The risk of domestic influence on foreign policy

Sunday, July 01, 2018

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In recent weeks, foreign policy issues have been the focus of attention in a number of countries, giving us reason to reflect on the well known adage: “All politics is local”.

By extension, all foreign policy is rooted in domestic politics.

Here in Jamaica, for instance, the Golding Report on the reform of the Caricom Single Market and Economy has brought to the fore strong local feelings about Jamaica not benefiting from membership in Caricom, even as many people hold the belief that regional integration is good. The real problem is lack of competitiveness in Jamaican production.

In Western European countries we are seeing growing anti-immigrant sentiments, despite the fact that populations in those jurisdictions are ageing and there still exists a need for immigrants to maintain their workforce.

Just north of us, the Trump Administration has embarked on an aggressive trade policy that is not only concerned with reducing the trade deficit, but is a direct attempt to maintain the US president's voter base, particularly in the Midwestern agricultural states and the rust belt of coal mining and manufacturing.

Don't be surprised if the rhetoric is toned down after the mid-term elections due in November this year. For, as we pointed out, domestic political interests motivate and strongly influence the goals and instruments of foreign policy.

Indeed, the full impact of the US trade policy will likely not be felt until after the elections, as export and import orders for the next few months are already placed. But in any case, the ill-effects can be blamed on the unfair trade practices of foreign countries.

The strategy, though, carries risks and faces two problems.

First, the imposition of tariffs could make the domestic economic situation worse because local substitutes could cost more, and retaliation by other countries could stymie US exports.

Second, every trade policy has winners and losers. Some potential losers can cause a great deal of pushback and, more importantly, take countervailing measures. Farmers of soybeans who export most of their crop to China are going to be seriously damaged while farmers in other parts of the world will increase production and sales to China.

US-produced steel will cause inflation in all downstream user industries. Worse, the quintessential American company Harley-Davidson has announced that it will move production and jobs to Europe rather than lose the export market.

The dilemma that Washington will face is that in a global economy dominated by multinational corporations, what is good for American workers may not be good for American companies. This why US motor car firms are against measures to restrict imports of cars into the USA. Restricting car imports hurts American companies making cars abroad and exporting to the USA.

While we acknowledge the right of every country to format foreign policy to secure their national interest, Washington, we suggest, should be guided by the experience of the United Kingdom, which has seen a number of large businesses deciding to relocate to the European Union after the Brexit vote.

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