Norfolk Island, you scoundrel

The latest round of US tariffs has been announced by President Donald J Trump, together with his explanation of why it was necessary for him to take so drastic a step.  According to a “fact sheet” issued by the White House, “foreign trade and economic practices have created a national emergency”.  The White House has denounced the “pernicious economic policies and practices of our trading partners”, such as “counterfeit goods, pirated software and theft of trade secrets”.  And it deplored the “current global trading order”, which “allows those using unfair trade practices to get ahead, while those playing by the rules get left behind”.

Basically, the way these tariffs work is simple: the more pernicious your practices, the higher the tariff.  So China, the ultimate ogre in all of this, has been hit with the highest tariff of 34%.  Australia, whose negotiating position with the United States essentially consists of thinking up new ways to say “yes”, has escaped with the minimum “reciprocal” tariff of 10%.  Australia, of course, imposes no tariffs on any US goods, but it does impose the same Goods and Services Tax on US goods that it imposes on all other goods, and the White House considers that an unacceptable restriction on the freedom of Australian consumers to buy American. 

Still: a 10% tariff places Australia at the lowest end of the scale of trade offenders.  Right up the top end of the scale, though, is that trading powerhouse, Norfolk Island, which has been slammed with a tariff of 29%.  Norfolk Island, in other words, is almost as great an international pariah as China.

What makes this just a little confusing is that the amount of trade between Norfolk Island and the United States is zero.  Norfolk Island exports nothing at all to the United States, unless you count Bob and Doris Wilson, but they’re only on holiday, and they’re expected home next Thursday.  Norfolk Island has a population of only 2186 people (although that rises to 2188 when Bob and Doris get back), and it has no policies or practices concerning international trade that differ from any other part of Australia.  As far as anyone can tell, the reason why Norfolk Island has been singled out as an absolute bastard of international trade is likely to be that goods sent to the United States from Norfolk in the UK, or imported through Norfolk, New Hampshire, have somehow been attributed to the odd but essentially harmless South Pacific territory. 

Of course, imposing a 29% tariff on goods sent from Norfolk Island to the United States will have no consequences at all in the real world: President Trump may as well have imposed tariffs on goods imported from Narnia.  The only reason it matters is that it points to the fact that there has been a colossal disruption to the global economy based on assumptions and data that… well, maybe haven’t been thought through with absolute clarity.

I’m in conferences in London this week, where a recurrent theme is the interaction between international law and the “rule of law”.  In the context of international law, the “rule of law” really means that countries abide by their treaties and adhere to certain long-accepted, basic minimum standards of conduct.  Most of the countries on the White House’s list of “reciprocal” tariffs have trading agreements with the United States, and most of those trade agreements limit or remove tariffs.  Now, there may be sound arguments in favour of the use of tariffs (though these appear to have eluded the global stock markets), but there is no avoiding the fact that President Trump’s imposition of them amounts to a wholesale breach of numerous bilateral and multilateral agreements.  The fabric of international law depends upon the voluntary observance by nations of the pacts they have made, and it’s an unsettling development that the United States now seems positively enthusiastic about tearing up agreements, on grounds that aren’t obviously rational.  The foundations upon which international law stands are fragile, and it’s a reasonable guess that this won’t be the last time in the next three and a half years that they’re going to be tested.