The United States, supposed champion of ‘freedom’, on Friday, once again vetoed a UN Security Council resolution that blamed Israeli military action for dozens of deaths of Palestinian civilian protestors in the recent anti-Occupation protests. But, the Palestinian bloodshed notwithstanding, the world is focussed on the blundering American President’s showmanship over North Korea and, now, the prospect of world market price rises following the sudden US import duty hikes on its biggest trade partners.
Meanwhile, India, China, and Malaysia are moving forward with their own strategic maritime extension projects – China in the South China Sea, India with a new port project on the Indonesian side of the Strait of Malacca and, Malaysia with an artificial island project also in the Malacca Strait.
Indian Prime Minister Narendra Modi last week quietly ended his state visit to emerging South East Asian powerhouse Indonesia, with a pact for India to develop a strategically located harbour at the tip of Sumatra island which would oversee the entrance to the busy Strait of Malacca on the one hand, and, on the other, link up with Delhi’s naval dominance arc that extends along the Indian-owned Andaman & Nicobar island chain.
At the same time, South East Asian media reported last week that newly re-elected Malaysian strongman Mahathir Mohamed had decided to build an artificial island on the disputed ‘Middle Rocks’ islets in the Malacca Strait, close to Singapore. Mahathir is not as friendly with China as his predecessor, the corruption-linked Najib Razzak, and is expected to downscale, if not fully end Chinese investor involvement in a massive harbour development project in the ancient port city of Malacca and in Kuala Lumpur’s main port of Klang.
Earlier, in mid-May, East Asian and Pacific powers reacted irritably over the test landing of Chinese People’s Army Air Force long distance bombers on China’s newly developed artificial island port and base in the Paracel Island chain in the South China Sea. The US and The Philippines have both protested at this latest step in what they claim is the Chinese militarization of the South China Sea, which Beijing says is entirely within its maritime boundary but which all other East Asian states insist are fully international waters.
Indonesia, already at loggerheads with China over other islands in the South China Sea close to Indonesia, gave Indian Premier Modi a warm welcome on his visit to Jakarta last week. While Jakarta has bought in on China’s massive ‘Silk Road & Belt’ economic development projects, the rising South East Asian power, sensitive about its own large ethnic Chinese minority, does not wish to get subservient to Beijing. This is why Jakarta has been quick to sign up with India for port development at Sabang island, at the currently remote northern tip of under-developed Sumatra island.
South East Asian news media reported last week that Indonesia’s principal minister dealing with maritime affairs, Luhut Pandjaitan, had disclosed that the existing port at Sabang, which is 40m deep, could be developed to accommodate both commercial vessels and submarines. Such transparency about strategic international deals is in stark contrast with Sri Lanka’s previous leadership which entered port development pacts with Beijing but remained secretive about the naval implications for Sri Lanka.
But none of these developments has drawn world attention as global news media focuses on the latest grandstanding by the world’s sole superpower. US President Donald Trump, having shaken world diplomacy by first abruptly cancelling scheduled talks with North Korean strongman Kim Jong-Un, just days later announced that the talks are back on track for June 12, in Singapore. His officials are currently in talks with North Korean top officials in New York where Pyongyang maintains its embassy to the United Nations.
But the far bigger news event last week was the announcement by Washington that it was slapping hugely hiked import duties on steel and aluminium imports from the US’ major supplier countries. Since the United States is the world’s biggest dealer in these vital basic metal products, this unilateral move by Washington, cutting across all global trade protocols, has already shaken the metals and metal products industries across the world. The principally affected countries, ironically, are all the US’ main trading partners and closest military allies.
Hence, the formal reason given by Washington under World Trade Organization rules, to justify its unilateral tariff hikes, namely that of ‘national security’, seems highly pretentious given that Canada and the European Union powers are all collectively bound with the US in NATO and other security arrangements and could not be security ‘threats’ to America. From July 1, American imports of steel and aluminium from Canada, the EU and Mexico will suffer from import duties of 25 per cent and 10 per cent respectively.
And Washington has threatened that counter tariff hikes imposed by these economic blocs would be met by further targeted import duty hikes on other exports from these countries. The EU as a whole and, Canada, have announced they would raise the issue at the World Trade Organization, which could see punitive measures against America. But some European powers like Germany, which exports automobiles to the US, are reluctant to engage in a trade war with what is yet the world’s most lucrative market.
Steel, is a most basic metal for a huge range of products – from ships and aircraft to building materials and consumer goods – and trade tariff contests will only see a rise in world prices as the currently over-supplied world market retracts due to the higher cost factor.
Canada has already said it would, as a counter measure, slap 25% tariffs on certain types of American steel, as well as a 10% tax on other items, including yoghurt, whiskey and roasted coffee. Mexico’s Economy Ministry said it is planning new duties for steel, pork legs and shoulders, apples, grapes, blueberries and cheese. Europe had previously outlined a list of items, including US bourbon, cranberries and jeans, as targets for retaliation.
Canada, Mexico and the EU combined exported $23bn worth of steel and aluminium to the US last year - nearly half of the $48bn total American steel and aluminium imports in 2017. From Canada to Germany to France and Mexico, as well as the EU, governmental leaders and senior officials have condemned the US move as immensely destructive in that it unnecessarily disrupts world supply for these products as well as all related products.
Furthermore, the collapse of the carefully constructed WTO trade system only engenders uncertainty over market trends, industrial investments and balance of payments values among the world’s largest economies.
Attempts at re-negotiations are also replete with uncertainty given Washington’s current reputation, under Donald Trump, as a betrayer of highly sensitive and vital global treaties such as the Paris Climate Accord and the Iran Nuclear limitations pact. Thus, virtually no one took notice – except the Palestinians and Arab states, and, humanitarian agencies – when, on Friday, the US cast its veto on a draft resolution submitted by Kuwait to the UN Security Council that condemned the Israeli military violence against Palestinian protesters in recent weeks and called for measures to protect civilians in the Palestinian Occupied territories (now trying to win recognition as the state of Palestine).
At the same time, however, Washington could not get a single vote from its traditional European and other western allies for its own resolution on the issue which tried to blame the Hamas group (now in government in the West Bank) for the civilian bloodshed. In fact, for the first time in the Security Council’s entire history, the US was the sole voter in favour of its own resolution. The NATO allies currently in the Council abstained in Friday’s vote.