‘America First’ policy to have direct implications for Pakistan’s economy

CPEC becomes victim of US policy change which is hindering investments in Pakistan

Shakeel Ahmad Ramay March 05, 2018

ISLAMABAD: The Trump administration is trumpeting a new role to play in the world with the “America First” slogan.

The White House is releasing executive orders which are bound to reverse the globalisation process and domestic social-sector reforms undertaken by former president Barack Obama.

The very first victim of Trump policies is the immigrants. The health care bill has extensively been debated and the Trump administration is on its way to repeal it.

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The North America Free Trade Agreement (Nafta) is under negotiation keeping in view the America First policy. Imports, especially of solar panels and washing machines, have been made difficult by imposing heavy taxes and duties.

Amid all this hoodwinking, China becomes the favourite target and is being criticised for creating economic crisis in the US. Despite all efforts, economic recovery is still very slow except for a sharp increase in Wall Street stocks. Professor Steve Pincus from Yale University has compared the current situation with the “Declaration of Independence” and period of struggle of US founding fathers.

In his book “The Heart of Declaration, The Founders’ Case for an Activist Government”, he considers economy and migration as basic elements for the independence struggle. The US founding fathers were British Americans first and America was second in their identity.

After the 1760s, ideas began to change. Britain was more keen on its “British First” policy. Subsidies started to shrink and growth in colonies started to reverse. Colonies were expecting more support, but the British Empire introduced new taxes and levies.

The British parliament passed Stamp Act of 1765 and Townshend Act of 1767. The new legislation gave authority to collect more revenue from colonies instead of investing there. The reason was that the British were under debt and they had not enough resources to pay it back.

Debt kept on increasing due to involvement in wars and adventures for new territories. The British also made it difficult for immigrants to move in and introduced new measures to halt it. Many people considered this as an act of independence as a majority of colonies looked for their separation from the British Empire.

The founding fathers considered free trade and economic integration as primary and must elements of growth and development. They looked towards Spanish Americans for extending trade, but the British Empire acted in a different way.

The Empire strictly prohibited the colonies from trading outside the Empire. It was evident that all these measures would negatively impact the well-being of common citizens of the colonies against the principles of free and liberal society.


Trump’s actions are closely in line with the British Empire’s actions. The America First policy is a prominent feature and guideline for actions. Prohibitory measures are being applied to many countries. Immigration has become very complicated and has literally stopped many from travelling to the US. Lessons from the past are scary and significant to understand the dynamics of this policy.

The US started pursuing its dreams and it achieved the status of global leader after the First World War. The Second World War was a decisive moment for strengthening the US leadership. Now, the US is the sole superpower whereas the UK is a great power with limited influence in world politics.

History teaches us that the US consolidated its power by adopting a unique model of free and liberal trade and society. It generously helped war-devastated Europe to rebuild its economy, promote democracy, liberal values and prosperity. The principal lesson is that it was not about the construction of infrastructure, rather it was the idea of shared and prosperous future for all. The US also received immigrants with an open heart and paved the way for their integration into American society. Support for democracy further strengthened its positive image and respect.

American investment in Europe also created new economic opportunities back home. It also enhanced the US influence across the world as a reliable partner. Immigrants gave a boost to the economy as best minds from the world landed there. These measures were pivotal for the creation of America as a superpower.

Regrettably, the track followed by the US administration over the past few decades was similar to that of the British Empire. It has fuelled wars across the world. The US is under heavy debt and one of the major reasons is its war expenditure. It is revisiting its trade agreements and is finding ways to prohibit the countries from open trade. It is counter-productive, which is creating opportunities for other countries to fill the gap.

Filling the void

Now, China is filling this gap and is pursuing a two-pronged policy – non-interference and economic integration – with the objective of common future and shared destiny.

President Xi Jinping announced the new initiative called Belt and Road Initiative (BRI). It is a comprehensive package of investment in infrastructure, trade and economic integration.

China is investing across the world in railways, energy, airports, roads, ICT, tourism, etc and allocated $1 trillion for improving infrastructure. A new multilateral institution in the name of Asian Infrastructure Investment Bank was established to attract additional resources.

It has been estimated by the Asian Development Bank that Asia needs an investment of $12 trillion to upgrade the existing infrastructure.

China is creating a global economic model, which ensures participation of everyone for common destiny. Common destiny is being defined as an equal opportunity to grow and prosper. CPEC is one of the prominent examples which is a signature initiative of the BRI. On the contrary, the US and West are pressing their allies not to join the BRI, but with little success. Australia and South Korea have already joined the initiative and Japan is seriously considering joining it.

FATF grey list

The US is also using other instruments to hinder the success of CPEC and future investments in Pakistan. CPEC has also become the first victim of this change in US policy.

First prominent example can be quoted from the Financial Action Task Force (FATF) resolution about Pakistan. The US, along with its allies, is pursuing to put Pakistan on the grey list and ultimately on black list.

It would have severe implications for Pakistan’s economy and doing business in the country. It will discourage FDI and international business community from working in Pakistan.

Therefore, the America First policy will have direct implications for Pakistan’s economy and future investments. Pakistan should work on a two-pronged strategy to avert this situation.

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First, it should try to cover any gap in national policies and the institutional framework, which can be exploited by the international community. Second, it should negotiate with the West and the US to try to make them understand that only collaborative measures and joint ventures will lead to prosperity and enduring peace.

The writer is the Head of Centre for Future Policy and Head of Research Coordination Unit, Sustainable Development Policy Institute

Published in The Express Tribune, March 5th, 2018.

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