Uncertain US Policies

Source: The Hitavada      Date: 14 Jul 2017 11:32:51

By S SETHURAMAN


US withdrawal from Paris Agreement on climate change has upset a universally agreed framework to tackle global warming. In the unsettled geopolitical conditions and uncertain US policies under Trump, security and terrorism pose greater challenges to nations working together on international economic issues with a degree of harmony.

UNDER Mr. Donald Trump, America seems to have begun a process of disengagement, though selectively yet, at the risk of forfeiting its global leadership and its prized “exceptionalism”. This has now become formal with US withdrawal from Paris Agreement on climate change, announced at the G20 Hamburg Summit, while Mr. Trump remains equally determined to scuttle moves on free trade, away from protectionism.

In strategic terms, Mr. Trump’s Presidential statements early in office had already disillusioned long-term US allies in East Asia on future dependence on American defence umbrella while European partners, on the other side of the Atlantic, were no less left to wonder about Washington’s commitments to NATO, the post-war defence architecture it had helped to create to provide common security, especially European, and safeguard world peace.


What is more in a speech in Warsaw ahead of the G-20 Summit in Hamburg (July 7-8), his first encounter with leaders of major economies, developed and developing, Mr. Trump raised eyebrows with his disparaging observation, “The fundamental question of our time is whether the West has the will to survive”. He left it there without attempting to elaborate on what ought to be done for the future.


And he had also both during election campaign in 2016 and after entering the White House, not made a secret of his admiration for his tough Russian counterpart, Mr. Putin. It is thus no wonder that the Hamburg Summit should have revealed the fault lines. First thing he did in Hamburg was to greet Mr. Putin and take his word that there was no interference from Moscow in the US Presidential elections, hardly convincing for his own Republicans at home or vast influential sections of US media.


The US President has been enmeshed in what has come to be viewed as a political scandal that Mr. Trump’s election managers and senior son himself had contacted influential Russians and were prepared to accept any dirt that Moscow was willing to throw at Trump’s Democratic rival Ms Hillary Clinton in the 2016 campaign, helpful for Mr. Trump’s prospects. At a time, allegations of Russian interference in the US electoral processes were under investigation by the top US Intelligence agency, FBI, the Trump-Putin interface, lasting two hours, with business-as-usual approaches, proved too galling for Congressional leaders to relax the current US sanctions on Russia (enforced by the Obama Administration) that Mr. Trump is inclined to favour.


Most Republicans realise the folly of having promoted a crude business moghul to the world’s highest office. His economic agenda –set of policies on tax, infrastructure spending, growth and Federal budget – are all hanging in the air a full six months after his inauguration. In this uncertainty, even IMF had moderated its earlier upbeat growth projection for the US economy in 2017.


With “America First” as his war cry, Mr. Trump had begun reversing globally acclaimed policies of his predecessor President Barack Obama, especially climate change with all commitments under the Paris Agreement (December 2015).


Mr. Trump had equally denounced free trade accords, instantly rejected Obama’s carefully negotiated TPP with eleven Asia-Pacific nations, excluding China, and put Canada and Mexico on notice for revisiting NAFTA (North American Free Trade Agreement).


A major preoccupation of Republicans and Mr. Trump for months has been to repeal the American Health Care Act and provide a substitute to Obamacare, which brought millions of Americans under health insurance, but they have stumbled and unable to come up with legislation acceptable to all sections of Republicans. At Hamburg, playing host, German Chancellor Angela Merkel announced in the Summit Statement US withdrawal from the multilateral deal and its cessation of national contribution for emission reductions, as spelt out by the former Obama Administration. Instead the new US line is in favour of an approach that lowers emissions while supporting economic growth and improving energy needs. Mr. Trump has thus upset a universally agreed framework to tackle global warming through commitments to reduce emissions with commitments to help developing countries in their mitigation efforts. He has in the process broken the extraordinary unanimity that has been in display over the last decade among the major economies, advanced and emerging, through G20 which emerged over the post-crisis decade as the world’s principal economic decision-making institution on issues of global concern.


All major economies had invested their interests and resources in this mechanism to promote inclusive growth, financial stability and clean environment for the future. Undeterred by the Trump posturing, the Summit declared that the Paris Agreement is “irreversible” and reaffirmed strong commitment to it and moving swiftly towards its full implementation in accordance with the principle of “common but differentiated responsibilities and respective capabilities”.
Mr. Trump had already thrown overboard many of former President Obama’s regulations for achieving emission reductions and securing cleaner energy. The Hamburg Summit outcome underlines the division for the first time with the United States led by Mr. Trump asserting his “America First” priorities and the other 19 countries determined to stand on both key issues of climate change and free trade.


Unlike the Paris Agreement, totally unacceptable to Mr. Trump, the G20 Summit Declaration took a guarded line on trade and investment issues. Recognising international trade and investment as important engines of growth, productivity, innovation and job creation, the Summit leaders said they would keep markets open “on reciprocal terms and observe the principle of non-discrimination.”
The reference to protectionism was guarded, possibly to mollify Mr. Trump, by stating they would continue to fight protectionism “including all unfair trade practices and recognise the role of legitimate trade defence instruments in this regard”. They would strive to ensure a level playing field, in particular by promoting a favourable environment for trade and investment in this regard.


Mr. Trump strongly opposes large trade deficits USA has been running for years. The deficits with countries, big and small, totalled around 750 billion dollars in 2016. While China remained the largest gainer with 327 billion dollars, US trade deficits were accounted for by other G20 nations including Germany and some EU member-countries and countries like India and South Korea. In the unsettled geopolitical conditions and uncertain US policies under Trump, security and terrorism pose greater challenges to nations working together on international economic issues with a degree of harmony.