Trade resilient

Ikenson, 9
[Daniel, associate director of the Center for Trade Policy Studies at the Cato
Institute, A Protectionism Fling: Why Tariff Hikes and Other Trade Barriers Will Be
Short-Lived, March 12, 2009, http://www.cato.org/pub_display.php?pub_id=10651]

Although some governments will dabble in some degree of protectionism, the

combination of a sturdy rules-based system of trade and the economic self interest
in being open to participation in the global economy will limit the risk of a
protectionist pandemic. According to recent estimates from the International Food Policy Research Institute,
if all WTO members were to raise all of their applied tariffs to the maximum bound
rates, the average global rate of duty would double and the value of global trade
would decline by 7.7 percent over five years .8 That would be a substantial decline relative to the
5.5 percent annual rate of trade growth experienced this decade.9

to put that 7.7 percent decline in historical perspective , the value of global trade
declined by 66 percent between 1929 and 1934 , a period mostly in the wake of Smoot
Hawley's passage in 1930.10 So the potential downside today from what Bergsten calls "legal
protectionism" is actually not that "massive," even if all WTO members raised all of their tariffs to
But,

the highest permissible rates.

If most developing countries raised their tariffs to their bound rates, there would be an adverse impact on the

most developing countries

that have room to backslide (i.e., not China) are not major importers, and thus the impact on
countries that raise barriers and on their most important trade partners. But

global trade flows would not be that significant. OECD countries and China account for the top twothirds of global
import value.11

Backsliding from India, Indonesia, and Argentina (who collectively account for
2.4 percent of global imports) is not going to be the spark that ignites a global trade war.
Nevertheless, governments are keenly aware of the events that transpired in the 1930s ,
and have made various pledges to avoid protectionist measures in combating the current
economic situation.

after President Obama publicly registered his concern that the "Buy
American" provision in the American Recovery and Reinvestment Act might be
perceived as protectionist or could incite a trade war, Congress agreed to revise the
legislation to stipulate that the Buy American provision "be applied in a manner consistent with United States
In the United States,

obligations under international agreements." In early February, China's vice commerce minister, Jiang Zengwei,
announced that China would not include "Buy China" provisions in its own $586 billion stimulus bill.12

even more promising than pledges to avoid trade provocations are actions taken
to reduce existing trade barriers. In an effort to "reduce business operating costs, attract and retain
But

foreign investment, raise business productivity, and provide consumers a greater variety and better quality of

the Mexican government initiated a plan in January

to unilaterally reduce tariffs on about 70 percent of the items on it s tariff schedule.
goods and services at competitive prices,"

Those 8,000 items, comprising 20 different industrial sectors, accounted for about half of all Mexican import value
in 2007. When the final phase of the plan is implemented on January 1, 2013, the average industrial tariff rate in
Mexico will have fallen from 10.4 percent to 4.3 percent.13

the Brazilian government suspended tariffs entirely on

some capital goods imports and reduced to 2 percent duties on a wide variety of machinery and other
And Mexico is not alone. In February,

capital equipment, and on communications and information technology products.14 That decision came on the

heels of late-January decision in Brazil to scrap plans for an import licensing program that would have affected 60
percent of the county's imports.15

on February 27, a new free trade agreement was signed between Australia,
New Zealand, and the 10 member countries of the Association of Southeast Asian Nations to
Meanwhile,

reduce and ultimately eliminate tariffs on 96 percent of all goods by 2020.

While the media and members of the trade policy community fixate on how various
protectionist measures around the world might foreshadow a plunge into the abyss,
there is plenty of evidence that governments remain interested in removing barriers
to trade. Despite the occasional temptation to indulge discredited policies, there is a
growing body of institutional knowledge that when people are free to engage in commerce with one
another as they choose, regardless of the nationality or location of the other parties, they can leverage that
freedom to accomplish economic outcomes far more impressive than when governments attempt to limit choices
through policy constraints.

No impact to trade
Miller 14 (Charles Miller, lecturer at ANUs Strategic and Defence Studies Centre,
Globalisation and war, April 2014) http://www.aspistrategist.org.au/globalisationand-war/

John ONeal and Bruce Russetts work is perhaps the best known in this regardand
Steven Pinker cites them approvingly in his book The Better Angels of Our Nature.
Analysing trade and conflict data from the nineteenth to the twenty-first centuries,
they found that trade flows do have a significant impact in reducing the chances of
conflict, even when taking a variety of other factors into account. But their
conclusions have in turn been questioned by other scholars. For one thing, their
model failed to take three things into account. First, its quite possible that peace
causes trade rather than the other way around no company wants to start an
export business to another country if it anticipates that business linkages will be cut
off by war further down the line. Second, conflict behaviour exhibits whats called
network effects if France and Germany are at peace, chances are Belgium and
Germany will be too. And third, both the likelihood of conflict and the level of trade
are influenced by the number of years a pair of countries has already been at peace
because prolonged periods of peace increase mutual trust. Take any of these
factors into account, and studies have shown (here and here) that the apparent
relationship between trade flows and peace disappears . Perhaps, though,
conceiving of globalisation solely in terms of trade flows is mistaken. Alternative
indicators of globalisation include foreign direct investment, financial openness and
the levels of government intervention in economic relations with the rest of the
world. Data on those variables is less extensive than on trade flows, usually dating
back only to the post World War II period. But some analysts, such as Patrick
McDonald and Erik Gartzke, have argued that a significant correlation can be found
between them and a reduction in the probability of conflict. Those findings, newer
than ONeal and Russetts, havent yet been subjected to the same intense scrutiny,
so may in turn be qualified by future research. What does all that mean for the

policy-maker? The statistical evidence certainly doesnt tell us that globalisation has
made war in East Asia impossible. Cromwells law counsels us that a logically
conceivable event should never be assigned a probability of zero. The most we
could conclude is that globalisation has made such an occurrence much less likely.
Theres some hopeful numerical evidence that globalisation does indeed have that
effect, but the evidence isnt so compelling that we can substitute an economic
engagement policy for a security policy. By all means, lets continue to promote
trade in the Asia-Pacific. But we should also continue to be prepared for scenarios
which are unlikely but would be hugely damaging if they were to occur.

Trade wont collapse and doesnt solve war

Fordham 12professor of political science at Binghamton University (Ben,
International Economic Institutions and Great Power Peace, 8/12/12,
http://gt2030.com/2012/08/15/international-economic-institutions-and-great-powerpeace/)
I enjoyed Jack Levys comments on how the world would have looked to people writing in 1912. As part of my current research,
Ive been spending a lot of time thinking about the three decades before World War I. As Levy pointed out, this last period of great
power peace has some interesting parallels with the present one. Like today, the international economy had become increasingly

The period also saw the

emergence of several new great powers, including Japan, Germany, and the United States.
integrated. For good reason, some even refer to this period as the first age of globalization.

Like emerging powers today, each of these states sought to carve out its own world role and to find, as the German Foreign

I dont think these parallels we are doomed to repeat the

catastrophe of 1914. I want to highlight the different institutional rules governing the
international economic system today. The dangers discussed in the NIC report are real, but there is
reason for hope when it comes to avoiding great power war . The rules of the game
governing the first age of globalization encouraged great powers to pursue foreign
policies that made political and military conflict more likely. Declining transportation costs, not more liberal
trade policies, drove economic integration. There was no web of international agreements
discouraging states from pursuing protectionist trade policies. As Patrick McDonalds recent book, The Invisible
Hand of Peace, explains nicely, protectionism went hand-in-hand with aggressive foreign
policies. Many of the great powers, including the emerging United States, sought to shut foreign
competitors out of their home markets even as they sought to expand their own
overseas trade and investment. Even though markets and investment opportunities in less developed areas of the world
Secretary put it, a place in the sun. Like Levy,

were small, great power policy makers found these areas attractive because they would not export manufactured products. As one
American policy maker put it in 1899, they preferred trade with people who can send you things you ant and cannot produce, and

a trade largely between different

zones, and largely with less advanced peoples. Great powers scrambled to obtain
privileged access to these areas through formal or informal imperial control. This zero-sum
competition added a political and military component to economic rivalry. Increasing
take from you in return things they want and cannot produce; in other words,

globalization made this dangerous situation worse, not better, in spite of the fact that it also increased the likely cost of a great

because of the international economic institutions constructed after

World War II, present day great powers do not face a world in which protectionism and
political efforts to secure exclusive market access are the norm. Emerging as well as
longstanding powers can now obtain greater benefits from peaceful participation
in the international economic system than they could through the predatory foreign
policies that were common in the late 19th and early 20th centuries. They do not need
power war. In large part

a large military force to secure their place in the sun. Economic competition among
the great powers continues, but it is not tied to imperialism and military rivalry in
the way it was in 1914.

Empirical studies render their models obsolete

The only quantitative research and historical analysis proves that trade fails to deter
conflict only our evidence accounts for potential results of trade as well as
interdependence itself which means this is the most conclusive evidence
Katherine Barbieri 13, Associate Professor of Political Science at the University of
South Carolina, Ph.D. in Political Science from Binghamton University, Economic
Interdependence: A Path to Peace or Source of Interstate Conflict? Chapter 10 in
Conflict, War, and Peace: An Introduction to Scientific Research, google books
How does interdependence affect war , the most intense form of conflict? Table 2 gives the empirical
results . The rarity of wars makes any analysis of their causes quite difficult, for variations in interdependence will seldom result in the occurrence
of war. As in the case of MIDs, the log-likelihood ratio tests for each model suggest that the inclusion of the various measures of interdependence and the
control variables improves our understanding of the factors affecting the occurrence of war over that obtained from the null model. However, the
individual interdependence variables, alone, are not statistically significant. This is not the case with contiguity and relative capabilities, which are both
statistically significant. Again, we see that contiguous dyads are more conflict-prone and that dyads composed of states with unequal power are more
pacific than those with highly equal power. Surprisingly, no evidence is provided to support the commonly held proposition that democratic states are less

evidence from the pre-WWII period provides

support for those arguing that economic factors have little, if any, influence
on affecting leaders decisions to engage in war, but many of the control variables are also statistically insignificant. These
likely to engage in wars with other democratic states. The

results should be interpreted with caution, since the sample does not contain a sufficient number wars to allow us to capture great variations across
different types of relationships. Many observations of war are excluded from the sample by virtue of not having the corresponding explanatory measures.

This
study provides little empirical support for the liberal proposition that trade
provides a path to interstate peace. Even after controlling for the influence of
contiguity, joint democracy, alliance ties, and relative capabilities, the evidence
suggests that in most instances trade fails to deter conflict . Instead, extensive
economic interdependence increases the likelihood that dyads engage in militarized dispute; however, it appears to
have little influence on the incidence of war . The greatest hope for peace appears to arise from
A variable would have to have an extremely strong influence on conflictas does contiguityto find significant results. 7. Conclusions

symmetrical trading relationships. However, the dampening effect of symmetry is offset by the expansion of interstate linkages. That is, extensive
economic linkages, be they symmetrical or asymmetrical, appear to pose the greatest hindrance to peace through trade.

No trade impact
Fletcher 11
Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, former Research Fellow at the U.S.
Business and Industry Council M.A. and B.A. from Columbia and U Chicago, "Avoid Trade War? We're Already In
One!" August 29 2011 www.huffingtonpost.com/ian-fletcher/avoid-trade-war-were-alre_b_939967.html

The curious thing about the concept of trade war is that, unlike actual shooting
war , it has no historical precedent
there has never been a significant trade
war,
All history records are minor skirmishes at best.
The standard example free traders give is that
Smoot-Hawley
either caused the Great Depression or made it spread around the
. In fact,

"significant" in the sense of having done serious economic damage.

and name a trade war. The Great Trade War of 1834? Nope. The Great Trade War of 1921? Nope Again. There isn't one.
America's

tariff of 1930

Go ahead. Try

world. this does not survive serious examination and has actually been
denied by almost every economist who has actually researched the question
in depth
ranging from Krugman on the left to Friedman on the right. The
Depression's cause was monetary. The Fed allowed the money supply to balloon
It then panicked, miscalculated, and let it collapse by a third by 1933,
Trade had nothing to do with it As for the charge that Smoot caused the
Depression to spread worldwide: it was too small a change to have plausibly so
large an effect
it only applied to about one-third of America's trade: about 1.3
percent of our GDP
Our tariff went up
in 1861, 1864, 1890, and 1922 without producing global depressions
But

canard

-- a group

Paul

Milton

during the late 1920s, piling up

in the stock market as a bubble.

depriving the economy of the

liquidity it needed to breathe.

. For a start,

. Our average tariff on dutiable goods went from 44.6 to 53.2 percent -- not a terribly big jump. Tariffs were higher in almost every year from 1821 to 1914.

, and the recessions of 1873 and 1893 managed to spread

worldwide without tariff increases. As the economic historian (and free trader!) William Bernstein puts it in his book A Splendid Exchange: How Trade Shaped the World, Between 1929 and 1932, real GDP fell 17 percent worldwide, and by 26 percent in

most economic historians now believe that only a miniscule part of that huge loss of
both world GDP
can be ascribed to the tariff wars
Had all international trade been eliminated, and had no domestic use for the
previously exported goods been found, world GDP would have fallen by the same amount -9 percent
The inescapable
conclusion: contrary to public perception, Smoot-Hawley did not cause, or even significantly
deepen, the Great Depression The oft-bandied idea that Smoot-Hawley
started a global trade war of endless cycles of tit-for-tat retaliation is
also mythical .
With the exception of discriminations
the
extent of discrimination against American commerce is very slight ...By far the largest
number of countries do not discriminate against the commerce of the United
States in any way .
The doom-loop of spiraling tit-for-tat retaliation between trading
partners that paralyzes free traders with fear today simply did not happen.
SmootHawley is a deliberately fabricated myth , plain and simple We should not allow
this myth to paralyze our policy-making in the present day. There is a basic unresolved
paradox at the bottom of the very concept of trade war . If, as free traders
insist, free trade is beneficial whether or not one's trading partners reciprocate, then why
would any rational nation start one
The only way to explain this is to
assume that major national governments
governments which, whatever bad
things they may have done, have managed to hold nuclear weapons for
decades without nuking each
are not players of realpolitik, but
schoolchildren When the moneymen in Beijing, Tokyo, Berlin, and the other nations
currently running trade surpluses against the U.S. start to ponder the financial realpolitik of
exaggerated retaliation
they will discover the
advantage is with us, not them

the United States, but

and the United States' GDP

. .. At the time of Smoot-Hawley's passage, trade volume accounted for only about 9 percent

of world economic output.

. Between 1930 and 1933, worldwide trade volume fell off by one-third to one-half. Depending on how the falloff is measured, this computes to 3 to 5 percent of world GDP, and these losses were partially made up by more

expensive domestic goods. Thus, the damage done could not possibly have exceeded 1 or 2 percent of world GDP -- nowhere near the 17 percent falloff seen during the Great Depression...

According to the official State Department report on this very question in 1931:

in France,

That is to say, foreign nations did indeed raise their tariffs after the passage of Smoot, but this was a broad-brush response to the Depression itself, aimed at all other foreign nations without

distinction, not a retaliation against the U.S. for its own tariff.

"Notorious"

, no matter how provoked?

like the Chinese and the U.S. --

other over trivial spats --

against the U.S. for any measures we may employ to bring our trade back into balance,

. Because they are the ones with trade surpluses to lose, not us.

So our present position of weakness is, paradoxically, actually a position of

strength. Likewise, China can supposedly suddenly stop buying our Treasury Debt if we rock the boat. But this would immediately reduce the value of the trillion or so they already hold -- not to mention destroying, by making their hostility overt, the fragile
(and desperately-tended) delusion in the U.S. that America and China are still benign economic "partners" in a win-win economic relationship. At the end of the day,

China cannot force us to

We can -- an irresponsible
as the ultimate counter-

do anything economically that we don't choose to

but not impossible scenario -- repudiate our debt to them
move to anything they might contemplate
Thus a certain amount of back-and-forth token retaliation (and loud squealing) is
. America is still a nuclear power.

(or stop paying the interest)

. More plausibly, we might simply restore the tax on the interest on foreign-held bonds that was repealed in 1984 thanks to Treasury Secretary

Donald Regan.

indeed likely if America starts defending its interests in trade as diligently as our trading
partners have been defending theirs, but that's it . The rest of the world engages in
these struggles all the time without doing much harm ; it will be no different if we
join the party
.