Rules are fine but enforcement lags

There are rules to trade between most countries, but that does not mean those rules are always followed.

Of course there are avenues to push for the rules to be applied properly, but like the wheels of justice in general the process on world trade has wheels which move slowly.

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The body in terms of world trade is ultimately the World Trade Organization (WTO), which recently again came to the forefront in terms of farm trade, as it brought down a ruling in favour of the United States in a trade dispute regarding China’s application of tariff-rate quotas (TRQ’s) for wheat, corn and rice.

What is interesting here, more so than the ruling, is the general slowness of the process.

According to a recent Western Producer article, “the U.S. Department of Agriculture (USDA) estimated that US$3.5 billion of corn, wheat and rice could have been imported by China in 2015, if the latter applied the TRQ’s in a proper manner.

We are now talking about a trade issue that was first noted four-plus years ago.

Granted, the same article also noted, “it wasn’t until December 2016 that the U.S. requested consultations with China regarding the latter’s application of TRQ’s. Eight months later the U.S. turned to the WTO to settle the matter, and submissions from the U.S. and China were made during the spring of 2018.”

However you mark the actual dates on a calendar the dispute hung a cloud over trade between two major economic powers for an extended period of time. While such a dispute might be assumed to singularly involve the two countries directly involved, when it is major traders such as China and the U.S., it does hang a cloud over trade in the particular commodities involved on a broader basis.

In this particular case the dispute is but one element of a larger issue in terms of world trade, which has the U.S. and China in a confrontation separate from trade, but with trade being dragged into the dispute as a club for both sides to bring pressure to bear.

The dispute is ultimately a symptom of a protectionist American government, led by a wild card president positioned versus a China which has emerged as a world economic leader which is flexing its economic muscles to get what it wants.

It is a situation which should be seen as worrisome as it brings a definite air of instability in world trade which has nothing to do with supply and demand economics, but is being caused by political arrogance and posturing.

Calvin Daniels is Editor with Yorkton This Week.

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