Trump Trade Agenda

The Trump trade agenda is in the news. Since January (2018), the Trump Administration has imposed tariffs on steel and aluminum imports, started a trade war with China, and re-negotiated the 6-year old Korea-US Free Trade Agreement (KORUS). The Administration also continues NAFTA re-negotiations and most recently is considering having the U.S. re-join the Trans Pacific Partnership (TPP) Agreement left within three days of Trump taking office.

Trade wars and trade deals appear contradictory. Can we look to some coherent agenda to explain these seemingly disparate actions? The Trump trade agenda is enunciated in its 2018 Trade Agenda Report, sent to Congress in February (2018).

The Trump Trade Agenda rests on the following five pillars:

Supporting US National Security: US trade policy and trade deals must –

  • Help to build a strong American economy, first and foremost;
  • Aggressively defend US national sovereignty in the face of multilateral trade obligations;
  • Respond to economic competitors, notably China;
  • Preserve the US lead in research and technology; and
  • Cooperate with countries that give the US reciprocal treatment and act to defend US interests against those that do not.

Strengthening the U.S. Economy: Key elements of this pillar are –

  • Anticipated benefits to corporations of the new tax regime; and
  • Reduction in regulatory burdens imposed by trade policy;

Negotiating Better Trade Deals:

  • Renegotiate NAFTA, KORUS, and any other trade deals the Administration considers bad for American workers and farmers with a view to –
  • Achieving outcomes that improve U.S. export opportunities and reduce the US trade deficit;
  • Resolving outstanding implementation issues that harm or undermine U.S. interests and U.S. export potential;
  • Rebalancing commitments on tariffs necessary to maintain a general level of reciprocal and mutually advantageous commitments under the agreement;
  • Reducing and eliminating barriers to exports of U.S. made motor vehicles and motor vehicle parts; and
  • Improving other terms to ensure the benefits of the agreement are more directly supportive of job creation in the United States.
  • Negotiate new trade agreements with other countries, noticeably, the United Kingdom and the countries of the Trans-Pacific; and
  • Focus on increasing US agricultural exports.

Enforcing and Defending U.S. Trade Laws:  Key elements of this pillar include –

  • Aggressive use of all tools available under US trade law to address violations;
  • Imposition of available remedies, as appropriate, including suspension of trade agreement concessions, imposition of tariffs, negotiation to remove the offending practice or for compensatory benefits to the United States, fees or restrictions on services; and
  • Investigation of China’s acts, policies and practices related to technology transfer, intellectual property, and innovation.

Strengthening the Multilateral Trading System: Key actions to be taken under this pillar include –

  • Vigorously defend use of US trade laws against complaints brought at the WTO, notably by China, Canada, the EU;
  • Aggressively challenge other countries’ trade laws and policies that negatively impact US exports, notably China, Canada, and India;
  • Address US concerns regarding the WTO Appellate Body, which makes final decisions on disputes brought before the organization;
  • Work with WTO Members who are ready and able to negotiate free, fair and reciprocal agreements commensurate with their status in the global economy;
  • Work to change how the WTO approaches questions of development, so that emerging economies like Brazil, China, India, and South Africa do not receive the same flexibilities as very low-income countries; and
  • Pursue negotiations on agriculture, fisheries subsidies, and digital trade at the WTO.

These pillars weave together a protectionist, America-first agenda that provides context for the seemingly disparate actions of trade wars alongside trade negotiations.

The strong anti-China bias exists because China is undoubtedly playing by its own set of rules, violating the spirit, if not the letter, of international trade law. It is not clear, however, that imposing tariffs is the solution.

More importantly, this protectionist agenda ignores the reality that all countries negotiate from their perceived national interests as well. This results in a balancing of compromises – give and take.

For example, under the re-negotiated Korea FTA, the U.S. got to export more cars, but Korea won partial exemption from the steel tariffs. NAFTA re-negotiations are struggling to address unreasonable US demands. The United Kingdom, which is considered to be in a weak negotiating position as it also negotiates its new trading landscape outside of the EU, probably does not plan to roll over to aggressive US proposals either.

Then, there is the interconnectedness of today’s global markets. US imposition of tariffs on China threatens US manufacturers who rely on imported inputs. China’s retaliation threatens the livelihood of US farmers dependent on exports to the Chinese. Which is why the Administration may be exploring another approach – coming full circle to re-join the rejected Trans-Pacific Partnership (TPP), a 12-nation pact covering 40 percent of the global economy envisioned by the Obama Administration as a multilateral counterweight to China. The other 11 countries have moved on to conclude the Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP) so this time, the U.S. would be the one negotiating its way back in.

(Crossposted from DevelopTradeLaw.)

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