Question

The United States appears at times to have a totally schizophrenic attitude toward protectionism. The United States was the country that proposed the establishment of the World Trade Organization as early as the late 1940s, and was also the only industrialized country that refused to ratify this at that time. The United States has consistently argued on the side of multinational free trade in GATT Rounds, and yet maintains many protectionist laws such as those which reserve oil shipments from Alaska to U.S. flag carriers. How can you explain this apparent lack of national consistency on this issue?

Answer 1

This inconsistency is directly related with the political atmosphere in the USA, with the rise of conservative hard line politicians like Donald Trump, GW Bush, Ronald Raegan etc had significant implication on the government's policies. Some of the issues that led to the rise of this inconsistent policies and decision are :-

1. Raising Competition:- Because of raising competition amoung firms, the local US industries are suffering from huge losses.
2. Cheap Imports:- Imports from China, Japan, South Korea are rising due to its low pricing, governments of this nations providing subsidies in the manufacturing export, thus becoming more export oriented.
3. Balance of Payments Crisis:- BOP for USA with respect to China, UK and Japan is negative, it shows that US is becoming more import dependent nation, thus US wealth is draining.
4. Jobs:- Most of the firms outsourced there work to countries like China, Philipines, Vietnam, India etc, thus unemployement rate is raising.
5. Immigration:- Immigration of people from developing countries created safety related issues, increase in crime rate across the nation, raised the anti immigration wave.

Thus, this pleothora of challenges or factors are responsible for inward looking attitude and protectionist movements across the United States Of America.