Opinion | ‘Trump will achieve nothing with tariffs’: former WTO head blasts US policy on China
- In candid interview, Pascal Lamy says arrested Huawei CFO is the victim of ‘odd’ and ‘wrong’ extraterritorial sanctions
Pascal Lamy does not mince words. That may be because he is no longer burdened by his position as director general of the WTO, which he held between 2005 and 2013, or because the China-Europe International Business School (CEIBS), where he is a distinguished professor, offers a rare platform to speak freely in China. In this conversation with the South China Morning Post, before his master class at the Shanghai campus, he analyses the current trade dispute between the United States and China and explains why he thinks US tariffs on Chinese products will not achieve their aims.
– How should China’s trade surplus, which seems to be the key point of friction with the US, be addressed?
– I don’t think there is any serious problem with this surplus. It was 10 per cent of Gross National Product 10 years ago and it is 1 per cent now. Imports have also increased more than exports in the past decade, which is what was expected to happen. The US has a structural trade deficit that will remain in place as long as its citizens consume more than the average consumers on the planet and save less than the rest. This is not a trade-related issue and, therefore, [US President Donald] Trump will achieve nothing imposing tariffs on Chinese products.
– What will happen if he keeps doing just that?
– Chinese producers will delocalise to Vietnam, Bangladesh, Egypt or Ethiopia, and the US overall trade deficit will remain unchanged. It’s similar to what happened in the 70s and 80s, when the big deficit was with Japan. Now it’s less with Japan and more with China. But if you take the US deficit with Asia, it has not changed. And selling a few more Boeings or tonnes of soya will not solve anything.
