For decades now, the conventional wisdom has led us to believe there is a tension between a progressive trade policy – one that focuses on values beyond returns to capital – and American foreign policy. This is a false tension, however. Far from impeding American foreign policy goals, a progressive trade policy advances them. FDR’s…
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The Open Society Foundation has published a white paper on a new model for trade agreements. As OSF explains: Around the world, the process of economic globalization is under fire for serving the needs of corporate elites rather than ordinary citizens. But it is important to recall that trade does not have to aggravate inequality.…
In a previous post, we discussed how it came to be that the rules of the rules-based system reflect the philosophy of Milton Friedman, not John Maynard Keynes. Today, even as the business community feels obliged to at least look as though it is distancing itself from the Milton Friedman regime; the Financial Times editorial…
Geopolitical strife? Let’s do a trade agreement! The latest version of this strategy involves Taiwan. China is a geopolitical concern; Taiwan is an ally; ergo, the United States should do a trade agreement with Taiwan, because it will reinforce economic relations between the two. Which two, though, is the question. Taiwan and the United States? Nope.…
The House Ways and Means Trade Subcommittee had a hearing on September 10, 2020 to discuss U.S. trade preference programs, including the Caribbean Basin Trade Partnership Act, which expires at the end of the month. My testimony focused on ways to reform these preference programs so that they more directly address the goal of promoting…
In Globalists, Quinn Slobodian examines the relationship between the Austrian School of economics, influential in the first half of the 20th century, and the rules for the global economy. Members of the School opposed the Havana Charter. The Austrian School was not monolithic. Its members variously supported pure laissez-faire, government intervention in the marketplace, and support…
As the Beltway sorts out the implications of Joe Biden’s VP pick, the trade world enjoys the benefit of having Kamala Harris’ views on the new NAFTA. While traditional critics of trade deals such as Senators Sherrod Brown, Jeff Merkley, and Elizabeth Warren voted for the agreement on the strength of its new labor provisions,…
We think of Adam Smith as the father of free trade. Having coined the phrase “Invisible Hand,” he’s portrayed as something of a libertarian icon. But that’s a caricature of a man who had much more profound, and nuanced, views of political economy – and of the welfare of the working class. Smith on Tariffs Generally opposed to…
Mr. Lewis was a civil rights icon. But he was also a member of the House Ways and Means Committee, and he had strong views on trade. Indeed, it is because of his views on civil rights that he had such strong views on trade. As he said in 2015: In a very few weeks,…
As the Trump Administration has recognized, trade involves a larger question consuming most countries: what kind of policy can make “it possible for most citizens, including those without college educations, to access the middle class through stable, well-paying jobs”? Trickle-Down Trade The Administration, however, can’t achieve this goal, because its trade policy is but an…
On June 30, 2020, the Senate Finance Trade Subcommittee held a hearing on Censorship as a Non-Tariff Barrier. It was a pleasure to testify. The hearing can be seen here, and my written testimony can be found here. My opening statement: My name is Beth Baltzan, and I am a fellow at the Open Markets…
At this point we’re all more aware of shortages relating to COVID-19 than we’d like to be. But still another shortage looms: food. Yet even as the specter of starvation emerges, farmers in the United States are plowing under their crops and dairy farmers are dumping their milk. We are seeing deep failures in the ability of the…
Vice President Biden announced his intention to be one of the most progressive Presidents since FDR. What was FDR’s approach in the aftermath of the Depression? As the eponymous Roosevelt Institute has explained, “to restore the nation’s economic health FDR understood that he must do two things. First, re-establish the bond between the American people…
COVID-19 is exposing what many of us have known for a long time: our fealty to efficiency has left us dependent on a hostile authoritarian power for the supply of essentials, like medicines and medical equipment. TPP has been marketed for years as the antidote to the Chinese Communist Party’s mercantilist view of the world…
The trade establishment is looking for comfort as supply chain shocks upend confidence in the rules of the global trading system. They’re turning to the same playbook they used in the 1990s, arguing that tariffs, regulations, and export bans are the problem. The supply chain shocks aren’t due to tariffs or regulations or export…
The question seems almost facile in a day and age when so many countries have so many trade agreements. But COVID-19 is leading to us to focus on aspects of globalization that have long been ignored. So let’s reevaluate the basics – like the purpose of these agreements. The Foreign Policy View The foreign policy…
We remember the Tariff Act of 1930 because it included the infamous Smoot-Hawley tariffs. But we should remember it for something much more important: it prohibited imports made with forced labor. Back in the day, slave labor was seen principally as unfair competition, rather than as a matter of human rights. So the law included a “consumptive…
Trade agreements are supposed to be permanent because certainty promotes stability. Or so the thinking has been for the past few decades. The reaction when a sunset clause was included in the new NAFTA was almost uniformly one of horror: the instability of such a thing! The effects on investment! Trade flows! Peace! Prosperity! It’s…
COVID-19 has revealed something many of us already knew: our supply chains reflect a precarious dependence on the People’s Republic of China. We don’t have enough testing kits; we don’t have enough masks; we don’t have enough ventilators. And as Congress is well aware, we are dependent on the PRC for all sorts of essential…
On December 12, the United States Trade Representative announced plans to hike the tariffs on imports of certain European products as a result of the seemingly endless Boeing/Airbus dispute. Capitol Hill was immediately inundated with the usual panoply of hyperbolic claims that tariffs spell doom for {fill in the blank} industry on the target list.…
The House Ways and Means Committee held a hearing last Tuesday with two trade topics: the WTO Appellate Body and NAFTA 2.0. The first half of the hearing was devoted to the Appellate Body, including both support for the U.S. government’s longstanding concerns over the flaws with the dispute settlement system, as well as a…
As of today, the WTO Appellate Body will be, at least temporarily, no more. The Trump Administration has strangled it by refusing to agree to appoint new members. This can be seen as an extension, albeit an extreme one, of positions taken in prior Administrations, including the Obama Administration. This blog explains various ways the…
The World Trade Organization’s dispute system was once lauded as an important advancement in trade law enforcement. Now it appears that the system’s legal backbone has been broken. If the dispute system cannot be salvaged from the current crisis, it’s worth asking: what do we lose? Answering that question means putting politics aside an taking…
If you are struggling to understand the rise of economic populism in the United States, and the resulting chasm between populists and elites, then Matt Stoller’s new book Goliath will enlighten you. Goliath is focused on antitrust, but it tells a much broader story of the way the intelligentsia has been led, through a combination…
The hang-up over the new NAFTA comes down to labor enforcement. This should be of no surprise to anyone who’s been paying attention. The United States has, for years, expressed concern over the historical alliance between Mexican government officials and business – including U.S. business – to frustrate labor rights. To be clear, suppressing labor…
The conventional wisdom on trade, which typically emanates from K Street, is generally long on being conventional, and short on being wise. Today’s version is the meme that Democratic demands on NAFTA 2.0 are just politickin’ to deny Trump a victory. How about a few facts, and then we can reevaluate that line of thinking.…
The express shippers responded to the last blog, on the de minimis loophole. Out of respect for the time and effort they put into responding, the comments are, with the shippers’ permission, set out below. In addition, the National Council of Textile Organizations sent this letter to Customs in regards to de minimis. The shippers’…
We’ve talked about one loophole in NAFTA called “de minimis.” In addition to rules of origin that already allow a certain amount of content originating from outside the region, the original NAFTA contains a loophole that allows an extra 7% on top of it. The Trump Administration, in a position completely at odds with its China…
The recent furor over the NBA, South Park, and the long arm of the Chinese Communist Party is giving the average American a much better understanding of Chinese government authoritarianism in action. Until now, the discussion about the relationship between China and the United States had been dominated by pearl-clutching over how much more dog…
The following is an executive summary of a paper submitted to the Institute for Corporate Governance and Finance Conference A New Deal for a New Century: Making Our Economy Work for All. Papers for the conference, including the full version of the summary below, can be found here. Too often, the debate over trade devolves into tribalist…
Typically, trade agreement marketers rely on gains to GDP to explain why the agreements are worth doing. (Of course, in 2016 the U.S. International Trade Commission concluded that all these bilateral and regional trade agreements combined added a mere .2% per year to GDP.) Herein lies the conundrum: the existing NAFTA already provides duty-free treatment among…
On June 6, Inside Cybersecurity had a webinar of government and American industry voices to discuss Huawei, 5G, and cybersecurity. The panelists’ main concern is the myriad ways hostile actors, including state actors, can exploit supply chains to engage in nefarious activities. Huawei, which has a prominent position in the race to 5G thanks to Chinese government…
Who said the following: many . . . have focused in particular on enforcement of labor and environmental provisions . . . . I am pleased that we obtained strong provisions in those areas, and I agree that they should be fully and effectively enforced so that our companies can compete based on…
In the last blog, we talked about the SOE chapter. It lays out some interesting rules on anticompetitive behavior; but those rules only apply to state-owned enterprises. If the goal is to discipline state capitalism, that chapter won’t do it. But because it has such detailed rules on anticompetitive behavior, it is worth comparing to…
Much has been made of the TPP and NAFTA chapters on state-owned enterprises (SOEs). They are supposed to be forward-looking provisions that will put a dent in state capitalism. But the premise is wrong, and so the response is wrong. The premise of the argument is that state capitalism is executed through SOEs. In some…
According to Politico, a “coalition of free-market advocacy, business and nonprofit groups is urging the leaders of the Senate Finance Committee to press forward on new legislation curbing the president’s tariff authority.” Ah, the siren song of the free market. But does anyone really think the global trading system is characterized by “free” markets? A…
Donald Trump campaigned in part on the flaws in the auto rules of the Trans-Pacific Partnership. Much of his renegotiation of NAFTA has focused on tightening up those rules. As this paper explains, he can rightly claim some credit for strengthening them. But there are nevertheless questions about whether those rules will work the way…
One of the goals of this blog has been to facilitate an understanding of the backlash against the global trading system. That system is characterized by a broad set of rules that are complex — opaque, even — with which few are familiar, even many of those staunchly defending the status quo. An improved understanding…
Although the Trump Administration is no friend of environmental groups, the current U.S. Trade Representative has, as we have noted before, enforced environmental provisions under the U.S-Peru trade agreement. In that context, it is not as surprising as it might otherwise be that the NAFTA 2.0 environmental chapter contains new, positive provisions. However, on the whole,…
To those outside the trade world, it might seem like a foregone conclusion that the Trump Administration’s renegotiation of NAFTA would contain provisions hostile to, rather than supportive of, organized labor. However, trade has been the anomaly in this Administration. As we have pointed out before, the President has consistently borrowed Democratic talking points on…
According to a recent poll, a novice politician, J.D. Scholten, is giving long-standing incumbent Steve King a run for his money in Iowa, trailing King by one percentage point. How is he doing it? One of the issues Scholten is raising is the effect of corporate concentration on farmers. Senator Cory Booker joined Scholten at an…
NAFTA 2.0 includes what many consider a novel provision: a sunset clause. That is, the agreement will terminate in 16 years unless all three parties agree to extend it. When the United States first proposed the concept of a sunset for the agreement, the reaction was to treat it akin to heresy. A disagreement between…
With the conclusion of the NAFTA renegotiation, the next step in the United States is Congressional consideration. The assumption is that the agreement will be considered pursuant to Trade Promotion Authority (TPA), and there are some questions as to whether the Administration has complied with TPA. For example, TPA requires consultations with members “upon request,”…
To situate the ongoing debate over trade, let’s take a look at some of the key takeaways from Judith Stein’s book Pivotal Decade: How the United States Traded Factories for Finance in the Seventies. Stein traces the evolution of American trade policy from Nixon to Clinton, and in particular she identifies choices that were made, across successive…
The Op-Ed can be found here.
There isn’t one. Contrary to the prevailing narrative, the pain didn’t start when the United States imposed tariffs on our trading partners. The pain started much earlier. When, exactly, doesn’t necessarily matter, though we can focus on China’s accession to the World Trade Organization (WTO), its subsequent skirting of the rules, the WTO’s insistence on…
As the Trump Administration continues to borrow the Democratic message that globalization has left American manufacturing workers behind, some of our trade partners have chosen to retaliate by targeting American agricultural workers. As we rightly focus on whether our farmers will be hurt, however, it is important to recall the degree to which our trade agreements…
Last month the Center for Automotive Research produced a briefing paper on the proposed changes to the NAFTA rules of origin. An evaluation of that briefing paper can be found here.
For many Americans, the 1950s were the golden age of American history. When asked when America was great, Donald Trump pointed to the post-war era of the 1940s and 1950s. America was the world’s unquestioned economic, political, and military power. The business of America was business. The American economy was humming as never before. The…
A previous blog explained that: the U.S. willingness to be the market of last resort has been a component critical to the functioning of the global trading system; the U.S. ability to serve as the market of last resort has been compromised by WTO overreach; and no other WTO Member seems to be willing to shoulder…
2018 seems to be the year of the Progressive trade agreement. The Trans-Pacific Partnership has been renamed the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership” (CPTPP). Canada has floated proposals in the NAFTA renegotiation that it has advertised as progressive. Why? Populists in 2016 reminded us that trade agreements are inherently not progressive. Economic theory…
The Trump Administration has made no secret about its frustration with the World Trade Organization. Campaign rhetoric is being channeled into policy. The United States is single-handedly strangling the Appellate Body by blocking appointment of new members and complaining about those who are holding over past their terms. The latest WTO ministerial resulted in no…
Earlier this month Politico reminded us that, in the talks with the Koreans about KORUS, the Trump Administration is not following the procedures set out under Trade Promotion Authority. The theory is that the Administration doesn’t plan to change U.S. law, no Congressional vote is required, and thus TPA isn’t applicable. So far so good. …
The last blog pierced the China meme – the premise that we need to do trade deals with countries in order to keep China at bay. But if trade deals with other countries aren’t the way to deal with competitive threats from China, what is? Part of the problem is that trade people look at…
The go-to talking point when a trade agreement is in trouble in the United States is to invoke the specter of China. When TPP began to falter, the rallying cry for passage was that if we failed to seal the deal, China would score a win, not just commercially, but geopolitically as well. At the…
On October 19, 2017, USTR announced that imports of Peruvian wood from the exporter Inversiones Oroza would be banned. Notably, the ban isn’t being executed pursuant to environmental laws such as the Lacey Act – it’s being executed pursuant to an annex to the U.S.-Peru Trade Partnership Agreement. That agreement gives the United States the…
Is short-termism on its way out? Steven Pearlstein of the Washington Post has posited as much, in the wake of the departure of one CEO after another from White House advisory councils after the Charlottesville protests. He argues that this event is likely to be looked back upon as a turning point in the evolution…
The House Ways and Means Trade Subcommittee invited submissions in connection with its hearing on modernizing NAFTA. This is the Executive Summary of American Phoenix’s comments. The full comments can be found here. In the past year, the backlash against globalization has expressed itself through Brexit, the withdrawal of the U.S. from the Trans-Pacific Partnership,…
The debate over trade policy seems to lead to only two possible views: on one side, trade is responsible for the decline of the American middle class; on the other, trade is always beneficial, regardless of the rules. Each side has a pejorative label for the other, so that we live in a world where…