But some economists think , this step will destroy
450,000 jobs in the US automotive industry , since input costs will push up
selling prices, which in turn , will reduce the demand ( local + export )
At the same time, Trump has agreed to exempt Canada /
Mexico from these revised duties
Other major steel-exporting countries ( to USA ) , are
asking similar exemptions !
Some ( like EU ) are even threatening counter measures
on US exports to them !
As of yesterday , US has slapped a “ #AntiDumping Duty “ on
stainless steel flanges imported from India , claiming these are priced 18 % to
145 % below their fair value !
Not leaving things at this, last week US has lodged a
complaint with #WTO
against India !
US wants India to stop all #ExportSubsidy to its exporters , as
mandated by #WTO clause
{ Since, India’s
per capita #GDP exceeded $ 1,000 per year for 3 years in a row }
"These #Eexport-Subsidy
programs harm American workers by creating an uneven playing field on which
they must compete," said US Trade Representative Robert Lighthizer.
I believe India’s Export Subsidies , add up to $ 7 billion per year
No doubt , Commerce Minister Nirmala Sitharaman and
Commerce Secretary Rita Teaotia , will defend India’s position at #WTO
They may even succeed in getting extension of a few
years for India to phase out / dismantle its current practice
But, at the most , they may succeed in “ postponing the
evil day “ !
As FIEO , Director General , Ajay Sahai told PTI :
"It
is a huge concern for export sector and the industry feels that the so called export subsidies should be eliminated gradually "
We
, in India , must realize the following :
·
Trade wars will intensify with all countries trying to
protect local jobs / industries
·
In this “ dog eat dog “ world, WTO cannot continue to provide
much protection, where large importing countries want to “ balance their trade
surpluses / deficits “
·
#Multilateralism will gradually give way to #Bilateralism
·
Bilateral Trade Agreements will be a matter of “ trade off /
give and take “
·
In this war there will be neither permanent friends nor
permanent enemies
·
Even an enemy of your enemy, may not count as your friend !
·
Only way to survive, will be by ensuring that we turn India into a :
#LOW-COST-ECONOMY,
where we can compete with the rest of the world (
for our share of the World trade ), on the basis of a BETTER QUALITY / LOWER PRICE / FASTER
DELIVERY , of our products and services
We must immediately implement #REFORMS which will help our companies lower their costs of :
# Manpower
(
Salaries / Wages )
# Materials ( Raw
materials / Components / Sub Assys )
# Money
( Funds
/ Finance / Capital )
# Space ( Constructed factories / offices / homes )
# Management
(
Manufacturing and Marketing Overheads )
# Compliance
( Forms / Reports to be filled / filed )
# Corruption
( Bribes to be paid to Govt Agencies / IT
dept )
# Non-Governance
( MPs – MLAs fail their
responsibility )
As
far as enabling Indian companies to lower their costs is concerned , ( - thereby , effectively making them more competitive in export market
), there is an urgent need for our governments ( both at the Centre and at the
States ) , to :
·
Speed up the pace of #REFORMS already initiated
during past 4 years
·
Initiate NEW REFORMS
During the
past 4 YEARS , I
have sent many suggestions to our Policy Makers
It is not
possible to list all of these here
But ,
readers interested to know , may look up a few of these at :
·
Agenda for Reforms [ 01 Oct 2015 ]