ZERO - ZERO Trade -- Chancellor Merkel Considers It

Having finished her difficult negotiations on immigration, it appears Ms. Merkel has decided to consider Pres. Trump's war on tariffs.

The first thing of importance is that she doesn't understand why anyone would focus on ONLY automobiles or the manufacturing sector. Why not services also? That is an obvious and quite sensible response. Indeed, why not consider all kinds of trade items at once?

The suggestion I have made before is that every nation or trading bloc will have some trade items which it must protect, such as the U.K. defending their National Health Services or any nation wishing to protect its domestic food supply and national defense system. But, for all those items which are not to be protected, there can be a way to match them dollar-for-dollar or Euro-to-Euro or Yuan-to-Yuan and simply lower rates to ZERO-ZERO (both trade partners reducing their tariffs to zero). That would be done within the current WTO system. Then other protected items would be negotiated to create special arrangements (regarding tariff, subsidies or other trade barriers) and any necessary changes to the WTO to enable unbalanced tariffs on those items could be put in place. That may take a while (perhaps a year or two), so for the short-run the existing conditions would go forward for those items.

This is a more aggregate approach matching trade items not on a one for one basis with tariff percentages, but in the aggregate matching monetary units dollar-for-dollar or euro-for-euro, so for ALL in that category the tariffs can be reduced quickly to ZERO-ZERO.

This approach may be easier for trading blocs (groups of nations like the EU or NAFTA or the soon to be TPP of East Asia) to speak as one in negotiations vis-à-vis other individual nations or another bloc. Thus, America, Canada, or Mexico (of the NAFTA bloc) may trade with each other on current rules or they may readjust to ZERO-ZERO, but they may trade with a bloc such as the EU or TPP on other rules negotiated between blocs. Hopefully they would also be able achieve ZERO-ZERO in a short time.

There are a few nations, such as the U.K. or Russia or Israel (perhaps) which don't fit naturally in a regional trade bloc. Those could negotiate by themselves as a bloc with another bloc. Trade between the one such nation and the NAFTA nations would be one negotiation to establish rules for trade with four nations, while negotiation with the EU would be one negotiation which would enable trade with many nations.