Does a trade war benefit economies?
Major economies around the world and their trades are based on treaties on which the countries make agreements based on exports and imports. Taking the case of the USA and China, an analysis for the WTO is illustrated.
China and the USA are reviewing the trade pacts with each other, owing to a USD 500 billion of trade deficit with China, which the USA wants to address, by planning to reduce the trade to a balance of USD 200 billion within 2020. Here are a few plans that China and the USA can work on their trades.
- Rise of China in electronic and retail manufacturing can inspire the USA to allow certain multi-national economies, or corporate identities to keep local sourcing in China to avoid direct colliation.
- India can play a major role based on currency value by establishing electronic based SEZs in certain regions based on talent surplus.
- The concept of state-run economy in China needs to be challenged by the USA and India, where China needs to open up more on specific investments based on their state laws, instead on One-China laws. Specific laws related to agro-based and agri-based products can boost further exports including a passage to India, which can import rice, rather than wheat and bread that can be exported to countries in Latin America from China.
- Quality control checks at certain import and export points for random sampling of products can enhance the so-called ‘less quality’ image of China to certain parts of the world. Meeting the local needs of the people of China is a big norm that are needed to challenge companies who cannot avoid duplication through local entrepreneurs, especially with technology and retail companies and their products.
- Exporting electronic items only that China has dependent on can be challenged by India, by setting up manufacturing bases in India. In all probabilities, if China agrees for technology transfer to India, royalty fees of 15-20% of the profits can be set-up towards royalty allowances to China.
- Sunset industries in China which create health hazards and environmental changes with detoriating climatic conditions that create a back track. One-China Policy should never inspire to do business without any regulatory compliance that mean to restore faith on the detoriation of soil and climate.
- Levying reasonable taxes on Chinese goods that pass through quality checks can be reduced after a certain tenure or time of trade, but the USA needs to realize that the USA can reduce import barriers, and not charge export allowances from the side of China, while raising certain duties for quality goods based on exports to the USA. High duties cannot be a long-term key for trade growth.
- Corporations as Apple, Microsoft and Alphabet can tap Chinese resources to produce goods for electronics back in China to export in the long run, but given the competition that South Korea, Taiwan and India can offer, China needs to take a technology transfer from the USA to set up manufacturing bases under new laws.
- Making up for the short-fall of the products made in the USA of higher quality can enter trade pacts with countries with less import barriers so as not to raise everyday prices of goods in those countries, where people of any country use the goods from the USA towards disposable incomes.
- Soyabean and other products which have a high demand in countries outside the USA, need a promotion council in the other countries to market the goods and products. Walmart can keep the inflation low in the USA with local sourcing coming from NATA or North American Trade Association with 30-50% coming from NATA. Shipping non-perishable items from China as exports can be a good step for the USA.