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As trade tensions rise between the United States of America and its traditional allies, Canada’s Foreign Minister Chrystia Freeland hits the right note in responding to U.S. President Donald Trump as she accepts the Diplomat of the Year Award from Foreign Policy magazine.
Below are both the full video and transcript of her speech courtesy of ForeignPolicy.com
“Tonight, I would like to speak about a challenge that affects us all: and I believe worries us all, and that is the weakening of the rules-based international order and the threat that resurgent authoritarianism poses to liberal democracy itself.
I’d like to start on a personal note. In the 1980’s and 1990’s, I studied and worked as a reporter in what was first the USSR and while I was living there [it] became independent Ukraine and Russia.
My experience of watching from the inside as this vast authoritarian regime crumbled, profoundly shaped my thinking. It was a euphoric moment, and one in which it was tempting to imagine that liberal democracy was both inevitable and invulnerable.
As Francis Fukuyama put it, we seemed to have reached the ‘end of history’.
Fukuyama wasn’t, of course, arguing that history had ground to a halt. Rather, he was saying that the half-century-long competition between liberalism and authoritarianism had been settled and that liberal democracy had won. What a seductive argument.
Now, we harbored no illusions then, that institutions such as the WTO, or the IMF, or the World Bank, or the U.N. were perfect. Or that that our own democracies at home with their sausage-making methods of legislating and governing were without flaw.
But there was a broad consensus that the Atlantic nations, plus Japan, led an international system of rules that had allowed our peoples’ to thrive and which would surely continue to do so. Crucially, this was built as a system that other nations, emerging powers could join, and join they have.
The past 25 years have seen the rapid rise of the global south and Asia, most prominently China, as major economic powers in their own right. We created the G20, with Canadian leadership I might add. Russia was invited into the G7 making it the G8 in 1998, and the WTO in 2012. China has been a WTO member since 2001.
In Latin America, in the Caribbean, in Africa, and in Asia, developing countries have joined these institutions and accepted their rules, and that has delivered ever-greater living standards to their people.
But although this was and remains a broadly positive evolution, with extraordinary gains, in reducing extreme poverty, lengthening lives and decreasing infant mortality, one assumption about this great global shift turned out to be wrong: that was the idea that as authoritarian countries joined the global economy and grew rich, they would inevitably adopt Western political freedoms too. That hasn’t always happened. Indeed, in recent years, even some democracies have gone in the other direction and slipped into authoritarianism, notably and tragically, Venezuela. And some countries that had embarked on the difficult journey from communism to democratic capitalism have moved backwards. The saddest personal example for me is Russia.
Even China, whose economic success in lifting hundreds of millions of people out of poverty is one of the great accomplishments of recent times, stands as a rebuke to our belief in the inevitability of liberal democracy.
And within the club of wealthy Western nations, we are seeing homegrown anti-democratic forces on the rise. Whether they are neo-Nazis, white supremacists, incels, nativists, or radical anti-globalists, such movements seek to undermine our democracies from within. Liberal democracy is also under assault from abroad. Authoritarian regimes are actively seeking to undermine us with sophisticated, well-financed propaganda and espionage programs. And they seek to suborn smaller countries, those wavering between democracy and authoritarianism.
Now, the idea that democracy could falter or be overturned in places where it had previously flourished may seem outlandish. But other great civilizations have risen and then fallen. It is hubris to think we will inevitably be different. Our Prime Minister likes to say about our country that Canada didn’t happen by accident and it won’t continue without effort.
The same can be said of liberal democracy itself.
Now let’s set aside the external malevolent actors for a moment. Why are liberal democracies vulnerable at home?
Here’s why: Angry populism thrives where the middle class is hollowed out, where people are losing ground and losing hope, even as those at the very top are doing better than ever. When people feel their economic future is in jeopardy — when they believe their children have fewer opportunities than they themselves had in their youth, that’s when people are vulnerable to the demagogue who scapegoats the outsider, the other, whether it’s immigrants at home or trading partners abroad.
The fact is, middle-class working families aren’t wrong to feel left behind. Median wages have been stagnating. Jobs are becoming more precarious, pensions uncertain, housing, childcare, and education harder to afford. These are the wrenching human consequences, the growing pains, if you will, of the great transformative forces of the past 40 years — the technology revolution and globalization.
Now, of the two, technology is having the greatest impact. But even free traders like me need to recognize that globalization has contributed as well. So, what’s the answer?
I think we are agreed that it is not, as the Luddites unsuccessfully proposed at the start of the Industrial Revolution, to stop the march of technology. We all love our smartphones too much.
When it comes to trade though, we do need to introduce labor standards with real teeth as Canada and the EU have done in our free trade agreement, and as we are discussing as part of our ongoing NAFTA modernization negotiations. It is long past time to bring the WTO up to date with the realities of 2018 and beyond. We need to seriously address non-tariff barriers to trade and force technology transfers.
However, and overwhelmingly, the chief answer to the legitimate grievances of the middle class lies in domestic policies.
The middle class and people working hard to join it need the security that comes from educationing your youth, health care for your family, good jobs for your children, and dignity in your retirement.
We need to think about what the jobs of the future for our citizens will be, and ensure that those jobs will pay a living wage and that our people have the skills to do them. Perhaps most importantly, and this is work that would benefit from international cooperation, in a 21st century in which capital is global but social welfare is national, we need to ensure that each of our countries has the durable tax base necessary to support the 99 percent.
But setting our own house in order is just one part of the struggle. The truth is that authoritarianism is on the march and it’s time for liberal democracy to fight back. To do that, we need to raise our game.
One device strongmen use to justify their rule is the Soviet trick of whataboutism. The strategy of false moral equivalency which holds that because democracies are inevitably imperfect, they lack the moral authority to criticize authoritarian regimes.
We heard this species of cynical rhetoric for example, from the Venezuelan foreign minister at the Organization of American States meeting in Washington just last week. We must be smart enough to see through it. It’s possible, indeed necessary, for us to acknowledge that our own democracies aren’t perfect.
The record of my own country’s relationship with indigenous peoples, for example, is one of tragic failure.
But admitting our mistakes doesn’t discredit us. On the contrary, it is one of the things that makes us who we are. Authoritarianism is also often justified as a more efficient way of getting things done. No messy contested elections, no wrenching shift from one short-termist governing party to another, no troublesome judicial oversight, no time-consuming public consultation. How much more effective the apologists argue for a paramount leader with a long-term vision, unlimited power and permanent tenure, to rule.
We need to resist this corrosive nonsense. We need to summon Yeats’ oft-cited passionate intensity in the fight for liberal democracy and the international rules-based order that supports it.
Remember those great words at Gettysburg. Government of the people, by the people, for the people, shall not perish from the Earth. Preserving Lincoln’s vision means striking back. It means resisting foreign efforts to hijack our democracies through cyber-meddling and propaganda. It means outshining the other models and encouraging those who are on the fence. And it means governing with integrity.
Facts matter. (applause) Truth matters. (applause) Competence and honesty among elected leaders and in our public service matter. (applause)
Now, I’d like to speak directly to Canada’s American friends and to my own many American friends who are here in this room.
Let me begin by simply saying: Thank you.
For the past 70 years and more, America has been the leader of the free world. We Canadians have been proud to stand at your side and to have your back. As your closest friend, ally, and neighbor, we also understand that many Americans today are no longer certain that the rules-based international order of which you were the principal architect and for which you did write the biggest cheques, still benefits America.
We see this most plainly in the U.S. administration’s tariffs on Canadian steel and aluminum imposed under the 232 national security provision. We share the world’s longest undefended border. Our soldiers have fought and died alongside yours in the First World War, in the Second World War, in Korea, in Afghanistan, and in Iraq.
The idea that we could pose a national security threat to you is more than absurd, it’s hurtful.
The 232 tariffs introduced by the United States are illegal under WTO and NAFTA rules. They are protectionism pure and simple. They are not a response to unfair actions by other countries that put American industry at a disadvantage. They are a naked example of the United States putting its thumb on the scale in violation of the very rules it helped to write. Canada has no choice but to retaliate with a measured, perfectly reciprocal, dollar for dollar response. And we will do so. We act in close collaboration with our like-minded partners in the EU and Mexico.
They too are your allies, and they share our astonishment and our resolve.
Chrystia continues her speech in Canada’s other official language (French) then reverts to English, as below…
No one will benefit from this beggar-thy-neighbour dispute. The price will be paid in part, by American consumers and American businesses and the price will also be paid by those who believe that a rules-based system is worth preserving.
Since the end of the Second World War, we have built a system that promoted prosperity and prevented smaller and regional conflicts from turning into total war. We’ve built a system that championed freedom and democracy over authoritarianism and oppression. Canada for one, is going to stand up in defense of that system. We will not escalate and we will not back down.
We remember a time when the United States believed great international projects like the Marshall Plan or the reconstruction of Japan were the path to lasting peace. When America believed its security and prosperity were bolstered by the security and prosperity of other nations. Indeed, that America could only be truly safe and prosperous when its allies were too. This vision, the greatest generation’s vision, was crucially dependent on the rules-based international order and the postwar institutions built to maintain it. It was based upon the willingness of all, especially the strongest, to play by the rules and be bound by them. It depended on the greatest countries of the world giving up, collectively, on the idea that ‘might made right’.
Now, the Second World War was over 70 years ago, it is reasonable to ask whether our grandparents’ hard-won wisdom still applies today. I am certain that it does and for some new reasons.
After the devastation of the Second World War, the United States was the unquestioned colossus, accounting alone for half the world’s economy. Today, the U.S. economy stands at just a quarter of the world’s. Together, the EU, Canada, and Japan, your allies in the G-7 and beyond, account for just a little bit more. China, meanwhile, produces nearly 20 percent of the world’s GDP. And in our lifetimes, its economy is set to become the world’s largest.
Now, that’s not necessarily a bad thing.
Americans, Canadians, and Europeans are much richer and healthier, and live longer than our grandparents did. The ‘rise of the rest’ has been a chapter in the story of our own increased prosperity. And it’s only natural that the 85 per cent of people who live outside the industrialized West should, over time, account for a greater and growing share of the world’s wealth.
But that shift leaves the Western liberal democracies with a dilemma. How shall we behave in a world we no longer dominate?
One answer is to give up on the rules-based international order, to give up on the Western alliance and to seek to survive in a Metternichian world defined, not by common values, mutually-agreed upon rules and shared prosperity, but rather by a ruthless struggle between the great powers governed solely by the narrow, short-term, and mercantalist pursuit of self-interest.
Canada could never thrive in such a world. But you, still the world’s largest economy, may be tempted. That, of course, is your sovereign right. But allow me, as your friend to make the case that America’s security amid the inexorable ‘rise of the rest’ lies in doubling-down on a renewed rules-based international order. It lies in working alongside traditional allies like Canada and alongside all of the younger democracies around the world.
From the Americas, to Africa, to Asia, to the former Soviet Union — who are so keen to join us and who yearn for leadership, you may feel today that your size allows you to go ‘mano a mano’ with your traditional adversaries and be guaranteed to win. But if history tells us one thing, it is that no one nation’s preeminence is eternal.
That is why the far wiser path and the more enduring one is to strengthen our existing alliance of liberal democracies. To hold the door open to new friends. To countries that have their own troubled past such as Tunisia, Senegal, Indonesia, Mexico, Botswana, or Ukraine.
To reform and renew the rules-based international order that we have built together. And in so doing, to require that all states, whether democratic or not, play by these common rules.
This is the difficult truth. As the West’s relative might inevitably declines, now is the time when, more than ever, we must set aside the idea that ‘might is right’. Now is the time for us to plant our flag on the rule of law so that the rising powers are induced to play by these rules too.
To explain my faith in you, in America, let me remind you of the ‘City on the Hill’ Ronald Reagan evoked in his farewell speech in 1989. It was a tall, proud city, built on rocks stronger than oceans, windswept, God-blessed, and teeming with people of all kinds living in harmony and peace. A city with free ports that hummed with commerce and creativity and if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get there.
This city, open to trade, open to immigrants, speaks to Canada’s values too. Indeed, these are the values of liberal democracy. These values are under attack from outside our walls. Most corrosively, even inside the shining city some have begun to doubt them. My country, Canada, believes in these values. We are ready to defend them and the rules-based international order that unites all of the world’s cities on the hill.
Our friends among the world’s democracies in Europe, in Asia, in Africa, and here in the Americas are shoulder to shoulder with us. We all know we will be strongest with America in our ranks and indeed, in the lead. But whatever this great country’s choice will turn out to be, let me be clear that Canada knows where it stands, and we will rise to this challenge. Thank you.” — As read by Chrystia Freeland, Foreign Minister for Canada, June 14, 2018
Q: Are the concerns of a superpower relevant to the other G7 members? A: Not really.
Maybe it’s time for a superpower group of the U.S., China, the EU, Russia, and The Commonwealth of Nations to form up, instead of the G7 group that has worked very well until now.
Even the sage Moses who lived 3400-years ago, suggested, “Thou shall not plow with an ox and a donkey yoked together” and the reason is quite clear to every farmer. Being so dissimilar in size and power, both the ox and the donkey will be miserable the entire time they try to plow forward together and the farmer will spend most of his time ‘arbitrating’ disputes between the two and the plowing enterprise will get little actual plowing done.
It’s unfair to the U.S., it’s unfair to the smaller or weaker members of the G7 club and it’s unfair — even to near-superpowers like Japan and Germany which have far different challenges and causes to ‘plow’ than those of the superpowers.
Shall I list the ways?
If so, this would become a very long blog post indeed!
For just three examples:
- Which of the G7 partners have a negative balance of trade of $862.8 billion for 2017? The entire G7 combined doesn’t have a negative balance of trade anywhere approaching that of the United States.
- Which of the other G7 members have an inventory of nuclear warheads like the United States which includes 6450 nuclear warheads; 1750 that are retired and awaiting dismantlement, and 3800 that remain part of the U.S. stockpile?
- If we’re talking GDP, the U.S. represents 52.8% of the Group of Seven’s GDP, while the next largest country in the group (Japan) represents 13.3% of GDP, with only Germany at 10% remaining as the only other double-digit GDP member of the G7.
Population figures and economic growth indicators may be even more telling than the above indicators of superpower status.
Should the U.S. Join It’s Own 1-Member Club?
That may be a tempting thought for President Donald Trump and certain members of his administration, but there are common concerns among superpowers that only apply to superpowers (and there’s no doubt the U.S. remains the Number One superpower by a significant margin) and it’s those superpowers that must work together to deliver solutions for their large populations.
If we look at a superpower club of 5 members: The United States, China, the EU, The Commonwealth of Nations and Russia, we’re looking at a group that is roughly comparable to each other and have similar challenges.
Let’s look at our three main indicators, just to be certain:
Big 5 (Nominal) GDP U.S.A. --------- $20.3 trillion (USD) (Focuseconomics.com) China ---------- $13.0 trillion (USD) (Focuseconomics.com) EU ------------- $19.7 trillion (USD) (IMF) Commonwealth --- $10.4 trillion (USD) (Commonwealth.org) Russia --------- $1.72 trillion (USD) (IMF/StatisticsTimes.com)
Although there are some disparities in nominal GDP among the five countries, we must remember that China is on an exponential growth curve while The Commonwealth of Nations statistic (provided by commonwealth.org) is from 2017 and their economic group is also growing at a rapid rate ($13 trillion by 2020). Russia is the outlier in this group, however, as we shall see, that country has other (huge) chips on the table when it comes to retaining its superpower status.
Big 5 Nuclear Warheads U.S.A. --------- 6450 (Federation of American Scientists) China ---------- 270 (Federation of American Scientists) EU ------------- 300 (Federation of American Scientists) Commonwealth --- 485 (Federation of American Scientists) Russia --------- 6850 (Federation of American Scientists)
Although nuclear stockpiles vary, the U.S. and Russia were the main protagonists of the Cold War which lasted from 1950 through 1990 which is why they own far more nuclear weapons than all other countries combined. The only EU country to publish their ownership of nuclear weapons is France, with 300 warheads. The Commonwealth of Nations countries that publish ownership of nuclear weapons include the UK, Pakistan and India.
Balance of Trade Issues
Big 5 Balance of Trade (in U.S. Dollars) U.S.A. --------- $-862.8 billion (2017) (Handlesblatt/IMF/WTO) China ---------- $+98.46 billion (2017) (TradingEconomics.com) EU ------------- $+44.45 billion (2016) (Statista.com) Commonwealth --- $-187.5 billion (2015) (Commonwealth.org) Russia --------- $+ (2017) (Statista.com)
While balance of trade issues vary wildly between the United States, China, the EU, The Commonwealth of Nations and Russia, very few countries can play in the triple-digit or even high double-digit space occupied by those nations. Especially when analyzed using their (Nominal) and (Purchasing Power Parity) GDP numbers, these are exceptional nations and groupings of nations, which put them in a different category than other countries.
The Big 5 (B5) A Better ‘Fit’ for the United States, China, the EU, The Commonwealth and Russia
There is nothing wrong with small countries and there is nothing wrong with big countries. But small countries have far different challenges than large countries, and everything happens on a truly massive scale for the bigger countries and in country groupings like the EU and The Commonwealth of Nations.
And those differences cause irritations.
Instead of heads of government trying to plow forward with their challenges and issues while ‘yoked’ to dissimilar and dissimilar-sized partners, why not make it easier on everyone and ‘put like with like’ to gain a more comfortable fit?
It’s so obvious this should be done and the latest G7 meeting proves that the problems in that organization are systemic problems and are the sole cause of divisions between the oddly mismatched countries of that group.
The ‘Big 5’ followed by the ‘Next 20’
Every country stuck in a trade or political grouping that doesn’t match it’s particular talents will suffer. Therefore, the Big 5 must form into a group of their own, and the G20 (minus the by-then departed ‘Big 5’ members) must attract ‘the Next 20 nations’ to their refashioned N20 organization.
Helping Every Country and Individual to Become All That They Can and Should Be
In that way, the top 25 countries in the world can finally become all that they can and should be instead of being held back by arbitrary, mismatched, or outdated groupings.
And, isn’t that what it’s really all about?
At first glance, the idea that the ‘Big Three’ American automakers (Chrysler, Ford and GM) would stop manufacturing their cars and trucks in other countries might seem like a ground-breaking idea.
But it’s not as shocking as some new ideas that were brought to light over past decades, such as putting engines in sailing ships enabling them to cross entire oceans, or travel by aircraft instead of train, or that man should walk on the Moon by 1970.
Still, the idea that America’s Big Three automakers would stop building their cars in other countries might be seen as a novel idea.
Why Would American Automakers Want to Stop Building Cars in Other Countries?
Let’s take the case of the North American car market:
Chrysler, Ford and GM own auto assembly plants in Canada, the United States and Mexico where they produce millions of cars and trucks per year. The majority of those vehicles are then sold into the U.S. because it’s a far bigger market than the Canadian and Mexican vehicle market combined.
Which means that many American auto industry jobs are lost to Canada and Mexico.
President Trump wants to lower the unemployment rate in his country and help make his domestic auto industry stronger and more responsive to the American market via high tariffs or restrictions on the number of cars Canada and Mexico can export to the United States.
The trade-off of that move would be worse relations with Canada and Mexico which have long benefited from Big Three auto factories located in their respective countries and Canada and Mexico would be loathe to lose those economic benefits.
And although I see U.S. President Donald Trump’s point on this — I’d rather talk about solutions that could work for all three countries.
What if There’s a Way for Each of the NAFTA Countries to Win?
Let’s pretend for a minute that we’re looking at the North American auto industry from the vantage point of 5-years in the future.
Five years on, let’s say that every Chrysler, Ford and GM vehicle sold in the United States is manufactured in the United States, unemployment is at an all-time low, and the American economy is rocketing along like it was in the 1960’s. Great!
What about Canada?
Five years from now the Big Three factories presently located in Canada would remain but would no longer be needed by the Big Three automakers because Canadian companies approved by Chrysler, Ford and GM would build 100% of all the Chrysler, Ford and GM vehicles required for the Canadian market.
Such licensee companies would be required to meet the exact same manufacturing and quality standards and warranty terms as U.S. built cars.
Canadian companies like Magna International already produce a significant number of the parts required for all of the Big Three automakers; Extending their license to include vehicle assembly on behalf of one of the U.S. auto companies would be an easy transition.
Or, entirely new companies could be formed; One company (‘Chryton Co.’) could build all Chrysler cars and trucks for the Canadian market by purchasing the existing Chrysler manufacturing plants in Canada and paying the required per-unit license fees to Fiat Chrysler USA, while ‘FordX’ could purchase all the Ford factories located in Canada and build every Ford vehicle for its Canadian dealers after paying the appropriate per-unit license fee to Ford USA. Likewise, GM vehicles would be built by a GM-approved company (‘AC Delco’) that would pay a license fee to GM USA for each vehicle it builds for the Canadian market.
In that way, 100% of all Chrysler, Ford and GM vehicles destined for the Canadian market would be manufactured in Canada by Canadian workers — and other than paying license fees to the respective USA auto manufacturer — the Canadian automotive manufacturing industry would be 100% Canadian. That’s 100% Canadian-owned and 100% Canadian-staffed. (They would still need to match U.S. manufacturing and warranty standards however)
Exactly the same could be done in Mexico for Mexican companies and consumers. (They would still need to match U.S. manufacturing and warranty standards however)
And all Chrysler, Ford and GM cars and trucks destined for the U.S. market would be manufactured in the United States by American workers and the U.S. auto industry would find itself in the middle of an economic boom!
In an Era of 3D Printing, License Fees Will be Everything
Welcome to the future!
If you live in Canada and you want a Ford car you simply order the car online and the Ford-approved Canadian company 3D prints and otherwise assembles your Ford car in a city near you, and the car arrives at your local Ford dealership a few days later.
You might even choose to watch it being 3D printed, painted, and assembled on your laptop.
Other than upholstery and tires, etc. all 3D printed cars and trucks will need to be made from aircraft-grade aluminum alloy which works better than steel for 3D printing.
Not Only The Big Three, But European and Japanese Automakers Too!
Imagine if EVERY new car and truck sold in Canada is built in Canada by Canadian companies that pay a license fee to the respective American, European, or Japanese automaker. That equals full employment in the Canadian auto sector — without the (understandable) griping by President Trump about American job losses.
Imagine if EVERY new car and truck sold in the U.S.A. would be built in the United States by American workers, and even European and Japanese vehicles sold in the U.S. would be built by U.S. companies that paid for the rights to 3D print and assemble those cars. That equals full employment in the American auto sector.
Imagine if EVERY new car and truck sold in Mexico would be built by Mexican companies that pay a license fee to the respective American, European, or Japanese automakers. That equals full employment in the Mexican auto sector, without any griping by President Trump about American job losses.
NOTE: Hand-built cars like Rolls Royce, Ferrari, Aston Martin, etc. would decline to take part in such an arrangement, but those cars account for less than 1% of the North American market share. They would simply continue to export their cars to their North American customers as usual.
Again, manufacturing and warranty standards would need to be carefully vetted by the licensor before granting manufacturing rights to licensees. Even so, every country in this equation would ‘Win-Win-Win’.
And consumers could purchase a locally built vehicle that wasn’t shipped across the continent or thousands of miles of ocean.
Shop Local, and still get the ‘foreign’ car of your dreams!
Auto Manufacturers Would Make the Same Per Vehicle Profit in Foreign Countries as They do Now — but via License Fees (only)
The era of ‘things-based’ globalization is morphing into ‘ideas-based’ globalization where things are designed in country ‘A’ by a company that retains 100% rights over who is allowed to 3D print and assemble its products in country ‘B’ — which could be anywhere on the planet.
Whether it’s T-shirt graphics electronically transmitted and licensed to a company thousands of miles away (as is done now) or whether licensed companies 3D print and assemble your foreign car in the city where you live — globalization might finally become all that it can and should be — creating hundreds of thousands of jobs in each country for workers in 3D printing/manufacturing facilities that could literally build anything, anytime, for anyone, as long as they have purchased the proper license.
Such ‘On Demand Manufacturing’ might become the biggest job creator ever and lower the tensions brought on by the endless competition between the world’s free trading nations.
Ready for the future Canada? Order your foreign-designed but locally-manufactured American, European or Japanese car here.
(OK, just kidding… But it might be just that easy in only a few years!)