Resisting Trade Sanctions

The U.S. and China could agree on specific, mutually reinforcing steps to boost growth

By ·

As we noted in yesterday’s posting, the World Bank reports that the easing of regulations has permitted U.S. shippers with greater access to foreign markets. But the organization’s president, Robert Zoellick, has also cautioned against U.S. protectionism.

In a letter originally printed in the Financial Times, he observed that with a new Congress, the U.S. will need to address structural spending and ballooning debt that will tax future growth. President Barack Obama has also spoken of plans to boost competitiveness and revive free-trade agreements.

According to Zoellick, the U.S. and China could agree on specific, mutually reinforcing steps to boost growth.

“Based on this, the two might also agree on a course for renminbi appreciation, or a move to wide bands for exchange rates,” he said. “The U.S., in turn, could commit to resist tit-for-tat trade actions; or better, to advance agreements to open markets.”

Among his other points:

*Major economies, starting with the G7, should agree to forego currency intervention, except in rare circumstances agreed to by others. Other G7 countries may wish to boost confidence by committing to structural growth plans as well.

*These steps would assist emerging economies to adjust to asymmetries in recoveries by relying on flexible exchange rates and independent monetary policies. Some may need tools to cope with short-term hot money flows. The G20 could develop norms to guide these measures.

*The G20 should support growth by focusing on supply-side bottlenecks in developing countries. These economies are already contributing to half of global growth, and their import demand is rising twice as fast as that of advanced economies. The G20 should give special support to infrastructure, agriculture and developing healthy, skilled labor forces. The World Bank Group and the regional development banks could be the instruments of building multiple poles of future growth based on private sector development.

*The G20 should complement this growth recovery program with a plan to build a co-operative monetary system that reflects emerging economic conditions. This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalization and then an open capital account.

And his most thoughtful observation might be this: “with talk of currency wars and disagreements over the US Federal Reserve’s policy of quantitative easing, the summit of the Group of 20 leading economies in Seoul this week is shaping up as the latest test of international co-operation. So we should ask: co-operation to what end?”


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

China · Exports · G20 · G7 · Imports · Logistics · Sanctions · Supply Chain · Trade · World Bank · All Topics
Latest Whitepaper
Logistics Network Analysis
Logistics network monitoring is an important step in understanding what actually occurs throughout your supply chain.
Download Today!
From the January 2018 Logistics Management Magazine Issue
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and the most successful shippers will be those that are able to mitigate their impact on profitability. And, the right technology will play an increasingly vital role in driving efficiencies across the global logistics network.
The Future of Retail Distribution
Navigating the Reverse Supply Chain for Connected Devices
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
IAM, IoT and the Connected Supply Chain
There are three primary models of Identity and Access Management (IAM) technology that CTOs, CSOs, and Supply Chain executives are using to enhance their trading partner communities. While each leverages IAM and the IoT as core components only an “Outside-in” approach truly connects people, systems and things reliably and securely across the supply chain.
Register Today!
EDITORS' PICKS
State of Global Logistics: Delivering above and beyond
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and...
2018 Rate Outlook: Economic Expansion, Pushing Rates Skyward
Trade and transport analysts see rates rising across all modes in accordance with continued...

Building the NextGen Supply Chain: Keeping pace with the digital economy
Peerless Media’s 2017 Virtual Summit shows how creating a data-rich ecosystem can eliminate...
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...