tag:theconversation.com,2011:/fr/topics/tpp-7972/articlesTPP – The Conversation2023-02-02T04:32:08Ztag:theconversation.com,2011:article/1989952023-02-02T04:32:08Z2023-02-02T04:32:08ZIs terrorism returning to Pakistan?<figure><img src="https://images.theconversation.com/files/507754/original/file-20230202-2734-nxfh9e.jpg?ixlib=rb-1.1.0&rect=180%2C43%2C3273%2C2382&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Muhammad Sajjad/AP</span></span></figcaption></figure><p>Earlier this week, a suicide blast ruptured the relative calm that had returned to Pakistan in recent years. The attack at a mosque in the northwestern city of Peshawar <a href="https://www.nytimes.com/2023/01/31/world/asia/pakistan-mosque-peshawar-terrorism.html">killed more than 100 people</a> and stunned many Pakistanis who thought the days of such horrific suicide bombings were long behind them. </p>
<p>While Monday’s attack was among the worst in the country in a decade, the blast doesn’t necessarily signal a return of terrorism so much as an escalation of a problem that never really went away.</p>
<p>The Pakistan Taliban, also known as Tehreek-e-Taliban Pakistan (TTP), denied responsibility for Monday’s blast. Instead, a TTP faction, Jamaat-ul-Ahrar, claimed to be behind it.</p>
<p>But in many ways, Pakistan’s deteriorating security situation is directly linked to a resurgent TTP and the increasing fragility in neighbouring Afghanistan since the <a href="https://www.cfr.org/backgrounder/taliban-afghanistan">Taliban’s takeover in August 2021</a>. </p>
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<a href="https://theconversation.com/how-pakistan-stands-to-gain-or-lose-from-the-talibans-victory-in-afghanistan-166414">How Pakistan stands to gain — or lose — from the Taliban's victory in Afghanistan</a>
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<p>The Pakistani government had supported the Afghan Taliban for years, but the <a href="https://www.theguardian.com/world/2023/jan/31/terrorists-north-west-pakistan-deadly-taliban-resurgence">relationship began to break down</a> after the Afghan Taliban offered shelter to TTP fighters and <a href="https://www.businessinsider.com/watch-afghan-prisoners-isis-al-qaeda-fighters-freed-by-taliban-2021-8">released thousands of terrorists</a> from prison after taking power.</p>
<p>The TTP not only appeared to be strengthened and energised by the Taliban’s return to power in Afghanistan, it also <a href="https://www.usip.org/publications/2022/01/after-talibans-takeover-pakistans-ttp-problem">drew closer to the group</a>. </p>
<p>Last year, the Afghan Taliban facilitated dialogue between the Pakistani government and the TTP that led to a ceasefire deal. But by November, the TTP <a href="https://www.aljazeera.com/news/2022/11/28/pakistan-taliban-ends-ceasefire-with-govt-threatens-new-attacks">ended the five-month truce</a>, claiming the government had not complied with all its requests, most notably the freeing of important TTP members. </p>
<p>The result has been a slow but steady uptick in terrorist attacks. </p>
<p>Documented acts of terrorism <a href="https://www.satp.org/datasheet-terrorist-attack/incidents-data/pakistan">hit a high of 3,923</a> in Pakistan in 2013, with more than 2,000 deaths. The number of fatalities plunged to 267 in 2021, but last year, started to climb again to 365. </p>
<p>Pakistan also only <a href="https://www.satp.org/datasheet-terrorist-attack/suicide-attacks/pakistan">registered</a> four suicide attacks in 2021, but there were 13 last year and four already this year. The TTP has claimed responsibility for most attacks. </p>
<h2>Decade-long war on extremism</h2>
<p>Pakistan had achieved enormous strides against terrorism over the past 15 years, in large part because of its significant “<a href="https://en.wikipedia.org/wiki/Second_Battle_of_Swat">Rah-e-Rast</a>” military operation in 2009 and the “Zarb-e-Azb” operation in 2014. </p>
<p>The TTP retaliated to the latter with an attack on an army public school in Peshawar in 2014, <a href="https://www.bbc.com/news/world-asia-30491435">killing more than 130 children</a>. This prompted the <a href="https://www.brookings.edu/blog/order-from-chaos/2021/01/15/terrorism-in-pakistan-has-declined-but-the-underlying-roots-of-extremism-remain/">army to intensify its activities</a>, and by 2017, it had largely routed the TTP. </p>
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<img alt="" src="https://images.theconversation.com/files/507758/original/file-20230202-2941-6lbgd6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/507758/original/file-20230202-2941-6lbgd6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=392&fit=crop&dpr=1 600w, https://images.theconversation.com/files/507758/original/file-20230202-2941-6lbgd6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=392&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/507758/original/file-20230202-2941-6lbgd6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=392&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/507758/original/file-20230202-2941-6lbgd6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=492&fit=crop&dpr=1 754w, https://images.theconversation.com/files/507758/original/file-20230202-2941-6lbgd6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=492&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/507758/original/file-20230202-2941-6lbgd6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=492&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A protest following the Taliban attack on a military-run school in Peshawar in 2014.</span>
<span class="attribution"><span class="source">Fareed Khan/AP</span></span>
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<p>These security operations, however, only addressed the symptoms of the problem by pushing most TTP fighters across the border into Afghanistan. Terrorist attacks in Pakistan declined, but the problem didn’t go away.</p>
<p>Despite the development of a counter-terrorism blueprint called the <a href="https://nacta.gov.pk/nap-2014/">National Action Plan</a> in 2014, the government’s security operations have been too limited in scope. They do not focus on all terrorist groups, but selectively target a few, such as the TTP. </p>
<p>The National Counter Terrorism Authority has <a href="https://nacta.gov.pk/wp-content/uploads/2018/12/Proscribed-OrganizationsEng-3.pdf">registered</a> 78 terrorist organisations in Pakistan, but little is known what the government is doing to counter them. The National Action Plan also does not focus much attention on preventative measures like education. </p>
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<a href="https://theconversation.com/it-is-a-big-relief-for-me-how-the-welfare-provided-by-madrassas-holds-a-key-to-fighting-the-taliban-167899">'It is a big relief for me': how the welfare provided by madrassas holds a key to fighting the Taliban</a>
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<h2>Addressing the root causes of extremism</h2>
<p>Nonetheless, there is growing interest in Pakistan to invest more in promoting a stronger national counter-narrative against extremist ideologies, such as the <a href="http://www.paighamepakistan.com/category/capacity-building-of-local-bodies-on-cve/">Paigham-e-Pakistan</a>, which the government developed with the help of hundreds of Islamic scholars. </p>
<p>Moreover, there is a growing desire in policymaking circles to address the root causes of extremism, including the grievances of locals in the region previously known as the Federally Administered Tribal Areas on the Afghan border and Balochistan in southwestern Pakistan. </p>
<p>The growing insecurity in Balochistan, for instance, is in part driven by Chinese investment, which is opposed by the militant Baloch Liberation Army. The group believes the government has <a href="https://www.lowyinstitute.org/the-interpreter/pakistani-separatists-turn-their-sights-china">exploited</a> the region’s resources and ignored its development needs. It has targeted Chinese citizens in <a href="https://www.bbc.com/news/world-asia-61229589">numerous attacks</a>.</p>
<p>The stakes here are very high for Pakistan, which is desperate for foreign investment. As such, Planning Minister Ahsan Iqbal has <a href="https://tribune.com.pk/story/2355543/minister-directs-cpec-security-review-every-month">urged</a> the government to focus on addressing the socio-economic concerns of locals, in particular young people, so they don’t turn toward extremism.</p>
<p>The same grievances exist in the former tribal areas, where millions have suffered due to the government’s neglect. </p>
<p>Until 2018, this region was governed under the notorious, colonial-era <a href="https://interactive.aljazeera.com/aje/2019/pakistans-tribal-areas-fata/index.html">Frontier Crimes Regulation</a>. This meant Pakistani laws did not apply and there were no local courts or political parties, allowing armed groups to thrive. The first time residents <a href="https://dailytimes.com.pk/433472/first-ever-elections-in-erstwhile-fata-today/">participated</a> in any election was in 2019, more than 70 years after independence. </p>
<p>When the government merged the tribal areas with a neighbouring province in 2018, residents believed their lives would improve. But this coincided with the <a href="https://www.geo.tv/latest/397037-sheikh-rasheed-reveals-ttp-has-started-asking-extortion-in-peshawar">resurgence of the TTP</a> in the region, bringing new concerns about security and stability.</p>
<h2>What the state should do now</h2>
<p>For now, Pakistan’s counter-terrorism efforts are largely focused on TTP, but the country needs a broader approach. </p>
<p>First, Pakistan needs to have its own house in order by addressing the ongoing governance challenges in the former tribal areas and Balochistan. </p>
<p>Second, the government can no longer limit counter-terrorism operations to only a few areas. This will only increase the grievances of locals, who continue to suffer due to displacement and disempowerment. As terrorist groups are spread across the country, it is time the state tries a more holistic approach. </p>
<p>With the TTP, it is already clear that attempting dialogue has not worked. It only provided the group more legitimacy and time for recruitment and fundraising. </p>
<p>Instead of playing into the hands of terrorist groups, the government needs to address the structural causes of extremism, such as the marginalisation of millions living in peripheral areas, in particular highly vulnerable young people.</p><img src="https://counter.theconversation.com/content/198995/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Zahid Shahab Ahmed receives funding from the Australian Research Council.</span></em></p>Since the Taliban’s return to power in neighbouring Afghanistan, the security situation in Pakistan has grown increasingly dire.Zahid Shahab Ahmed, Senior research fellow, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1784082022-03-04T01:48:35Z2022-03-04T01:48:35ZBehind the ‘inclusive’ window dressing, the NZ-UK free trade deal disappoints politically and economically<figure><img src="https://images.theconversation.com/files/449948/original/file-20220303-17-19tdou2.jpg?ixlib=rb-1.1.0&rect=15%2C0%2C3389%2C2220&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The free trade agreement (FTA) signed between <a href="https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/new-zealand-united-kingdom-free-%20%20trade-agreement/resources/#bookmark0">New Zealand and the United Kingdom</a> this week demonstrates the intransigence of political leaders and their official advisers in the face of concerted demands to rethink the country’s trade policy paradigm. </p>
<p>Those demands reached a high point with the deeply unpopular Comprehensive and Progressive Agreement for Trans-Pacific Partnership (<a href="https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-in-force/comprehensive-and-progressive-agreement-for-trans-pacific-partnership-cptpp/">CPTPP</a>), which was rescued from the even more unpopular Trans-Pacific Partnership Agreement (<a href="https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/trans-pacific-partnership-agreement-tpp/">TPP</a>) after the US had quit. </p>
<p>Opposition to the TPP/CPTPP was part of an international backlash that saw a series of high-profile negotiations abandoned or seriously stalled.</p>
<p>These included the EU’s mega-deal with the US for the Trans-Atlantic Trade and Investment Partnership (<a href="https://ec.europa.eu/trade/policy/in-focus/ttip/">TTIP</a>), the Trade in Services Agreement (<a href="https://www.dfat.gov.au/trade/agreements/negotiations/tisa/trade-in-services-agreement">TiSA</a>) across 23 mainly rich parties, the Canada and EU Trade Agreement (CETA) and others.</p>
<p>As I wrote in <a href="https://www.bwb.co.nz/books/the-fire-economy/">The FIRE Economy</a> in 2015, this backlash was part of a broader rejection of neoliberal globalisation and the massive private power accumulated by global capital, especially finance capital. </p>
<p>The global financial crisis had brought a human face to structural wealth and income inequality in Anglo-American countries (as Thomas Piketty documented in his book <a href="https://www.theguardian.com/books/2014/jul/17/capital-twenty-first-century-thomas-piketty-review">Capital in the 21st Century</a>), and to its unequal gender and race impacts.</p>
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<span class="caption">Then-trade minister David Parker and Prime Minister Jacinda Ardern announce the start of free trade negotiations with the UK in 2020.</span>
<span class="attribution"><span class="source">GettyImages</span></span>
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<h2>‘Inclusive trade’</h2>
<p>Free trade agreements were powerful vehicles to advance and lock in that failed model. Multinationals could even sue host governments offshore through investor-state dispute settlement (<a href="https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-in-force/comprehensive-and-progressive-agreement-for-trans-pacific-partnership-cptpp/understanding-cptpp/investment-and-isds/">ISDS</a>) arbitration for moves that undermined their value or profits. </p>
<p>Equally, the secrecy under which trade pacts were negotiated, and the fetters they put on future governments’ policy options, were an affront to democracy and self-determination.</p>
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<a href="https://theconversation.com/new-zealand-is-overdue-for-an-open-and-honest-debate-about-21st-century-trade-relations-160922">New Zealand is overdue for an open and honest debate about 21st-century trade relations</a>
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<p>So Labour faced a quandary when it formed a government in October 2017. Having voted against the ratification of the TPPA, it scrambled to justify its U-turn to support the CPTPP as “progressive”. </p>
<p>In April 2018, the then trade minister, David Parker, announced “<a href="https://www.beehive.govt.nz/release/modernising-our-trade-policy-trade-all-have-your-say">Trade for All</a>”, a slogan <a href="https://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf">borrowed from the EU</a>, to develop a “progressive and inclusive” trade agenda. A year later he appointed the <a href="https://www.mfat.govt.nz/assets/Trade-General/Trade-policy/Trade-for-All-report.pdf">Trade for All Advisory Board</a>, which delivered its moderate report and recommendations in November 2019. </p>
<p>The government took another seven months to <a href="https://www.mfat.govt.nz/en/media-and-resources/proactive-release-trade-for-all-advisory-board-recommendations-report-on-progress/">respond</a>. Meanwhile, New Zealand continued pursuing its usual agenda through the 16-country Regional Comprehensive Economic Partnership, in the World Trade Organisation, in negotiations with the EU – and in informal pre-Brexit talks with the UK. </p>
<p>The one significant change was Labour’s decision not to include ISDS provisions in future agreements. </p>
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<h2>Trade and the Treaty</h2>
<p>Predictably, the government adopted the advisory board’s “soft” recommendations that could be accommodated within the existing trade policy paradigm, including new chapters on “inclusive trade”.</p>
<p>But the government rejected recommendations that could make a substantive difference. These included a moratorium on new commitments pending a comprehensive review of digital trade policy, and reviewing the widely criticised Te Tiriti o Waitangi/Treaty of Waitangi exception that allows “more favourable treatment” to Māori, subject to various conditions, but does not protect treaty compliance measures more generally. </p>
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<a href="https://theconversation.com/the-uk-wants-to-join-a-pacific-trade-deal-why-that-might-not-be-a-risk-worth-taking-162900">The UK wants to join a Pacific trade deal – why that might not be a risk worth taking</a>
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<p>Also rejected was a proposal that the “national interest analysis”, which accompanies any FTA text to parliament, be prepared independently rather than by the trade ministry that negotiated it.</p>
<p>Since then, the pandemic has fuelled calls to waive intellectual property rules in trade agreements that guarantee Big Pharma’s patents over medical supplies. The UK and EU oppose the waiver. </p>
<p>In December 2021 the Waitangi Tribunal found the CPTPP’s electronic commerce chapter, especially its rules on offshoring of data, which are now standard in many FTAs, breached the Crown’s Treaty of Waitangi <a href="https://waitangitribunal.govt.nz/news/tribunal-releases-report-on-electronic-commerce-chapter-in-cptpp/">obligations</a>.</p>
<h2>‘Clip-on’ agreements</h2>
<p>That context explains what we see in the new UK FTA. Of its 33 chapters, two-thirds could be largely cut and pasted from the TPPA. </p>
<p>Those chapters constrain the future policy and regulatory options available to governments on (among other things) import tariffs, food labelling and standards, intellectual property rights, investment, financial services, state-owned enterprises and government procurement. </p>
<p>Many remaining chapters on trade and gender, Māori, development, and small and medium enterprises are clustered under an “inclusive trade sub-committee”. While these are new to New Zealand’s agreements, they mirror the “inclusive trade” agenda designed by the EU, Canada and others to defuse the backlash against these deals. </p>
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<a href="https://theconversation.com/old-wine-in-new-bottles-why-the-nz-uk-free-trade-agreement-fails-to-confront-the-challenges-of-a-post-covid-world-170621">Old wine in new bottles – why the NZ-UK free trade agreement fails to confront the challenges of a post-COVID world</a>
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<p>I describe these chapters as “clip-ons”. None is enforceable. Most promise to co-operate on sharing “best practice”, ensuring access to information, promoting exchanges and facilitating opportunities to take advantage of an agreement that works for big business more than ordinary consumers. </p>
<p>The preamble and the Māori trade chapter “note” the UK was the original signatory to Te Tiriti o Waitangi, but eschew any ongoing obligations. The UK rejects any inference that it recognises Māori genetic resources and traditional knowledge as forms of intellectual property, or that these affect the UK’s laws. </p>
<p>A footnote records that the UK has no legal or financial obligation to explore or undertake any of the proposed co-operation activities. </p>
<p>The labour and environment chapters reiterate existing international obligations. Each country promises to comply with its domestic laws and try not to dilute them to get a trade or investment advantage, and to promote voluntary corporate social responsibility. These chapters are enforceable through a tailored dispute process.</p>
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<h2>Did NZ try for a better deal?</h2>
<p>Maybe New Zealand’s negotiators sought to do more that was genuinely progressive, but the secrecy surrounding the negotiations means we will never know. </p>
<p>The government must be judged on the deal it agreed to – which fails to confront the need for more fundamental reform, compounded by allowing a mere ten days for submissions on the 1,700-page text.</p>
<p>And for what? There are the usual grand headlines that the FTA is worth NZ$1 billion to exporters with a <a href="https://www.1news.co.nz/2022/03/01/nz-and-uk-free-trade-deal-signed-worth-up-to-1-billion/">50% increase in exports</a> to the UK. </p>
<p>But the government’s own <a href="https://www.mfat.govt.nz/assets/Trade-agreements/UK-NZ-FTA/NZ-UK-FTA-National-Interest-Analysis.pdf">economic modelling</a> projects a mere 0.3% increase on current GDP when the agreement comes into force fully – a rate of 0.02% per year over 15 years. Hardly a bonanza.</p><img src="https://counter.theconversation.com/content/178408/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jane Kelsey is a pro bono technical adviser for the Ngā Toki Whakarururanga on trade policy and negotiations.</span></em></p>Government modelling projects a mere 0.3% increase on current GDP when the NZ-UK free trade agreement comes into full force. Does that justify the concessions the deal makes?Jane Kelsey, Professor of Law, University of Auckland, Waipapa Taumata RauLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1521482021-05-12T12:48:00Z2021-05-12T12:48:00ZWhat American farmers could gain by rejoining the Asia-Pacific trade deal that Trump spurned<figure><img src="https://images.theconversation.com/files/375184/original/file-20201215-18-1w95l1w.jpg?ixlib=rb-1.1.0&rect=53%2C44%2C6000%2C3853&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Trans-Pacific Partnership agreement covers a broad range of goods and services, including food safety standards. </span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/6_ee0s7d0Ck">Simon Fanger/Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The Biden administration has an opportunity to recalibrate American global trade by rejoining the influential Trans-Pacific Partnership trade agreement. Signing on to this partnership has the potential to deliver <a href="https://asia.nikkei.com/Politics/International-relations/Biden-s-Asia-policy/Biden-s-trade-chief-pick-dodges-question-on-rejoining-TPP">powerful diplomatic and economic gains</a> yet politically, the odds appear slim that there will be political consensus to agree to this partnership. </p>
<p>The U.S. began <a href="https://crsreports.congress.gov/product/pdf/R/R44489">Trans-Pacific Partnership</a> negotiations in 2008 during the Bush administration, efforts that were intensified during Barack Obama’s presidency. Hammered out between the <a href="https://www.cambridge.org/core/journals/agricultural-and-resource-economics-review/article/effects-of-tariff-concessions-on-japanese-beef-imports-by-product-and-source/2263506BF6AF507C928F4D1A78A216DB">U.S. and 11 Pacific Rim countries</a>, the intention of joining the partnership was to set trade policy and greatly expand U.S. trade and investment in the Asia-Pacific region. President Obama signed the agreement in 2016 and less than a year later, immediately after Donald Trump’s inauguration, the U.S. <a href="https://theconversation.com/can-the-trans-pacific-partnership-survive-after-trump-71821">withdrew from the agreement</a>. </p>
<p>Rejoining the partnership, renamed the <a href="https://crsreports.congress.gov/product/pdf/IF/IF10000">Comprehensive and Progressive Agreement for Trans-Pacific Partnership</a> in 2018, could signal to the world that the U.S. is back in the global engagement arena. It would also strike a stark contrast to the <a href="https://www.brookings.edu/blog/future-development/2017/02/08/what-will-trumps-embrace-of-bilateralism-mean-for-americas-trade-partners/">previous adminstration’s bilateral</a> and nationalistic approach, <a href="https://cepr.org/content/new-ebook-trade-war-clash-economic-systems-threatening-global-prosperity">which has resulted in tensions with major U.S. trading partners</a>. Aside from improved trade relations, rejoining the this agreement would counter <a href="https://www.wsj.com/articles/obamas-tpp-wouldve-helped-limit-china-11553454969">China’s economic and geopolitical influence</a> in the Asia-Pacific region.</p>
<p><a href="https://scholar.google.com/citations?user=e0WqEuoAAAAJ&hl=en">Both</a> of <a href="https://scholar.google.com/citations?user=3UKxaEcAAAAJ&hl=en">us</a> have worked extensively with the U.S. Department of Agriculture on trade policy issues. As economists specializing in international agricultural trade, our research demonstrates that the U.S. would benefit from rejoining the <a href="https://www.ers.usda.gov/publications/pub-details/">trade accord</a> and, in particular, American agriculture.</p>
<h2>Pathway to a Southeast Asia trade agreement</h2>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Large shipping containers stacked closely together." src="https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">International trade agreements can reduce uncertainty for trading partners in the marketplace.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/SPPUHSsaT-8">Marco Pregnolato/Unsplash</a></span>
</figcaption>
</figure>
<p><a href="https://doi.org/10.1111/1746-692X.12293">Regional trade agreements</a> like the Trans-Pacific Partnership can go far beyond tariffs to tackle deeper trade and domestic issues such as investment, labor, migration, competition, intellectual property and, in some cases, key regulatory issues governing food safety standards.</p>
<p>Although agriculture comprises only about 10% of <a href="https://www.usitc.gov/research_and_analysis/trade_shifts_2019/us.htm">total U.S. exports</a>, the agricultural sector in the U.S. and other countries account for a large share of trade policy considerations. Rejoining the accord has the potential to <a href="https://www.piie.com/blogs/trade-and-investment-policy-watch/rebuild-trans-pacific-partnership-back-better">establish economic ties with emerging economies</a> like Vietnam and Malaysia and embrace the need for improved trade relations in Southeast Asia overall. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/384159/original/file-20210215-17-1rkluno.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Cranes and container ships at the Port of Seattle." src="https://images.theconversation.com/files/384159/original/file-20210215-17-1rkluno.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/384159/original/file-20210215-17-1rkluno.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/384159/original/file-20210215-17-1rkluno.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/384159/original/file-20210215-17-1rkluno.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/384159/original/file-20210215-17-1rkluno.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/384159/original/file-20210215-17-1rkluno.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/384159/original/file-20210215-17-1rkluno.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Shipping cranes at the Port of Seattle.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/CpsTAUPoScw">Andy Li/Unsplash</a></span>
</figcaption>
</figure>
<p>The Comprehensive and Progressive Agreement for Trans-Pacific Partnership could be the easiest path forward if the U.S. wanted to improve trade relations with Southeast Asia. Joining this partnership could be especially beneficial based on the volume of agricultural trade and expected growth in these markets. At an approximate US$14.3 billion annually, Southeast Asia accounts for a significant amount of U.S. agricultural exports, making it the <a href="https://apps.fas.usda.gov/gats/default.aspx">fourth-leading destination</a> behind China, Canada and Mexico.</p>
<p><iframe id="jNqwz" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/jNqwz/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>A return to global engagement</h2>
<p>The Trans-Pacific Partnership was seen as an opportunity for the U.S. <a href="https://www.piie.com/commentary/speeches-papers/tpp-origins-and-outcomes">to shape regional and global trade rules</a>, potentially influencing economic policies and practices in China. However, there are concerns that need to be addressed if the U.S. were to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/384165/original/file-20210215-13-2xkehf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Colorful wine barrels stacked in Tokyo." src="https://images.theconversation.com/files/384165/original/file-20210215-13-2xkehf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/384165/original/file-20210215-13-2xkehf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/384165/original/file-20210215-13-2xkehf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/384165/original/file-20210215-13-2xkehf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/384165/original/file-20210215-13-2xkehf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/384165/original/file-20210215-13-2xkehf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/384165/original/file-20210215-13-2xkehf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Colorful Japanese wine barrels in Tokyo.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/9cYtFg2_N5I">Manuel Velasquez/Unsplash</a></span>
</figcaption>
</figure>
<p>There are important differences between the agreement signed under Obama in 2016 and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Provisions important to the U.S. were changed <a href="https://www.csis.org/analysis/tpp-cptpp">in the subsequent agreement</a>, such as <a href="https://www.csis.org/analysis/tpp-cptpp">the investment and intellectual property provisions</a> that offered improved standards on intellectual property relative to past trade agreements. The provisions fall short of the more <a href="https://crsreports.congress.gov/product/pdf/IN/IN10822">stringent requirements</a> in the earlier Trans-Pacific Partnership. </p>
<h2>What are the odds?</h2>
<p>Like all trade agreements, joining the partnership would require congressional approval. Historically, Republicans have been more supportive of <a href="https://www.piie.com/research/piie-charts/nearly-all-us-trade-deals-were-negotiated-signed-and-implemented-republicans">trade agreements</a>. But President Trump’s rhetoric, that past trade agreements <a href="https://theconversation.com/trumps-anti-trade-tirades-recall-gops-protectionist-past-54631">have been “disastrous” for the U.S. economy</a>, may have lessened Republican support for an agreement like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.</p>
<p>President Joe Biden quickly rejoined the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/paris-climate-agreement/">Paris Climate Agreement</a> and reversed President Trump’s decision to withdraw from the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/21/readout-of-vice-president-harriss-call-with-world-health-organization-director-general-dr-tedros-adhanom-ghebreyesus/">World Health Organization</a>, showing that the U.S. is back in the global engagement area. </p>
<p>Mega-regional trade agreements offer more than a forum for negotiating trade barriers. They establish procedures that reduce uncertainty in international transactions, make rules that are clear to members and provide an institutional framework to remedy trade concerns or disputes. If the Biden administration wants to signal to the world that the U.S. is pivoting to a more expansive global engagement, joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership could be an initial step.</p>
<p>[<em>You’re smart and curious about the world. So are The Conversation’s authors and editors.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklysmart">You can get our highlights each weekend</a>.]</p><img src="https://counter.theconversation.com/content/152148/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Muhammad and Jason Grant receive grant funding from the U.S. Department of Agriculture to work on international agricultural trade and trade policy issues. </span></em></p><p class="fine-print"><em><span>Jason Grant receives funding from the United States Department of Agriculture. </span></em></p>Rejoining the Trans-Pacific Partnership would boost trade in Southeast Asia, counter China and help show the world the US is back.Andrew Muhammad, Professor of Agriculture and Resource Economics, University of TennesseeJason Grant, Associate Professor of Agricultural and Applied Economics, Virginia TechLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1495792020-11-06T10:14:51Z2020-11-06T10:14:51ZExperts: Biden is preferred over Trump for Indonesia’s economy growth<p>Indonesia prefers Joe Biden, currently <a href="https://www.theguardian.com/us-news/ng-interactive/2020/nov/05/us-election-2020-live-results-donald-trump-joe-biden-presidential-votes-arizona-nevada-pennsylvania-georgia">leading the US election</a>, over incumbent Donald Trump, according to experts. </p>
<p>“If Biden is elected, then the tension in the trade war will decrease, demand for Indonesian good will increase and also capital or investment that flows into the country,” said Bhima Yudhistira Adhinegara, a researcher at the Institute for Development of Economics and Finance (INDEF).</p>
<p>Having a president that creates a favourable trade policy towards Indonesia is important, according to Bhima, as the United States’ contribution to the Indonesian economy is quite significant. </p>
<p>In September, the US was the second-largest contributor for exports of goods and services from Indonesia sold abroad with <a href="https://www.bps.go.id/pressrelease/2020/10/15/1683/ekspor-september-2020-mencapai-us-14-01-miliar-dan-impor-september-2020-sebesar-us-11-57-miliar.html">a total of US$ 1.69 billion</a>. </p>
<p>This amount is equivalent to <a href="https://www.bps.go.id/pressrelease/2020/10/15/1683/ekspor-september-2020-mencapai-us-14-01-miliar-dan-impor-september-2020-sebesar-us-11-57-miliar.html">12.68% of Indonesia’s total exports or around US$14 billion </a> in September this year. The US came second after China, which contributed nearly 20% of Indonesia’s exports at US$ 2.63 billion.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/367754/original/file-20201105-21-hn75yq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/367754/original/file-20201105-21-hn75yq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/367754/original/file-20201105-21-hn75yq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/367754/original/file-20201105-21-hn75yq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/367754/original/file-20201105-21-hn75yq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/367754/original/file-20201105-21-hn75yq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/367754/original/file-20201105-21-hn75yq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Joe Biden press conference.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/190887385@N06/50555606063/in/photolist-2k2qGmp-2jc8tpc-2iHzCAX-2iHzCSZ-2jNcwzY-2jkeLzE-2iBtWdg-B3RX59-2k2WB2M-2inc64h-2iytzHN-2ihymhg-2ihAHSe-2ihBTi2-2ihAKof-2ihAJBf-2ihyixd-2ihAN4F-2iL8C7p-2iHDX25-2iHCmW7-2iBm1PS-2iHCn1W-2ihAGxL-2ihAJeB-2ihAHu5-2ihAPQm-2ihAPvd-2ihBSbN-2ihAMhq-2jYHLj7-2iHzD3U-2iHzCPC-2iHCmT6-2iHCmQ5-2iBqa57-2jEcyYt-2iHDWDB-2iw6Ywp-2iHCn34-2iytzHh-2k36yDC-2k31GFh-2k32edR-2k36yQz-RK4jg4-2jjkyw5-2iLbJG1-2jjmLZW-2k31Dw6">photonews/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Biden has more positive sentiments than Trump</h2>
<p>Bhima argued that Biden is the better candidate. He said Biden has experience in establishing more productive relations between countries, such as during his time as vice president to Barack Obama.</p>
<p>Fithra Faisal Hastiadi, a researcher and lecturer in economics at the University of Indonesia, also projects that Biden will prefer multilateral or several countries partnership compared to Trump that prefers bilateral agreements.</p>
<p>Obama and Biden were the initiators of the <a href="https://www.cfr.org/backgrounder/what-trans-pacific-partnership-tpp">Trans-Pacific Partnership</a> (TPP) cooperation framework in 2008, which is a trade agreement containing 12 countries. However, Trump <a href="https://www.washingtonpost.com/news/worldviews/wp/2018/04/13/a-timeline-of-trumps-complicated-relationship-with-the-tpp/">withdrew from TPP in 2018</a> and is more focused on bilateral discussions.</p>
<p>Both Biden and Trump, however, have a similar perspective on China’s influence on Asia. If Obama and Biden use the TPP as a way to reduce China’s dominance in Asia as well as efforts to penetrate the market, Trump is far more aggressive in taking a more direct approach by using trade wars.</p>
<p>“With Biden, although it looks like Indonesia is about to start over from scratch, the potential for reinforcing commitments between America and Indonesia also seems wide open,” Fithra said.</p>
<p>On the other hand, Bhima also sees that the economic stimulus policy in the democratic party will encourage the recovery of the middle-class purchasing power in the US with Biden’s agenda to increase the <a href="https://www.businessinsider.com/joe-biden-15-minimum-wage-election-economy-paychecks-low-workers-2020-10">federal minimum wage up to US$ 15/hour</a>.</p>
<p>“The impact is the demand for goods from Indonesia will be even greater if the purchasing power in the US increases,” Bhima added.</p>
<p>Bhima also emphasises about the impact on Indonesia’s financial markets, Biden will provide a breath of fresh air to foreign capital flows if elected. US investors who have been playing it safe by buying gold, dollars and Japanese yen will begin to venture into emerging markets like Indonesia.</p>
<p>The Jakarta Composite Index (JCI) or Indonesia’s stock exchange <a href="https://market.bisnis.com/read/20201102/7/1312610/kinerja-ihsg-membaik-reksa-dana-saham-jadi-jawara">increased by 4.72% last month to reach the level of 5,159</a>. </p>
<p>One of the things that investors will be looking for is Indonesian government bonds because they offer high-interest rates to investors. Investment from the US will also increase in size if trade relations improve, according to Bhima.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/367749/original/file-20201105-17-1rlpad4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/367749/original/file-20201105-17-1rlpad4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/367749/original/file-20201105-17-1rlpad4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/367749/original/file-20201105-17-1rlpad4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/367749/original/file-20201105-17-1rlpad4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/367749/original/file-20201105-17-1rlpad4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/367749/original/file-20201105-17-1rlpad4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President of the United States Donald Trump speaking with supporters at a</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/iip-photo-archive/50558394573/in/photolist-2k2EZha-2jFPbqG-2jimM5W-2izrCXB-2iqwHkD-2ihAMAb-2ihyfpE-2ihBLEC-2ihALWA-2k2qGmp-2jc8tpc-2iHzCAX-2iHzCSZ-2jNcwzY-2jkeLzE-2iBtWdg-B3RX59-2k2WB2M-2inc64h-2iytzHN-2ihymhg-2ihAHSe-2ihBTi2-2ihAKof-2ihAJBf-2ihyixd-2ihAN4F-2iL8C7p-2iHDX25-2iHCmW7-2iBm1PS-2iHCn1W-2ihAGxL-2ihAJeB-2ihAHu5-2ihAPQm-2ihAPvd-2ihBSbN-2ihAMhq-2jYHLj7-2iHzD3U-2iHzCPC-2iHCmT6-2iHCmQ5-2iBqa57-2jEcyYt-2iHDWDB-2iw6Ywp-2iHCn34-2iytzHh">gageskidmore/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Trump surrounded by controversies that impact Indonesia’s economy</h2>
<p>According to Fithra, with Trump elected, Indonesia’s cooperation with the United States will still grow. </p>
<p>One of the recent positive sentiments coming from Trump administration is the extension of the <a href="https://www.thejakartapost.com/news/2020/11/01/us-extends-gsp-status-for-indonesia.html">general system of preferences (GSP) facility</a>. GSP is a free import duty program for several imported products from Indonesia. </p>
<p>The extension of the program is a sign of a strategic partnership between Indonesia and the US, as previously it has discontinued the GSP program for other countries such as <a href="https://www.orfonline.org/research/understanding-the-impact-of-gsp-withdrawal-on-indias-top-exports-to-the-us/">India</a> and <a href="https://www.nationthailand.com/news/30386896">Thailand</a>.</p>
<p>The US Secretary of State, Mike Pompeo visit to extend the GSP program also explored the possibility of opening other limited trade agreements; Indonesia could reap more significant results in the future.</p>
<p>However, there are also Trump’s controversies that will continue to create negative sentiments for Indonesia.</p>
<p>According to Bhima, Trump’s policy of protectionism or tightening trade from other countries has harmed Indonesia’s economic interests. This is evident from the sluggish performance of Indonesia’s exports even before the pandemic due to the low demand for raw materials to China and direct export to the US.</p>
<p>Since 2018 Trump has carried out a <a href="https://theconversation.com/trumps-trade-war-what-was-it-good-for-not-much-147247">trade war with China</a>, Indonesia’s biggest importer, by raising taxes on imported goods originating from China</p>
<p>Indonesia’s exports throughout 2019 only reached <a href="https://www.bps.go.id/pressrelease/2020/01/15/1734/ekspor-desember-2019-mencapai-us-14-47-miliar--sedangkan-nilai-impor-mencapai-us-14-50-miliar.html">US$ 167.53 billion</a>, this figure fell sharply by 6.94% compared to the previous year’s achievement of US$ 180.01 billion.</p>
<p>Bhima also predicts that if Trump wins then the stimulus will be more focusing on reducing taxes for the wealthy individuals. Hence the demands for goods from the US may not be as high as compared if Biden win.</p>
<h2>Positive trend going forward</h2>
<p>Fithra projected after the COVID-19 pandemic ends, the United States will aim to reduce its dependence on production from China and look for alternative places. This trend has at least been seen in the last few months when Indonesia’s exports to the United States have grown. </p>
<p>Some of the products such as raw materials for drug manufacturing previously imported from China <a href="https://jakartaglobe.id/business/us-pharma-company-to-relocate-plant-to-central-java-from-china/">were diverted to Indonesia</a>. This phenomenon is the first phase of relocation by the United States to alternative markets. The second stage is the transfer of its strategic industries from China to ASEAN. Indonesia should be able to seize these opportunities, according to Fithra.</p>
<p>“Armed with improved negotiation skills, Indonesia will increasingly get positive results going forward,” Fithra concluded.</p><img src="https://counter.theconversation.com/content/149579/count.gif" alt="The Conversation" width="1" height="1" />
Indonesia is a strategic country for the United States and the cooperation between the two countries will only grow.Yessar Rosendar, Business + Economy (Indonesian edition)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1453342020-09-09T20:07:59Z2020-09-09T20:07:59ZClive Palmer versus (Western) Australia. He could survive a High Court loss if his company is found to be “foreign”<p>We may not like Clive Palmer as a person, or his business activities, or his politics, but from a legal perspective that should not matter. </p>
<p>All of us, rich or poor, should have equal rights under the rule of law, including access to independent review mechanisms. </p>
<p>So we should be concerned in principle about the oddly-named <a href="https://www.parliament.wa.gov.au/Parliament/Bills.nsf/2F1CFD31ACD372EE482585C100337061/$File/Bill%2B205-1.002.002.pdf">Iron Ore Processing (Mineralogy Pty. Ltd.) Agreement Amendment Act</a>. </p>
<p>It was hastily passed by the Western Australian parliament on August 13 in order to legislate away Palmer’s rights under a contract with Western Australia regarding the Balmoral South mining project. </p>
<p>Former High Court judge Michael McHugh upheld those rights in 2014 and 2019 arbitration awards.</p>
<p>The Act declares the contract to have no effect (s9) and declares both arbitration awards to have no effect (s7). </p>
<p>It makes the contract’s arbitration clause “not valid” (s10).</p>
<p>It says Western Australia cannot be sued and has no liability in any project-related dispute (s11). </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/356856/original/file-20200908-18-1aemhcz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/356856/original/file-20200908-18-1aemhcz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/356856/original/file-20200908-18-1aemhcz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=214&fit=crop&dpr=1 600w, https://images.theconversation.com/files/356856/original/file-20200908-18-1aemhcz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=214&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/356856/original/file-20200908-18-1aemhcz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=214&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/356856/original/file-20200908-18-1aemhcz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=269&fit=crop&dpr=1 754w, https://images.theconversation.com/files/356856/original/file-20200908-18-1aemhcz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=269&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/356856/original/file-20200908-18-1aemhcz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=269&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.parliament.wa.gov.au/Parliament/Bills.nsf/2F1CFD31ACD372EE482585C100337061/$File/Bill%2B205-1.002.002.pdf">Iron Ore Processing (Mineralogy Pty. Ltd.) Agreement Amendment Act 2020</a></span>
</figcaption>
</figure>
<p>Rules of “natural justice” (including any duty of procedural fairness) are said not to apply to the West Australian government’s conduct, past or future (s12). </p>
<p>Palmer and associates must indemnify Western Australia against any loss connected with them including reduced funding from the Commonwealth (s14).</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-wa-government-legislated-itself-a-win-in-its-dispute-with-clive-palmer-and-put-itself-above-the-law-144360">The WA government legislated itself a win in its dispute with Clive Palmer — and put itself above the law</a>
</strong>
</em>
</p>
<hr>
<p>Palmer has challenged the statute <a href="https://www.abc.net.au/news/2020-08-26/clive-palmer-suing-mark-mcgowan-john-quigley-in-new-legal-action/12596538">under Australian law</a>. There’s every chance the case will make it to the High Court. </p>
<p>But even that might not be the end of the matter.</p>
<p>He has also foreshadowed a challenge under <a href="https://www.afr.com/companies/mining/wa-s-palmer-legislation-could-end-up-costing-the-commonwealth-billions-20200818-p55mum">international law</a> of the kind allowed under several of Australia’s free trade agreements. </p>
<h2>Palmer might say his company is foreign</h2>
<p>He says his Balmoral South project is an investment made by Mineralogy International, registered in Singapore (and reportedly perhaps <a href="https://thewest.com.au/business/mining/palmer-to-put-himself-first-with-singapore-sling-ng-b881101575z">for this purpose</a>), and so is protected under a free trade agreement. </p>
<p>Australia’s <a href="https://www.dfat.gov.au/trade/agreements/in-force/safta/Pages/singapore-australia-fta">Free Trade Agreement with Singapore</a> was signed in 2003 and amended in 2017 to refine its <a href="https://theconversation.com/au/topics/isds-16000">investor-state dispute settlement</a> provisions bringing them into line with the <a href="https://www.dfat.gov.au/trade/agreements/in-force/cptpp/Pages/comprehensive-and-progressive-agreement-for-trans-pacific-partnership">Comprehensive and Progressive Agreement for Trans-Pacific Partnership</a>, in force between Australia and six other nations including Singapore and also the so-called <a href="https://www.dfat.gov.au/trade/agreements/in-force/aanzfta/Pages/general-review-of-the-asean-australia-new-zealand-fta">ASEAN+ treaty</a>. </p>
<p>Provisions in such treaties allow foreign investors to seek compensation from Australia for <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2767996">acts of expropriation</a>. </p>
<h2>Foreigners get extra rights</h2>
<p>They cover not only direct expropriation – where the government acquires property – as do <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2802450">similar provisions</a> in the Australian Constitution, but also indirect expropriation, where a government prevents an investor from exercising property rights. </p>
<p>Australia has only once squarely faced the use of such provisions, after the High Court dismissed a challenge to its 2010 tobacco plain packaging legislation.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/356877/original/file-20200908-24-1gcjcwh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/356877/original/file-20200908-24-1gcjcwh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/356877/original/file-20200908-24-1gcjcwh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/356877/original/file-20200908-24-1gcjcwh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/356877/original/file-20200908-24-1gcjcwh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/356877/original/file-20200908-24-1gcjcwh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/356877/original/file-20200908-24-1gcjcwh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Philip Morris Asia’s use of a Hong Kong treaty was found to be an abuse of process.</span>
</figcaption>
</figure>
<p>Philip Morris Asia, a Hong Kong based company which took control of Philip Morris trademarks when Australia was preparing its plain packaging legislation, used a Hong Kong-Australia investment treaty to claim <a href="https://www.italaw.com/sites/default/files/case-documents/italaw7303_0.pdf">US$4.16 billion</a> for indirect expropriation.</p>
<p>The arbitration tribunal dismissed that claim as an “<a href="https://www.italaw.com/sites/default/files/case-documents/italaw7303_0.pdf">abuse of process</a>” under customary international law. </p>
<p>Philip Morris Asia was found to have obtained control of the trademarks in order to gain investment treaty protection when the dispute was foreseeable. </p>
<p>The <a href="https://www.dfat.gov.au/trade/agreements/in-force/safta/Pages/singapore-australia-fta">Singapore-Australia Free Trade Agreement</a> further commits Australia to providing the “customary international law minimum standard of treatment to foreigners”. </p>
<p>This “includes the obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world”.</p>
<p>Why promise additional rights to foreign investors? </p>
<p>Because domestic law may not meet international standards. The extension of such rights can encourage domestic investors press for better local standards. </p>
<p>Offering the global standard can also encourage more <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2824090">foreign direct investment</a>.</p>
<h2>Palmer might face problems…</h2>
<p>If Mineralogy International does try to file an investor state dispute claim, it will have to establish that its investment is covered and that it is a foreign investor for the purpose of the treaty.</p>
<p>Australia might invoke a “denial of benefits” provision if Mineralogy International lacks substantial business activities in Singapore. </p>
<p>It might also allege “forum shopping” of the kind Philip Morris Asia was <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2842065">found to have engaged in</a>. </p>
<h2>…but those rights are important</h2>
<p>This is how international law is supposed to work. As with human rights treaties, nations consent to international standards. </p>
<p>Impartial investor state dispute settlement procedures make a national commitments to investors credible. Exceptions acknowledge abuses of process.</p>
<p>If provisions generate problems, such as <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3227401">costs and delays</a>, Australia can negotiate improvements and review and modernise old treaties. </p>
<p>It did that with the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3548358">Hong Kong Australia treaty</a> after the Philip Morris case and it has <a href="https://www.dfat.gov.au/trade-and-investment/discussion-paper-review-australias-bilateral-investment-treaties">just committed</a> to do it with the remaining older treaties.</p>
<p>An innovative way forward would be adding compulsory mediation before arbitration, as with the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3548358">Australia-Indonesia Free Trade Agreement</a> signed last year.</p><img src="https://counter.theconversation.com/content/145334/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Luke Nottage received funding from the Australian Research Council over 2014-8 for a joint interdisciplinary Discovery Project examining Australia's investment treaties and dispute management in Asia-Pacific context (DP140102526). He was also a non-resident Fellow at the Centre for International Governance Innovation in Canada over 2016-7 for its book project on "Investor-State Arbitration Between Developed Democracies". </span></em></p>Foreign companies can get rights Australian companies can’t, so long as they are actually foreign.Luke Nottage, Professor, Sydney Law School, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1441962020-08-16T20:11:29Z2020-08-16T20:11:29ZLast to know: the EU knows more about our trade talks than we do<figure><img src="https://images.theconversation.com/files/352899/original/file-20200814-20-1tgqz3v.jpg?ixlib=rb-1.1.0&rect=222%2C251%2C2364%2C1056&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Mikhail Mishchenko/Shutterstock</span></span></figcaption></figure><p>In the negotiations for an <a href="https://www.dfat.gov.au/trade/agreements/negotiations/aeufta/Pages/default">Australia-European Union Free Trade Agreement</a> at present underway, the European Union is pushing for longer monopolies on medicines for its pharmaceutical companies.</p>
<p>If it gets them, Australians will wait longer for cheaper versions of those medicines.</p>
<p>It is important information, but we are only aware of it because (unlike Australia) the European Union <a href="http://trade.ec.europa.eu/doclib/docs/2018/july/tradoc_157190.pdf">publishes</a> its trade negotiating positions.</p>
<p>Ours have long been kept secret, even from us.</p>
<p>Next week the parliament’s Joint Standing Committee on Treaties will hold a <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Treaties/Treaty-makingProcess/Public_Hearings">hearing</a> into whether we should change the system to make sure we know more.</p>
<p>The government itself commissioned the inquiry after the committee’s investigation into the Australia-Hong Kong and Indonesian free trade agreements <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Treaties/A-HKFTA/Report_186/section?id=committees%2freportjnt%2f024355%2f27910">recommended</a> it give</p>
<blockquote>
<p>due consideration to implementing a process through which independent modelling and analysis of a proposed trade agreement is undertaken in the future by the Productivity Commission or equivalent organisation</p>
</blockquote>
<p>At the moment the committee only gets to see trade agreements after they have been signed, meaning (literally) that the Australian people don’t get to know what their government is a bout to sign until after it has signed it.</p>
<h2>We don’t get to see what we are about to sign</h2>
<p>Afterwards, the parliamentary committee is effectively limited to saying yes to ratification (the final step after signing) or no. It can’t suggest changes to the text.</p>
<p>Nor can the parliament, which only gets to vote on the enabling legislation. Some parts of agreements, including some that constitute binding commitments, are <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Foreign_Affairs_Defence_and_Trade/Treaty-making_process/Report">not included</a> in that legislation.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/352886/original/file-20200814-18-1fmk1z3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/352886/original/file-20200814-18-1fmk1z3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/352886/original/file-20200814-18-1fmk1z3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/352886/original/file-20200814-18-1fmk1z3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/352886/original/file-20200814-18-1fmk1z3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/352886/original/file-20200814-18-1fmk1z3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/352886/original/file-20200814-18-1fmk1z3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/352886/original/file-20200814-18-1fmk1z3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">No independent analyses of free trade treaties.</span>
</figcaption>
</figure>
<p>The committee’s recommendation follows <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Foreign_Affairs_Defence_and_Trade/Treaty-making_process/Report">similar recommendations</a> by previous inquiries, and a plea by the <a href="https://www.pc.gov.au/inquiries/completed/trade-agreements/report">Productivity Commission</a> for independent modelling of likely outcomes before negotiations begin, and and an independent public assessment of agreements after they are concluded, but before they are signed.</p>
<p>The Commission says the current arrangements lack transparency and tend to <a href="https://www.pc.gov.au/inquiries/completed/trade-agreements/report">oversell the likely benefits</a>.</p>
<p>The so-called national interest analyses and regulatory impact statements prepared by negotiators are delivered after the agreements have been signed and so far have <a href="https://www.pc.gov.au/inquiries/completed/trade-agreements/report">always recommended they be ratified</a>.</p>
<p>The agreements deal with <a href="https://theconversation.com/its-more-than-a-free-trade-agreement-but-what-exactly-have-australia-and-indonesia-signed-112853">more than trade</a>.</p>
<p>One reason is that Australia already has very low or zero tariffs. Negotiators from other countries need to obtain other concessions. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/its-more-than-a-free-trade-agreement-but-what-exactly-have-australia-and-indonesia-signed-112853">It's more than a free trade agreement. But what exactly have Australia and Indonesia signed?</a>
</strong>
</em>
</p>
<hr>
<p>The <a href="https://www.dfat.gov.au/trade/agreements/not-yet-in-force/tpp/Pages/tpp-text-and-associated-documents">Comprehensive and Progressive Trans-Pacific Partnership</a> ratified by Australia in 2018 has chapters dealing with the regulation of essential services such as medicines, education, aged care, childcare, energy, financial and digital services, as well as foreign investment, labour and environment regulations and government procurement and product standards.</p>
<p>The <a href="https://theconversation.com/planned-trade-deal-with-europe-could-keep-medicine-prices-too-high-102836">European Union</a>, <a href="https://theconversation.com/the-new-naftas-assault-on-public-health-116918">the United States</a> and <a href="https://theconversation.com/rcep-the-trade-agreement-youve-never-heard-of-but-should-be-concerned-about-42885">Japan</a> use the negotiations to fight for longer monopolies on medicines. Investors use them to obtain the right to <a href="https://theconversation.com/when-even-winning-is-losing-the-surprising-cost-of-defeating-philip-morris-over-plain-packaging-114279">sue governments</a>; copyright owners use them to achieve <a href="https://theconversation.com/life-plus-70-who-really-benefits-from-copyrights-long-life-48971">longer copyright terms</a>.</p>
<h2>What’s needed?</h2>
<p>The committee could recommend that government table in parliament a document setting out its priorities and objectives at the start of each negotiation.</p>
<p>It could also recommend the release of <a href="http://trade.ec.europa.eu/doclib/docs/2018/july/tradoc_157190.pdf">updates</a> and negotiating texts, European Union style, and the release of the <a href="http://trade.ec.europa.eu/doclib/press/index.cfm?id=1230">final text</a> of agreements before they are signed.</p>
<p>It could recommend an independent analysis of the costs and benefits of proposed agreements of the kind suggested by the Productivity Commission, both before signing, and also some years after signing to get an idea of whether they have lived up to their promise. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/when-even-winning-is-losing-the-surprising-cost-of-defeating-philip-morris-over-plain-packaging-114279">When even winning is losing. The surprising cost of defeating Philip Morris over plain packaging</a>
</strong>
</em>
</p>
<hr>
<p>It could consider the health, environment and gender impacts, as well as the economic impacts.</p>
<p>And it could recommend that the parliament rather than the executive be given the role of agreeing to whole treaties, something legal experts say would <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Completed_Inquiries/jsct/ratification_bill/report/chapter3">permitted</a> by the Constitution.</p>
<p>These changes would give us a better idea of what’s being negotiated in our name.</p><img src="https://counter.theconversation.com/content/144196/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dr Patricia Ranald is an honorary research associate at the University of Sydney and is the Convener of the Australian Fair Trade and Investment Network.</span></em></p>Australia won’t let Australians see the Australia-EU deal before it is signed. The EU is publishing running updates.Patricia Ranald, Honorary research fellow, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1253212019-10-20T19:06:10Z2019-10-20T19:06:10ZArrogance destroyed the World Trade Organisation. What replaces it will be even worse<figure><img src="https://images.theconversation.com/files/297760/original/file-20191019-56198-16xy1hv.jpg?ixlib=rb-1.1.0&rect=813%2C34%2C2073%2C1107&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">As the public face of globalism, the WTO mobilised protesters. It'll be replaced by the law of the jungle.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/fuzheado/73079281">fuzheado/Flikr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>In line with his usual practice, Australia’s Prime Minister Scott Morrison has backed Donald Trump over the World Trade Organisation, criticising of China’s status in it as a “developing country”. </p>
<p>Critics of the intervention have pointed out that being a “developing country” <a href="https://theconversation.com/myth-busted-chinas-status-as-a-developing-country-gives-it-few-benefits-in-the-world-trade-organisation-124602">doesn’t provide China with many benefit</a>, and that Australia would be better off not taking sides. </p>
<p>But the debate, to use the cliché, is like arguing about the deck chairs on the Titanic. </p>
<p>In the absence of a surprising reversal from Trump, the World Trade Organisation will cease to exist as it has been <a href="https://theconversation.com/are-trumps-tariffs-legal-under-the-wto-it-seems-not-and-they-are-overturning-70-years-of-global-leadership-121425">in a matter of weeks</a>. </p>
<p>More likely than not, it will never be revived.</p>
<p>The demise has been a long time coming. </p>
<h2>Higher than heaven…</h2>
<p>The WTO was established to replace the <a href="https://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade">General Agreement on Tariffs and Trade</a> at the end of the long <a href="https://www.wto.org/english/thewto_e/minist_e/min98_e/slide_e/ur.htm">Uruguay round</a> of trade talks in 1995. </p>
<p>Its establishment coincided with the peak of market liberal triumphalism, exemplified by such books as Fukuyama’s <a href="https://books.google.com.au/books?id=NdFpQwKfX2IC&printsec=frontcover&dq=The_End_of_History_and_the_Last_Man&hl=en&sa=X&ved=0ahUKEwi2rNfS4anlAhWGbn0KHQgJC7QQ6AEIKDAA#v=onepage&q=The_End_of_History_and_the_Last_Man&f=false">The End of History</a> and Thomas Friedman’s <a href="http://www.thomaslfriedman.com/the-lexus-and-the-olive-tree/">The Lexus and the Olive Tree</a>. </p>
<p>It embraced the hubris of the times. </p>
<p>Its mission, according to one of its director-generals Renato Ruggiero, was “<a href="https://unctad.org/en/pages/PressReleaseArchive.aspx?ReferenceDocId=3607">writing the constitution of a single global economy</a>”.</p>
<p>In that context it felt free to override national governments on any issue that might affect international trade, most notably environmental policies.</p>
<p>Most famously, the WTO overrode US laws that required tuna and shrimp sold in the US (whether by US firms or importers) to follow practices that protected <a href="http://www.globalization101.org/the-tuna-dolphin-case/">dolphins</a> and <a href="http://www.globalization101.org/the-shrimp-turtle-case-in-the-new-wto-context/">turtles</a> in decisions that were eventually reversed.</p>
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Read more:
<a href="https://theconversation.com/myth-busted-chinas-status-as-a-developing-country-gives-it-few-benefits-in-the-world-trade-organisation-124602">Myth busted: China’s status as a developing country gives it few benefits in the World Trade Organisation</a>
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<p>Unsurprisingly, it became a symbol of the way democratic governments were becoming powerless to resist the forces of the global economy. Popular resistance, including <a href="https://en.wikipedia.org/wiki/1999_Seattle_WTO_protests">demonstrations and riots</a>, boiled over at the 1999 WTO conference in Seattle.</p>
<p>Although tight security prevented a recurrence of the “Battle of Seattle” in later years, the WTO never recovered its aura of invincibility.</p>
<h2>…too close to the sun</h2>
<p>The Doha round of negotiations, launched in 2001, broke down over attempts by developed countries to push the so-called “<a href="https://en.wikipedia.org/wiki/Singapore_issues">Singapore issues</a>” that would have extended the free trade agenda to government procurement, investment, and competition. They would have mandated the adoption of free-market policies throughout the world, and so met vigorous resistance. </p>
<p>After limping along for a decade or more, the negotiations petered out in a limited agreement reached at Bali in 2013.</p>
<p>Meanwhile, the United States, which had been the primary promoter of the worldwide rules-based WTO model, shifted its focus to one-on-one agreements unencumbered by rules, such as the <a href="https://theconversation.com/a-decade-on-is-the-australia-us-fta-fit-for-the-21st-century-33016">Australia-US FTA</a>, where it could take advantage of its superior bargaining power.</p>
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Read more:
<a href="https://theconversation.com/a-decade-on-is-the-australia-us-fta-fit-for-the-21st-century-33016">A decade on, is the Australia-US FTA fit for the 21st century?</a>
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<p>In all these agreements, including the Australia-US agreement, the US gave hardly any ground on issues such as agricultural protection, while extracting concessions on intellectual property and special treatment for US investors.</p>
<p>The culmination of the process was going to be the Trans-Pacific Partnership, a 12-nation agreement which had the geopolitical goal of <a href="https://www.geopoliticalmonitor.com/the-tpps-loss-is-chinas-gain/">keeping China out</a> of important trading agreements. </p>
<p>This deal, lauded by Hillary Clinton as the “gold standard” of international agreements, was dumped by Trump. It was resurrected by the remaining parties, but is <a href="https://theconversation.com/theres-no-point-to-australias-push-to-ratify-the-tpp-71796">largely pointless without the participation of the US</a>.</p>
<h2>We’re entering a world with few rules…</h2>
<p>As in other areas of policy, Trump’s tariff wars are often characterised as a radical break with the past, but they can also be seen as a continuation of long-standing trends. </p>
<p>Trump’s attempts to exploit the greater size of the US economy to extract concessions isn’t new. The problem is that his chosen targets, China and the European Union, have been big enough to resist, using the WTO.</p>
<p>His response has been to cripple the WTO by <a href="https://www.reuters.com/article/us-usa-trade-wto-idUSKCN1LC19O">refusing to appoint new judges to its appellate panel</a>. </p>
<p>By December only one judge will be left and the WTO will be <a href="https://theconversation.com/are-trumps-tariffs-legal-under-the-wto-it-seems-not-and-they-are-overturning-70-years-of-global-leadership-121425">unable to take on new cases</a>.</p>
<p>To prepare for this likely outcome, the EU has <a href="https://www.politico.eu/article/eu-builds-anti-trump-trade-bazooka/">set up structures</a> that would allow it to retaliate against the US on a far larger scale than WTO rules would allow. </p>
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Read more:
<a href="https://theconversation.com/are-trumps-tariffs-legal-under-the-wto-it-seems-not-and-they-are-overturning-70-years-of-global-leadership-121425">Are Trump's tariffs legal under the WTO? It seems not, and they are overturning 70 years of global leadership</a>
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<p>China is attempting to do the same thing using <a href="https://www.scmp.com/economy/china-economy/article/3021246/china-pushes-rcep-regional-pact-amid-us-trade-war-japan-korea">Regional Comprehensive Economic Partnership</a>), in which Australia – but not the US – would be a member. And it is going beyond trade restrictions, warning Chinese tourists and businesses <a href="https://www.usatoday.com/story/money/2019/06/18/trade-war-china-hits-tourism-us/1477264001/">against travelling to the US</a>. </p>
<p>The recent thaw in the trade war might halt the escalation for a while, but it’s unlikely to reverse it.</p>
<h2>…for which we’ve few plans</h2>
<p>If Trump is re-elected in 2020, the World Trade Organisation will be, for all practical purposes, finished.</p>
<p>The rules will revert to those of the earlier General Agreement on Tariffs and Trade, which give large countries like the US much more scope to do what they want.</p>
<p>Even if Trump is defeated, it is unlikely Humpty Dumpty can be reassembled. Likely Democratic alternatives such as Elizabeth Warren are not free-traders. </p>
<p>And, having rearmed in response to the US, other countries aren’t likely to put down their weapons.</p>
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<a href="https://theconversation.com/a-no-deal-brexit-wont-end-the-uncertainty-for-business-123217">A no-deal Brexit won't end the uncertainty for business</a>
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<p>It raises interesting questions for advocates of a “hard Brexit” who are relying on Britain relying on WTO rules. </p>
<p>UK trade minister Liz Truss says she is backing Trump in his campaign to “<a href="https://uk.reuters.com/article/us-wto-britain/uk-will-back-wto-reform-after-brexit-trade-minister-says-idUKKBN1WO1RB">reform</a>” the WTO, but the reform he is talking about will make its universally-applied rules weaker. By the time the UK emerges alone into the world market, it is likely to find there is little to protect it from the trading practices of the US, China and EU, whether they are fair or not.</p>
<p>The same points apply in spades to Australia. In backing Trump against China, our government is a (presumably unwitting) partner in the dismantling of the rules-based order we have previously defended. </p>
<p>It would be nice to imagine that we have plans for what comes next, but there is little to suggest we do.</p><img src="https://counter.theconversation.com/content/125321/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We are about to go from having rules that overreached to having few rules. The US, China and the EU will be able to act with impunity.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1130002019-03-15T12:32:47Z2019-03-15T12:32:47ZTrade wars are growing over the digital economy – and developing countries are shaping the agenda<figure><img src="https://images.theconversation.com/files/263954/original/file-20190314-28468-14jz4oo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/aerial-view-kwai-tsing-container-terminals-1061199119">Shutterstock</a></span></figcaption></figure><p>At the heart of the <a href="https://theconversation.com/trade-war-is-in-neither-the-us-nor-chinas-interests-94942">current US trade war with China</a> is tariffs on imports like steel, sorghum and silicon chips. But, with the growing role of data and digital technology in the world economy, a new arena of digital trade conflict is on the cards.</p>
<p>Rapid growth in e-commerce, cloud computing, and other parts of the digital economy are driving important shifts in the global economy. Digital firms are today among the leading global companies. Meanwhile, firms in all sectors are incorporating digital tools into their business models. </p>
<p>But the growth and globalisation of the digital economy is still not underpinned by clear global regulatory frameworks. While there are clear rules governing trade in goods such as books and DVDs, it is still not clear what happens when these goods become digital and are transmitted across borders through platforms such as Netflix. Similarly, while we have clear rules on goods like cars, TVs and industrial machinery, we lack clear regulations on the data that these goods increasingly collect and transmit.</p>
<p>The desire to put rules in place on digital trade is gaining momentum. This has grown as a number of countries, such as <a href="https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/march/2018-fact-sheet-key-barriers-digital">China, Indonesia and Nigeria</a>, which have introduced policies that legislate against foreign data flows and e-commerce, affecting the business models of leading global digital corporations. A new push came during the World Economic Forum in Davos earlier this year when 76 countries <a href="https://www.weforum.org/agenda/2019/01/davos-participants-call-for-digital-trade-deal/">announced plans</a> to begin negotiations on digital trade. </p>
<h2>Digital divide</h2>
<p>Behind the agenda to introduce global rules on digital trade, there are significant tensions that could spill over into conflict. On one side is the US and a number of leading digital nations, backed by the vast lobbying power of Silicon Valley and big business. On the other side, a number of emerging and developing countries are looking to resist new rules that they see as adding extra burden on them, with vague benefits.</p>
<p>Leading digital firms, and other big companies using digital tools, <a href="http://www.lse.ac.uk/internationalDevelopment/pdf/WP/WP175.pdf">have mobilised</a>. They are pushing for international rules on issues such as data flows, custom duties on e-commerce and requirements that foreign firms reveal their computer (source) code. </p>
<p>This campaign is most visible in the US where digital firms like Google, Facebook, and Amazon have grown in political power. They have pushed for trade rules that enable them to expand globally without facing complex rules in different countries, which limit their ability to operate from a distance. This is the <a href="https://publicpolicy.googleblog.com/2010/11/promoting-free-trade-for-internet.html">core of their business models</a>.</p>
<p>During the Obama administration in the US these activities contributed to the emergence of the <a href="https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2016/digital-2-dozen">“digital trade agenda”</a>. Digital trade rules were seen as crucial for giving rapidly growing US firms a predictable global landscape, as they expanded. This agenda was pursued through a number of channels, notably the Trans-Pacific Partnership (TPP), which was <a href="https://ustr.gov/sites/default/files/TPP-Ensuring-a-Free-and-Open-Internet-Fact-Sheet.pdf">described by the US trade representative at the time as</a> the “most ambitious and visionary internet trade agreement ever attempted”. </p>
<p>The Trump administration, with a focus on supporting traditional industries, has shown less interest in digital trade. This has led to a stronger roles for other leading digital economies such as Australia, Japan, and some European countries, <a href="https://www.politico.eu/article/silicon-valley-tech-lobbyists-swarm-brussels/">with support from global digital firms</a>.</p>
<p>But there has been strong opposition from a number of less developed countries. Many of them believe these rules will widen the digital divide that already exists between the developed and the developing world, by exposing local digital firms to fierce competition. As the history of trade rules <a href="https://www.theguardian.com/politics/2003/may/19/globalisation.politics">has shown</a>, rapidly opening developing economies up to foreign competition can potentially hollow them out. Plus, some countries argue that they might need to adopt more active policy to develop their own digital economies, which they fear global rules could limit. </p>
<p>Their resistance came to the fore during discussions on new digital trade rules <a href="https://www.ictsd.org/bridges-news/bridges-africa/news/the-digital-trade-agenda-and-africa">in the World Trade Organisation (WTO) in 2017</a>. The fight was led by India and the WTO’s Africa Group, which highlighted the risks of imposing WTO rules on future economic development. Through coalition building, they were able to resist the push for new rules leading to an impasse in the WTO.</p>
<h2>A global realignment?</h2>
<p>The success of developing and emerging countries in resisting the push for digital trade rules at the WTO was also down to the lack of strong consensus in leading economies. The EU, in particular, was hesitant. Key voices expressed concerns about the impact of new rules on the European digital economy, limiting the ability to establish strong online data protections in the continent. </p>
<p>Recent indications, however, highlight growing alignment between these leading economies. A <a href="http://trade.ec.europa.eu/doclib/press/index.cfm?id=1490&serie=1106&langId=en">recent draft</a> of the digital trade chapter in the “deep and comprehensive trade agreement” between the EU and Tunisia shows a European shift towards a stronger position on digital trade.</p>
<p>Nonetheless, emboldened by their previous successes, some developing country alliances are now looking to roll back other digital trade commitments in the WTO which they see as damaging. Notably, the “moratorium on e-commerce” – <a href="https://www.wto.org/english/thewto_e/minist_e/mc11_e/briefing_notes_e/bfecom_e.htm">adopted in 1998 at the WTO</a> in which countries agreed to (temporarily) refrain from imposing custom duties on electronic transmissions – is being challenged by India and South Africa. They see these rules as problematic, limiting their ability to collect tariffs as more goods are sold digitally.</p>
<p>These diverging positions are likely to increasingly cause conflict in the coming years. The stakes are high and outcomes are likely to shape the direction of the global economy in the future.</p><img src="https://counter.theconversation.com/content/113000/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Despite the growing role of data and technology in the world economy, there are very few rules to govern digital trade.Christopher Foster, Presidential Fellow at the Global Development Institute, University of ManchesterShamel Azmeh, Lecturer in International Development, Global Development Institute, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1128532019-03-05T19:06:16Z2019-03-05T19:06:16ZIt’s more than a free trade agreement. But what exactly have Australia and Indonesia signed?<figure><img src="https://images.theconversation.com/files/262101/original/file-20190305-48438-168142a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Simon Birmingham and Enggartiasto Lukita have signed an agreement that might never be ratified in that form.</span> <span class="attribution"><span class="source">DFAT</span></span></figcaption></figure><p>Australia’s trade minister Simon Birmingham and his Indonesian counterpart Enggartiasto Lukita signed the Indonesia-Australia Comprehensive Economic Partnership Agreement on Monday. Only afterwards (as is often the case) did we get to see what was in it.</p>
<p>We might never see an independent assessment of its costs and benefits.</p>
<p>Beforehand the Department of Foreign Affairs and Trade released a summary of the good news about increased Australian agricultural and education exports, together with statements of support from export industry representatives.</p>
<p>It said more than 99% of Australian goods exports by value would enter Indonesia duty free or under significantly improved preferential arrangements by 2020. Indonesia will guarantee automatic issue of import permits for key products including live cattle, frozen beef, sheep meat, feed grains, rolled steel coil, citrus products, carrots and potatoes. Australia will immediately <a href="https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/Pages/ia-cepa-key-outcomes-for-australia.aspx">eliminate remaining tariffs</a> on Indonesian imports into Australia.</p>
<p>But most deals have winners and losers. The devil is in the detailed <a href="https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/iacepa-text/Pages/default.aspx">text</a>, released only after the ceremony. </p>
<h2>Employment rights? The environment?</h2>
<p>First, what’s missing. There are no chapters committing both governments to implement basic labour rights and environmental standards as defined in the United Nations agreements, and to prevent them from seeking trade advantages by reducing these rights and standards.</p>
<p>Such chapters are increasingly included in trade deals like the Comprehensive Progressive Trans-Pacific Partnership (<a href="http://aftinet.org.au/cms/node/1599">TPP-11</a>) encompassing nations including Brunei, Malaysia, Mexico, Peru and Vietnam, and the Australia-EU Free Trade Agreement at present under negotiation. </p>
<p>They acknowledge that trade agreements increase competitive pressures, and are intended to prevent a race to the bottom on labour rights and environmental standards.</p>
<p>The fact they are missing from the Indonesia-Australia agreement shows neither government sees them as a priority.</p>
<h2>Extra-national tribunals</h2>
<p>The deal does include something else contentious that was included in the Trans-Trans-Pacific Partnership; so-called <a href="https://dfat.gov.au/trade/agreements/not-yet-in-force/iacepa/iacepa-text/Pages/default.aspx">investor-state dispute settlement clauses</a>, in Chapter 14, Section B.</p>
<p>They give <a href="http://aftinet.org.au/cms/ISDS">special rights to foreign corporations</a> to bypass local courts and sue governments for millions of dollars in extra-national tribunals if they believe a change in law or policy will harm their investment.</p>
<p>The tobacco giant Philip Morris <a href="http://isdsblog.com/2016/05/26/philip-morris-asia-limited-v-australia/">tried it in 2011</a> using investor-state dispute settlement provisions in an obscure Australia Hong Kong agreement after it lost a fight against Australia’s plain packaging laws in the High Court. It eventually lost in the international tribunal, although after four years and at the cost to Australia of <a href="https://www.theguardian.com/business/2018/jul/02/revealed-39m-cost-of-defending-australias-tobacco-plain-packaging-laws">nearly 40 million dollars</a>.</p>
<h2>Temporary migrant workers</h2>
<p>Article 12.9 of the Indonesia-Australia agreement will give Indonesia an additional 4,000 temporary working holiday visas, and a commitment over the next three years to negotiate arrangements for more “contractual service providers”.</p>
<p>Unlike permanent migrants, who have the same rights as other workers, temporary workers and contractual service providers are tied to one employer and can be deported if they lose their jobs, and so are vulnerable to exploitation, as shown by recent <a href="http://apo.org.au/system/files/120406/apo-nid120406-483146.pdf">research</a>.</p>
<p>After signing, the implementing legislation has to be passed by both the Australian and Indonesian parliaments before it can come into force.</p>
<h2>And not for some time</h2>
<p>In Australia, the next steps are for the treaty to be reviewed by the Joint Standing Committee on Treaties. But the likely calling of the federal election in April will dissolve this committee. The committee will be reconstituted after the election with the winning party having a majority.</p>
<p>Last year Labor faced a strong backlash from its membership and unions when it supported the implementing legislation for the TPP-11 despite the fact that it was contrary to the then Labor policy. </p>
<p>This led to the adoption of an even stronger policy at its <a href="https://www.alp.org.au/media/1539/2018_alp_national_platform_constitution.pdf">national conference</a> and a <a href="https://parlinfo.aph.gov.au/parlInfo/download/legislation/ems/r6201_ems_f52a2980-5bf9-48d2-a9a1-f654acb16383/upload_pdf/18215EMClare.pdf;fileType=application%2Fpdf">draft bill</a> that would apply to both future and existing trade agreements.</p>
<p>It requires independent assessments of the economic, social and environmental impacts of future trade agreements before they are ratified, outlaws investor-state dispute settlement clauses and the removal of labour market testing for temporary workers, mandates labour rights and environmental clauses and requires the renegotiation of non-compliant agreements should Labor win office.</p>
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Read more:
<a href="https://theconversation.com/the-senate-is-set-to-approve-it-but-what-exactly-is-the-trans-pacific-partnership-104918">The Senate is set to approve it, but what exactly is the Trans Pacific Partnership?</a>
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<p>If the Coalition wins office but not a Senate majority, and Labor implements its policy, a Coalition government could face opposition to ratification of the Indonesia-Australia agreement in the Senate.</p>
<p>If Labor wins government, it will face pressure from its base to implement its policy to conduct an independent assessment and renegotiate the provisions before ratification.</p>
<p>In Indonesia, which has elections in April, the deal could also face a rocky road.</p>
<p>Criticisms of the process led civil society groups to lodge a case which resulted in a <a href="http://igj.or.id/statement-of-the-advocacy-team-for-economic-justice-in-the-post-court-verdict-concerning-the-international-treaty-law/?lang=en">ruling by the Indonesian Constitutional Court</a> in November that the Indonesian President cannot approve trade agreements without parliamentary approval. </p>
<p>The opposition parties have been sceptical about the deal. Azam Azman Natawijana, deputy chairman of the parliamentary committee overseeing trade, was quoted in <a href="https://www.theaustralian.com.au/national-affairs/union-threat-to-scupper-agreement-withjakarta/news-story/29f624086de08da84cb35fd5a8492d46">The Australian</a> saying he expected the ratification process to be protracted.</p>
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Read more:
<a href="https://theconversation.com/investor-rights-to-sue-governments-pose-real-dangers-40004">Investor rights to sue governments pose real dangers</a>
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<img src="https://counter.theconversation.com/content/112853/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pat Ranald is Coordinator of the Australian Fair Trade and Investment Network, a network of community organizations, including church groups, human rights groups, public health, union and environmental organizations. AFTINET advocates for fair trade policies based on human rights, labour rights and environmental sustainability.</span></em></p>No commitments on environmental standards, but foreign corporations will shore up their rights to sue the Australian and Indonesian governments.Patricia Ranald, Research fellow, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1119712019-03-03T15:11:06Z2019-03-03T15:11:06ZA U.S.-China trade deal does not slow China’s rise<figure><img src="https://images.theconversation.com/files/261752/original/file-20190302-110123-8wo9rf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">U.S. President Donald Trump with China's President Xi Jinping during a bilateral meeting in December 2018 in Buenos Aires, Argentina.</span> <span class="attribution"><span class="source">(AP Photo/Pablo Martinez Monsivais)</span></span></figcaption></figure><p>The original <a href="https://www.cnbc.com/2019/03/01/trump-says-hes-asked-china-to-remove-tariffs-on-agricultural-products.html">March 1 deadline</a> has passed as the United States and China hash out a trade deal amid <a href="https://www.cnbc.com/2019/02/14/us-and-china-trade-talks-deadlocked-on-technology-transfers-reports.html">deadlocked negotiations</a>.</p>
<p>Any U.S.-China trade deal likely falls short compared to what the <a href="https://www.cfr.org/backgrounder/what-trans-pacific-partnership-tpp">Trans-Pacific Partnership</a> (TPP) could have been. </p>
<p>Within current talks, Donald Trump’s administration is focused on greater access to subsidized Chinese industries and addressing intellectual property theft linked to alleged forced technology transfers to China. All of this has an impact on America’s economic competitiveness <a href="https://www.bbc.com/news/business-47392570">in the short term</a>. </p>
<p>But is the U.S. adequately managing <a href="https://www.brookings.edu/blog/order-from-chaos/2019/01/15/assessing-u-s-china-relations-2-years-into-the-trump-presidency/">long-term Chinese efforts</a> to don the mantle of global leader?</p>
<p>On the <a href="https://www.washingtonpost.com/news/worldviews/wp/2018/04/13/a-timeline-of-trumps-complicated-relationship-with-the-tpp/?utm_term=.0f28a1e83e38">third day of his administration in 2017</a>, Trump honoured a campaign promise by withdrawing from the contentious TPP. The historic 12-nation agreement was on track to cover roughly 40 per cent of the global economy.</p>
<p><a href="https://www.nytimes.com/2016/09/02/business/international/pacific-trade-pact-faces-rough-road-in-congress.html">Democrats and some Republicans</a> in Congress, advocacy groups and some members of the American public flatly opposed the agreement. Concerns about the oversized influence of multinational corporations and the controversial investor-state dispute process <a href="https://slate.com/news-and-politics/2017/01/why-the-trans-pacific-partnership-failed.html">was a feature of the public discourse</a>.</p>
<h2>Lost opportunity to rein in China?</h2>
<p>But America may have missed a window of opportunity to curb China’s rise when it pulled out of the TPP.</p>
<p>Scholars <a href="https://www.belfercenter.org/publication/destined-war-can-america-and-china-escape-thucydidess-trap">Graham Allison</a> and <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674975071">Kori Schake</a> have grappled over if and how China can replace America as the world’s ranking power. Allison’s recent work, <a href="https://www.belfercenter.org/publication/destined-war-can-america-and-china-escape-thucydidess-trap"><em>Destined for War</em></a>, discusses the “windows of opportunity” the U.S. can exploit to slow the pace of the rising power. </p>
<p>If history is any credible guide, the transition from <a href="https://warontherocks.com/2017/12/a-tale-of-two-hegemons-the-anglo-american-roots-of-the-postwar-international-system/"><em>Pax Britannica</em> to <em>Pax Americana</em> </a> may help U.S. policy-makers and the public alike to understand the imperatives that surround China’s rise.</p>
<p>At the turn of the 20th century, America had unprecedented growth, thanks to Alfred Thayer Mahan’s <a href="https://www.theatlantic.com/magazine/archive/1890/12/the-united-states-looking-outward/306348/">vision of American sea power</a>. And in the early years between the two World Wars, the United States, Great Britain and Japan headlined a global naval arms race.</p>
<p>In 1921, President Warren Harding held the <a href="https://history.state.gov/milestones/1921-1936/naval-conference">Washington Naval Conference </a> to disarm tensions among the competing navies in the Pacific. The naval powers agreed to discontinue their shipbuilding programs and capped their naval fleets in the region. America also protected holdings in East Asia from the threat of a rising Japan. </p>
<p><a href="https://warontherocks.com/2017/12/a-tale-of-two-hegemons-the-anglo-american-roots-of-the-postwar-international-system/">The agreement was a triumph for America</a>. But for Britain, their naval power was now at “eye level” with the United States.</p>
<h2>The U.K. could not challenge the U.S.</h2>
<p><a href="https://www.economist.com/special-report/2002/06/27/imperial-overstretch">An overstretched</a> Britain had neither the political will nor the financial ability to oppose America’s demands, aware that an arms race with the U.S. would likely bankrupt the British economy. </p>
<p><a href="https://www.jstor.org/stable/j.ctt1df4g5b"><em>Pax Britannica</em></a>, a symbol of Britain’s naval dominance, was forced to <a href="https://www.theatlantic.com/international/archive/2016/05/china-india-rising-powers/484106/">deliberately accommodate</a> America’s rise. Britain’s reduced Pacific fleet and degraded Anglo-Japanese relations marked a turning point in America’s ascendancy.</p>
<p>It was not the first time Britain missed an opportunity to slow America’s rise. The American Civil War offered the chance, but Britain decided against joining on behalf of the Confederacy due to the <a href="https://newrepublic.com/article/94957/amanda-foreman-britain-america-civil-war-neutrality">issue of slavery</a>. Schake also notes the <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674975071">Venezuela crisis of 1895</a> marked an early turning point in the leadership transition. This could have also been a window of opportunity. </p>
<p>How does this apply to current U.S.-China relations? The “battleground” remains the same as in 1921; instead, <a href="https://www.hurstpublishers.com/book/belt-and-road/">China plans to supplant America</a> to become the global leader. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/261754/original/file-20190302-110143-vh1amb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/261754/original/file-20190302-110143-vh1amb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/261754/original/file-20190302-110143-vh1amb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=381&fit=crop&dpr=1 600w, https://images.theconversation.com/files/261754/original/file-20190302-110143-vh1amb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=381&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/261754/original/file-20190302-110143-vh1amb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=381&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/261754/original/file-20190302-110143-vh1amb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=479&fit=crop&dpr=1 754w, https://images.theconversation.com/files/261754/original/file-20190302-110143-vh1amb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=479&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/261754/original/file-20190302-110143-vh1amb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=479&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">U.S. President Barack Obama, right, talks with Australia’s Prime Minister Malcolm Turnbull, left, before the start of a meeting with other leaders of the Trans-Pacific Partnership countries in the Philippines in November 2015. (AP Photo/Susan Walsh)</span>
<span class="attribution"><span class="source">(AP Photo/Susan Walsh)</span></span>
</figcaption>
</figure>
<p>Barack Obama’s administration <a href="https://www.cfr.org/backgrounder/what-trans-pacific-partnership-tpp">crafted the TPP</a> as a geopolitical instrument to halt China’s plans. It presented east and southeast Asian nations with an alternative to China’s coercive diplomacy in the region, such as in the case of <a href="https://www.nytimes.com/2018/06/25/world/asia/china-sri-lanka-port.html">Sri Lanka</a>. </p>
<p>Reducing trade barriers had the potential to provide America with greater investment opportunities in the Asia-Pacific region. It could have weakened China’s diplomatic clout while also creating economic incentives for American investment in the area. It exploited a window of opportunity that targeted the source of China’s rise — its economy. </p>
<p>Pulling out of the TPP was not solely a product of the current administration —a Hillary Clinton administration <a href="https://www.bloomberg.com/news/videos/2016-08-11/clinton-i-oppose-tpp-now-and-i-ll-oppose-it-as-president">may have withdrawn</a> too. America’s anti-free trade mood reflects the priority of the public and lawmakers, which is to preserve U.S. jobs and sovereignty. </p>
<h2>Shifts in global power are afoot</h2>
<p>But shifts in global power may be under way with implications beyond what happens on the home front. A <a href="https://foreignpolicy.com/2019/01/07/a-new-cold-war-has-begun/">tech Cold War</a> is brewing, China’s plans for expansion under the <a href="https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative">Belt and Road initiative</a> continue and South China Sea claims are an extension of China’s sovereignty. </p>
<p>The rebooted TPP, the 11-nation <a href="https://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/index.aspx?lang=eng">Comprehensive and Progressive Agreement for Trans-Pacific Partnership</a>, is likely to reduce barriers to trade and increase investment opportunities across Asia and Latin America for its member countries, including Canada.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/261753/original/file-20190302-110119-1u8rarn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/261753/original/file-20190302-110119-1u8rarn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/261753/original/file-20190302-110119-1u8rarn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/261753/original/file-20190302-110119-1u8rarn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/261753/original/file-20190302-110119-1u8rarn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/261753/original/file-20190302-110119-1u8rarn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/261753/original/file-20190302-110119-1u8rarn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/261753/original/file-20190302-110119-1u8rarn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Canada’s minister of international trade, Francois-Philippe Champagne, talks to the media about the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in January 2018.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Christopher Katsarov</span></span>
</figcaption>
</figure>
<p>But the agreement, without U.S. representation, hardly lives up to America’s once-desired aim to create a trade zone in a large swath of East Asia that would isolate China while addressing the global power shifts under way. A renegotiated CPTPP, with American backing, may have even strengthened the Trump administration’s position in its current trade negotiations with the Chinese.</p>
<p>The U.K. was unable to prevent the last global leadership transition due to missed windows of opportunity and deliberate accommodation. An America that views China’s rise through a short-term bilateral lens runs the risk of accidentally accommodating Chinese efforts to replace America. </p>
<p>Taking advantage of a window of opportunity may be key to curbing the next global leadership transition —and the CPTPP may be the window that America needs before we are forced to accommodate to China’s interests. The U.S. should reconsider joining the pact if it wants any shot at slowing China’s rise.</p><img src="https://counter.theconversation.com/content/111971/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The author is affiliated with the United States Air Force. This article was prepared by James L. Anderson in his personal capacity. The opinions expressed in this article are the author's own and do not reflect the view of the United States Air Force, Department of Defense, or United States Government. </span></em></p>America may have missed a window of opportunity to curb China’s rise when it pulled out of the Trans-Pacific Partnership.James L. Anderson, Visiting Fulbright Fellow at Centre for International and Defence Policy, Queen's University, OntarioLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1112012019-02-06T15:07:36Z2019-02-06T15:07:36ZUK’s post-Brexit trade with Japan in jeopardy while uncertainty persists<p>Nissan <a href="https://www.bbc.co.uk/news/business-47107561">has said</a> it will no longer be producing its new X Trail car at its Sunderland plant in north-east England. They will instead be produced in Japan. Although no current jobs are scheduled to be lost, the region was looking forward to benefiting from an extra 740 jobs that the new car would create. </p>
<p>Nissan explained that Brexit was only one factor among several, accounting for the decision. A shrinking car market in Europe and China, as well as new regulations on diesel, have hit the sector hard. Plus, Japan has just signed a <a href="https://theconversation.com/eu-japan-trade-deal-comes-into-force-to-create-worlds-biggest-trade-zone-110729">trade deal with the EU</a> which will see tariffs on its car exports reduced to zero over the next seven years.</p>
<p>Nonetheless, it’s hard not to see this as a product of Brexit uncertainty and could well be the start of others leaving British shores. It reflects concerns among many international businesses in the UK about the prospect of a no-deal Brexit.</p>
<p>Nissan’s presence in the UK is driven by its bottom line. It set up its Sunderland plant following tax breaks and other financial incentives offered to Japanese companies <a href="http://www.thejournal.co.uk/news/revealed-how-margaret-thatcher-saved-6464068">by Prime Minister Margaret Thatcher in 1984</a>. A big part of the appeal was the fact that the UK offered a “gateway” to the rest of Europe, with access to the EU single market and a readily available pool of labour. </p>
<p>Today, more than 1,000 Japanese firms jointly employ around 160,000 people in the UK, in sectors including financial services, <a href="https://www.independent.co.uk/news/uk/politics/brexit-japan-shinichi-iida-trade-eu-theresa-may-a8280021.html">manufacturing and pharmaceuticals</a>. And the three Japanese car giants – Honda, Nissan and Toyota – comprise almost half of UK car production. </p>
<p>Japanese investment in the UK, <a href="https://www.gov.uk/government/speeches/japan-and-the-uk-an-enduring-trade-partnership">amounting to £46 billion to date</a>, is part of a valuable trading partnership. UK exports to Japan in 2016 <a href="https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/whodoestheuktradewith/2017-02-21">amounted to £12.5 billion</a>, split evenly between goods and services, and comprising sectors like vehicles, power generating equipment, financial services, food and drink, and pharmaceuticals. In the same year, the UK’s imports of Japanese goods and services reached £11.5 billion, notably in automobiles, automobile parts and power engines. Today, more than <a href="https://www.gov.uk/government/publications/exporting-to-japan/exporting-to-japan">450 UK firms operate in Japan</a> and they sit at the forefront of innovation in sectors like life sciences and energy, exploiting the opportunities presented by Japan’s acute ageing population and its dearth of resources.</p>
<h2>Deal or no deal</h2>
<p>A managed departure based on Theresa May’s withdrawal agreement would provide Japanese and UK firms with a transition period of 21 months, during which negotiations for a longer-term agreement could be set in train. In contrast, a no-deal Brexit, requiring the UK immediately to trade according to World Trade Organisation rules, would mean that British products have only weeks to enjoy their tariff-free entry into the Japanese market.</p>
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Read more:
<a href="https://theconversation.com/no-deal-seven-reasons-why-a-wto-only-brexit-would-be-bad-for-britain-102009">No deal? Seven reasons why a WTO-only Brexit would be bad for Britain</a>
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<p>Meanwhile, high-profile Japanese firms have repeatedly warned that a no-deal Brexit could lead to them halting production in the UK and diverting investments elsewhere. Johan van Zyl, head of Toyota Motor Europe, said that tariff-free sales to Europe <a href="https://www.bbc.co.uk/news/business-45715029">are crucial for the future of its plant</a>, which employs 2,500 people in Derbyshire and from which 90% of the 150,000 cars produced each year are exported to the rest of the continent. Nissan’s chief made similar warnings in 2016. More surprisingly, the Japanese prime minister, Shinzo Abe, along with leaders from Japan’s business lobby, Keidanren, <a href="https://www.theguardian.com/world/2016/jun/15/brexit-is-a-huge-negative-for-japanese-companies-in-the-uk">also voiced fears</a> that a hard Brexit could be a “huge negative” for Japanese companies in the UK and re-emphasised the UK’s principal value as a gateway to Europe. </p>
<p>Concerns around a no-deal Brexit centre on the impact of reintroducing border controls, and the re-imposition of those recently removed tariff and non-tariff barriers, as well as a loss of access to valuable European labour. Large Japanese banks have <a href="https://www.theguardian.com/politics/2016/dec/15/philip-hammond-japanese-banks-concerned-brexit">also expressed concerns</a> about the possible loss of the “EU passport”, which enables banks based in London to operate freely across the continent’s financial markets. </p>
<p>Not every sector would lose out and more positive noises come from industries where the UK would remain competitive, particularly where it has notable R&D expertise and skills. Japan’s SoftBank <a href="https://www.ft.com/content/235b1af4-4c7f-11e6-8172-e39ecd3b86fc">purchase</a> of software design firm Arm Holdings after the referendum in 2016 is a case in point. Abe has also spoken of Japan negotiating a new trade deal with the UK and he invited the UK <a href="https://www.bbc.co.uk/news/uk-politics-45780889">to join the Trans-Pacific Partnership trade bloc</a>.</p>
<p>The sticking point for all of these agreements is that to date the British government has been unable to present a clear picture of what the immediate future will look like. In 1984, Thatcher stood firmly against her chancellor, who was keen to make changes to corporation tax that would damage Nissan’s interests. She recognised that damaging relations with this major employer could jeopardise future inward investment. The same could well be true today.</p><img src="https://counter.theconversation.com/content/111201/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Julie Gilson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>What Brexit means for future UK-Japan business.Julie Gilson, Reader in Asian Studies, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1046712018-11-29T11:36:58Z2018-11-29T11:36:58ZTrump was dealt a winning hand on trade – his hardball negotiating tactics are squandering it<figure><img src="https://images.theconversation.com/files/247377/original/file-20181126-140534-5q1bf8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Trump had a full hand, but he may have squandered it.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/pair-aces-chips-blackjack-winning-hand-1184225827?src=CIsUunPVUtu0rp6xxuoNJw-1-6">Happy Author/shutterstock.com</a></span></figcaption></figure><p>As President Donald Trump <a href="https://www.cnbc.com/2018/11/26/trade-is-the-only-bilateral-deal-trump-and-xi-can-discuss-commentary.html">prepares</a> to meet with his Chinese counterpart on the sidelines of the G-20 summit on Nov. 30, the stakes could hardly be higher. </p>
<p>The two countries are in the middle of a trade war Trump launched earlier this year, one of the hardball negotiating strategies he believes can extract more benefits from trading partners. Such “economic bullying” <a href="https://www.politico.com/story/2018/11/19/pressure-xi-trump-meet-g20-1003391">was blamed</a> for creating a first-ever deadlock at a recent Asia-Pacific Economic Cooperation meeting. </p>
<p>So far, China shows few signs of budging in the face of mounting tariffs. Could Trump’s tough talk work? Or will it backfire on him and the Americans he represents?</p>
<h2>Threats and humiliation</h2>
<p>Exhibit A for those who believe such tactics are effective is the <a href="https://theconversation.com/how-is-new-nafta-different-a-trade-expert-explains-104212">United States Mexico Canada Agreement</a>, negotiated to replace NAFTA. Trump used <a href="https://twitter.com/realdonaldtrump/status/788919099275390976?lang=en">threats</a>, <a href="http://www.latimes.com/opinion/la-ol-enter-the-fray-trump-s-tough-guy-negotiating-stance-1535753232-htmlstory.html">humiliation</a> and <a href="https://www.nytimes.com/2018/06/01/world/canada/steel-aluminum-trump-trade-ontario.html">punishing tariffs</a> to get Canada and Mexico to agree to the new deal.</p>
<p><a href="https://thegoldwater.com/news/38453-Trump-s-Negotiation-Brilliance-Displayed-in-Successful-USMCA-Trade-Deal">Supporters argue</a> this shows <a href="https://www.watershedassociates.com/negotiationblog/donald-trumps-art-deal-whats-his-final-grade">his brand of bluster</a> works. And that this strategy will help the U.S. win its trade war with China and get the better of the EU. </p>
<p>But even without the <a href="http://www.trumptwitterarchive.com/archive/China/ttff">taunting tweets</a>, Trump already has enormous leverage going into any trade negotiation, whether with Canada and Mexico, China or the EU. That’s because, as <a href="https://scholar.google.com/citations?user=Dj1KNt8AAAAJ&hl=en&oi=sra">my own research</a> <a href="https://doi.org/10.1111/ecin.12360">has shown</a>, boasting the <a href="https://www.weforum.org/agenda/2018/04/the-worlds-biggest-economies-in-2018/">world’s largest and strongest economy</a> puts the U.S. in a unique position to extract concessions from its partners.</p>
<p>Yet, despite this advantage and the blustery rhetoric, Trump hasn’t actually achieved all that much. And in negotiations with China, he may have already squandered some of his biggest chips. </p>
<h2>The US always has a strong hand</h2>
<p>Forgetting Trump’s negotiating tactics for a moment, the U.S. went to the bargaining table with Canada and Mexico with an inherently strong hand. And, the same will be true when arriving at the bargaining table with China and the EU. </p>
<p><a href="https://www.jstor.org/stable/2951352?casa_token=sSZ-nhWABpIAAAAA:3G2DceaYyQVpRmw-MGlduV4ZSXYqmUnzL-wQMS00mBnDNovipQT56SPfPBHh_WZU2eqZUnXInClBIQp5JHcaH4d7xcdoH2vD7zeu34yF-aeHJy6R2uqD&seq=1#metadata_info_tab_contents">Research</a> by economist John McLaren shows how small countries become more dependent on big ones when they integrate with each other. Indeed, recent <a href="https://cdn.theconversation.com/static_files/files/377/phaseOutsNAFTA.pdf?1543421844">research</a> of my own, together with economists Tibor Besedes and Tristan Kohl, says Canada and Mexico did become more dependent on the U.S. because of the North American Free Trade Agreement.</p>
<p>And <a href="https://doi.org/10.1093/qje/qjt016">empirical work</a> by economists Rod Ludema and Anna Maria Mayda shows countries like the U.S. with greater exporting power tend to get more market access during bilateral negotiations. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/247379/original/file-20181126-140516-1j8ptug.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Trump’s supporters argue that the new NAFTA deal with Canada and Mexico gives him a leg up.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/US-Canada-Mexico-Trade/d315ceb2fa3c48ea95d00162870341eb/20/0">AP Photo/Manuel Balce Ceneta</a></span>
</figcaption>
</figure>
<h2>Threats and tariffs</h2>
<p>But, rather than focusing on playing the strong hand he was dealt, the president threatened to burn the house down. </p>
<p>For example, he’s been threatening to <a href="https://www.wsj.com/articles/donald-trump-lays-out-protectionist-views-in-trade-speech-1467145538">withdraw from NAFTA</a> since the 2016 U.S. presidential campaign and repeatedly tried to use his apparent eagerness to rip it up <a href="https://www.forbes.com/sites/phillevy/2018/01/22/the-nafta-withdrawal-threat-is-real/#11eb88aa6458">as a way to force</a> Canada and Mexico to the negotiating table. </p>
<p>He also imposed steep tariffs on steel and aluminum – new levies that adversely affect <a href="https://www.bloomberg.com/news/articles/2018-10-01/with-nafta-sorted-focus-shifts-to-aluminum-and-steel-tariffs">Canada and Mexico</a> much more than China. They’ve also hurt American carmakers, <a href="https://www.vox.com/business-and-finance/2018/11/26/18112988/general-motors-plant-closures-tariffs-trump">playing a part</a> in General Motor’s plan to close up to five plants in North America and lay off more than 14,000 workers. </p>
<p>Yet Trump used these steel and aluminum tariffs – as well as the <a href="https://business.financialpost.com/news/economy/trumps-auto-tariffs-threat-is-making-it-harder-to-secure-a-nafta-deal">specter of new and severe auto tariffs</a> – to back Canada and Mexico <a href="https://www.bloomberg.com/news/articles/2018-03-06/steel-tariffs-transform-into-nafta-chip-as-trump-plays-dealmaker">into a corner</a>, even though both are key allies. </p>
<p>Furthermore, after reaching a separate deal with Mexico in August, Trump used it to put even more pressure on Canada by <a href="https://www.nytimes.com/2018/08/27/us/politics/us-mexico-nafta-deal.html">threatening to exclude</a> America’s northern neighbor if it didn’t agree to their terms. </p>
<h2>Tough talk and modest gains</h2>
<p>And after all this, did he get “the <a href="https://www.forbes.com/sites/johnbrinkley/2018/10/08/usmca-is-not-the-magnificent-trade-deal-trump-says-it-is/#6bbe5ea34054">most important trade deal we’ve ever made</a>, by far,” as he claimed? Not quite. </p>
<p>In fact, U.S. gains in the United States-Canada-Mexico Agreement <a href="https://www.forbes.com/sites/johnbrinkley/2018/10/08/usmca-is-not-the-magnificent-trade-deal-trump-says-it-is/#4c363c1a4054">are modest</a> at best, even in the three areas most touted as wins.</p>
<p>While it’s true that U.S. dairy producers now have better access to the Canadian market, the <a href="https://www.cnbc.com/2018/10/24/fed-says-the-new-nafta-isnt-going-to-help-us-dairy-farmers.html">Federal Reserve Banks</a> of Minneapolis and Chicago predict little benefit. The increased market access is small. And U.S. dairy farmers are still facing tariffs from Mexico and Canada as retaliation for Trump’s metal tariffs.</p>
<p>Mexico’s promise of passing laws strengthening labor unions and worker rights also has little value for the U.S. Although these laws should reduce the extent to which Mexican workers are low-wage substitutes for U.S. workers, the new deal <a href="https://www.vox.com/2018/8/29/17791430/trump-mexico-trade-deal-nafta-labor">doesn’t spell out</a> enforcement. So, like the old NAFTA, these are unenforceable promises by Mexico.</p>
<p>Finally, the U.S. did manage to get its way on a rule requiring a zero-tariff car coming from Mexico to have at least 30 percent of the work done by employees earning at least US$16 an hour – three times the typical Mexican autoworker wage. <a href="https://www.reuters.com/article/trade-nafta-autos/trump-administration-says-trade-pact-will-bring-auto-jobs-back-to-us-idUSL2N1WH1V0">Some argue</a> this will create more high-wage auto jobs in the U.S. </p>
<p>Good news for American autoworkers right? Wrong. The penalty tariff for missing this mark is just 2.5 percent. Rather than shifting lots of labor back to the U.S., car companies will <a href="https://www.washingtonexaminer.com/policy/economy/usmca-deal-may-pressure-white-house-to-add-auto-tariffs-too">simply pay</a> the tariff. </p>
<h2>Squandering a good hand</h2>
<p>Now we turn to China, a trade relationship that’s far more complex.</p>
<p>Interestingly, the U.S. has even more leverage with China because most of its allies, such as the EU, <a href="https://www.brookings.edu/blog/order-from-chaos/2018/10/05/why-its-time-to-end-the-tit-for-tat-tariffs-in-the-u-s-china-trade-war/">agree with its concerns over intellectual property theft</a> and a lack of market access. They would have joined a coordinated effort to push China to change its ways. </p>
<p>But once again, rather than playing this already strong hand, Trump doubled down on go-it-alone confrontation by piling on the <a href="https://piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide">tariffs</a>, which now cover more than half of U.S. imports from China. </p>
<p>And he’s repeatedly threatened to go for broke and slap tariffs on <a href="https://www.cnbc.com/2018/07/20/cnbc-transcript-president-donald-trump-sits-down-with-cnbcs-joe-kern.html">all imports</a> from China. </p>
<p>What has this achieved? A tit for tat, full-blown trade war, in which each Trump salvo is greeted by retaliation. This retaliation has pummeled U.S. farmers: <a href="https://piie.com/blogs/trade-investment-policy-watch/first-tariffs-then-subsidies-soybeans-illustrate-trumps">Over 90 percent</a> of U.S. agricultural exports to China are now subject to tariffs. Although the Trump administration has <a href="https://www.wsj.com/articles/farmers-say-aid-wont-cover-tariff-damage-1537974178">promised billions</a> in tariff relief to farmers, many say it won’t be enough to offset the losses. </p>
<p>Putting aside China’s slapping of the U.S. with retaliation, possible concessions outlined by China don’t amount to much. They include offers of <a href="https://www.forbes.com/sites/charleswallace1/2018/04/06/china-offers-to-help-us-reduce-its-trade-deficit/#544cfeca3f08">helping reduce the bilateral trade deficit</a> – even though economists say they <a href="https://www.nytimes.com/2018/10/05/business/surprising-truths-about-trade-deficits.html">don’t matter</a> – and <a href="https://www.bloomberg.com/news/articles/2018-11-14/china-said-to-outline-concessions-to-u-s-ahead-of-g20-talks">other modest changes</a>. </p>
<p>Moreover, Trump <a href="https://www.cnbc.com/2018/04/18/trump-dismisses-tpp-but-may-have-missed-opportunity-in-china-trade-skirmish.html">already gave up</a> the ace in the hole that could have helped achieve so many of his goals: the <a href="https://theconversation.com/us/topics/tpp-7972">Trans-Pacific Partnership</a>. </p>
<p>Because the TPP would have been the largest trade deal ever and included so many of its Pacific neighbors, China would most likely have <a href="https://foreignpolicy.com/2015/10/07/china-tpp-trans-pacific-partnership-obama-us-trade-xi/">eventually joined</a>. That would have resulted in more market access for American companies in China and forced China to abide by rules essentially written by the U.S., the dominant economic superpower in the deal. </p>
<p>Alas, one of Trump’s first official acts as president was to <a href="https://www.washingtonpost.com/news/worldviews/wp/2018/04/13/a-timeline-of-trumps-complicated-relationship-with-the-tpp/">withdraw</a> from the TPP. </p>
<h2>How to play a winning hand</h2>
<p>Holding aces doesn’t ensure a win, of course. It’s more about making the right moves.</p>
<p>Trump’s best move now on China is to <a href="https://www.ft.com/content/ee361e2e-b283-11e8-8d14-6f049d06439c">focus on cooperating with the EU and Japan</a>. Uniting as a massive trading bloc is the best way to extract concessions from China. </p>
<p>And while early rumors of a possible <a href="https://www.nytimes.com/2018/11/27/us/politics/trump-xi-trade-g-20.html">truce</a> in the trade war are encouraging, the EU and Japan will only take part if they believe Trump is serious about cooperating with them and negotiating with China. That belief <a href="https://www.chathamhouse.org/expert/comment/us-allies-aren-t-buying-its-new-strategies-confront-china">has surely been dented</a> by Trump’s negotiating tactics. </p>
<p>The U.S. doesn’t have to keep threatening to burn down the house to get a good deal. The U.S. only has to play the cards it’s been dealt, which is typically a winning hand.</p><img src="https://counter.theconversation.com/content/104671/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>James Lake does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Boasting the world’s biggest and strongest economy, the U.S. has enormous leverage when it sits down with a partner to negotiate a trade deal. Threats and tariffs are not really helping.James Lake, Associate Professor of Economics, Southern Methodist UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1057742018-10-30T21:57:03Z2018-10-30T21:57:03ZIn defence of Canada’s dairy farmers<figure><img src="https://images.theconversation.com/files/242525/original/file-20181026-7074-qw35ic.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Canada's dairy industry is being increasingly put at risk in trade negotiations. A visit to a Canadian dairy farm illuminates why the industry should be protected. </span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>At 8 a.m. one recent morning, when the milking of 110 cows was complete, I helped Jeannie van Dyk feed her calves and give them clean bedding. Van Dyk has not lost any calves due to excellent biosecurity and their housing and feeding regimes.</p>
<p>All the calves at Lellavan Farms in Noel Shore, N.S., are fed warm water, which helps them avoid getting chilled. The calf hutches are modular, allowing them to be taken down for cleaning. The space is being moved to a positive air-pressure system to ensure protection from disease. </p>
<p>The calves are fed milk twice daily, individually according to size, appetite and age. Then they’re taught to drink from a bucket and they start solid food at around three weeks.</p>
<p>At 8:20, the milk tanker arrived, collecting 8,000 litres that would soon reach homes across the province. The conversation at the farm shifted from cows to macro forces shaping the Lellavan Farm family’s world: Supply management and international trade deals.</p>
<h2>At the centre of trade talks</h2>
<p>Our dairy industry has been in the news a lot in recent years as a focal point in Canada’s many international trade negotiations.</p>
<p>First, there was the <a href="http://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/ceta-aecg/index.aspx?lang=eng">Comprehensive Economic and Trade Agreement</a> between Canada and the European Union, known as CETA. Then came the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, <a href="https://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/index.aspx?lang=eng">dubbed the TPP</a>. Most recently there was the sticky renegotiation of NAFTA, resulting in the new United States-Mexico-Canada Agreement, <a href="https://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/usmca-aeumc/index.aspx?lang=eng">or the USMCA.</a> </p>
<p>Every farmer in Canada rides the waves of these negotiations. Concessions and deals are cut in faraway urban environments, sometimes with little input from the rural communities that depend on agriculture for cultural and physical survival.</p>
<h2>Day kicks off in darkness</h2>
<p>I’ve worked with the agricultural industry for more than 20 years, in at least four different countries. But until this past Thanksgiving weekend at Lellavan Farms, I didn’t really know what it was to be a dairy farmer, to stomp a mile in their muddy boots, kicking my day off in the darkness at 4:30 a.m.</p>
<p>As we worked our way through the various chores, I chatted with Jeannie about her job, her farm and what these trade agreements mean to her. The three aforementioned agreements have collectively given other countries access to more than nine per cent of the Canadian milk market.</p>
<p>That is more milk than is produced in all of Atlantic Canada. Van Dyk shared with me a <a href="https://www.agropur.com/sites/default/files/documents/Analysis_of_%20impacts_of_supply_management_Canadian_dairy_inudstry-EN.pdf">report commissioned by Agropur Dairy co-operative</a>, whose members are spread across five Canadian provinces, called <em>Analysis of the potential impacts of the end of supply management in the Canadian dairy industry.</em> </p>
<p>It says opening up the Canadian dairy system risks a net loss of $2.1 to $3.5 billion of Canada’s GDP. Approximately 24,000 direct jobs would be affected.</p>
<h2>A spike followed by a decline</h2>
<p>Other studies suggest that countries that have transitioned away from supply management, such as Australia, have seen an initial spike in dairy production, <a href="http://www.momagri.org/UK/focus-on-issues/A-glimpse-of-the-world-abolition-of-supply-management-in-Australia_1667.html">then a steady reduction in production,</a> farms and farmers. Many producers have been <a href="http://www.agrifoodecon.ca/uploads/userfiles/files/dairy%20policy%20reform-cautionary%20july-18.pdf">forced to exit the industry</a> due to soft market conditions.</p>
<p>Van Dyk tells me that she writes 50 business cheques each month to local companies, a substantial contribution to the local economy. Her farm employs people from the community and hosts a student each summer, so future farmers have applied knowledge.</p>
<p>Being a dairy farmer is more than a job. It’s a way of life. The recent concessions in trade agreements are eroding farmers’ livelihoods, and thus that way of life.</p>
<p>Granted, it’s a challenging life. I often ask farmers why they do it.</p>
<h2>Love of their animals</h2>
<p>The answer is always the same: Love. Canadian dairy farms are not just milk factories. They are collections of people who love what they do and the animals in their care. That gets them through 20-hour days in the summer.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/242528/original/file-20181026-7071-pjvba9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/242528/original/file-20181026-7071-pjvba9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=459&fit=crop&dpr=1 600w, https://images.theconversation.com/files/242528/original/file-20181026-7071-pjvba9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=459&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/242528/original/file-20181026-7071-pjvba9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=459&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/242528/original/file-20181026-7071-pjvba9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=577&fit=crop&dpr=1 754w, https://images.theconversation.com/files/242528/original/file-20181026-7071-pjvba9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=577&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/242528/original/file-20181026-7071-pjvba9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=577&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Canada’s dairy farmers care about their livestock. In this 2016 photo, Andy Benson poses with a calf he saved a month earlier by performing CPR on his dairy farm in Bellisle Creek, N.B.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Ron Ward</span></span>
</figcaption>
</figure>
<p>Jeannie and her husband John are proudly mentoring their two sons into the management of the 600-acre crop and 300-head farm. They all showed me how incredibly innovative farmers are as well as their dedication to the welfare and comfort of their animals. </p>
<p>Lellavan Farms just installed a $2.2-million dairy barn designed around the principal criteria of animal welfare, comfort and safety. Jeannie knows every single animal. As we walked around and interacted with them, it was clear they knew her. They showed affection.</p>
<p>In the language of reports, the Agropur report states that the dairy industry “contributes to the regional fabric and territory occupations.”</p>
<p>I’ll put it this way: You cannot separate farming from the fabric of rural Canada. The families, animals and land are fully integrated into the community and landscape. The survival of rural Atlantic Canada, in particular, is dependent on this, and it is something we must keep in mind during all of our trade negotiations.</p>
<p>Agriculture is our future; it’s that simple.</p><img src="https://counter.theconversation.com/content/105774/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Gray does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Countries that have phased out supply management systems in the dairy industry have seen an initial spike in production, then a steady decline. That’s why Canada should protect its dairy farmers.David Gray, Dean of the Faculty of Agriculture, Dalhousie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1042872018-10-17T10:27:57Z2018-10-17T10:27:57ZFree trade isn’t dead yet – despite Trump’s threats to the system that upholds it<figure><img src="https://images.theconversation.com/files/240860/original/file-20181016-165905-bhzii6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Canada, Mexico and other U.S. allies aren't walking away from the principles of economic cooperation. </span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Mexico-NAFTA/9c10bb0f98a34d76b3bf7059c3b31ebd/30/0">AP Photo/Marco Ugarte</a></span></figcaption></figure><p>The rules-based world order, which has been the scaffolding supporting the global economy since World War II, appears to be in serious jeopardy. And, judging by the <a href="https://newrepublic.com/article/149813/inevitable-death-global-trade-know">number</a> of <a href="https://www.politico.com/magazine/story/2018/09/28/donald-trump-unga-liberal-world-order-220738">eulogies</a> <a href="https://www.politico.eu/article/is-free-trade-dead-ttip-uk-eu-ceta-ttip/">published</a> in <a href="https://washingtonmonthly.com/magazine/junejulyaug-2016/free-trade-is-dead/">recent months</a>, it would be easy to conclude that this <a href="https://theconversation.com/rules-based-trade-made-the-world-rich-trumps-policies-may-make-it-poorer-97896">system</a> of international cooperation on trade and other issues is already dead.</p>
<p>Concern for the fate of cooperation among nations is understandable. In his attacks on the <a href="https://www.newyorker.com/magazine/2018/06/18/donald-trumps-new-world-order">United Nations</a>, <a href="http://www.atlanticcouncil.org/blogs/new-atlanticist/this-is-how-the-liberal-international-order-dies">NATO</a> and the <a href="https://foreignpolicy.com/2018/07/25/the-world-order-is-starting-to-crack/">World Trade Organization</a>, President Donald Trump has shown his disdain for American commitments to peace, security and trade. </p>
<p>Notwithstanding Trump’s bluster, I believe it’s too soon to mourn the end of international cooperation. While there are some very real challenges facing the global system, when we look at international economic law – <a href="https://sgpp.arizona.edu/user/jeff-kucik">one of my areas of expertise</a> – there are several reasons to believe that it can, and will, endure.</p>
<h2>Trade cooperation under threat</h2>
<p>Trump has been attacking free trade since his 2016 campaign. </p>
<p>He singled out multilateral trade agreements such as the <a href="https://theconversation.com/us/topics/tpp-7972">Trans-Pacific Partnership</a> as harmful to U.S. interests. He also claimed the North American Free Trade Agreement was responsible for <a href="https://www.washingtonpost.com/politics/2018/09/24/president-trumps-claims-about-nafta-us-auto-industry/">accelerating the decline</a> in American manufacturing. </p>
<p>Once in office, this anti-trade rhetoric turned into policy. Trump <a href="https://www.washingtonpost.com/news/worldviews/wp/2018/04/13/a-timeline-of-trumps-complicated-relationship-with-the-tpp/">withdrew</a> from the TPP, <a href="https://slate.com/business/2018/06/trump-wants-to-kill-nafta-not-negotiate-a-better-deal.html">demanded</a> a renegotiation of NAFTA and has repeatedly <a href="https://www.cnbc.com/2018/08/30/trump-threatens-to-withdraw-from-world-trade-organization.html">threatened</a> to leave the WTO. And earlier this year, he began <a href="https://theconversation.com/us/topics/trade-wars-50746">trade wars</a> with allies such as the European Union and rivals like China. </p>
<p>In addition to <a href="https://theconversation.com/how-trumps-trade-war-affects-working-class-americans-100702">concerns</a> that these actions will harm Americans’ pocketbooks, there is fear that Trump’s strategy is eroding faith in the very rules that promote economic cooperation, including those intended to limit trade protection and constrain retaliation.</p>
<p>Look beyond Trump’s tough talk on trade, however, and you’ll see reasons to be hopeful. </p>
<h2>The WTO is still active</h2>
<p>Many cite the <a href="https://www.economist.com/leaders/2018/07/19/how-to-rescue-the-wto">president’s attacks</a> on the World Trade Organization as evidence that the system is <a href="https://www.washingtonpost.com/world/national-security/in-trump-some-fear-the-end-of-the-world-order/2018/06/08/d6026dde-6b44-11e8-bf8c-f9ed2e672adf_story.html?utm_term=.312ccbd0aef0">breaking down</a>. </p>
<p>Trump’s main problem with WTO is its formal system for dispute settlement, which the White House <a href="https://theconversation.com/trumps-go-it-alone-approach-to-china-trade-ignores-wtos-better-way-to-win-93918">argues</a> treats the U.S. unfairly. Indeed, the United States is <a href="https://theconversation.com/why-trumps-wrong-about-wto-treating-us-unfairly-102562">sued more often</a> than any other country. </p>
<p>In response, Trump has <a href="https://www.reuters.com/article/us-usa-trump-wto-idUSKBN16832U">threatened to ignore</a> WTO rulings and U.S. authorities have <a href="https://www.reuters.com/article/us-usa-trade-wto/u-s-unveils-new-veto-threat-against-wto-rulings-idUSKBN1JI22J">blocked</a> the appointment of new appellate judges to the organization. </p>
<p>These moves are certainly disconcerting given that U.S. withdrawal would be a serious blow to a system it once helped build. However, ongoing activity in the WTO’s dispute system indicates that other members still see value in the system. </p>
<p>Instead of relying solely on unilateral trade retaliation, countries have filed <a href="https://www.wto.org/english/tratop_e/dispu_e/dispu_status_e.htm">17 new filings</a> against the U.S. this year to combat its tariffs and other protectionist measures. That is the highest number of cases against the U.S. since steel tariffs brought on a <a href="https://www.trademonitoronline.com/litigation-spike-wto">wave of disputes</a> in 2002. </p>
<p>But rather than supporting Trump’s contention that the WTO is biased against the U.S., these filings are a statement that economies around the world want the system to work. And for good reason. There are benefits to seeking settlements at the WTO over punitive tariffs. </p>
<p>For example, <a href="https://www.princeton.edu/politics/about/file-repository/public/Peritz-WTO-Compliance-NGCC.pdf">research shows</a> that WTO dispute settlement works pretty well as a way to combat discriminatory trade policies. Countries comply with the WTO’s rulings about 60 percent of the time. While that may not seem like a lot, given the WTO <a href="https://www.researchgate.net/profile/Eric_Reinhardt/publication/248183805_Tying_Hands_without_a_Rope_Rational_Domestic_Response_to_International_Institutional_Constraints/links/0f31753bc5bad3c755000000.pdf">isn’t strictly able to enforce its rulings</a>, 60 percent compliance is actually pretty good. </p>
<p>By bringing these complaints to the WTO, countries also <a href="https://www.cambridge.org/core/journals/international-organization/article/audience-features-and-the-strategic-timing-of-trade-disputes/95D499979846BE3977B71FF5B06A8165">draw the world’s attention</a> to violations, naming and shaming violators of the rules, effectively damaging the reputations of leaders who erect discriminatory barriers.</p>
<p>And just as importantly, <a href="https://www.cambridge.org/core/journals/british-journal-of-political-science/article/measuring-the-cost-of-privacy-a-look-at-the-distributional-effects-of-private-bargaining/4572C5E003235E54D5C1C6001D5C952A">in some circumstances</a>, disputes <a href="https://46080139-a-62cb3a1a-s-sites.googlegroups.com/site/krzysztofpelc/KuPe2-chapter.pdf?attachauth=ANoY7coXHuW1ed3H07S6n1BcAn-RcmEmudMzTwL54Jsq_xvOr_mf5wfCMkdtYyxNfd4rbjVpXmXJNuedx3HzXTKdZEio0a-mwT7kQDxTrhLadXuV1TRuAZenUXmw3IzKzN8JQQbogMwg6MI_v_EmG3l9p_o4OpH6sAgmDkm1doe0iSMN7MvaYdXETu951vZrUwljTShnu1i_iZVlBzrO45R4-7r4gLkESQ%3D%3D&attredirects=0">may even deter</a> future violations. </p>
<p>Governments clearly recognize these benefits. </p>
<h2>No shortage of new agreements</h2>
<p>Another reason trade experts and economists <a href="https://www.washingtonpost.com/news/monkey-cage/wp/2018/08/24/worried-about-tariffs-trade-blocs-are-the-real-danger-to-the-u-s-and-china/?utm_term=.209d9b746538">bemoan</a> the end of cooperation is that Trump is snubbing multilateral agreements <a href="https://www.washingtonpost.com/opinions/trumps-foreign-policy-is-perfectly-coherent/2018/07/23/43dce312-8a0c-11e8-a345-a1bf7847b375_story.html?utm_term=.9cd5f0110fd8">in favor of bilateral ones</a>, which, <a href="http://www.latimes.com/business/la-fi-trump-trade-strategy-20170526-story.html">he says</a>, can <a href="https://thediplomat.com/2017/08/trumps-bilateralism-and-us-power-in-east-asia/">better leverage U.S. market power</a> to secure better deals. </p>
<p>While it’s true that there has been a spate of new one-on-one agreements among U.S. trading partners in the last few years, this isn’t evidence that other countries are buying into Trump’s rhetoric. </p>
<p>Notably, the TPP didn’t die with Trump’s withdrawal. Partly on the <a href="http://www.eastasiaforum.org/2018/02/27/cptpp-a-boost-for-japans-regional-trade-leadership/">insistence of Japan</a>, the rebranded Comprehensive and Progressive Agreement for Trans-Pacific Partnership was <a href="https://www.npr.org/sections/thetwo-way/2018/03/08/591549744/the-tpp-is-dead-long-live-the-trans-pacific-trade-deal">signed</a> in March. </p>
<p>This new deal looks like a sign of things to come. Canada currently has a <a href="http://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/japan-japon/fta-ale/background-contexte.aspx?lang=eng">conversation ongoing</a> with Japan. South of the border, Mexico <a href="https://www.reuters.com/article/us-china-mexico-trade/china-open-to-free-trade-agreement-with-mexico-xinhua-idUSKBN19K01Z">has been talking</a> to China. </p>
<p>Bilateral deals may be seen as <a href="https://www.cigionline.org/sites/default/files/pb_no.87.pdf">messy</a> and even <a href="https://www.cato.org/research/trade-agreements-wto">inefficient</a> compared with the multilateral trading system. But that reading is too simple. </p>
<p>It’s important to recognize that the WTO hasn’t undergone comprehensive revisions in many years, and this has led countries to prefer regional and bilateral alternatives. </p>
<p>But these alternatives don’t necessarily signal a turn away from cooperation. Nor are they representative of a global wave of Trump-inspired economic nationalism. Just the opposite. In an effort to maintain open trade routes, countries are seeking alternatives to U.S. leadership. </p>
<h2>Don’t mourn yet</h2>
<p>Certainly, it is difficult to overstate the damage that Trump’s strategy is doing to American diplomatic relations. </p>
<p>By <a href="https://www.bnnbloomberg.ca/canada-u-s-relations-at-all-time-low-amid-trade-troubles-mackay-1.1144869">many</a> <a href="https://www.theglobeandmail.com/business/commentary/article-trumps-barbs-send-canada-us-relations-to-new-lows/">accounts</a>, his main “victory” on trade – the conclusion of negotiations over a new NAFTA – <a href="https://www.nytimes.com/2018/10/03/world/canada/trudeau-trump-nafta.html">came at the expense</a> of any lingering goodwill between Trump and Canadian Prime Minister Justin Trudeau. </p>
<p>And that victory, has <a href="https://www.bloomberg.com/graphics/2018-nafta-vs-usmca/?srnd=politics-vp">been seen</a> as <a href="https://hillreporter.com/us-canada-reach-new-usmca-trade-deal-not-much-different-than-nafta-8867">much ado about nothing,</a> resulting in <a href="https://www.vox.com/2018/10/3/17930092/usmca-nafta-trump-trade-deal-explained">very modest revisions</a> to the status quo.</p>
<p>Yet one <a href="https://www.reuters.com/article/us-trade-wto-eu/eu-lays-out-wto-reform-ideas-to-keep-us-on-board-idUSKCN1LY1FV">significant result</a> of Trump’s tirades against trade law is a <a href="https://www.bloomberg.com/news/articles/2018-10-12/trump-s-threat-to-leave-the-wto-could-be-a-saving-grace?srnd=premium">growing push</a> for much-needed reform at the WTO, particularly by Canada and the EU. If successful, this could result in actually boosting international economic cooperation. </p>
<p>Whether those efforts will be successful is uncertain. But at the very least, countries seem interested in salvaging the system. As long as that’s true, it’s too soon to mourn the end of trade cooperation.</p><img src="https://counter.theconversation.com/content/104287/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeffrey Kucik does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The death of the rules-based world order that supports the global economy and free trade has been greatly exaggerated.Jeffrey Kucik, Assistant Professor of Political Science, University of ArizonaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1049182018-10-15T19:00:57Z2018-10-15T19:00:57ZThe Senate is set to approve it, but what exactly is the Trans Pacific Partnership?<p>These days it is called the TPP-11 or, more formally, the <a href="https://dfat.gov.au/TRADE/AGREEMENTS/NOT-YET-IN-FORCE/TPP-11/Pages/trans-pacific-partnership-agreement-tpp.aspx">Comprehensive and Progressive Agreement for Trans Pacific Partnership</a>. </p>
<p>It is what was left of the 12-nation Trans Pacific Partnership after President Donald Trump pulled out the US, after a decade of negotiation, in 2017. </p>
<p>Still in it are Australia, New Zealand, Canada, Mexico, Peru, Chile, Japan, Brunei, Singapore, Malaysia and Vietnam. It’ll cover 13% of the world’s economy rather than 30%. </p>
<h2>What’s in it for us?</h2>
<p>It is hard to know exactly what it will do for us, because the Australian government hasn’t commissioned independent modelling, either of the TPP-11 before the Senate or the original TPP-12.</p>
<p>A <a href="http://www.minerals.org.au/sites/default/files/180905%20Australia%20will%20gain%20from%20continued%20Asia-Pacific%20trade%20integration.pdf">report</a> commissioned by business organisations, including the Minerals Council, the Business Council, the Food and Grocery Council, the Australian Industry Group and the Australian Chamber of Commerce and Industry, finds the gains for Australia are <a href="https://www.crikey.com.au/2018/09/05/even-spruikers-cant-find-benefits-in-jury-rigged-trans-pacific-partnership/">negligible</a>, eventually amounting to 0.4% of national income (instead of 0.5% under the TPP-12).</p>
<p>The report says:</p>
<blockquote>
<p>The reason is simple:
Australia already benefits from extensive past
liberalisation, especially with Asia-Pacific partners.</p>
</blockquote>
<p>But it says bigger gains would come from expanding TPP-11 to many more members, all using “common rules” and the same “predictable regulatory environment”.</p>
<h2>Gradual deregulation</h2>
<p>Setting up that predictable environment takes an unprecedented 30 chapters, covering topics including temporary workers, trade in services, financial services, telecommunications, electronic commerce, competition policy, state-owned enterprises and regulatory coherence. </p>
<p>Most treat regulation as something to be frozen and reduced over time, and never increased.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-trans-pacific-partnership-is-back-experts-respond-87432">The Trans-Pacific Partnership is back: experts respond</a>
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</em>
</p>
<hr>
<p>It’s a regime that suits global businesses, but will make it harder for future governments to re-regulate should they decide they need to. </p>
<p>Our experience of the global financial crisis, the banking royal commission, escalating climate change and the exploitation of vulnerable temporary workers tells us that from time to time governments do need to be able to re-regulate in the public interest.</p>
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<h2>International ISDS tribunals</h2>
<p>And some decisions will be beyond our control. In addition to the normal state-to-state dispute processes in all trade agreements, the TPP-11 contains so-called <a href="https://www.smh.com.au/politics/federal/it-s-time-to-stop-giving-more-rights-to-global-corporations-20180611-p4zkrq.html">Investor-State Dispute Settlement (ISDS)</a> provisions that allow private corporations to bypass national courts and seek compensation from extraterritorial tribunals if they believe a change in the law or policy has harmed their investments.</p>
<p>Only tobacco cases are clearly excluded.</p>
<p>ISDS clauses will benefit some Australian-based firms. They will be able to take action against foreign governments that pass laws that threaten their investments, although until now there have been only four cases. John Howard did not include ISDS in the 2004 Australia-US FTA, following strong public reaction against it. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/when-trade-agreements-threaten-sovereignty-australia-beware-18419">When trade agreements threaten sovereignty: Australia beware</a>
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<p>Known ISDS cases have increased from less than 10 in 1994 to 850 in 2017, and many are against <a href="https://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/eli-lilly-fights-canadas-move-to-strip-drug-patent/article6082557/">health</a>, <a href="http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/clayton.aspx?lang=eng">environment</a>, <a href="http://aftinet.org.au/cms/node/1551">indigenous rights</a> and other public interest regulations.</p>
<p>If, after the TPP-11 is in force, a future government wants to introduce new regulations requiring <a href="https://www.cambridge.org/core/journals/transnational-environmental-law/article/regulatory-chill-in-a-warming-world-the-threat-to-climate-policy-posed-by-investorstate-dispute-settlement/C1103F92D8A9386D33679A649FEF7C84">mining or energy companies</a> to reduce their carbon emissions, it is not beyond the bounds of possibility that companies headquartered in TPP-11 members might launch cases to object. </p>
<p>Legal firms specialising in ISDS are already <a href="https://www.ashurst.com/en/news-and-insights/legal-updates/arbitration-update-recent-investment-arbitration-developments-in-australia/">canvassing</a> those options.</p>
<p>Even where governments win such cases, it takes years and tens of millions of dollars in legal and arbitration fees to defend them. It took an FOI decision to discover that the Australian government spent <a href="http://aftinet.org.au/cms/node/1597">$39 million in legal costs</a> to defend its tobacco plain packaging laws in the Philip Morris case. The percentage of those costs recovered by the government is still not known.</p>
<h2>A limited role for parliament</h2>
<p>The text of trade agreements such as TPP-11 remains secret until the moment they are signed. After that it’s then tabled in parliament and reviewed by a parliamentary committee.</p>
<p>But the parliament can’t change the text. It can only approve or reject the legislation before it.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/sovereign-risk-fears-around-tpp-are-overblown-39865">Sovereign risk fears around TPP are overblown</a>
</strong>
</em>
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<hr>
<p>In another oddity, that legislation doesn’t cover the whole agreement, merely those parts of it that are necessary to do things such as cut tariffs. </p>
<p>The parliament won’t be asked to vote on Australia’s decision to subject itself to ISDS, or on many of the other measures in the agreement that purport to restrict the government’s ability to impose future regulations.</p>
<h2>Could Labor approve it, then change it?</h2>
<p>In the midst of internal opposition to TPP-11, the Labor opposition has decided to endorse it and then try to negotiate changes if it wins government.</p>
<p>In government it has promised to release the text of future agreements before they are signed, and to subject them to independent analysis.</p>
<p>And it says it will <a href="https://parlinfo.aph.gov.au/parlInfo/download/legislation/ems/r6201_ems_f52a2980-5bf9-48d2-a9a1-f654acb16383/upload_pdf/18215EMClare.pdf;fileType=application%2Fpdf">legislate</a> to outlaw ISDS and temporary labour provisions in future agreements. </p>
<p>But renegotiation won’t be easy. Labour will have to try to negotiate side letters with each of the other TPP governments. If the TPP-11 gets through the Senate, Labor is likely to be stuck with it.</p><img src="https://counter.theconversation.com/content/104918/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pat Ranald is the unpaid voluntary convener of the Australian Fair Trade and investment Network that advocates for fair trade based on human rights and environmental sustainability</span></em></p>Labor says it will wave through the 11-nation Trans Pacific Partnership deal, then amend it in government. That won’t be easy.Patricia Ranald, Research Associate, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1028362018-09-20T20:12:49Z2018-09-20T20:12:49ZPlanned trade deal with Europe could keep medicine prices too high<figure><img src="https://images.theconversation.com/files/237259/original/file-20180920-10514-1pndqdj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Extending pharmaceutical monopolies would substantially increase costs for taxpayers.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/download/confirm/1040974624?src=Zmx8cNfEC7tzBU4jw9pdPg-1-6&size=huge_jpg">Shutterstock</a></span></figcaption></figure><p>The United States’ <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/january/US-Withdraws-From-TPP">withdrawal</a> from the Trans Pacific Partnership and the recent <a href="https://www.nytimes.com/2018/08/12/us/politics/trumps-tariffs-foster-crisis-at-the-wto.html">US-China tariff wars</a> have flamed concerns that international trade is becoming unstable. </p>
<p><a href="https://dfat.gov.au/trade/agreements/negotiations/aeufta/Pages/default.aspx">Trade talks</a> between Australia and the European Union – Australia’s second-largest trading partner – launched in June this year to much fanfare. They’re being promoted as a way to overcome some of the international uncertainty around trade. </p>
<p>But negotiating with the EU means Australia faces pressure once again to extend monopoly protection for foreign pharmaceutical companies. This could mean taxpayers end up paying high prices for medicines for longer.</p>
<h2>Extending patents</h2>
<p>The EU appears to be <a href="http://trade.ec.europa.eu/doclib/docs/2018/july/tradoc_157190.pdf">asking Australia</a> to agree to extend patent terms, at least for some drugs, although it’s not yet clear for how long. This could mean Australia, through the <a href="https://theconversation.com/au/topics/pbs-487">Pharmaceutical Benefits Scheme</a> (PBS), pays for more expensive brand-name pharmaceuticals for longer periods before cheaper, generic versions become available. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/health-check-how-do-generic-medicines-compare-with-the-big-brands-42472">Health Check: how do generic medicines compare with the big brands?</a>
</strong>
</em>
</p>
<hr>
<p>The EU’s push is driven by <a href="http://ec.europa.eu/trade/policy/accessing-markets/intellectual-property/">claims</a> that its pharmaceutical firms need longer periods of monopoly in countries like Australia to recoup the costs of developing new drugs before a competitor enters the market.</p>
<p>But the argument doesn’t stand up to scrutiny. Two independent Australian reviews from <a href="https://www.ipaustralia.gov.au/about-us/public-consultations/archive-ip-reviews/pharmaceutical-patents-review">2013</a> and <a href="http://www.pc.gov.au/inquiries/completed/intellectual-property/report">2016</a> found no evidence monopolies needed to be extended to recoup development costs. In fact, the reviews found some evidence for reducing pharmaceutical monopolies in Australia.</p>
<h2>Increasing costs</h2>
<p>Evidence shows that extending monopolies can increase costs to taxpayers. </p>
<p>A <a href="http://www.canada-europe.org/en/pdf/The%20Canada-EU%20CETA%20-%20An%20Economic%20Impact%20Assessment%20of%20Proposed%20Pharmaceutical%20Intellectual%20Property%20Provisions%20-%207%20February%202011%20.pdf">2011 study</a> examined similar EU demands on Canada. It found generics would be delayed by 3.46 years on average, with an annual loss of C$811 million for every year of delayed generic entry. This would result in an additional C$2.8 billion in costs to taxpayers per year.</p>
<p>The EU demands for Australia include longer monopoly terms for medicines where clinical trials have been done with children. These demands would likely place further pressure on the costs of pharmaceuticals in Australia. </p>
<p>Reducing patent terms, in contrast, could elicit substantial savings. </p>
<p>An <a href="https://www.ipaustralia.gov.au/about-us/public-consultations/archive-ip-reviews/pharmaceutical-patents-review">independent 2012-13 review</a> of Australia’s pharmaceutical patent system found taxpayers would save A$244 million a year by reducing existing patent term extensions. </p>
<h2>Data exclusivity</h2>
<p>Another concerning EU proposal is for Australia to lengthen monopolies on clinical trial data, known as “data exclusivity”. This is a separate monopoly to a patent and can apply whether or not there is a valid patent on a medicine, and cannot be challenged in court. </p>
<p>During the period of data exclusivity, generic manufacturers can’t rely on the clinical trial data demonstrating the safety and efficacy of the original drug to gain marketing approval for their generic version.</p>
<p>The problem is that it is not only expensive for generic companies to duplicate the trials, it’s also unethical to conduct placebo trials when the outcome is known. </p>
<p>So the EU push for Australia to increase its current period of data exclusivity for medicines from five to eight years (plus an additional two to three years before generics can be placed on the market) will be particularly controversial.</p>
<p>The result is a likely delay to the market entry of generics. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-trade-agreements-are-locking-in-a-broken-patent-system-32564">How trade agreements are locking in a broken patent system</a>
</strong>
</em>
</p>
<hr>
<p>An <a href="https://www.oxfam.org/sites/www.oxfam.org/files/bp-trading-away-access-to-medicines.pdf">Oxfam study</a> in Jordan found data exclusivity contributed to “significant delays” in generic entry of 79% of medicines examined. These delays result in paying high prices for longer. </p>
<p>A <a href="https://www.ncbi.nlm.nih.gov/pubmed/17102189">US study</a> found market exclusivity periods for just three drugs cost Medicaid US$1.5 billion in 2000–2004 alone.</p>
<h2>High price for ‘biologics’ without ‘biosimilars’</h2>
<p>“Biologics” are newer and often more expensive medicines produced through <a href="https://theconversation.com/explainer-what-are-biologics-and-biosimilars-45308">biological processes</a> and include treatments for cancer and rheumatoid arthritis. The EU’s definition of medicinal products seems to include biologics so they would be subject to the same expanded monopoly protection.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/explainer-what-are-biologics-and-biosimilars-45308">Explainer: what are biologics and biosimilars?</a>
</strong>
</em>
</p>
<hr>
<p>The complexity of biologics and the way they are made means generics (exact copies) are not possible, but “biosimilars”, which have the same effects in the body, can often be made. Delays in access to less expensive biosimilars could mean a greater proportion of Australia’s health funding is siphoned off to buy costly medicines, leaving fewer resources for other key health needs. </p>
<p>Our <a href="http://www.publish.csiro.au/AH/AH17031">study</a> of the cost of biologic drugs in Australia found taxpayers spent more than A$2 billion through the PBS in the year 2015-2016 alone. We also found PBS spending on biologics could be reduced by as much as 24% through the timely availability of biosimilars.</p>
<p>Fortunately, Australia and remaining TPP parties agreed to <a href="https://theconversation.com/the-trans-pacific-partnership-is-back-experts-respond-87432">suspend</a> data exclusivity provisions in the final TPP negotiations after the US withdrew from the agreement.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/time-for-costly-medicine-monopolies-to-go-from-tpp-trade-talks-87176">Time for costly medicine monopolies to go from TPP trade talks</a>
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<hr>
<p>The task now is for Australia to hold out on extending pharmaceutical monopolies in trade talks with the EU. The economic evidence is on our side, and the stakes too high.</p><img src="https://counter.theconversation.com/content/102836/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Belinda Townsend is a member of the People's Health Movement and the Public Health Association of Australia. She has received funding from national and international non-government (not-for-profit) organisations to attend speaking engagements related to trade agreements and health. She has represented the Public Health Association of Australia on matters relating to trade and health. </span></em></p><p class="fine-print"><em><span>Deborah Gleeson has received research funding in the past from the Australian Research Council. She has received funding from various national and international non-government (not-for-profit) organisations to attend speaking engagements and undertake consultancy projects related to trade agreements and health. She has represented the Public Health Association of Australia on matters related to trade agreements and public health.</span></em></p><p class="fine-print"><em><span>Hazel Moir does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The EU is asking Australia to extend drug company monopolies. This could mean Australians wait longer for access to cheaper, generic medicines.Belinda Townsend, Research Fellow, NHMRC Centre for Research Excellence in the Social Determinants of Health Equity, School of Regulation and Global Governance, Australian National UniversityDeborah Gleeson, Senior Lecturer in Public Health, La Trobe UniversityHazel Moir, Adjunct Associate Professor; economics of patents, copyright and other "IP", Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/978362018-06-08T15:53:03Z2018-06-08T15:53:03ZTrump could be using advanced game theory negotiating techniques – or he’s hopelessly adrift<p>The latest G-7 summit, held June 8 to 9 in Quebec, was one of the <a href="https://www.bbc.com/news/world-us-canada-44409775">most contentious</a> in years. </p>
<p>That’s because Donald Trump and his counterparts from six other industrialized countries have been at loggerheads over the president’s aggressive but unstable trade policy. Trump’s renunciation of the <a href="https://www.cnbc.com/2018/05/24/washington-and-europe-playing-game-of-chicken-over-iran-nuclear-deal.html">Iran nuclear deal</a>, his efforts to <a href="https://www.nytimes.com/2018/06/06/us/politics/trump-nafta-businesses-frustrated.html">renegotiate NAFTA</a> and his intransigent stance on <a href="https://www.nationalobserver.com/2018/06/07/news/trump-leave-g7-early-miss-session-climate-change-and-clean-energy">climate change</a> are not helping matters. Nor is his proposal to <a href="https://www.nytimes.com/2018/06/08/world/americas/trump-g7-trade-russia.html">readmit Russia</a> to the G-7 gathering. </p>
<p>But the ink on the G-7 communique wasn’t dry before Trump <a href="http://time.com/5305550/donald-trump-north-korea-kim-jong-un-singapore-summit-what-to-know/">darted to Singapore</a> to meet with North Korean leader Kim Jong Un for nuclear talks, another example of his unpredictable decision-making style. One moment he’s threatening war with the dictator, and the next he’s buttering him up for a summit. </p>
<p>One way to understand Trump’s foreign policy decisions is to focus on their inconsistency rather than their content. Let’s take trade policy as an example.</p>
<p>I <a href="https://theconversation.com/what-does-america-first-mean-for-american-economic-interests-71931">have written</a> a <a href="https://theconversation.com/why-its-too-soon-for-davos-billionaires-to-toast-trumps-pro-business-policies-90803">number of times</a> about the economic dangers of the Trump administration’s tilt toward protectionism. And I <a href="https://theconversation.com/trumps-go-it-alone-approach-to-china-trade-ignores-wtos-better-way-to-win-93918">have pointed to</a> the risk that Trump’s use of trade policy as a unilateral weapon <a href="https://cpianalysis.org/2018/05/09/u-s-china-trade-jockeying-for-influence/">could undermine</a> the rule-based international order.</p>
<p><a href="https://scholar.google.com/citations?user=Y58-EhUAAAAJ&hl=en&oi=ao">I remain worried</a> about these issues, but what has struck me much more deeply in recent days is the seeming inconsistency, indeed instability, of Trump’s behavior on trade. It is worth considering its causes and consequences – which extend far beyond trade to his nuclear game of chess with North Korea and Iran.</p>
<h2>Trouble in Trump trade land</h2>
<p>First let’s review just a few of Trump’s recent trade decisions. </p>
<p>At the G7, Trump’s belligerent and unpredictable trade policy was the main reason the other leaders – which also include Germany’s Angela Merkel, the U.K.’s Theresa May and France’s Emmanuel Macron – are so perturbed. Some commentators are even beginning to term the meeting a “<a href="https://talkingpointsmemo.com/news/a-g6-plus-one-us-singled-out-by-g7-allies-over-steel-tariffs">G6 plus one</a>” to signify Trump’s estrangement from his allies. </p>
<p>Recent events have inflamed tensions significantly. The White House said on May 31 <a href="https://www.nytimes.com/2018/05/31/us/politics/trump-aluminum-steel-tariffs.html">that it would impose</a> steel and aluminum tariffs on the European Union, Canada and Mexico. The three had previously <a href="http://money.cnn.com/2018/03/22/news/economy/steel-aluminum-tariff-exemptions/index.html">received exemptions</a> from the new tariffs, first imposed in March and justified with a little-used <a href="https://theconversation.com/economic-history-shows-why-trumps-america-first-tariff-policy-is-so-dangerous-92715">national security provision</a>.</p>
<p>All are now planning <a href="https://www.wsj.com/articles/u-s-slaps-steel-aluminum-tariffs-on-canada-mexico-european-union-1527774283">retaliatory tariffs</a> against the United States, along with <a href="https://www.theguardian.com/business/2018/jun/01/eu-starts-retaliation-against-donald-trumps-steel-and-aluminium-tariffs">legal action</a> at the World Trade Organization.
Friends indeed. </p>
<p>It’s the same story with China, which Trump has not only made subject to the same metals tariffs but has also threatened with <a href="http://nymag.com/daily/intelligencer/2018/05/trump-moves-ahead-with-trade-sanctions-against-china.html">US$50 billion of other sanctions</a> if it doesn’t meet a series of demands. </p>
<p>Commerce Secretary Wilbur Ross recently traveled to Beijing hoping to negotiate increased Chinese purchases of American goods and a reduction of its trade deficit with the U.S. He was forced to return empty-handed after the Chinese government <a href="https://www.politico.com/story/2018/06/04/china-trade-talks-indicate-impasse-1334995">declared itself unwilling</a> to act without an American promise to drop its tariff threats. An earlier leak that China would purchase an additional <a href="https://www.nytimes.com/2018/05/18/us/politics/trump-china-trade-talks.html">$200 million</a> of U.S. exports turned out to be wildly optimistic.</p>
<p>The United States now finds itself isolated, not only from China but from its strongest allies as well. Is this a temporary step in negotiations, or is it the new normal? </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/222395/original/file-20180608-191947-1ac0q90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/222395/original/file-20180608-191947-1ac0q90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/222395/original/file-20180608-191947-1ac0q90.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/222395/original/file-20180608-191947-1ac0q90.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/222395/original/file-20180608-191947-1ac0q90.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/222395/original/file-20180608-191947-1ac0q90.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/222395/original/file-20180608-191947-1ac0q90.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">U.S. Commerce Secretary Wilbur Ross returned from China with little to show for it.</span>
<span class="attribution"><span class="source">AP Photo/Andy Wong</span></span>
</figcaption>
</figure>
<h2>Shifting trade winds</h2>
<p>Of course, Trump’s proclivity for changing his mind is <a href="https://www.washingtonpost.com/opinions/trumps-one-consistent-policy-chaos/2016/12/06/f1a5a5ae-bbf7-11e6-91ee-1adddfe36cbe_story.html?utm_term=.650a63acba8a">well-known</a>, but all the same there is an understandable tendency among commentators to focus on the content of his policy choices. </p>
<p>This is especially true on trade, where Trump’s <a href="https://www.forbes.com/sites/rogeraitken/2018/03/05/u-s-president-trump-ratchets-up-protectionist-stance-but-trade-wars-have-no-winners/#391cde384292">protectionist rhetoric</a> has been exuberant, to say the least.</p>
<p>And it is true that Trump’s actions have been more anti-trade than those of his predecessors, beginning with <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/january/US-Withdraws-From-TPP">his withdrawal</a> from the Trans-Pacific Partnership during the first week of his presidency.</p>
<p>Nevertheless, over the last few months, Trump’s trade policy has seemed increasingly erratic. He publicly discussed <a href="https://theconversation.com/what-is-the-tpp-and-can-the-us-get-back-in-95028">reentering the Pacific trade deal</a> and just as quickly dismissed the idea. He imposed metal tariffs, immediately granted exemptions to most of America’s major exporters and then withdrew those exemptions three months later. He threatened China with new tariffs on $150 billion worth of exports, then <a href="https://www.usatoday.com/story/news/politics/2018/05/21/trump-sends-mixed-messages-tariffs-china/628507002/">suspended them</a> and risked political capital <a href="https://www.nytimes.com/2018/05/25/us/politics/trump-trade-zte.html">to save</a> the Chinese corporation ZTE. And after pushing for extraordinary trade concessions from China, he had to take a U-turn after it <a href="http://money.cnn.com/2018/05/17/news/economy/china-us-trade-talks/index.html">denied</a> that it had agreed to the most important of those demands.</p>
<h2>Two schools of thought</h2>
<p>There are two schools of thought about what is driving this policy instability.</p>
<p>Supporters of the president tend to see it as a <a href="https://www.foxbusiness.com/politics/trump-tariffs-on-us-allies-a-negotiating-tactic-for-free-trade-larry-kudlow">negotiating tactic</a>, the “<a href="https://www.thestreet.com/story/13289498/1/10-things-you-learn-reading-donald-trump-s-best-seller-the-art-of-the-deal.html">Art of the Deal</a>” on a grander scale. Trump, they believe, is trying to throw world leaders off-balance so that he can <a href="https://www.nytimes.com/2018/03/08/upshot/trumps-latest-tariff-strategy-less-trade-war-and-more-lets-make-a-deal.html">extract more trade concessions</a> from them.</p>
<p>Trump’s detractors, by contrast, see the president as hopelessly adrift, swayed this way and that by the <a href="https://www.nytimes.com/2018/06/02/business/trump-trade-china-europe-whiplash.html">varying opinions</a> of his advisers. When globalists such as Steve Mnuchin and Wilbur Ross, secretaries of the treasury and commerce, respectively, have his ear, the president <a href="https://www.nytimes.com/2018/06/03/us/politics/mnuchin-trump-trade.html">softens his stance</a> on trade. But when U.S. Trade Representative Robert Lighthizer and White House adviser Peter Navarro, economic nationalists both, are in the room, Trump <a href="https://www.wsj.com/articles/mnuchin-says-tariffs-on-hold-while-u-s-negotiates-trade-deal-with-china-1526833109">doubles down on protection</a>.</p>
<h2>Master negotiator?</h2>
<p>If U.S. observers accept that Trump’s shifting policy is part of a broader negotiating strategy, Americans can perhaps hope for a better outcome than what they see now.</p>
<p>Indeed, there is some basis in game theory for “irrational” behavior as a negotiating technique. Nobel laureate Thomas Schelling, in his 1960 classic <a href="https://www.amazon.com/Strategy-Conflict-New-Preface-Author/dp/0674840313">“The Strategy of Conflict</a>,” pointed out that negotiators with a reputation for overreacting when their demands aren’t met can be in a <a href="https://medium.com/@GabeNicholas/trump-and-the-strategy-of-irrationality-4344d7f7e37d">stronger position</a> to extract concessions.</p>
<p>If a country can convince its opponent of its willingness to follow through on threats even when they are self-destructive, the country can more effectively compel changes in behavior. Moreover, if an opponent doubts the ability of a country’s leaders to understand or carefully consider the consequences of the opponent’s threats, the country is, ironically, in a <a href="http://slantchev.ucsd.edu/courses/ps142j/lectures/credible-commitments.pdf">stronger negotiating position</a>. This “irrationality” approach was famously termed the <a href="https://historynewsnetwork.org/article/17183">“madman strategy”</a> by Richard Nixon and played a role in <a href="https://www.nytimes.com/2011/08/06/opinion/the-madman-theory.html">motivating his escalation</a> of the Vietnam War during the Paris negotiations.</p>
<p>Perhaps, then, Americans are witnessing the early stages of a negotiating strategy that will ultimately bear fruit.</p>
<h2>Or malleable amateur?</h2>
<p>Even in this optimistic scenario, however, the president’s approach seems too myopic. </p>
<p>After all, international trade negotiations do not play by the same rules as military diplomacy, where much of this theory was developed. Such techniques might have a greater chance of working with Iran and North Korea, but of course the risks of escalation here are even more severe.</p>
<p>Trade is different because it is mutually beneficial and also because it requires cooperation that is <a href="http://www.ir.rochelleterman.com/sites/default/files/Oye%201985.pdf">sustained over time</a>. A country’s <a href="https://press.princeton.edu/titles/1322.html">reputation for stable compliance</a> with its agreements is thus put at a premium; otherwise the country risks being shunned by potential partners. To wrest trade concessions from America’s partners may be satisfying, but if it is accomplished at the cost of weakening the world trading system, it is hardly worth the price.</p>
<h2>The costs of instability</h2>
<p>If, on the other hand, Trump’s unstable policy is a symptom of indecision in the face of the competing agendas of his aides, the world economy may be in for a bumpy ride. Irrational behavior can be used selectively as a negotiating technique but <a href="http://foreignpolicy.com/2017/04/18/trumps-madman-theory-isnt-strategic-unpredictability-its-just-crazy/">has a high cost</a> if not applied carefully and strategically. If a country’s negotiating partners doubt its willingness or ability to follow through on its promises, cooperation becomes impossible.</p>
<p>In the final analysis, a <a href="https://www.bostonglobe.com/news/nation/2016/12/20/donald-trump-and-madman-theory/V2a8etfjkTfFzf1S4G7IbO/story.html">stable and rule-based</a> trading system is in the United States’ long-term interest. Inconsistent and aggressive trade policies, whether produced by a master negotiator or a malleable amateur, risk poisoning the mutual trust necessary to make such a system function.</p>
<p>Some are <a href="https://twitter.com/byHeatherLong/status/1004426052150624257">now saying</a> that President Trump is in the early stages of reconsidering America’s membership in the WTO. Hopefully the president will come to understand what is at stake soon, before it is too late.</p><img src="https://counter.theconversation.com/content/97836/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Hankla does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A political scientist and economist explores the causes and consequences of Trump’s scattershot trade policy.Charles Hankla, Associate Professor of Political Science, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/946252018-04-20T10:37:27Z2018-04-20T10:37:27ZTrump’s exports-good, imports-bad trade policy, debunked by an economist<figure><img src="https://images.theconversation.com/files/215634/original/file-20180419-163995-fanknv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The White House frets about how the U.S. imports more stuff than it exports.
</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Trade-Gap/1765e13121094b5db61b6b8c001110a8/9/0">AP Photo/Ben Margot</a></span></figcaption></figure><p>President Donald Trump’s trade policy leaves international economists <a href="https://scholar.google.com/citations?user=2B5IAEgAAAAJ&hl=en">like me</a> scratching our heads. </p>
<p>His apparent desire to <a href="https://theconversation.com/trumps-go-it-alone-approach-to-china-trade-ignores-wtos-better-way-to-win-93918">start a trade war with China</a> is only one example on a long list of what I see as poor trade policy choices. Others include: abandoning the <a href="https://theconversation.com/what-is-the-tpp-and-can-the-us-get-back-in-95028">Trans-Pacific Partnership</a> trade deal, threatening to <a href="https://www.politico.com/magazine/story/2018/02/26/donald-trump-nafta-negotiations-217085">abandon NAFTA</a> and the tariffs he’s imposing on <a href="https://www.marketplace.org/2018/04/17/economy/us-companies-line-be-excluded-steel-aluminum-tariffs">imported steel and aluminum</a>.</p>
<p>The U.S. has historically led the global trade system, which I’d argue has <a href="https://www.economist.com/news/united-states/21695855-americas-economy-benefits-hugely-trade-its-costs-have-been-amplified-policy">benefited the nation economically</a> overall, even if researchers estimate that <a href="https://doi.org/10.1146/annurev-economics-080315-015041">the U.S. lost 985,000 manufacturing jobs</a> to Chinese competition between 1999 and 2011. Why is this administration apparently willing to undermine a half-century-old system of rules governing the international exchange of goods and services?</p>
<p>The short answer is Trump’s “<a href="https://qz.com/890868/donald-trumps-america-first-foreign-policy-is-now-official-heres-what-it-means/">America First</a>” ideology, a term that <a href="https://theconversation.com/trumps-america-first-echoes-from-1940s-59579">among other things</a> rests on a guiding principle of economic nationalism. </p>
<h2>Modern mercantilists</h2>
<p>I can describe this trade policy’s logic, even if I can’t understand why his administration embraces it.</p>
<p>Trump essentially subscribes to a modern version of mercantilism, a school of thought most economists believe Adam Smith extinguished after he published his landmark book “<a href="https://www.adamsmith.org/the-wealth-of-nations/">The Wealth of Nations</a>” in 1776. Mercantilism rests on <a href="http://www.econlib.org/library/Enc1/Mercantilism.html">a key idea</a>: Exports are good and imports are bad. People who believe in mercantilism therefore see global <a href="https://www.dartmouth.edu/%7Erstaiger/Chapter%2014%20from%20AgeOfTrump_June2017.pdf">trade as a zero-sum game.</a></p>
<p>Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and Peter Navarro – a presidential aide with multiple titles and roles – advise Trump on trade. This trio who I’d label modern-day mercantilists is carrying out trade policies that Trump espoused while running for president.</p>
<p><a href="https://www.ocregister.com/2016/08/16/one-of-trumps-biggest-economic-supporters-its-a-uc-irvine-economist/">Navarro</a>, a former University of California, Irvine associate professor, is the only <a href="https://scholar.google.com/citations?user=usrEMP4AAAAJ&hl=en">economist with a Ph.D.</a> of the bunch. But when I scanned <a href="https://scholar.google.com/citations?user=usrEMP4AAAAJ&hl=en">Navarro’s scholarship</a> it surprised me to find that he has not published on this topic in a leading academic economics journal. One sign that he’s outside the mainstream on trade: <a href="https://www.economist.com/news/briefing/21715017-there-are-reasons-be-worried-about-head-donald-trumps-new-national-trade-council-peter">The Economist magazine</a> dismissed him as a “China-bashing eccentric.”</p>
<p>It didn’t take Ross long to live up to his reputation as “<a href="https://www.reuters.com/article/us-usa-trump-ross/trumps-commerce-pick-wilbur-ross-is-no-stranger-to-protectionism-idUSKBN14U17M">Mr. Protectionism</a>.” Under his leadership, the Commerce Department took the lead on <a href="https://theconversation.com/what-is-a-tariff-an-economist-explains-93392">slapping tariffs</a>, taxes levied on imported goods, <a href="http://fortune.com/2018/03/08/trump-signs-tariffs-steel-aluminum/">on steel and aluminum</a> from other nations. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/215636/original/file-20180419-163995-xd8ito.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/215636/original/file-20180419-163995-xd8ito.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/215636/original/file-20180419-163995-xd8ito.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/215636/original/file-20180419-163995-xd8ito.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/215636/original/file-20180419-163995-xd8ito.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/215636/original/file-20180419-163995-xd8ito.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/215636/original/file-20180419-163995-xd8ito.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/215636/original/file-20180419-163995-xd8ito.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">From left to right, Donald Trump, Wilbur Ross, Peter Navarro and Mike Pence, at a signing ceremony for executive orders regarding trade in the Oval Office.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Trump/e571301b1a1946d98e7f3b58cb6952f1/4/0">AP Photo/Andrew Harnik</a></span>
</figcaption>
</figure>
<p><a href="https://www.reuters.com/article/us-usa-trump-trade/trump-names-china-critic-lighthizer-as-u-s-trade-representative-idUSKBN14N0YA">Lighthizer</a> is a lawyer with decades of experience litigating <a href="https://www.investopedia.com/terms/d/dumping.asp">anti-dumping cases</a> on behalf of American steelmakers that accuse foreign manufacturers of selling here at prices below what customers have to pay in their own countries. He is <a href="http://www.businessinsider.com/r-ustr-lighthizer-says-wto-losing-focus-must-rethink-development-2017-12">highly critical of the World Trade Organization</a>, especially the process through which it handles <a href="https://www.reuters.com/article/us-trade-nafta-lighthizer/us-trade-envoy-says-wto-dispute-settlement-is-deficient-idUSKCN1BT205">trade disputes over dumping</a>.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/215635/original/file-20180419-163995-b3260t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/215635/original/file-20180419-163995-b3260t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/215635/original/file-20180419-163995-b3260t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/215635/original/file-20180419-163995-b3260t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/215635/original/file-20180419-163995-b3260t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/215635/original/file-20180419-163995-b3260t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/215635/original/file-20180419-163995-b3260t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/215635/original/file-20180419-163995-b3260t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">U.S. Trade Representative Robert Lighthizer, testifying on Capitol Hill.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Congress-Trade/d4863ff524d545aa8725ac4315fe68e4/11/0">AP Photo/Jose Luis Magana</a></span>
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</figure>
<p>Until former Goldman Sachs President <a href="https://www.cnbc.com/2018/03/06/gary-cohn-plans-to-resign-as-trumps-top-economic-advisor-new-york-times.html">Gary Cohn resigned</a> as Trump’s chief economic adviser in March, there was at least one strong supporter of free trade inside the White House. Now that he’s moved on, the mercantilists are clearly in charge.</p>
<p>Although <a href="https://www.cnbc.com/2018/04/09/larry-kudlow-says-trump-is-warning-china-with-tariffs-youre-no-longer-a-developing-nation-act-like-it.html">Cohn’s replacement Larry Kudlow</a> has criticized the steel and aluminum tariffs, he has expressed support for Trump’s hard line on trade with China. His background as a television pundit with no formal training in economics suggests he will have a hard time pushing back on the mercantilist rhetoric, making it unlikely that the administration will adopt a more mainstream trade policy anytime soon. </p>
<h2>Three counts</h2>
<p>Like nearly all economists, I believe that contemporary mercantilism is wrong on three counts. First, trade is not a zero-sum game. Second, imposing new and higher tariffs on imports won’t make the U.S. trade deficit go away. Third, reciprocity in trade negotiations does not require all countries to cut their tariffs to the same level.</p>
<p>Actually, every one of my students at The Ohio State University can explain why trade is a positive-sum game. Most of the exchanges that occur, such as when the U.S. sells China soybeans and China sells the U.S. sneakers, are efficient uses of a country’s resources. Overall, <a href="https://www.foreignaffairs.com/articles/2016-06-13/truth-about-trade">trade boosts</a> national incomes and consumer purchasing power. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/215638/original/file-20180419-163971-w538c6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/215638/original/file-20180419-163971-w538c6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/215638/original/file-20180419-163971-w538c6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/215638/original/file-20180419-163971-w538c6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/215638/original/file-20180419-163971-w538c6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/215638/original/file-20180419-163971-w538c6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/215638/original/file-20180419-163971-w538c6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/215638/original/file-20180419-163971-w538c6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An Adam Smith statue in Scotland.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/statue-adam-smith-edinburgh-front-stgiles-689526940?src=l73xumfL78sLNDppMxZy2g-1-1">Matt Ledwinka/Shutterstock.com</a></span>
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</figure>
<p>All Macroeconomics 101 classes taught in America should quickly impart an appreciation of the <a href="https://piie.com/publications/policy-briefs/trade-balances-and-nafta-renegotiation">underlying cause of the U.S. trade deficit</a>. Currently, the value of goods and services the U.S. produces adds up to less than the total value of the nation’s consumption, investment, government spending and exports. Due to low household savings and high federal expenditures, the U.S. runs a trade deficit, imports making up the difference between consumption and production.</p>
<p>Given this macroeconomic imbalance, raising tariffs and pulling out of trade deals will not tame the trade deficit. Any reduction in imports from, say, China, would be matched by new imports from elsewhere. <a href="https://piie.com/blogs/trade-investment-policy-watch/three-ways-reduce-trade-deficit">A more effective policy</a> would encourage U.S. households and businesses to consume less and save more while cutting federal spending. </p>
<p>Thanks to global trade diplomacy, the average tariffs developed countries apply to their imports <a href="https://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report07_e.pdf">have been falling since WWII</a> and most now <a href="https://www.wto.org/english/thewto_e/20y_e/wto_20_brochure_e.pdf">average between 10 and 15 percent</a>.</p>
<p>As you might suspect, trade negotiations are not politically feasible if they strongly favor one country over another. Some 167 countries belong to the WTO, an organization through which they conduct multilateral trade negotiations and resolve trade disputes. With the <a href="http://www.nber.org/papers/w17650">exception of developing countries</a>, its members must offer to <a href="https://aede.osu.edu/sites/aede/files/imce/images/SSRN-id3152299.pdf">cut their tariffs when other countries cut their own</a>.</p>
<p>The <a href="https://piie.com/publications/policy-briefs/trade-balances-and-nafta-renegotiation">standard approach</a> is for WTO members to reduce their tariffs by the same percentage, as opposed to reducing them to the same level. For example, at the start of a round of trade negotiations, tariffs applied to agricultural commodities may be higher in Japan than the U.S., but the reciprocity norm does not require Japan to reduce its tariffs to the same level as those in the U.S. Instead, Japan and the U.S. agree to reduce their tariffs by the same percentage. </p>
<p>Trump seems to favor a <a href="https://www.economist.com/news/briefing/21721935-idea-reciprocity-animates-white-houses-view-trade-what-donald-trump-means-fair">new approach to reciprocity</a> that would, in this example, require Japan to bring its tariffs to the same level as America’s, essentially forcing it to make a bigger concession. As a result, Japan would likely walk away from the negotiating table.</p>
<p>In short, I believe that the Trump administration’s trade policy is grounded in an ideology that was debunked long ago, lies outside mainstream economic thinking, and isn’t backed by any credible empirical evidence. This mindset could possibly push the U.S. into a full-blown trade war and <a href="https://global.upenn.edu/uploads/media_items/go-trumps-attempted-bown.original.pdf">undermine the established rules</a> of the global trading system, <a href="https://www.theguardian.com/business/2018/apr/17/world-trade-system-imf-trump-tariff-china-us-world-economic-outlook">endangering the global economy</a>.</p><img src="https://counter.theconversation.com/content/94625/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian Sheldon receives funding from USDA and NSF</span></em></p>The administration embraces mercantilism, an ideology with few adherents.Ian Sheldon, Chair in Agricultural Marketing, Trade and Policy, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/950282018-04-18T10:43:54Z2018-04-18T10:43:54ZWhat is the TPP and can the US get back in?<figure><img src="https://images.theconversation.com/files/214853/original/file-20180414-46652-1qh5yl8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Is there still room for the U.S.? </span> <span class="attribution"><span class="source">AP Photo/Esteban Felix</span></span></figcaption></figure><p>President Donald Trump recently said he was open to returning to the <a href="https://theconversation.com/trans-pacific-partnership-piles-up-challenges-for-democracy-32815">Trans-Pacific Partnership</a>, but only if he could get a “substantially better” deal than his predecessor.</p>
<p>This apparent change of heart, <a href="https://twitter.com/realDonaldTrump/status/984631073865953280">announced via Twitter</a>, caught most observers off guard. The TPP was on track to become the <a href="https://www.weforum.org/agenda/2016/05/world-free-trade-areas-everything-you-need-to-know/">world’s largest free trade zone</a> by joining <a href="https://www.investopedia.com/terms/p/pacific-rim.asp">Pacific Rim</a> countries that collectively produce about <a href="http://www.bbc.com/news/business-32498715">40 percent of global economic output</a>. But Trump railed against the accord on the campaign trail, making it the ultimate bugbear for his brand of economic nationalism. In a widely anticipated move, he <a href="https://theconversation.com/can-the-trans-pacific-partnership-survive-after-trump-71821">withdrew the U.S.</a> from the TPP as one of his first presidential acts.</p>
<p>If Trump ever officially <a href="https://www.cnbc.com/video/2018/04/13/president-trump-reconsiders-tpp.html">changed his tune</a> and tried to rejoin this trade pact, could he? </p>
<p>Like <a href="http://thehill.com/opinion/finance/383383-even-if-trump-wants-to-rejoin-tpp-that-ship-may-have-sailed">many observers</a>, I believe it would be tough to pull off. The other 11 countries would clearly prefer to have the U.S. in rather than out, but <a href="http://money.cnn.com/2018/04/13/news/economy/us-tpp-trade-trump/index.html">they are understandably reluctant</a> to throw open, for a third time, negotiations that took years to conclude. </p>
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<h2>Backstory</h2>
<p>In 2008, most of the major Pacific Rim economies – with the notable exception of China – <a href="http://as.ucpress.edu/content/ucpas/56/6/1017.full.pdf">began to consider</a> a massive free trade agreement for the region.</p>
<p>Formal TPP talks finally began <a href="https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/round-1-melbourne">two years later</a>, when representatives of the U.S. and several other Pacific nations, such as Australia, Chile and Vietnam, started to hammer out the pact’s contentious details. </p>
<p>The deal, which took another <a href="https://ballotpedia.org/The_Trans-Pacific_Partnership_trade_deal:_An_overview">six years</a> to complete, later expanded to include more countries – including Japan, Canada and Mexico.</p>
<p>The <a href="http://www.bbc.com/news/business-32498715">aim of the TPP</a> was to deepen economic ties between the dozen countries, slash tariffs on a broad range of goods and services, and better synchronize their policies and regulations. The <a href="https://theconversation.com/tpps-new-battle-lines-may-pose-threat-to-worlds-biggest-trade-deal-48802">substance of the agreement</a> was complex, and different countries negotiated different grace periods for its implementation. </p>
<p>TPP proponents <a href="https://scholar.google.com/citations?user=Y58-EhUAAAAJ&hl=en&oi=ao">like me</a> based our <a href="https://theconversation.com/does-tpps-slow-death-mean-the-world-is-now-unsafe-for-trade-deals-64577">support</a> on <a href="http://econ.tu.ac.th/archan/Chayunt/Site/EE451_files/03Neoclassic.pdf">well-established economic theories</a>, which point to the benefits of barrier-free trade for all participating countries. These theories do not deny, of course, that some industries and workers can suffer significantly from open exchange. But they emphasize the overall advantages of freer trade in generating new jobs, cheaper products and more innovation.</p>
<p>Another argument in favor of the accord was <a href="https://theconversation.com/how-the-tpps-demise-threatens-us-national-security-and-pax-americana-67514">more geopolitical</a>, considering the TPP as a <a href="https://theconversation.com/is-tpp-about-jobs-or-china-42296">bulwark against China</a> – which was <a href="https://www.cnn.com/2017/01/23/opinions/killing-ttp-great-for-china-bergstrand-opinion/index.html">never slated to join</a>. </p>
<p>Despite its potential benefits, however, the emerging partnership soon became a lightning rod for U.S. opponents of open markets. </p>
<h2>Objections</h2>
<p>The critics lodged three distinct complaints. They expressed skepticism for the benefits of free trade itself, arguing that imports can <a href="https://theconversation.com/is-trump-right-that-the-tpp-will-destroy-millions-of-jobs-and-cede-us-sovereignty-62085">destroy industries</a>, uproot communities and threaten national security. They also argued that international agreements <a href="https://theconversation.com/trans-pacific-partnership-piles-up-challenges-for-democracy-32815">undermine democracy</a> and objected to the <a href="https://www.cnn.com/2015/06/11/politics/trade-deal-secrecy-tpp/index.html">secrecy of the negotiations</a> themselves. </p>
<p>Finally, opponents homed in on the pact’s specific details, especially those that were leaked or released early on. The most controversial issues proved to be indirectly related to trade policy.</p>
<p>TPP foes, for example, lambasted provisions regarding <a href="https://www.citizen.org/article/news-intellectual-property-table">intellectual property</a>, <a href="https://www.vox.com/cards/trans-pacific-partnership/will-the-tpp-protect-labor-rights">labor</a> and the <a href="https://news.nationalgeographic.com/2015/11/151105-TPP-free-trade-wildlife-trafficking-conservation-cites/">environment</a>. Some critics argued that these rules went too far, while others complained that they didn’t go far enough.</p>
<p>Many of them also <a href="https://theconversation.com/investor-rights-to-sue-governments-pose-real-dangers-40004">vehemently opposed</a> its <a href="https://theconversation.com/tpp-trade-pact-still-needs-improvements-to-protect-governments-from-foreign-suits-54078">investor-state dispute settlement provisions</a>, which would have let foreign businesses sue member governments for any violations that they claimed were hurting their interests.</p>
<p>Despite this opposition in the U.S and elsewhere, the 12 nations ultimately signed the TPP in February 2016 and began the process of domestic ratification. But Trump was elected later that year, and he backed out of the deal as soon as he entered the White House. </p>
<p>Most observers expected America’s exit to doom the agreement. Instead, the 11 remaining signatories <a href="https://theconversation.com/farmers-and-services-industry-the-winners-under-the-revised-trans-pacific-partnership-trade-deal-90619">forged a smaller pact</a> <a href="https://www.reuters.com/article/us-trade-tpp/asia-pacific-nations-sign-sweeping-trade-deal-without-u-s-idUSKCN1GK0JM">among themselves</a>, renamed the <a href="https://www.csis.org/analysis/tpp-cptpp">Comprehensive and Progressive Agreement for Trans-Pacific Partnership</a> and signed in March 2018. Lawmakers in the countries taking part are now considering ratification.</p>
<h2>Another flip-flop</h2>
<p>Besides, this bout of Trump’s apparent openness to join the TPP seemed to be short-lived. It may have ended as it started, on Twitter. The pact would have “too many contingencies and no way to get out if it doesn’t work,” Trump said in a tweet that mischaracterized South Korea as a member. (It isn’t.)</p>
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<p>Perhaps Trump realized that the U.S. would probably have to accept terms that are no better – and possibly worse – than those President Barack Obama agreed upon in 2016 when the TPP talks ended.</p><img src="https://counter.theconversation.com/content/95028/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Hankla does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Trump, who withdrew the US from the Trans-Pacific Partnership when he became president, briefly appeared to consider joining the trade accord again.Charles Hankla, Associate Professor of Political Science, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/921002018-02-21T17:23:41Z2018-02-21T17:23:41ZChina, North Korea and trade the key talking points when Turnbull meets Trump<figure><img src="https://images.theconversation.com/files/207189/original/file-20180220-161908-1br71rj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Malcolm Turnbull will be relieved to have some time away from the Barnaby Joyce affair when he arrives in Washington this week.</span> <span class="attribution"><span class="source">Reuters/Jonathan Ernst</span></span></figcaption></figure><p>Malcolm Turnbull was no doubt relieved when the prime ministerial jet lifted off from Australian soil yesterday, bound for the United States and his first formal round of discussions in Washington with an American president.</p>
<p>In Turnbull’s own words – applied to Deputy Prime Minister Barnaby Joyce’s domestic troubles – he will be hoping to leave behind a “world of woe”.</p>
<p>After a steadier start to the new year, <a href="https://theconversation.com/barnaby-joyce-dumped-as-acting-prime-minister-next-week-91915">the Joyce scandal</a>, involving an affair with a political staffer, has cut the ground from under those improved prospects.</p>
<p>This has been reflected in the <a href="https://theconversation.com/voters-tell-barnaby-joyce-to-quit-as-leader-newspoll-92014">latest round of polling</a>, which shows the Coalition slipping back against the Labor opposition. Turnbull’s own approval rating has taken a hit.</p>
<p>For these and other reasons, not least the need to establish a sound working relationship with a new administration, the prime minister will be looking to a circuit-breaker.</p>
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Read more:
<a href="https://theconversation.com/fischer-calls-for-quick-resolution-of-nationals-crisis-while-joyce-is-determined-to-fight-to-the-death-92060">Fischer calls for quick resolution of Nationals crisis, while Joyce is determined to fight to the death</a>
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<p>Whether Turnbull’s “first 100 years of mateship” visit to Washington – with state premiers and business leaders in tow – provides a diversion from his domestic woes remains to be seen.</p>
<p>The hokey branding for the mission refers to the centenary of American soldiers fighting under Australian command on the Western Front in the Battle of Hamel in 1918.</p>
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<p>In Washington, Turnbull’s discussions with President Donald Trump will focus primarily on China’s rise, the North Korean nuclear issue, and trade.</p>
<p>How to respond to North Korea’s provocations represents an immediate problem. But in the longer term, China’s expanding power and influence constitute the greatest security challenge facing Australia since the second world war.</p>
<p>In his public statements, Turnbull has been alternately hawkish and conciliatory toward Beijing, but it appears his instincts tend to align themselves with an American hedging strategy.</p>
<p>The Turnbull view of how to manage China’s rise was given particular expression in <a href="https://www.iiss.org/en/events/shangri-la-dialogue/archive/shangri-la-dialogue-2017-4f77/opening-remarks-and-keynote-address-fc1a/keynote-address---malcolm-turnbull-4bbe">a speech in June 2017</a> to the annual Shangri-La Dialogue in Singapore. In this speech he called for “new sources of leadership [in the Indo-Pacific] to help the United States shape our common good”.</p>
<p>Turnbull’s Shangri-La speech was forthright for an Australian prime minister. He sharply criticised China’s “unilateral actions to seize or create territory or militarise disputed areas” in the South China Sea.</p>
<p>Beijing denies it, but it is clear it has been constructing a defence perimeter on islands and features in disputed waters. This prompted the following from Turnbull:</p>
<blockquote>
<p>China has gained the most from the peace and harmony in our region and it has the most to lose if it is threatened … A coercive China would find its neighbours resenting demands they cede their autonomy and strategic space and look to counterweigh Beijing’s power by bolstering alliances and partnerships, between themselves and especially with the United States.</p>
</blockquote>
<p>That speech was followed by increased efforts to expand a quadrilateral security dialogue between Australia, Japan, India and the US.</p>
<p>Turnbull’s <a href="https://www.pm.gov.au/media/joint-press-statements-prime-minister-malcolm-turnbull-and-prime-minister-shinzo-abe">visit to Japan in January</a> for high-profile talks with Japanese Prime Minister Shinzo Abe emphasised shared regional security goals with other members of the so-called Quad.</p>
<p>What steps might be taken to further develop security collaboration between Australia, the US, India and Japan will almost certainly be on the table in Washington.</p>
<p>The Trump administration’s appointment of <a href="https://www.nytimes.com/2018/02/12/world/australia/harry-harris-us-ambassador.html">Admiral Harry Harris</a>, the outgoing head of the US Pacific Command, as the ambassador-designate in Canberra is a signal of its intentions.</p>
<p>Harris has a hawkish view of China’s expanding influence in the Indo-Pacific. His participation in a <a href="http://www.afr.com/opinion/india-wants-a-quad-to-counteract-chinas-expanding-influence-20180123-h0n1k9">security conference in Delhi in January</a> along with Australian, Japanese and Indian naval commanders was significant in light of stepped-up efforts to bolster maritime collaboration between Quad members.</p>
<p>However – and this is a sizeable “however” – Turnbull needs to be careful not to be sucked into an American slipstream where China is concerned. Australia’s commercial interests dictate prudence in how it positions itself between a rising China and the US under an unpredictable Trump presidency.</p>
<p>The new US <a href="https://www.defense.gov/Portals/1/Documents/pubs/2018-National-Defense-Strategy-Summary.pdf">National Defence Strategy</a> exposed differences between Canberra and Washington in their views of “revisionist” China and Russia as threats to US hegemony.</p>
<p>Foreign Minister Julie Bishop felt obliged to <a href="http://www.smh.com.au/federal-politics/political-news/we-have-a-different-perspective-julie-bishop-distances-australia-from-us-on-china-russia-threat-20180128-h0ppym.html">distance Australia</a> from the Trump administration’s characterisation of attempts by China and Russia to “shape a world consistent with their authoritarian model”. She said:</p>
<blockquote>
<p>We have a different perspective on Russia and China, clearly. We do not see Russia or China as posing a military threat to Australia.</p>
</blockquote>
<p>Turnbull, for his part, provided a more nuanced response. He said:</p>
<blockquote>
<p>We don’t see threats from our neighbours in the region but nonetheless every country must always plan ahead and you need to build the capabilities to defend yourself not just today but in 10 years or 20 years hence.</p>
</blockquote>
<p>Australia’s <a href="http://www.defence.gov.au/WhitePaper/Docs/2016-Defence-White-Paper.pdf">2016 Defence White Paper</a> and <a href="http://dfat.gov.au/news/news/Pages/opportunity-security-strength-the-2017-foreign-policy-white-paper.aspx">2017 Foreign Policy White Paper</a> (the two documents should be read in conjunction) sketched out a future in which the country needs to buttress its defence capabilities in light of China’s rise.</p>
<p>Apart from China and related security matters, Turnbull will focus on trade in Washington. He will no doubt try to persuade Trump to revisit his decision to pull the US out of the Trans-Pacific Partnership trade agreement, now rebranded as the <a href="http://dfat.gov.au/trade/agreements/tpp/news/Documents/Outcomes-at-a-glance--CPTPP.pdf">Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)</a>.</p>
<p>The US withdrawal from the TPP, as one of Trump’s first executive acts as president, was disappointing. A trading bloc in the Indo-Pacific accounting for 36% of global GDP would have served as a counterweight to China’s surging trade and investment ambitions.</p>
<p>The revised CPTPP – including Australia, Japan, Canada, Mexico, New Zealand, Malaysia, Peru, Singapore, Chile, Vietnam and Brunei – remains significant. But clearly the abrupt US withdrawal has lessened its reach.</p>
<p>Significantly, Turnbull will discuss the CPTPP on the eve of the initialling of the agreement among the 11 remaining participants on March 8.</p>
<p><a href="https://www.cnbc.com/2018/01/25/trump-says-he-would-reconsider-trans-pacific-partnership-trade-deal.html">Trump has indicated</a> he might be receptive to arguments for American re-engagement in the CPTPP process. However, this would require the renegotiation of provisions on such contentious issues as dispute settlements, copyright and intellectual property.</p>
<p>It is hard to see this happening in a timely manner. In a sense, the train has left the station.</p>
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Read more:
<a href="https://theconversation.com/trump-and-turnbull-have-little-cause-for-satisfaction-over-progress-in-afghanistan-90918">Trump and Turnbull have little cause for satisfaction over progress in Afghanistan</a>
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<p>The Turnbull-Trump focus on China may also yield discussion about a competing <a href="http://www.afr.com/news/australia-mulls-rival-to-chinas-belt-and-road-with-us-japan-india-20180216-h0w7k5">regional infrastructure investment initiative</a> to balance China’s <a href="https://theconversation.com/chinas-eurasian-gambit-needs-to-be-taken-seriously-77099">“Belt and Road” program</a>.</p>
<p>The latter is a vast Chinese infrastructure scheme. China is seeking to strengthen its influence in surrounding states by recycling a portion of its foreign exchange reserves in road, rail, port and other such projects.</p>
<p>It is not clear just how Turnbull and Trump might seek to provide alternative sources of infrastructure funding for projects to counter Chinese attempts to buy influence far and wide.</p>
<p>Such a scheme emerged from a pre-summit briefing in Canberra. The fact it is being floated attests to concerns in Washington and Canberra about China’s success in using its financial heft to extend its security interests.</p><img src="https://counter.theconversation.com/content/92100/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tony Walker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>When he meets the US president this week, the prime minister will talk about the North Korean nuclear threat, the rise of China, and the rebranded Trans-Pacific Partnership.Tony Walker, Adjunct Professor, School of Communications, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/904472018-01-25T19:13:54Z2018-01-25T19:13:54ZVital Signs: what the Davos meeting is good for<figure><img src="https://images.theconversation.com/files/203172/original/file-20180124-72597-c7ie6x.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> </figcaption></figure><p><em>Vital Signs is a weekly economic wrap from UNSW economics professor and Harvard PhD Richard Holden (<a href="https://twitter.com/profholden">@profholden</a>). Vital Signs aims to contextualise weekly economic events and cut through the noise of the data affecting global economies.</em></p>
<p><em>This week: There is more to the World Economic Forum meeting in Davos than celebrities and ski resorts.</em></p>
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<p>The World Economic Forum’s annual meeting in the Swiss resort town of Davos has become a bit like the Academy Awards. There are lots of celebrities and lots of publicity, but there are legitimate questions about the substance of the whole enterprise.</p>
<p>Is the whole thing a palaver? Actually, no.</p>
<p>The theme this year is Creating a Shared Future in a Fractured World - and it reflects legitimate concerns about the breakdown of international institutions.</p>
<p>The institutions that have guided the post-World War II era are under threat from both the left and the right. US President Donald Trump has decried institutions like the United Nations and threatened to withhold funding. </p>
<p>In his campaign he railed against NATO - a vital alliance that has underpinned European security for decades. His nativist agenda, with its America First slogan, is seen by many as a major threat the entire apparatus of international cooperation.</p>
<p>Yet a newly energised and combative left also decry many of these institutions as pushing a “neoliberal” agenda. The hero of the American left, Bernie Sanders, went as far as to <a href="http://www.huffingtonpost.com.au/entry/bernie-sanders-greece_n_7709322">blame the International Monetary Fund for the Greek debt crisis</a>. And Britain’s putative Prime Minister Jeremy Corbyn has widespread contempt for the international financial order, even agreeing with the accusation that he is <a href="https://www.businessinsider.com.au/jeremy-corbyn-morgan-stanley-banks-we-are-a-threat-2017-11?r=UK&IR=T">“a bigger threat than Brexit”</a>.</p>
<p>It is unlikely that this clash of ideologies is going to be solved this week. But against this backdrop, there is a more traditional international game being played: lobbying for national interests and positioning for national advantage.</p>
<p>US Treasury Secretary Steve Mnuchin declared that the US <a href="https://www.irishtimes.com/business/economy/trump-s-davos-advance-party-delivers-mixed-messages-to-global-elite-1.3366703">“is open for business”</a>, and according to administration officials, Trump will purportedly say similar things when he attends on Friday. </p>
<p>Enter the large Australian delegation at Davos this year. It includes Finance Minister Matthias Cormann and Trade Minister Steven Ciobo, who will be representing Australia’s trade and investment interests. As Cormann <a href="https://www.theaustralian.com.au/national-affairs/sarah-hansonyoung-pays-own-fare-to-mingle-with-world-leaders-at-davos/news-story/1b6d8a7d80fc27b72f3f9f55c08aa4da">put it</a>:</p>
<blockquote>
<p>The World Economic Forum is one of the best, most efficient opportunities to engage over a very short period, in one single location, with a very large number of senior political, business and community leaders from right around the world.</p>
</blockquote>
<p>It’s a critical time to defend free international trade. The US has pulled out of the Trans Pacific Partnership, but the other 11 countries (including Australia) are set to sign the so-called <a href="https://theconversation.com/farmers-and-services-industry-the-winners-under-the-revised-trans-pacific-partnership-trade-deal-90619">Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) deal</a>. Yet there are sceptics and critics of such deals at home and around the world.</p>
<p>At Davos yesterday, German Chancellor Angela Merkel rightly warned that despite the challenges faced by the world economy, “protectionism is not the proper answer”. In Australia, it’s unclear yet what Labor leader Bill Shorten’s reaction to the CPTPP will be. He declared the original TPP “dead” when the US pulled out, but the CPTPP still holds significant benefits for Australia.</p>
<p><a href="https://piie.com/system/files/documents/wp16-2_0.pdf">New modelling</a> by the highly respected Petersen Institute for International Economics suggests that although the overall benefits of the CPTPP may be lower, Australia will do nearly as well as under the larger agreement with the US involved.</p>
<p>The reason is that without the US, Australia will get a bigger share of markets like Japan and Mexico, for products like beef, that it would otherwise have had to share with the US.</p>
<p>Shorten’s response to this good but inconvenient fact (for him) will be telling.</p>
<p>An array of Australian business leaders will also be in attendance, and it’s an important time for Australian business to try to sell Australia as an attractive destination for foreign investment. Australia’s corporate tax rate, at 30%, is now among the highest in the OECD, whereas 15 years ago it was among the lowest. And unless you run a chain of moderately successful smoothie bars and hence have revenues under A$50 million, little tax relief is on the horizon.</p>
<p>The real fireworks from Davos might come from President Trump’s public remarks. But it will be the private remarks between senior Australian business leaders and foreign investors that will likely be the most consequential for the Australian economy in the coming few years.</p><img src="https://counter.theconversation.com/content/90447/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It will be the private remarks between senior Australian business leaders and foreign investors at Davos that will likely be the most consequential for the Australian economy in the coming few years.Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/906192018-01-24T05:37:26Z2018-01-24T05:37:26ZFarmers and services industry the winners under the revised Trans-Pacific Partnership trade deal<p>The revived trade agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), has finally made it across the line. It’s a considerable win for Australian farmers and service providers, in a trading area <a href="http://dfat.gov.au/trade/resources/trade-statistics/pages/trade-statistics.aspx">worth about</a> A$90 billion.</p>
<p>The 11 remaining countries from the initial Trans-Pacific Partnership agreement finally <a href="http://www.abc.net.au/news/2018-01-24/tpp-resurrected-as-nations-get-set-to-sign-trade-deal/9354502">agreed to go ahead</a> with the deal without the US, at the annual meeting of the World Economic Forum in Davos, Switzerland. </p>
<p>The deal reduces the scope for controversial investor-state dispute settlements, where foreign investors can bypass national courts and sue governments for compensation for harming their investments. It introduces stronger safeguards to protect the governments’ right to regulate in the public interest and prevent unwarranted claims.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australias-tenuous-place-in-the-new-global-economy-87346">Australia's tenuous place in the new global economy</a>
</strong>
</em>
</p>
<hr>
<p>Despite earlier <a href="http://www.smh.com.au/business/workplace-relations/tpp-unions-fear-impact-on-australian-workers-20151005-gk22tj.html">union fears of the impact for Australian workers</a>, the <a href="https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/19.-Labour-Chapter.pdf">CPTPP</a> does not regulate the movement of workers. It only has minor changes to domestic labour rights and practices.</p>
<p>The new agreement is more of an umbrella framework for separate yet coordinated bilateral deals. In fact, Australia’s Trade Minister Steven Ciobo <a href="https://www.ft.com/content/7a10d70a-0031-11e8-9650-9c0ad2d7c5b5">said</a>:</p>
<blockquote>
<p>The agreement will deliver 18 new free trade agreements between the CPTPP parties. For Australia that means new trade agreements with Canada and Mexico and greater market access to Japan, Chile, Singapore, Malaysia, Vietnam and Brunei.</p>
</blockquote>
<p>It <a href="http://dfat.gov.au/trade/agreements/tpp/news/Pages/trans-pacific-partnership-ministerial-statement.aspx">means a speedier process</a> for reducing import barriers on key Australian products, such as beef, lamb, seafood, cheese, wine and cotton wool.</p>
<p>It also promises less competition for Australian services exports, encouraging other governments to look to use Australian services and reducing the regulations of state-owned enterprises. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-trans-pacific-partnership-is-back-experts-respond-87432">The Trans-Pacific Partnership is back: experts respond</a>
</strong>
</em>
</p>
<hr>
<p>Australia now also has new bilateral trade deals with Canada and Mexico as part and parcel of the new agreement. This could be worth a lot to the Australian economy if it were to <a href="https://www.aspistrategist.org.au/us-china-trade-war-pay-dividends-australia/">fill commercial gaps</a> created by potential trade battles within North America and between the US and China. </p>
<h2>What’s in and out of the new agreement</h2>
<p>The new CPTPP rose from the ashes of the old agreement because of the inclusion of a <a href="http://dfat.gov.au/trade/agreements/tpp/news/Documents/annex-2.pdf">list of 20 suspended provisions</a> on matters that were of interest for the US. These would be revived in the event of a US comeback. </p>
<p>These suspended provisions involved substantial changes in areas like investment, public procurement, intellectual property rights and transparency. With the freezing of further copyright restrictions and the provisions on investor-state dispute settlements, these suspensions appear to re-balance the agreement in favour of Australian governments and consumers.</p>
<p>In fact, the scope of investor-state dispute settlements <a href="https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/9.-Investment-Chapter.pdf">are narrower in the CPTPP</a>, because foreign private companies who enter into an investment contract with the Australian government will not be able to use it if there is a dispute about that contract. The broader safeguards in the agreement make sure that the Australian government cannot be sued for measures related to public education, health and other social services. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-developing-countries-are-dumping-investment-treaties-56448">Why developing countries are dumping investment treaties</a>
</strong>
</em>
</p>
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<p>The one part of the agreement <a href="https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/12.-Temporary-Entry-for-Business-Persons.pdf">relating to the temporary entry for business people</a> is rather limited in scope and does not have the potential to impact on low-skilled or struggling categories of Australian workers. In fact, <a href="https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Annexes/12-A.-Australia-Temporary-Entry-for-Business-Persons.pdf">it only commits Australia</a> to providing temporary entry (from three months, up to two years) of only five generic categories of CPTPP workers. These include occupations like installers and servicers, intra-corporate transferees, independent executives, and contractual service suppliers. </p>
<p>The above categories squarely match the shortages in the Australian labour market, according to the <a href="https://www.homeaffairs.gov.au/trav/work/work/skills-assessment-and-assessing-authorities/skilled-occupations-lists">Lists of Eligible Skilled Occupation</a> of the Home Affairs Department. </p>
<p>Bits of the original agreement are still included in the CPTPP such as tariffs schedules that slash custom duties on 95% of trade in goods. But this was the easy part of the deal. </p>
<h2>Before the deal is signed</h2>
<p>The new agreement will be formally signed in Chile on March 8 2018, and will enter into force as soon as at least six members ratify it. This will probably happen later in the year or in early 2019. </p>
<p>The geopolitical symbolism of this timing is poignant. The CPTPP is coming out just as Donald <a href="https://www.ft.com/content/ea72a0f6-ffc7-11e7-9650-9c0ad2d7c5b5">Trump raises the temperature</a> in the China trade battle by introducing new tariffs. It also runs alongside China’s attempts to finalise a much bigger regional trade agreement, the 16-nation Regional Comprehensive Economic Partnership. </p>
<p>Even though substantially the CPTPP is only a TPP-lite at best, it still puts considerable pressure on the US to come out of Trump’s protectionist corner.</p>
<p>It spells out the geopolitical consequences of the <a href="https://theconversation.com/in-the-economic-power-struggle-for-asia-trump-and-xi-jinping-are-switching-policies-90173">US trade policy switch</a>, namely that the Asia Pacific countries are willing to either form a more independent bloc or align more closely with Chinese interests. </p>
<p>Will this be enough to convince the Trump administration to reverse its course on global trade? At present, this seems highly unlikely. To bet on the second marriage of the US with transpacific multilateral trade would be a triumph of hope over experience.</p><img src="https://counter.theconversation.com/content/90619/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Giovanni Di Lieto is affiliated with the Australian Institute of International Affairs (AIIA).</span></em></p>The new TPP means fewer barriers for Australian exports, but there a number of loose ends – not least if the United States decides to rejoin.Giovanni Di Lieto, Lecturer, Bachelor of International Business, Monash Business School, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/898182018-01-09T17:13:04Z2018-01-09T17:13:04ZNo Liam Fox, the UK should not join TPP – here’s what priorities should be<p>During a new year trip to China, the UK’s international trade secretary Liam Fox <a href="http://www.bbc.co.uk/news/uk-politics-42552877">signalled</a> that after Brexit the UK could sign up to Pacific free trade zone, the Trans-Pacific Partnership. If Britain joined this club of 11 nations, whose members include Japan, Australia, Canada and Mexico, it would be the first country from outside the “region” to do so. </p>
<p>Fox later clarified that the UK would first have to see what reconstituted TPP agreement emerged following <a href="https://www.brookings.edu/blog/unpacked/2017/03/24/trump-withdrawing-from-the-trans-pacific-partnership/">America’s departure</a> last year, but stressed it would be “foolish” to rule membership out. He may have kept his job in the <a href="https://theconversation.com/is-that-it-how-theresa-may-fumbled-her-cabinet-reshuffle-89877">cabinet reshuffle</a>, but his blasé approach always makes me think he understands trade deals about as well as David Davis <a href="https://voxpoliticalonline.com/2017/11/28/tory-liars-suggest-mps-cant-be-trusted-with-brexit-impact-assessments-so-what-they-dont-exist/">understands</a> Brexit sectoral impact assessments – which is not much. </p>
<p>Whether joining TPP would be economically desirable is questionable, but first some practical considerations. Since there is already an agreed TPP text of close to 5,000 pages, it’s doubtful whether London would get any say over any final deal. Signing up would essentially be on a “take it or leave it” basis, which may not be smart. </p>
<p>The agreement extends far beyond trade to other topics including the environment and labour standards. A UK government could find hard these to accept, fearing the prospect of fellow members not implementing them as diligently as the UK did.</p>
<p>The overall deal is not in any case finalised, since several participants have unresolved issues – Canada <a href="http://www.cbc.ca/news/politics/tpp-apec-summit-talks-1.4396984">is worried</a> about protections for cultural industries, for example; Vietnam <a href="https://www.newsroom.co.nz/2017/11/11/59680/new-tpp-text-brings-change-outstanding-issues">wants</a> a longer timescale to implement labour standards. </p>
<p>And following America’s withdrawal under Donald Trump, the dominant country in the region, though not formally a party to the TPP, can now be expected to be China. This suggests any final text would have to take account of China’s interests and expectations (though China is also pursuing its own regional trade deal, the RCEP, or <a href="http://asean.org/?static_post=rcep-regional-comprehensive-economic-partnership">Regional Comprehensive Economic Partnership</a>). Would it really make sense for the UK to be party to this? I’m sceptical.</p>
<p>Finally, of course, the UK is not a Pacific nation. Would the existing TPP nations really want to widen out the proposed deal to include a country like the UK – if so, where do you then set the boundary?</p>
<h2>Whither UK trade</h2>
<p>This raises the wider question of what trade set up would be best for the UK post-Brexit. The answer, unquestionably, is a good deal with the EU and a deal with the US. No other deal comes close in terms of the shares/volumes of British trade – as this <a href="http://stat.wto.org/CountryProfiles/GB_e.htm">World Trade Organisation (WTO) summary</a> makes clear. </p>
<p>The charts below show that the EU is miles out in front as the UK’s leading trade partner. The US and China are both important for goods trade, but the US is far more important for UK services: the UK exports 62% of its services to the EU and the US and relies on them for 68% of imported services. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=615&fit=crop&dpr=1 600w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=615&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=615&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=773&fit=crop&dpr=1 754w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=773&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/201350/original/file-20180109-36040-1ujdnpj.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=773&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">WTO 2016 figures.</span>
<span class="attribution"><a class="source" href="http://stat.wto.org/CountryProfiles/GB_e.htm">WTO</a></span>
</figcaption>
</figure>
<p>Now that negotiations over phase one of the Brexit agreement have <a href="http://www.telegraph.co.uk/news/2017/12/08/brexit-divorce-deal-agreement-full-read-report-published-phase/">concluded</a> with the EU, we will see whether a trade deal emerges this year. It will likely be a much tougher negotiation than what we have seen already. As for America, despite President Trump’s <a href="https://www.ft.com/content/15cdec38-63b5-11e7-8526-7b38dcaef614">initial enthusiasm</a> a deal will not be easy. </p>
<p>Deals with India and China might also be attractive, as large and growing trade partners. I am also not against separate free trade deals with Australia and New Zealand, for instance, though we cannot really claim these will transform the British economy. The trade involved is just too little: <a href="https://visual.ons.gov.uk/uk-trade-partners/">barely</a> 1% of UK trade between them. </p>
<p>Meanwhile, the UK government is currently putting a <a href="https://www.ft.com/content/15cdec38-63b5-11e7-8526-7b38dcaef614">Trade Bill</a> through parliament, mainly to replicate all the trade deals and economic partnerships to which the UK is a party by being an EU member state. This is sensible, but there will be <a href="https://www.ft.com/content/15cdec38-63b5-11e7-8526-7b38dcaef614">major hurdles</a>:</p>
<ul>
<li>The UK can’t just unilaterally declare a replicated trade deal with anyone. There needs to be some discussion with the countries in question. It may be quick and easy or could take years – who frankly knows?</li>
<li>The original EU deals’ clauses on rules of origin, which govern where the components of products can come from, cannot just be written over into a new UK deal. Unlike rules on, say, product standards or food safety, they have implications for third countries – you might not, for example, want to allow Jamaican exports preferential access to the UK if that enabled Chinese steel to come through Jamaica and enter the market without paying a tariff. Settling these might well entail tripartite discussion involving the UK, the EU27, and the other trade partner. Again, not straightforward.</li>
<li>Likewise for some products, notably in food and agriculture, the existing EU agreements provide for quotas. Would the UK abandon these, set its own, or expect to use a share of the existing EU quota? This too is difficult to settle without discussions with the EU27.</li>
<li>To replicate an EU deal where there are multiple partners – for example the <a href="http://ec.europa.eu/trade/policy/countries-and-regions/regions/caribbean/index_en.htm">EU-CARIFORUM</a> agreement with 15 Caribbean partners – the UK would need to hold discussions with each partner and/or the group representing them.</li>
<li>Trade agreements need ratified by all parties, then registered with the WTO. If an arrangement is not properly registered, then under <a href="https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm">WTO rules</a> the UK must offer the same favourable tariffs to all other WTO members.</li>
</ul>
<p>In short, never mind a TPP deal: establishing a post-Brexit trading framework for the UK will involve a huge amount of work, much of which is only getting started. By a large margin, the initial priorities must be a good trade agreement with the EU, preferably including major services, and a deal with the US. </p>
<p>For the rest of the world, including the 11 countries in the TPP, we can get by for quite a while by trading on standard WTO terms. For most sectors this is not a terrible model, as existing tariff rates are generally pretty low nowadays. In short, Liam Fox needs to stop flying unrealistic kites and get his priorities right.</p><img src="https://counter.theconversation.com/content/89818/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Hare had a paid consultancy project with the UK government in 2017 related to corruption interventions, and was an EU adviser to the Turks and Caicos Islands 2014-16. He will this year be part of an unfunded research project in Vietnam looking at economic policy. The views expressed in this article are not relevant to any of these projects. </span></em></p>The two things UK must do to survive Brexit.Paul Hare, Professor Emeritus, Heriot-Watt UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/891142018-01-04T04:31:57Z2018-01-04T04:31:57ZFor richer or poorer: 4 economists ponder what 2018 has in store<figure><img src="https://images.theconversation.com/files/200762/original/file-20180103-26163-rc8vst.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">At least one economist worries we'll be mostly poorer. </span> <span class="attribution"><span class="source">AP Photo/Go Nakamura</span></span></figcaption></figure><p><em>Editor’s note: We asked four economists to offer their thoughts and insights on what they expect to be a key theme or issue in 2018.</em></p>
<h2>The Gilded Age returns</h2>
<p><strong>Greg Wright, assistant professor of economics, University of California, Merced</strong></p>
<p>Income and wealth inequality are currently at levels last seen during the Gilded Age – when the top 10 percent of Americans owned nearly three-fourths of overall wealth, and the bottom 40 percent had virtually no wealth – and 2018 will see things get a whole lot worse. </p>
<p>Now, the richest 1 percent of Americans <a href="https://www.washingtonpost.com/news/wonk/wp/2017/12/06/the-richest-1-percent-now-owns-more-of-the-countrys-wealth-than-at-any-time-in-the-past-50-years/?utm_term=.d5667081375e">own</a> 40 percent of U.S. wealth, more than the bottom 90 percent of Americans combined.</p>
<p>In spite of this, Congress just <a href="https://www.bloomberg.com/view/articles/2017-12-15/this-tax-bill-is-a-trillion-dollar-blunder?utm_medium=email&utm_source=newsletter&utm_term=171215&utm_campaign=sharetheview">significantly reduced taxes</a> on capital and on high-earning individuals. Other income earners got smaller, temporary cuts. </p>
<p>Meanwhile, the government <a href="http://www.cnn.com/2017/12/14/politics/chip-extended-states-funds-kimmel-authorization/index.html">has yet to renew</a> federal funding for the Children’s Health Insurance Program, a program affecting 9 million poor families, and the tax bill <a href="http://thehill.com/policy/healthcare/365185-final-gop-tax-bill-repeals-obamacare-mandate">repealed</a> the Affordable Care Act’s individual insurance mandate, which may ultimately lead to a loss of coverage for millions of low- and middle-income Americans. </p>
<p>Other policies that will be enacted or pursued in 2018 that could further widen the income gap include <a href="https://www.washingtonpost.com/news/wonk/wp/2017/12/01/gop-eyes-post-tax-cut-changes-to-welfare-medicare-and-social-security/?utm_term=.47b9ba4d34f5">cuts in important programs</a> like Social Security and Medicare and a continuing rollback of financial, environmental and other regulations that benefit a few companies at the expense of all Americans’ living standards. </p>
<p>Why does widening inequality matter? </p>
<p>While some argue that inequality is irrelevant as long as all incomes are rising, even that has not been true in the U.S. for decades. The average income for the bottom 50 percent of Americans <a href="https://www.theguardian.com/inequality/2017/dec/14/inequality-is-not-inevitable-but-the-us-experiment-is-a-recipe-for-divergence?CMP=share_btn_tw">has been unmoved</a> at US$16,000 since 1980. In addition, <a href="https://www.nytimes.com/2017/12/03/opinion/lost-einsteins-innovation-inequality.html?_r=1">recent evidence</a> indicates that family income in childhood is a strong predictor of the likelihood that an individual will produce innovations as an adult. Poverty and social inequality thus lead to “<a href="http://www.equality-of-opportunity.org/assets/documents/inventors_summary.pdf">lost Einsteins</a>.”</p>
<p>Not long after accepting the Nobel prize in economics in 2014, <a href="http://www.businessinsider.com/shiller-on-inequality-and-taxes-2014-4">Robert Schiller stated</a>, “If we wait until income inequality is much more severe, we will have a whole class of new superrich who will … feel entitled to their wealth and will have the means to defend their interest.” </p>
<p>In 2018 we may begin to put these fears to the test.</p>
<hr>
<h2>War on poverty, revisited</h2>
<p><strong>Patricia Smith, professor of economics, University of Michigan</strong></p>
<p>By many measures, such as <a href="http://www.oecdbetterlifeindex.org/topics/income/">GDP, income and wealth per household</a>, the U.S. is among the richest countries in the world.</p>
<p>At least one measure, however, makes the U.S. look not so rich: its poverty rate. The share of American households living on less than half of the national median income, a commonly used measure for international comparisons, is the <a href="http://www.oecd.org/social/society-at-a-glance-19991290.htm">second-highest in the developed world</a>, at 17.5 percent. While the <a href="https://www.census.gov/library/publications/2017/demo/p60-259.html">official U.S. poverty rate</a> puts that lower, at 12.7 percent, even by that measure <a href="https://www.ers.usda.gov/topics/rural-economy-population/rural-poverty-well-being/poverty-demographics.aspx#byage">over a quarter</a> of children under 5 lived in poverty in 2016. </p>
<p>Past presidents have tried several ways to fight poverty. Lyndon Johnson <a href="https://www.washingtonpost.com/news/wonk/wp/2014/01/08/everything-you-need-to-know-about-the-war-on-poverty/?utm_term=.0731c94acd9d">declared “unconditional war”</a> in 1964 and championed anti-poverty programs such as Medicare and Medicaid. Bill Clinton <a href="https://royce.house.gov/uploadedfiles/the%201996%20welfare%20reform%20law.pdf">changed the battle strategy</a> 32 years later by pushing people to work more. </p>
<p>House Speaker Paul Ryan has once again reopened the debate on how best to win the fight by <a href="https://www.cbsnews.com/videos/paul-ryan-talks-gop-tax-bill-denies-rumors-of-him-leaving-congress/">declaring</a> poverty will be a focus in 2018. The rhetoric of the <a href="https://abetterway.speaker.gov/?page=poverty">Republican plan</a> sounds promising, beginning with “If the American Dream isn’t true for everyone, it isn’t true for anyone.” It would make work more rewarding in anti-poverty programs and improve education and training. </p>
<p>But Ryan <a href="https://www.washingtonpost.com/news/wonk/wp/2017/12/01/gop-eyes-post-tax-cut-changes-to-welfare-medicare-and-social-security/?utm_term=.4753bd1e7f26">has also made clear</a> he plans to cut Medicaid, Medicare and other anti-poverty programs to reduce the national debt, all of which were central to reducing the official poverty rate from 22 percent in the early 1960s.</p>
<p>Part of the argument supporting a focus on cutting debt is that it <a href="http://www.heritage.org/budget-and-spending/report/cutting-the-us-budget-would-help-the-economy-grow">spurs growth</a>, which in turn reduces poverty. The U.S. did experience this prior to the mid-1970s, when growth <a href="http://www.epi.org/publication/raising-americas-pay/">appeared correlated with less poverty</a>. Since then, however, the poverty rate has responded little to economic growth.</p>
<p>In fact, the correlation may work the other way around because research suggests that lowering poverty rates cuts health care costs and federal spending and boosts growth. Specifically, improving health and nutrition for the poor <a href="http://blogs.reuters.com/nicholas-wapshott/2013/06/13/robert-fogel-and-the-economics-of-good-health/">is critical</a> to long-term growth, leading to <a href="http://science.sciencemag.org/content/287/5456/1207.full">higher productivity</a> and incomes. For example, economists estimate that the cost of childhood poverty in terms of <a href="https://confrontingpoverty.org/wp-content/uploads/2017/02/PAPER15.pdf">lost economic productivity approaches $294 billion</a> annually. </p>
<hr>
<h2>Economic optimism and health care</h2>
<p><strong>Christos Makridis, Ph.D. candidate in labor and public economics, Stanford University</strong></p>
<p>Americans began 2018 <a href="https://www.cnbc.com/2017/12/18/economic-optimism-soaring-helping-trump-cnbc-survey.html">more optimistic about the economy</a> than they’ve been in at least a decade.</p>
<p>How can the government sustain and build on this hopefulness – a <a href="http://stanford.edu/%7Ecmakridi/Makridis%20-%20Sentimental%20business%20cycles">key driver of consumer spending</a> – among individuals and <a href="https://www.colorado.edu/business/sites/default/files/attached-files/lbci_q1_2018.pdf">small businesses</a> in 2018? </p>
<p>In my view, one of the most important ways to do this is by reforming health care in a financially stable way. Rising health care costs and the tax plan’s <a href="http://fortune.com/2017/12/20/tax-bill-individual-mandate-obamacare/">repeal of the Affordable Care Act’s individual mandate</a> mean it’s urgent that Congress tackle this in 2018. Health care exchanges <a href="https://www.nytimes.com/2017/12/18/us/politics/tax-cut-obamacare-individual-mandate-repeal.html">may implode</a> without the mandate. </p>
<p>Health care spending made up a record <a href="https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html">18 percent of U.S. gross domestic product</a> in 2016, up from 17.3 percent five years earlier. While spending has slowed a bit from previous decades, it’s beginning to accelerate and is forecast to reach <a href="https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/proj2016.pdf">20 percent of the economy</a> by 2025. </p>
<p>Following last year’s tax cut, <a href="https://www.nytimes.com/2017/12/15/us/politics/republican-tax-bill.html">some in Congress</a> – perhaps ironically – are arguing that the focus now needs to be on reducing the budget deficit in the short term. But the deficit is a long-term problem that is nearly impossible to balance without figuring out a way to rein in health care spending in part because it makes up so much of the economy. </p>
<p>Scholars from <a href="https://bipartisanpolicy.org/library/future-of-health-care-bipartisan-policies-and-recommendations/">both sides</a> of the aisle agree the status quo is problematic: There is far <a href="https://www.brookings.edu/research/making-health-care-markets-work-competition-policy-for-health-care/">too little competition</a>, and <a href="https://hbr.org/2016/12/health-care-needs-real-competition">incentives are too weak</a>. While there is no easy answer, structural changes like <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3054172">introducing penalties</a> for poor hospital performance in Medicare reimbursement claims could help. </p>
<p>Health care is one of the few items that matters to literally everyone, from small business owners and corporate executives to households of all incomes. It’s also one of the trickiest because of its life and death nature, with quality of service difficult to gauge and costs often not borne directly by patients.</p>
<p>I believe the tax cut President Trump signed into law in December will help turn the current economic optimism into tangible reality for tens of millions of families. By tackling health care next, the government could continue that momentum. Delaying reform will only make things tougher down the road. </p>
<hr>
<h2>Trade takes center stage</h2>
<p><strong>William Hauk, associate professor of economics, University of South Carolina</strong></p>
<p>President Trump <a href="https://www.cbsnews.com/videos/trump-calls-nafta-a-disaster/">made it clear during the 2016 presidential campaign</a> that he intended to either renegotiate or withdraw from most of the United States’ international trade agreements. In 2018, he may finally focus his energy on these campaign promises, which would put our prosperity at risk.</p>
<p>Early on in 2017, he announced the U.S. withdrawal from the Trans-Pacific Partnership. We’re <a href="https://www.voanews.com/a/4100538.html">already</a> <a href="https://www.cnbc.com/2017/11/11/trans-pacific-trade-deal-advances-without-united-states.html">beginning</a> to see the negative impact of that decision. Our economic and political influence in Asia may decline in 2018 and the years ahead.</p>
<p>He has also set his sights on the North American Free Trade Agreement and began <a href="https://www.news.virginia.edu/content/nafta-20-primer-tense-negotiations-between-us-canada-and-mexico">renegotiating</a> its terms. Talks are likely to accelerate in 2018, with the pact’s unraveling a real possibility.</p>
<p>And in interviews, he has <a href="https://www.yahoo.com/news/trump-says-us-could-pull-world-trade-organization-154808319.html">declared the World Trade Organization</a> “a disaster.” </p>
<p>International trade deals are an often misunderstood part of U.S. economic policy. However, they can have a large impact on the economy.</p>
<p>Since the end of World War II, the U.S. has taken the lead in setting up a multilateral, rules-based system of international trade. <a href="https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm">Central to this system</a> was the General Agreement on Tariffs and Trade. In 1994, this agreement was transformed into the WTO.</p>
<p>Under this system, world trade has expanded dramatically over the last 70 years. In 1947, <a href="http://www.hamiltonproject.org/charts/u.s._imports_and_exports_1947_2016">trade accounted for</a> approximately 6 percent of U.S. gross domestic product, whereas it now accounts for approximately 15 percent. Today, U.S. exports <a href="https://ustr.gov/about-us/benefits-trade">support over 11 million jobs</a>, while imports of many staples from overseas <a href="http://americastradepolicy.com/aafa-imports-benefit-the-u-s-worker-and-consumer/#.WkIw8VWnEqM">increase the purchasing power of domestic households</a>.</p>
<p>A retreat from a multilateral rules-based system of trade brings with it many problems. Domestically, it increases the probability of “trade wars” with our major trading partners. Relatively minor disputes could easily escalate into trade sanctions and counter-sanctions, like in the <a href="http://money.cnn.com/2016/07/07/news/economy/trump-trade-smoot-hawley/index.html">aftermath of the Depression-era Smoot-Hawley Tariff</a>, which raised tariffs on hundreds of imports.</p>
<p>Internationally, it could make it more difficult for developing countries to engage in trade relations with their much larger and wealthier counterparts.</p>
<p>While the Trump administration has drawn attention to the U.S.’s large trade deficit, most economists agree that <a href="https://piie.com/blogs/trade-investment-policy-watch/free-trade-agreements-and-trade-deficits">trade agreements have little to no effect on that</a>. </p>
<p>Certainly, some aspects of institutions such as NAFTA and the WTO can be questioned. However, a general retreat from the postwar system of trade could be a dangerous path for both the U.S. and the broader world economy.</p><img src="https://counter.theconversation.com/content/89114/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christos Makridis has received funding from the National Science Foundation. </span></em></p><p class="fine-print"><em><span>William Hauk has received funding from the Center for International Business Education and Research. </span></em></p><p class="fine-print"><em><span>Greg Wright and Patricia Smith do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We asked four of our regular economics writers to examine a key theme they expect to flare up in 2018 and why.Greg Wright, Assistant Professor of Economics, University of California, MercedChristos A. Makridis, Ph.D. Candidate in Labor and Public Economics, Stanford UniversityPatricia Smith, Professor of Economics, University of MichiganWilliam Hauk, Associate Professor of Economics, University of South CarolinaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/874772017-11-16T01:39:20Z2017-11-16T01:39:20ZTrump’s ‘America first’ trade policy ignores key lesson from Great Depression<figure><img src="https://images.theconversation.com/files/194885/original/file-20171115-19782-b2ncvz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Trump will soon learn the costs of going it alone on trade.</span> <span class="attribution"><span class="source">AP Photo/Andrew Harnik</span></span></figcaption></figure><p>President Donald Trump <a href="http://abcnews.go.com/International/wireStory/trump-asia-trade-rules-changed-watch-51131335">declared</a> his nearly two-week trip through Asia “tremendously successful,” but economic history should make us more skeptical. </p>
<p>During the trip, the president continued to promote his so-called <a href="https://theconversation.com/what-does-america-first-mean-for-american-economic-interests-71931">“America first” trade policy</a>. He is orienting the country distinctly toward protectionism and claiming that unilateralism in trade is good for America.</p>
<p>Here is the problem: President Trump’s <a href="http://www.businessinsider.com/trump-trade-policy-agenda-2017-3">approach to trade</a> seems to be based on a false understanding of how the global economy works, one that also plagued American policymakers nearly a century ago. The administration has forgotten an important lesson of the Great Depression, and <a href="http://foreignpolicy.com/2017/03/06/economists-take-aim-at-trump-trade-theory-again-peter-navarro-bilateral-multilateral-trade-deals-china-germany-national-security/">virtually all economists</a> <a href="https://www.voanews.com/a/trump-trade-policy-loser-economists-contend/3323997.html">agree</a> that this could have unfortunate consequences for the U.S. and the world. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/194884/original/file-20171115-19768-8hk2wk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/194884/original/file-20171115-19768-8hk2wk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=403&fit=crop&dpr=1 600w, https://images.theconversation.com/files/194884/original/file-20171115-19768-8hk2wk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=403&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/194884/original/file-20171115-19768-8hk2wk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=403&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/194884/original/file-20171115-19768-8hk2wk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=507&fit=crop&dpr=1 754w, https://images.theconversation.com/files/194884/original/file-20171115-19768-8hk2wk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=507&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/194884/original/file-20171115-19768-8hk2wk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=507&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">If Trump puts ‘America first’ in trade, other countries will follow. And that’s bad news for everyone.</span>
<span class="attribution"><span class="source">Hadrian/Shutterstock.com</span></span>
</figcaption>
</figure>
<h2>America and the global economy</h2>
<p>Trump’s “America first” orientation <a href="http://time.com/4386335/donald-trump-trade-speech-transcript/">assumes</a> that the United States, as the world’s dominant actor, can behave freely and independently in trade. </p>
<p>Unfortunately for the administration, America’s top economic position does not shield it from the dire consequences that unilateral trade policy can provoke. The constraints on U.S. action result from the basic nature of the international economy and from America’s <a href="https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci18-1.pdf">declining dominance</a> of the world trade system. </p>
<p>It is a standard principle of economics that all individual actors exist within a system. Any action taken by one actor will likely result in a response from others. This means that wise governments, in considering which policies to adopt, must make <a href="https://www.economist.com/news/economics-brief/21705308-fifth-our-series-seminal-economic-ideas-looks-nash-equilibrium-prison">difficult calculations</a> about how their actions will interact with those of others.</p>
<p>“America first” fails to make these calculations. It disregards how America’s trading partners will respond to the new U.S. protectionism – which is also what American lawmakers ignored during the Great Depression.</p>
<h2>‘Beggar thy neighbor’</h2>
<p>Before the 1930s, America’s trade policy was generally set unilaterally by Congress – that is, without the international negotiations used today. </p>
<p>Lawmakers, already in a <a href="http://www.nber.org/papers/w2001">protectionist mood</a>, responded to the pain of the Great Depression by passing the infamous <a href="https://www.investopedia.com/terms/s/smoot-hawley-tariff-act.asp">Smoot-Hawley Tariff Act of 1930</a>, which <a href="http://www.economist.com/node/12798595">raised duties on hundreds of imports</a>.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/194881/original/file-20171115-19823-b2itsw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/194881/original/file-20171115-19823-b2itsw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/194881/original/file-20171115-19823-b2itsw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=809&fit=crop&dpr=1 600w, https://images.theconversation.com/files/194881/original/file-20171115-19823-b2itsw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=809&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/194881/original/file-20171115-19823-b2itsw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=809&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/194881/original/file-20171115-19823-b2itsw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1016&fit=crop&dpr=1 754w, https://images.theconversation.com/files/194881/original/file-20171115-19823-b2itsw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1016&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/194881/original/file-20171115-19823-b2itsw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1016&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Senator Reed Smoot co-sponsored the famous act that bears his name.</span>
<span class="attribution"><span class="source">Everett Historical/Shutterstock.com</span></span>
</figcaption>
</figure>
<p>Meant in part to ease the effects of the Depression by protecting American industry and agriculture from foreign competition, the act instead helped prolong the downturn. <a href="https://press.princeton.edu/titles/9430.html">Many U.S. trading partners reacted</a> by <a href="http://www.nber.org/chapters/c6899.pdf">raising their own tariffs</a>, which contributed <a href="http://www.mitpressjournals.org/doi/abs/10.1162/003465398557410">significantly</a> to shutting down world trade.</p>
<p>Fortunately, America and the world learned a lesson from this experience. With the <a href="http://www.nber.org/chapters/c6899.pdf">Reciprocal Trade Agreements Act of 1934</a> and its successors, which granted the president authority to reach tariff reduction agreements with foreign governments, U.S. trade policy came to be global and strategic. This new approach was institutionalized at the international level with the creation of the <a href="https://www.wto.org/english/res_e/booksp_e/agrmntseries2_gatt_e.pdf">General Agreement on Tariffs and Trade</a> in 1948 and its successor, the World Trade Organization, in 1995.</p>
<p>The basic principle of these agreements is <a href="https://theconversation.com/why-the-wto-still-matters-34624">reciprocity</a> – that each country will agree to liberalize its trade to the extent that other countries liberalize theirs. The approach uses international negotiations to <a href="https://www.jstor.org/stable/2706411?seq=1#page_scan_tab_contents">overcome protectionist political pressures</a> and recognizes that trade is a global phenomenon that generates national interdependence.</p>
<h2>Dangers of ignoring history</h2>
<p>The dangers of ignoring history are only beginning to manifest themselves, but they can be seen in several recent developments that bode ill for us all.</p>
<p>One of the Trump administration’s <a href="https://theconversation.com/how-the-tpps-demise-threatens-us-national-security-and-pax-americana-67514">first actions</a> was to withdraw the United States from the <a href="https://theconversation.com/us/topics/transpacific-partnership-1882">Trans-Pacific Partnership</a>. This agreement, which was a major initiative of the Obama administration, would have created the <a href="https://www.nytimes.com/interactive/2016/business/tpp-explained-what-is-trans-pacific-partnership.html">largest economic bloc</a> in the world by linking America’s economy with those of 11 other Pacific nations. It would also have created an American-led, liberal bulwark in Asia against any Chinese challenge to the regional economic order.</p>
<p>Withdrawing from the agreement denied American exporters enhanced access to foreign markets and was a <a href="https://www.forbes.com/sites/johnbrinkley/2017/01/24/trump-dumps-trans-pacific-partnership-sad/#4543448e75dc">gift</a> to Chinese influence in Asia. But we are only now beginning to see the longer-term repercussions of President Trump’s decision. </p>
<p>During Trump’s trip, the other 11 signatories of the original trade deal, including Japan, Australia, Canada and Mexico, <a href="http://money.cnn.com/2017/11/13/news/economy/tpp-11-without-us-what-next/index.html">agreed to move forward</a> without the U.S. This is a problem for America because it means that these countries will grant preferential market access to one another, making it harder for American companies to compete in their markets.</p>
<p>American companies are already feeling the impact of what happens when they’re left out of a trade deal. A recent <a href="https://www.nytimes.com/2017/11/12/business/trump-trade-lobster-canada.html">New York Times article</a>, for example, highlights the plight of American lobster producers whose prices are being undercut by Canadian producers in the wake of a new <a href="http://ec.europa.eu/trade/policy/in-focus/ceta/">Canada-European Union trade agreement</a>. </p>
<p>If the United States is reluctant to participate in multilateral trade agreements, other countries have every incentive to do deals that exclude and even may hurt the U.S.</p>
<p>Trump’s <a href="https://theconversation.com/trumps-threat-to-withdraw-from-nafta-may-hit-a-hurdle-the-us-constitution-81444">ongoing efforts</a> to renegotiate the North American Free Trade Agreement also pose potential dangers. The administration has a tendency to speak of renegotiation as if it can <a href="http://money.cnn.com/2017/10/11/news/economy/trump-nafta/index.html">dictate the terms</a>. But while Canada and Mexico may be more dependent on the U.S. than the U.S. is on them, an <a href="https://www.cfr.org/backgrounder/naftas-economic-impact">implosion of NAFTA would be devastating</a> for many U.S. industries that rely on North American trade. <a href="https://www.cnbc.com/2017/11/13/the-next-big-worry-for-markets-nafta-fails-and-trade-wars-erupt.html">Markets increasingly worry</a> that NAFTA may not survive the negotiations. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/194882/original/file-20171115-19789-ujcuha.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/194882/original/file-20171115-19789-ujcuha.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=407&fit=crop&dpr=1 600w, https://images.theconversation.com/files/194882/original/file-20171115-19789-ujcuha.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=407&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/194882/original/file-20171115-19789-ujcuha.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=407&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/194882/original/file-20171115-19789-ujcuha.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/194882/original/file-20171115-19789-ujcuha.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/194882/original/file-20171115-19789-ujcuha.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Trade representatives from Canada, the U.S. and Mexico have been meeting to renegotiate NAFTA.</span>
<span class="attribution"><span class="source">AP Photo/Manuel Balce Ceneta</span></span>
</figcaption>
</figure>
<p>In addition to withdrawing from and renegotiating trade agreements, the administration has <a href="https://fivethirtyeight.com/features/trumps-trade-policies-keep-backfiring/">ramped up</a> unilateral efforts to sanction U.S. trading partners for receiving subsidies or for dumping their products on the American market. </p>
<p>Decisions to impose trade penalties risk blowback, as when sanctions on Bombardier drove the Canadian plane manufacturer into the <a href="https://fivethirtyeight.com/features/trumps-trade-policies-keep-backfiring/">arms of Airbus</a>, Boeing’s top foreign rival. The threatened imposition of sanctions on imports of solar panels may have <a href="https://www.politico.com/story/2017/09/22/solar-tariff-trump-china-trade-243021">a similar effect</a>, damaging American panel installers and encouraging foreign retaliation. </p>
<h2>Trade needs a champion</h2>
<p>President Trump assumes the U.S. can act unilaterally without consequences. </p>
<p>Economic history shows this doesn’t work. The world’s economies are far more interdependent than they were during the Great Depression, so the impact of governments all following a “my country first” trade policy – as the president said <a href="http://www.eaglenews.ph/trump-says-us-wont-tolerate-other-countries-unfair-trade-practices-anymore-to-protect-america-first/">he expected world leaders to do</a> – could have disastrous consequences. </p>
<p>Today, the international trade system America helped create, one based on open markets and classically liberal principles, is <a href="https://www.brookings.edu/research/the-twilight-of-the-liberal-world-order/">under threat</a> as never before. Yet President Trump’s “America first” approach is a total abdication of the traditional U.S. role as its defender. And in fact, the president is doing his best to <a href="https://www.nytimes.com/2017/10/31/business/economy/trump-trade.html?_r=0">undermine that system</a>. </p>
<p>In the final analysis, the Trump administration is reverting to a policy that is dangerous for the U.S. economy and for the international system. </p>
<p>If the U.S. abdicates, China may be the only country that can take the reins. The question is, what would that mean for the current system of open and free markets?</p><img src="https://counter.theconversation.com/content/87477/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Hankla does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>American lawmakers in the 1930s learned the hard way what happens when a country raises tariffs and makes other unilateral trade decisions.Charles Hankla, Associate Professor of Political Science, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.