tag:theconversation.com,2011:/us/topics/trade-negotiations-53749/articlesTrade negotiations – The Conversation2022-06-27T03:59:56Ztag:theconversation.com,2011:article/1855912022-06-27T03:59:56Z2022-06-27T03:59:56ZSome see NZ’s invite to the NATO summit as a reward for a shift in foreign policy, but that’s far from accurate<figure><img src="https://images.theconversation.com/files/471005/original/file-20220627-26-sjgjky.jpg?ixlib=rb-1.1.0&rect=48%2C153%2C5343%2C3015&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Getty Images/Hagen Hopkins</span></span></figcaption></figure><p>Prime Minister Jacinda Ardern’s acceptance of an invitation to speak at this week’s <a href="https://www.nato.int/cps/en/natohq/news_196144.htm">NATO leaders’ summit</a> in Madrid has fuelled a narrative that New Zealand’s independent foreign policy is <a href="https://democracyproject.nz/2022/06/20/geoffrey-miller-tale-of-two-summits-why-jacinda-ardern-said-no-to-the-commonwealth-but-yes-to-nato/">falling victim to a new Cold War</a>.</p>
<p>According to this view, Ardern’s participation is a reward for recently aligning New Zealand’s foreign policy <a href="https://www.nzherald.co.nz/nz/bryce-edwards-the-problem-of-blindly-following-the-us-against-china/2YS5MBE6Q5EBB2BP75DLRETAAU/">more closely with the US</a> and its allies against Russia and, to a lesser extent, China.</p>
<p>This narrative claims this shift has been exemplified by <a href="https://www.mfat.govt.nz/en/countries-and-regions/europe/ukraine/russian-invasion-of-ukraine/sanctions/">sanctions against Putin’s Russia</a>, <a href="https://www.beehive.govt.nz/release/nz-provide-additional-deployment-support-ukraine">humanitarian and military assistance</a> to Ukraine and public questioning of <a href="https://www.theguardian.com/world/2022/may/26/jacinda-ardern-says-new-zealand-ready-to-respond-to-pacifics-security-needs-as-china-seeks-deal-in-region">China’s growing involvement in the Pacific</a>. </p>
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<p>These developments purportedly show American power has forced New Zealand to abandon its preferred strategy of hedging between the two superpowers and instead follow Washington at the expense of its own national interests and the country’s crucial relationship with China.</p>
<p>But this reading of the current international situation and its impact on New Zealand foreign policy is wide of the mark.</p>
<h2>There is no new Cold War</h2>
<p>The post-Cold War era is fundamentally different from the period between 1947 and 1989 and its rival global economic systems and competing but comparable alliance systems. Those features simply do not exist in the globalising world of the 21st century. </p>
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<p>China’s rise to superpower status has been based on full-blooded participation in the global capitalist economy and its dependence on key markets like America, the European Union and Japan.</p>
<p>At the same time, the Ardern government has distinctive reasons, beyond simply following America’s lead, for opposing Putin’s Ukraine invasion and expressing public reservations about the <a href="https://www.newshub.co.nz/home/politics/2022/04/china-solomon-islands-security-agreement-jacinda-ardern-says-no-need-for-deal-expresses-concern-about-militarisation.html">China-Solomon Islands security deal</a>.</p>
<p>Since the second world war, New Zealand has been a firm supporter of a strengthened international rules-based order, enshrined in institutions such as the United Nations and embodied in norms such as multilateralism.</p>
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Read more:
<a href="https://theconversation.com/ukraine-war-nato-summit-to-meet-in-a-world-reordered-by-russian-aggression-and-chinese-ambition-184882">Ukraine war: Nato summit to meet in a world reordered by Russian aggression and Chinese ambition</a>
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<p>Putin’s invasion of Ukraine was a flagrant <a href="https://unsdg.un.org/latest/announcements/russias-invasion-ukraine-violation-un-charter-un-chief-tells-security-council">violation of the UN Charter</a>. It confirmed what has been clear for much of the post-Cold War era – the UN Security Council is no longer fit for purpose. </p>
<p>Ukrainian President Volodymyr Zelenskyy has pledged to campaign for a reformed Security Council that can more effectively hold aggression in check. The Ardern government believes it has a big stake in helping Kiev defeat Putin’s expansionism.</p>
<p>By framing concerns about China’s “militarisation” of the Pacific region as a possible breach of the <a href="https://pacificsecurity.net/resource/biketawa-declaration/">2000 Biketawa Declaration</a>, the Ardern government is seeking to foster local resilience against China’s assertiveness in a region considered as New Zealand’s neighbourhood.</p>
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Read more:
<a href="https://theconversation.com/ukraine-might-be-far-away-but-a-security-crisis-in-europe-can-still-threaten-aotearoa-new-zealand-175310">Ukraine might be far away, but a security crisis in Europe can still threaten Aotearoa New Zealand</a>
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<p>New Zealand’s worldview remains distinctive. It shares many of the concerns of close allies about the threat of authoritarian states to an international rules-based order. But it also rejects the view any great power should enjoy exceptional rights and privileges in the 21st century.</p>
<p>Here New Zealand’s foreign policy parts company with that of its traditional allies. New Zealand not only seeks to defend the international rules-based order, it wants to strengthen it.</p>
<h2>New Zealand’s strategic positioning</h2>
<p>There are other important strategic and economic reasons for Ardern to make this five-day visit to Europe.</p>
<p>She will have the chance to emphasise to so-called realists within NATO that ceding Ukrainian territory to Putin to bring peace is delusional, only likely to invite more territorial demands from the Kremlin. </p>
<p>China will also loom large in the discussions. Xi Jinping’s regime has diplomatically backed the Kremlin and recently declared Putin’s Ukraine invasion was “<a href="https://www.smh.com.au/world/europe/xi-tells-putin-s-ukraine-invasion-legitimate-20220616-p5au2o.html">legitimate</a>”.</p>
<p>Ardern has said China should not be “<a href="https://www.newshub.co.nz/home/politics/2022/04/prime-minister-jacinda-ardern-warns-against-pigeonholing-china-as-aligning-with-russia.html">pigeonholed</a>” with Moscow. But she will also be mindful a failure to strongly counter Putin’s assault on the rules-based order in Ukraine could increase China’s pressure to incorporate Taiwan, a state with vibrant trade and cultural ties with New Zealand.</p>
<p>Ardern should tell leaders in Madrid the best China strategy at this time is to make sure Putin’s invasion is rebuffed. If Putin’s army is defeated and ejected from Ukraine, it will be a serious blow to Xi’s leadership and could complicate any plans he might have for annexing Taiwan.</p>
<h2>Chance to advance bilateral trade talks</h2>
<p>The NATO meeting will also facilitate bilateral meetings with European leaders on some crucial trade questions.</p>
<p>In Brussels, Ardern and Trade Minister Damien O’Connor will seek to progress already advanced talks for a New Zealand-EU Free Trade Agreement (FTA). The EU single market remains the world’s largest and most prosperous. It offers New Zealand the prospect of enhanced trade links with an important like-minded partner.</p>
<p>In London, Ardern and O’Connor will meet UK Prime Minister Boris Johnson to build on a “gold-standard” <a href="https://www.beehive.govt.nz/release/next-steps-nz-uk-free-trade-agreement">New Zealand-UK FTA</a> negotiated earlier this year. </p>
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Read more:
<a href="https://theconversation.com/what-new-zealand-should-win-from-its-trade-agreement-with-post-brexit-britain-163423">What New Zealand should win from its trade agreement with post-Brexit Britain</a>
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<p>The UK government has applied to join the Comprehensive Progressive Trans-Pacific Partnership (<a href="https://www.mfat.govt.nz/en/about-us/who-we-are/treaties/comprehensive-and-progressive-agreement-for-tpp/">CPTTP</a>). Ardern may warn Johnson that breaching the EU withdrawal agreement in relation to the Northern Ireland protocols could jeopardise this goal.</p>
<p>Ardern’s participation in the NATO summit and bilateral discussions in Europe at a time of geopolitical uncertainty mirror New Zealand’s key national goals of promoting an international rules-based order and diversifying trade links.</p><img src="https://counter.theconversation.com/content/185591/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert G. Patman 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>At a time of geopolitical uncertainty, New Zealand’s government has distinctive reasons for opposing Putin’s Ukraine invasion and expressing public reservations about China’s ambition in the Pacific.Robert G. Patman, Professor of International Relations, University of OtagoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1854502022-06-23T15:04:28Z2022-06-23T15:04:28ZWhat trade unions do and what joining one means<p>Union membership among young workers today is incredibly low. Industrial action scholars speak of a worldwide trend towards the so-called <a href="https://www.researchgate.net/publication/277515552_Young_Workers_and_Trade_Unions_A_Global_View">de-unionisation of the young</a>. </p>
<p>In 1980 <a href="http://www.ilera-directory.org/15thworldcongress/files/papers/Track_4/Thur_W4_DICKENS.pdf">80% of the British workforce</a> was covered by collective bargaining between employers and unions. By the 2000s, that figure had fallen to around 30%. And the numbers have kept falling, in particular for young people. UK government statistics show that in 2021, only <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1077904/Trade_Union_Membership_UK_1995-2021_statistical_bulletin.pdf">4.3%</a> of 16 to 24-year-old workers were members of a union. This figure rose to 19.8% for the 25 to 34 category. </p>
<p>In their introduction to the 2015 compendium, <a href="https://www.researchgate.net/publication/277515552_Young_Workers_and_Trade_Unions_A_Global_View">Young Workers and Trade Unions: A Global View</a>, scholars Andy Hodder and Lefteris Kretsos explain that it’s not so much that young professionals view unions more negatively than their older counterparts. Rather, they tend to work in jobs and industries where union representation doesn’t exist. Crucially, for the most part, they <a href="https://www.academia.edu/8961890/Young_Workers_and_Trade_Unions_The_case_of_the_UK?auto=download">do not know</a> what unions are, what they do – and what they have done to change the world of work.</p>
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<img alt="Quarter life, a series by The Conversation" src="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em><strong><a href="https://theconversation.com/uk/topics/quarter-life-117947?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">This article is part of Quarter Life</a></strong>, a series about issues affecting those of us in our twenties and thirties. From the challenges of beginning a career and taking care of our mental health, to the excitement of starting a family, adopting a pet or just making friends as an adult. The articles in this series explore the questions and bring answers as we navigate this turbulent period of life.</em></p>
<p><em>You may be interested in:</em></p>
<p><em><a href="https://theconversation.com/the-last-two-recessions-hit-young-people-hardest-heres-how-you-can-protect-yourself-for-the-next-one-184783">The last two recessions hit young people hardest – here’s how you can protect yourself for the next one</a></em></p>
<p><em><a href="https://theconversation.com/four-ways-pensions-still-fail-to-support-staff-who-are-young-low-paid-and-part-time-176289?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">Four ways pensions still fail to support staff who are young, low paid and part time</a></em></p>
<p><em><a href="https://theconversation.com/hybrid-working-post-covid-how-young-professionals-can-optimise-their-time-in-the-office-and-why-they-should-184025">Hybrid working post-COVID: how young professionals can optimise their time in the office (and why they should)</a></em></p>
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<h2>What unions do</h2>
<p>Unions give employees a voice – both as individuals and as a collective – that is independent of their employer. Employers are more likely to engage through consultation and negotiations with the views of their workers where workers can speak as one. This is simply because it is more efficient and provides legitimacy to the result of these negotiations. </p>
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<img alt="A factory worker in protective gear looks at the camera." src="https://images.theconversation.com/files/470597/original/file-20220623-13-nn7sbp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/470597/original/file-20220623-13-nn7sbp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/470597/original/file-20220623-13-nn7sbp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/470597/original/file-20220623-13-nn7sbp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/470597/original/file-20220623-13-nn7sbp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/470597/original/file-20220623-13-nn7sbp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/470597/original/file-20220623-13-nn7sbp.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">
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<span class="caption">Unionised workplaces have been shown to be safer and healthier for workers.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/factory-woman-worker-technician-hygienic-mask-1681854001">SritanaN | Shutterstock</a></span>
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<p>For the workers, there is strength in numbers. They can club together to provide the resources to allow their union to negotiate on their behalf. The vast majority of collective disputes are settled without any industrial action. But having the ability to engage in such collective action, if necessary, can be vital, as many groups of workers this summer are finding out. </p>
<p>Quite what is negotiated has resulted in a number of procedural and substantive benefits to workers. First, unionised workplaces have been shown to be <a href="https://www.napier.ac.uk/%7E/media/worktribe/output-2659451/trade-unions-and-career-services-potential-partners-for-promoting-social-justice-at-work.pdf">fairer</a> than non-union workplaces. There is less wage disparity between different employees. </p>
<p>Unionised workplaces are also <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4880255/">healthier</a> places to work. Workers are subjected to less stress and more attention is paid to keeping working hours within healthy limits. </p>
<p>Similarly, unions have also been shown to make workplaces <a href="https://journals.sagepub.com/doi/pdf/10.1177/0950017006061275?casa_token=uz5Tzt7zLzgAAAAA:iIMk8P7S5AkhMFmgwbWoG4AyDwobTwZq-jqlx7poSvWAr3_RYvljxIGLiEBm3az2OEYTWgbxgSDv">safer</a>. There are fewer accidents and fatalities because workers in unionised workplaces are more likely to be given the equipment they need to work safely, whether ergonomically assessed workstations, or clothing to protect themselves from noxious substances. </p>
<p>And then there’s the question of pay. Union members <a href="https://www.statista.com/statistics/287278/uk-trade-union-wage-premium/#:%7E:text=In%202021%20members%20of%20trade,more%20than%20the%20average%20worker.">still earn more</a> than non-union members. Some recent pay deals negotiated by unions, such as those led by the Unite union on behalf of airport staff, dockers and carmakers <a href="https://www.theguardian.com/commentisfree/2022/jun/17/profiteering-bosses-workers-inflation-unite-sharon-graham-labour">have outstripped</a> the current rate of inflation.</p>
<p>Lastly, unions are able to lobby governments to push for greater employment rights for workers. They also work to stop any existing rights being withdrawn.</p>
<p><a href="https://www.bostonherald.com/2021/09/06/unionized-workers-becoming-more-satisfied-than-non-union/">Research indicates</a> that these benefits lead to happier, more satisfying and more productive workplaces as well as more <a href="https://www.epi.org/publication/unions-and-well-being/">democratic and fairer societal outcomes</a>. This in turn is a benefit for employers. </p>
<h2>How unions assert employees’ rights</h2>
<p>Some experts, including US economist Diana Furchtgott-Roth <a href="https://www.city-journal.org/amazon-employees-do-not-need-a-union">have argued</a> that unions are no longer needed. “Workers don’t need unions because the economy is booming, and workers face a sellers’ market for their skills. They also don’t want to pay substantial union dues,” Furchtgott-Roth wrote in March 2022. </p>
<p>While it is true that workers now have more individual rights in law covering minimum wages, discrimination, holidays and working hours, many of these things we now take for granted were achieved by union members acting collectively.</p>
<p>And still today, most workers <a href="https://journals.sagepub.com/doi/10.1177/0143831X07073031">do not know</a> what their rights are or how to enforce them, with some afraid to for fear of retribution. This is particularly true of people just starting out in their careers, who, research shows, increasingly find themselves in the <a href="https://www.etuc.org/en/young-people-and-precarious-work">most precarious</a> and <a href="https://theconversation.com/unions-rally-to-support-young-people-in-precarious-jobs-46657">insecure</a> jobs. </p>
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<img alt="A delivery cyclist on his bike with a delivery box on his back." src="https://images.theconversation.com/files/470598/original/file-20220623-51579-21t9k0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/470598/original/file-20220623-51579-21t9k0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/470598/original/file-20220623-51579-21t9k0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/470598/original/file-20220623-51579-21t9k0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/470598/original/file-20220623-51579-21t9k0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/470598/original/file-20220623-51579-21t9k0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/470598/original/file-20220623-51579-21t9k0.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">
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<span class="caption">Young people are increasingly employed in insecure jobs and non-unionised sectors.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/courier-on-bicycle-delivering-food-city-674369497">Daisy Daisy | Shutterstock</a></span>
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<p>In 2009, industrial relations scholar Linda Dickens <a href="http://www.ilera-directory.org/15thworldcongress/files/papers/Track_4/Thur_W4_DICKENS.pdf">pointed out</a> that trade unions remained “effective positive mediators” for ensuring that the rights of workers that are enshrined in our laws can be translated into changes in the workplace. In other words, collective action is still the best way by which to ensure that individual employees’ rights are respected and upheld. </p>
<p>Non-union bodies like the UK’s Citizens’ Advice Bureaux – which many people go to for <a href="https://www.researchgate.net/publication/237440551_Under-funded_Overstretched_and_Overwhelmed_the_Experience_of_Citizens_Advice_Bureaux_and_Law_Centre_Advisers_in_Supporting_Vulnerable_Workers">help at work</a> – are so under-resourced that they recommend union membership as the most effective way to resolve workplace grievances.</p>
<p>While union membership has fallen significantly over the last 20 to 30 years, this does not mean that <a href="https://www.cornellpress.cornell.edu/book/9780801444456/what-workers-say/#bookTabs=1">non-union workers</a> do not want to be in unions. It is often the case that they have no access to unions. <a href="https://link.springer.com/book/10.1057/9781137319067">Some employers</a> have also made it known that they are anti-union. </p>
<p>The average union member is no longer a male, blue-collar manual worker but a female white-collar worker. Indeed, <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1077904/Trade_Union_Membership_UK_1995-2021_statistical_bulletin.pdf">the highest levels of union membership</a> are among teachers, health workers, social workers and civil servants. </p>
<p>People from across the contemporary employment spectrum – including journalists, actors (like <a href="https://www.theguardian.com/politics/2010/oct/19/spending-cuts-union-protest-westminster">Benedict Cumberbatch</a>), writers, lawyers, doctors and musicians (like <a href="https://musiciansunion.org.uk/news/scots-folk-singer-and-mu-member-iona-fyfe-wins-stuc-equality-award">folk singer Iona Fyfe</a>) are union members. They see no conflict between unions representing their rights and their ability to be successful in their careers.</p><img src="https://counter.theconversation.com/content/185450/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gregor Gall is the director of the Jimmy Reid Foundation, the editor of Scottish Left Review, co-editor of Scottish Labour History and a member of the UCU union. He is not a member of any political party.</span></em></p>Workers, particularly at the beginning of their careers, don’t know their rights in the workplace, and often fear asserting them.Gregor Gall, Visiting Scholar, School of Law, University of GlasgowLicensed 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/1464142020-09-18T14:35:20Z2020-09-18T14:35:20ZHere’s why South Africa and its neighbours are anxious about EU and UK post-Brexit trade talks<figure><img src="https://images.theconversation.com/files/358824/original/file-20200918-20-rva8zg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">EU and UK are major markets for South African exports, including vehicles</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>As the deadline for the <a href="https://www.theguardian.com/politics/2020/jul/23/considerable-gaps-remain-brexit-talks-says-uk-negotiator-david-frost">post-Brexit trade talks</a> between the European Union (EU) and the United Kingdom (UK) looms, concerns have arisen as to whether the two parties will be able to conclude a deal. In terms of the Brexit divorce agreement, the UK is expected to leave the EU single market and customs union on 1 January 2021. A trade deal will govern future trade relations between the EU and the UK. The prospect of striking such a deal, however, has been <a href="https://www.bbc.com/news/world-europe-54099257">thrown into doubt</a> by the publication recently of a new controversial bill by the British government that seeks to overrule parts of the Brexit withdrawal pact.</p>
<p>The outcome of these talks will have implications for the South African economy, specifically trade. The EU as a regional bloc is South Africa’s largest trade partner in the world, and South Africa is the <a href="https://ec.europa.eu/trade/policy/countries-and-regions/countries/south-africa/">EU’s biggest trade partner</a> in Africa. South Africa has longstanding and extensive trade relations with the UK. Prior to exiting the EU, the UK was South Africa’s second largest trade partner, after Germany, in the EU regional community. The country is also <a href="https://www.ancparliament.org.za/content/statement-minister-trade-and-industry-conclusion-agreement-uk-addressing-trading">South Africa’s fourth biggest market</a> for exports, behind only China, Germany and the United States.</p>
<p>Until the UK decided to leave the EU, it traded with South Africa under an <a href="https://www.tralac.org/documents/resources/faqs/2049-sadc-eu-epa-faqs-july-2018/file.html">economic partnership agreement </a>(EPA) between the EU and some member states of the Southern African Development Community (SADC). The EU-SADC EPA entered into force on 10 October 2016. Under this agreement, the EU has fully or partially eliminated custom duties for South African exports, except for aluminium and various agricultural products.</p>
<p>The EU-SADC EPA specifies <a href="https://www.wto.org/english/tratop_e/roi_e/roi_info_e.htm">rules of origin</a> to fulfil in order for products to obtain preferential market access. Rules of origin refer to the criteria used to determine the national source of a product. The agreement provides for trade remedies to tackle unfair trade practices. It also contains <a href="https://www.wto.org/english/tratop_e/safeg_e/safeg_info_e.htm">safeguard measures</a> to increase import duties in cases where a surge in imports unduly threatens to cause serious injury to the domestic market.</p>
<p>With the UK deciding to quit the EU it meant that it would no longer be a part of the EU-SADC EPA. This implied, in turn, that trade between the SADC countries and the UK would no longer enjoy the preferential terms that existed under the EU-SADC EPA framework. </p>
<h2>The new deal</h2>
<p>To prevent disruption to trade, the Southern African Customs Union nations struck a deal with the UK in 2017. The custom union countries are South Africa, Botswana, Lesotho, Namibia, and Eswatini – plus Mozambique (SACUM). The agreement in principle is that SACUM and UK will carry over the terms of the provisions of the EU-SADC EPA into a new bilateral trade agreement. The roll-over was intended to ensure continuity in trade ties after the UK had left the EU.</p>
<p>Following two years of negotiations, <a href="https://www.ancparliament.org.za/content/statement-minister-trade-and-industry-conclusion-agreement-uk-addressing-trading">a new agreement</a>, the SACUM-UK EPA, was concluded in September 2019. In essence, this entailed a transfer of the terms of the SADC-EU EPA into the new SACUM-UK EPA. These terms cover rules for:</p>
<ul>
<li>trade in goods,</li>
<li>preferential tariff rates on all sides, </li>
<li>trade remedies, </li>
<li>technical standards for health and safety for agricultural and industrial products,</li>
<li>protection of South African and UK’s <a href="https://www.wipo.int/geo_indications/en/">geographical indications</a>, and </li>
<li>dispute settlement. </li>
</ul>
<p>But, there were some issues that needed further discussion and resolution. These are <a href="https://www.wto.org/english/tratop_e/agric_e/negs_bkgrnd10_access_e.htm">tariff-rate quotas</a>, and the sourcing of inputs from across the EU region into production for export. There’s also the treatment of bilateral safeguard measures, other transitional arrangements, geographical indications, and <a href="https://www.ancparliament.org.za/content/statement-minister-trade-and-industry-conclusion-agreement-uk-addressing-trading">the built-in agenda</a>.</p>
<p>SACUM countries are entitled to duty and quota-free access for their exports under the EU-SADC EPA. Given the developed nature of its economy, South Africa enjoys less favourable treatment for some of its agricultural, fish and aluminium exports. A new trade provision was agreed that allowed SACUM nations and the UK to source and use EU inputs for production to export to each other’s markets. This ensured the continuity of integrated value chains across South Africa, the EU and the UK, particularly in the automobile industry.</p>
<p>The SACUM-UK agreement provides for transitional arrangements. These enable the transfer to it of certain provisions from the EU-SADC EPA. These include, among others, customs matters concerning the protection of geographical indications. On the other hand, the UK is required to provide sufficient time for exporters from SACUM countries to adjust to new technical rules for manufactured goods in cases where those deviate from EU regulations. </p>
<p>An agreement was also reached on a built-in agenda to address areas of interest in future that could not be resolved during the negotiations. These include market access issues, <a href="https://findrulesoforigin.org/en/glossary?uid=accum&returnto=gloscen">regional cumulation</a>, export taxes, technical barriers to trade, geographical indications, and electronic certification.</p>
<h2>Need for certainty</h2>
<p>There has been a great deal of anxiety on the part of SACUM countries about the final outcome of the EU-UK trade talks, and the impact this will have on the trade relationship between SACUM nations and the UK. A deal between the EU and the UK will help reinforce the certainty and continuity that the SACUM-UK agreement seeks to achieve when the UK exits the EU customs area. If the EU and the UK are unable to agree on any deal, their trade relationship will be regulated by the rules of the World Trade Organisation. This means the UK will be treated as any trading nation that does not enjoy <a href="https://www.tandfonline.com/doi/abs/10.1080/10220461.2020.1779801">preferential trade with the EU</a>. </p>
<p>In this scenario, the SACUM-UK arrangement will be preserved, but it will also introduce new complications in trade and uncertainty concerning how certain issues, such as the level and quantity of local inputs in the production of motor cars in South Africa for export to the EU and UK markets, will be addressed. A deal between the EU and the UK, therefore, will be the most preferable outcome for SACUM countries.</p><img src="https://counter.theconversation.com/content/146414/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mills Soko 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>An EU-UK trade deal will reinforce the certainty and continuity that South Africa, Botswana, Lesotho, Namibia, and Eswatini – plus Mozambique are seeking in their relationship with the UK.Mills Soko, Professor: International Business & Strategy, Wits Business School, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1304902020-01-27T10:12:52Z2020-01-27T10:12:52ZAmerica has a unique 300 year old view of free trade – UK must recognise this to strike a deal<figure><img src="https://images.theconversation.com/files/311668/original/file-20200123-162185-i1kxcz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Let battle commence. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/flags-great-britain-united-states-papers-1339869017">Novikov Aleksey </a></span></figcaption></figure><p>With Boris Johnson <a href="https://www.ft.com/content/5f820986-3d47-11ea-a01a-bae547046735">hailing parliament’s</a> vote towards Britain leaving the EU on January 31, there is a general consensus among the country’s leaders that there will be an intimate trading relationship with the US after Brexit. But whenever the question of a deal comes up in the media, there is usually much talk of stumbling blocks. </p>
<p>There is the <a href="https://www.ft.com/content/9c8c232e-3d07-11ea-a01a-bae547046735">war of words</a> between UK chancellor Sajid Javid and US treasury secretary Steven Mnuchin over a digital tax on American companies in the UK, for instance. Or fears that the <a href="https://www.politico.eu/article/us-takes-aim-at-the-uks-national-health-service/">NHS will be sold off</a> to US healthcare giants. </p>
<p>Much is also written about the difficulty the UK faces in steering a course between its EU neighbours and the overwhelming political might of Washington. For example, will the UK <a href="https://www.theguardian.com/world/2020/jan/15/boris-johnson-uk-us-trade-deal-under-threat-unless-iran-stance-changes-says-trump-ally">have to abandon</a> the Iran nuclear deal to win free-trade concessions from America?</p>
<p>In light of the “<a href="https://theconversation.com/donald-trump-enthusiastic-about-boris-johnsons-victory-but-it-wont-be-smooth-sailing-for-the-special-relationship-128727">special relationship</a>”, you might wonder how these trade negotiations can be so testy before they are even underway. As my <a href="https://www.press.uchicago.edu/ucp/books/book/chicago/T/bo43233186.html">recent book</a> suggests, the conflict may well lie in the historic trading relationship between the two countries. Much as Britain and America are “two nations divided by a common language”, they are also divided by their understanding of trade. To comprehend this, you have to go back to the American Revolution and beyond. </p>
<h2>Colonist knaves</h2>
<p>The misunderstandings began the moment that English government officials tried to get 17th-century colonists to pay customs duties to William III on the tobacco, alcohol and sugar they were trading. These settlers were trading with everyone from Native Americans to the French and Dutch, and were soon breaking the rules on what they owed the Crown. </p>
<p>Customs officials failed miserably to stop the settlers trading free of government regulation. The stream of letters from colonial officers to London noting a general refusal to follow the rules suggests it was widespread. The Earl of Bellomont, governor of New York until 1700, <a href="https://www.press.uchicago.edu/ucp/books/book/chicago/T/bo43233186.html">complained that</a> America was “naturally cut out for unlawful trade”. </p>
<p>This behaviour grew exponentially in the 18th-century as Britain’s American colonies expanded. Some settlers even began to believe this was the natural way that trade functioned, arguing merchants should be free to do business without any government interference. As Philadelphia newspaper editor William Bradford <a href="https://allthingsliberty.com/2015/06/the-tombstone-edition-pennsylvania-journal-october-31-1765/">put it</a>, many thought that “trade should regulate itself”. </p>
<p>The perception of commerce in Britain was that the government had a central role as regulator and tax collector for the Crown. Colonial officials like Thomas Pownall, governor of Massachusetts Bay, <a href="http://www.masshist.org/terrafirma/pownall">insisted that</a> Americans’ dealings should be taxed to answer Britain’s “commercial interest”. Scottish economist Adam Smith might have advocated American-style free trade in his <a href="http://www.sjsu.edu/people/cynthia.rostankowski/courses/HUM2AF13/s3/Reader-Lecture-08-Adam-Smith-Wealth-of-Nations-Reading.pdf">1776 Wealth of Nations</a>, but he was very much an outlier in Britain at the time. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=713&fit=crop&dpr=1 600w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=713&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=713&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=895&fit=crop&dpr=1 754w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=895&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/311669/original/file-20200123-162221-16qmkxh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=895&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Stamp man: George Grenville.</span>
<span class="attribution"><a class="source" href="https://www.google.co.uk/search?hl=en&authuser=0&tbm=isch&source=hp&biw=1440&bih=760&ei=q80pXsPXCdvRgwfA5q34CQ&q=george+grenville&oq=george+grenville&gs_l=img.3..0l7j0i5i30l3.774.3485..3651...0.0..1.193.1406.14j2......0....1..gws-wiz-img.......0i131.gy5lIH-Lmyg&ved=0ahUKEwiD2YP0lZrnAhXb6OAKHUBzC58Q4dUDCAU&uact=5#imgrc=dpzaj3tHUeWHsM:">Wikimedia</a></span>
</figcaption>
</figure>
<p>In 1763, victory over France in the <a href="https://www.britannica.com/event/Seven-Years-War">Seven Years’ War</a> made Britain the supreme power in the Americas. She was free to trade profitably with its American colonies, except for <a href="https://www.yalebooks.co.uk/display.asp?k=9780300164251">tax-dodging colonists</a> skimming the potential income. Poor tax revenues from colonial trade, plus a huge bill for the war in America, prompted British Prime Minister George Grenville to pass the <a href="https://www.history.com/this-day-in-history/parliament-enacts-the-stamp-act">Stamp Act of 1765</a>. After this new direct tax was imposed on the colonies, we know what happened. </p>
<p>Like all revolutions, America’s had many causes. <a href="https://wwnorton.com/books/American-Revolutions/">Chief</a>, however, was Americans’ love of their “free” trade, which boiled down to a refusal to accept Britain’s right to profit from their entrepreneurism. By the time the US ratified its constitution in 1789, Americans had become highly protective of their right to trade, invest and deal exactly as they wished. </p>
<h2>America’s beating heart</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1125&fit=crop&dpr=1 600w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1125&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1125&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1413&fit=crop&dpr=1 754w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1413&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/311667/original/file-20200123-162246-eb31p3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1413&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">When Benny met Libby.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/travel-tourism-background-souvenirs-around-world-1288907035">Maglara</a></span>
</figcaption>
</figure>
<p>Britain continued its close trading relationship with the US in the 19th century. English cotton manufacturers <a href="https://www.cambridge.org/core/books/cotton/4474DAC211EB8DF76A2F2538118ADDB6">relied on slave-grown cotton</a>, for example. But such dealings were now premised on <a href="https://jhupbooks.press.jhu.edu/title/fragile-fabric-union">Americans’ understanding</a> that British commercial interests could never be imposed to their detriment. If there were attempts to introduce tariffs, the cotton would be sold elsewhere.</p>
<p>Washington’s view of American interests has inevitably ebbed and flowed over the years. An alternative belief in international cooperation arguably reached a high watermark under Franklin D Roosevelt in the 1940s, albeit still with <a href="https://rooseveltinstitute.org/fdrs-comprehensive-approach-freer-trade/">strong emphasis</a> on free trade. </p>
<p>But Donald Trump’s <a href="https://www.politico.eu/article/trump-launches-reelection-campaign-saying-keep-america-great/">Make America Great Again</a> “philosophy” strongly echoes the nation’s 18th-century mindset. His trade war with the Chinese and threats to other partners such as the EU stems from the same old prioritisation of US trading freedoms. The current American threat <a href="https://www.ft.com/content/9c8c232e-3d07-11ea-a01a-bae547046735">to impose tariffs</a> on British car exports in the row over the digital tax is no different. </p>
<p>Of course, the Anglo-American relationship has rarely played out in isolation to world events. Today, Britain no longer has an empire to lean on. It can’t abandon the US to build a powerbase elsewhere, like it did in <a href="https://global.oup.com/academic/product/the-making-and-unmaking-of-empires-9780199226665?view=Standard&sortField=2&resultsPerPage=100&facet_narrowbyprice_facet=25to50&lang=en&cc=us">India</a> and the Caribbean after the loss of America in 1783. Nor can it rely on that mature empire as it did when America’s international might <a href="https://www.cambridge.org/core/books/conspiracy-of-free-trade/7C40548E83C12DF472E08E5368243771">expanded</a> at the end of the American civil war. </p>
<p>Boris Johnson and his allies have proposed an “<a href="https://www.theguardian.com/politics/2018/nov/08/empire-fantasy-fuelling-tory-divisions-on-brexit">Empire 2.0</a>” free-trade model <a href="https://foreignpolicy.com/2019/10/24/boris-johnson-dreams-anglosphere-european-union-empire-colonialism/">for a post-Brexit Britain</a> with open trading relationships with the former colonies. This misunderstands how trading actually worked when the UK had an empire. Free trade was an illusion, achieved by diktat by the colonial master, underpinned by heavy government intervention. </p>
<p>Boris Johnson and his negotiators are therefore mistaken on two fronts. There was no halcyon period of British free trade, and the concept means a different thing to the Americans anyway. Failure to realise this risks a trade deal that Britons find as hard to stomach as a tikka masala made with <a href="https://theconversation.com/chlorine-washed-chicken-qanda-food-safety-expert-explains-why-us-poultry-is-banned-in-the-eu-81921">chlorinated chicken</a> – if this is even avoidable. </p>
<p>The best hope is to recognise the weakness of the British 21st century negotiating position and be mindful that American tetchiness towards the former colonial power is probably never far from the surface. It will be necessary to flatter the Americans, speaking their language of free trade as well as the British version, and somehow promoting British interests without seeming to damage those of the US. With that approach, the UK may yet secure the best deal that is realistically available.</p><img src="https://counter.theconversation.com/content/130490/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Emma Hart 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 US reaction to the UK’s digital tax proposals is like 1765 all over again.Emma Hart, Senior Lecturer in American History, University of St AndrewsLicensed 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/1048142018-10-21T13:02:53Z2018-10-21T13:02:53ZHow the new USMCA strengthens Canada in future trade deals<figure><img src="https://images.theconversation.com/files/241349/original/file-20181018-67161-103q0oz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Prime Minister Justin Trudeau and Minister of Foreign Affairs Chrystia Freeland hold a news conference on the United States Mexico Canada Agreement (USMCA) in Ottawa on Oct. 1, 2018. THE CANADIAN PRESS/Justin Tang</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Justin Tang</span></span></figcaption></figure><p>Now that the threat of the <a href="https://www.macleans.ca/news/canada/how-nafta-was-saved-the-bitter-fight-and-last-minute-recovery/">NAFTA-pocalypse has lifted for Canada</a>, the Monday morning quarter-backing is well under way on whether the new United States-Mexico-Canada (USMCA) Agreement is better or worse than trade pact that preceded it. </p>
<p>But beyond the negative headlines, the USMCA probably leaves Canada stronger than it was going into the negotiations when it comes to future trade negotiations.</p>
<p>Three components of the deal, however — those surrounding dairy, the <a href="https://www.theglobeandmail.com/opinion/article-the-china-clause-in-usmca-is-american-posturing-but-its-no-veto/">non-market economy clause</a> and the new sunset provision — are worth reviewing for how they change Canadian trade politics both domestically and globally.</p>
<h2>Dairy</h2>
<p>Canadian dairy farmers have long been largely untouchable politically. That may now be changing, and they should expect to have their market access further eroded in future trade agreements.</p>
<p>In the short run, U.S. President Donald Trump was probably the best thing that ever happened to them. His disdain for Canadian dairy caused Canada to close ranks to support supply management even though it was already under intense scrutiny domestically as well. </p>
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<strong>
Read more:
<a href="https://theconversation.com/in-trade-war-with-trump-canada-should-stop-defending-the-indefensible-on-dairy-products-98127">In trade war with Trump, Canada should stop defending the indefensible on dairy products</a>
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<p>A important turning point came with a seminal <a href="https://www.policyschool.ca/wp-content/uploads/2016/03/supply-management-hall-findlay.pdf">2012 research paper</a>. In the report, author Martha Hall Findlay argued that the 1970s version of supply management was outdated, unjustified, was enriching dairy farmers on the backs of middle-class and low-income consumers and interfering with our trade agenda.</p>
<p>When Trump demanded dairy concessions, it not only solidified but calcified support among politicians for a system in Canada that was otherwise losing ground. Nonetheless he probably only delayed the inevitable.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/241059/original/file-20181017-41147-1txohfl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/241059/original/file-20181017-41147-1txohfl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/241059/original/file-20181017-41147-1txohfl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/241059/original/file-20181017-41147-1txohfl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/241059/original/file-20181017-41147-1txohfl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=513&fit=crop&dpr=1 754w, https://images.theconversation.com/files/241059/original/file-20181017-41147-1txohfl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=513&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/241059/original/file-20181017-41147-1txohfl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=513&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">Cows check out visitors on a dairy farm in Saint-Henri-de-Taillon, Québec, in September 2018.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jacques Boissinot</span></span>
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<p>The number of dairy farmers actually in the system is down about 90 per cent since supply management’s start in the early 1970s <a href="https://www.theglobeandmail.com/news/politics/canadas-dairy-industry-is-a-rich-closed-club/article25124114/">to around 11,500 from about 140,000 in the late 1960s and early 1970s,</a> and they have been a key irritant in nearly all of the country’s trade negotiations. </p>
<p>The political power of Canada’s dairy farmers rests on a crumbling consensus about the value of supply management. <a href="http://policyoptions.irpp.org/magazines/june-2018/public-ahead-of-politicians-on-dismantling-supply-management/">The Institute for Research on Public Policy recently found many Canadians supported </a> dismantling the system.</p>
<p>Nearly every other country has phased out similar supply management systems. With Canadian concessions in the Trans Pacific Partnership (TPP) with the Pacific rim, the Comprehensive Economic Trade Agreement with the European Union (CETA) and now the USMCA, it seems likely that supply management is something that will be increasingly bargained away.</p>
<p>Despite the promise of compensation from Ottawa, the industry needs to prepare now for long-term liberalization.</p>
<h2>Section 32.10</h2>
<p>Probably no section of the new agreement has raised as many eyebrows as Section 32. It compels each of the three parties to notify the others three months before they start trade negotiations with a country defined as having a “non-market” economy — namely, China. </p>
<p>A trade pact’s text must be disclosed within 30 days of signing it for review by the other two USMCA partners. If the other two countries don’t like it, they can kick that country out of the USMCA.</p>
<p>The provisions have been erroneously reported as giving the United States a veto over Canadian trade policy. It doesn’t (but don’t take my word for it, <a href="https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/32%20Exceptions%20and%20General%20Provisions.pdf">go ahead and read it</a>). </p>
<p>Further, given that under <a href="https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/34%20Final%20Provisions.pdf">Section 34.6</a>, the USMCA allows for withdrawal on six months’ notice from any country for any reason at all, the clause is more political than legal. Even without the China clause, if the U.S. doesn’t like Canadian trade policy, it can just leave the USMCA under 34.6. </p>
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<img alt="" src="https://images.theconversation.com/files/241058/original/file-20181017-41135-1ssyvdw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/241058/original/file-20181017-41135-1ssyvdw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/241058/original/file-20181017-41135-1ssyvdw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/241058/original/file-20181017-41135-1ssyvdw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/241058/original/file-20181017-41135-1ssyvdw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/241058/original/file-20181017-41135-1ssyvdw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/241058/original/file-20181017-41135-1ssyvdw.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">
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<span class="caption">In this November 2017 photo, President Donald Trump and Chinese President Xi Jinping shake hands during a joint statement to members of the media Great Hall of the People in Beijing, China.</span>
<span class="attribution"><span class="source">(AP Photo/Andrew Harnik)</span></span>
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<p>So who wins with this largely symbolic provision? Trump, for domestic reasons. The president can present this to his protectionist base as part of his wider trade war on China. This gives him a win as both the mid-term elections and 2020 loom.</p>
<p>But longer term, Section 32 may actually serve Mexico’s and Canada’s interests more than America’s. It symbolically ties the U.S. tightly to the USMCA by linking its global anti-China ambitions to the trade agreement. That’s not a bad thing for Canada from a trade perspective.</p>
<p>Why?</p>
<h2>‘Political cudgel’</h2>
<p>Presenting the USMCA to the world as a common front against China — the American intent with Section 32 — means abandoning the trade agreement is now more difficult for the United States. Any future threat to kill the agreement from Washington (and it won’t come from anywhere else) can now be framed by supporters of the USMCA as being weak on China.</p>
<p>That will likely reduce any chance it will be scrapped, which benefits Mexico and Canada.</p>
<p>The agreement comes up for its first mandatory review in six years to decide whether it should be extended. At that time, Section 32 provides a political cudgel to Ottawa and Mexico City to remind the United States that the USMCA helps to cement their global leadership against countries it views as strategic competitors. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/241065/original/file-20181017-41150-u31grb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/241065/original/file-20181017-41150-u31grb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=429&fit=crop&dpr=1 600w, https://images.theconversation.com/files/241065/original/file-20181017-41150-u31grb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=429&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/241065/original/file-20181017-41150-u31grb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=429&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/241065/original/file-20181017-41150-u31grb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=539&fit=crop&dpr=1 754w, https://images.theconversation.com/files/241065/original/file-20181017-41150-u31grb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=539&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/241065/original/file-20181017-41150-u31grb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=539&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">Prime Minister Justin Trudeau and Minister of Foreign Affairs Chrystia Freeland are seen on Parliament Hill following a news conference on the USMCA trade deal on Oct. 1, 2018.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Justin Tang</span></span>
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<p>There was no similar provision in NAFTA, but if there was, there’s no doubt it would have helped us at the bargaining table.</p>
<p>Does this risk our relationship with China? Not likely. Remember, we’re nowhere near a trade agreement with China anyway given very different perspectives on environment and labour standards. </p>
<p>But that doesn’t mean there <a href="https://www.ppforum.ca/wp-content/uploads/2018/10/DiversificationNotDependence-PPF-OCT2018-EN-6.pdf">aren’t options</a>, and Canada has every right to pursue an agreement if we want. Mexico has already told China that <a href="https://www.scmp.com/news/china/diplomacy/article/2168493/mexico-seeks-assure-china-new-us-trade-deal-wont-block-other">it doesn’t see the USMCA as hindering any future agreements</a>. Canada can and should do the same.</p>
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<p>
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Read more:
<a href="https://theconversation.com/beyond-nafta-canada-must-find-new-global-markets-98430">Beyond NAFTA: Canada must find new global markets</a>
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<p>Canada can also use the USMCA to its advantage with China — a country many times its size. While NAFTA was in doubt, Canada was in a weaker position negotiating with China.</p>
<p>Now, by fully securing continental trade, Canada can leverage its more secure position at the bargaining table to more credibly insist on a deal that works for North America.</p>
<h2>Sunset clause</h2>
<p>The U.S. <a href="https://www.theguardian.com/us-news/2018/aug/25/nafta-trump-drops-sunset-clause-demand-mexico?CMP=twt_gu">walked back its insistence on a five-year sunset clause</a> on NAFTA. <a href="https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/34%20Final%20Provisions.pdf">Now, the USMCA technically expires </a> every 16 years, unless all parties commit to renewing it after the first six years. </p>
<p>Failure to do so will lead to an automatic expiry after 10 years, but with meetings held annually to work out the differences. The parties meet every six years otherwise to review the agreement.</p>
<p>Again, there is less here than meets the eye. The agreement can theoretically be terminated on six months’ notice anyway. But this process has some potential upsides for keeping the deal up to date.</p>
<h2>Overhaul was long overdue</h2>
<p>Drama aside, there was nothing wrong with updating NAFTA. It was time; the agreement was 24 years old and included nothing on topics like the digital economy. Yet there was scant motivation by its three members to overhaul it.</p>
<p>We shouldn’t wait for a crisis to break out every quarter century to review our most important trade agreement. The technical expiry dates of the USMCA can and should be used to make regular changes that will keep the agreement fresh and remind all three countries of its importance to their economies. </p>
<p>That means we may end up with a better, more flexible USMCA.</p>
<p>To summarize, the USMCA, while imperfect, is overall a positive development for Canada. It has a number of structural elements that may very well leave us stronger when negotiating trade pacts in the future.</p><img src="https://counter.theconversation.com/content/104814/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew McDougall 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 USMCA, while imperfect, is overall a positive development for Canada. It has a number of structural elements that may very well leave us stronger when negotiating trade pacts in the future.Andrew McDougall, Sessional Lecturer, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1025452018-09-03T13:52:39Z2018-09-03T13:52:39ZThe two key issues on the table to bring Canada back into NAFTA<figure><img src="https://images.theconversation.com/files/234551/original/file-20180902-195310-xrf0ys.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Improved access to Canada's dairy market for American producers is one of the key unresolved NAFTA issues.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span></figcaption></figure><p>Negotiations for a revised North American Free Trade Agreement have been ongoing for more than a year, but now it’s crunch time — especially for Canada.</p>
<p>What happens in the coming days will determine if NAFTA survives as a three-country trade pact or whether Canada will be left on the sidelines.</p>
<p>Since U.S. President Donald Trump announced <a href="https://www.cbc.ca/news/politics/nafta-us-mexico-progress-monday-1.4800182">the United States had a deal with Mexico that could replace NAFTA</a>, Canadian negotiators have been putting on a brave face publicly. Foreign Affairs Minister Chrystia Freeland <a href="https://www.cbc.ca/news/politics/nafta-trump-compromise-trudeau-1.4806240">was optimisitc</a> when talks took a break before the Labour Day weekend and <a href="https://www.huffingtonpost.ca/2018/08/29/trudeau-nafta-deal_a_23512048/">Prime Minister Justin Trudeau has said</a> “no NAFTA deal is better than a bad NAFTA deal.”</p>
<p>Trump, for his part, took to Twitter to keep up the pressure on Canada.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1035905988682018816"}"></div></p>
<p>There are two significant issues still on the table: How to resolve inevitable trade disputes and Canada’s policies that protect its dairy industry from foreign competition.</p>
<h2>How will disputes be resolved?</h2>
<p>The first sticking point is the existing <a href="https://www.nafta-sec-alena.org/Home/Dispute-Settlement/Overview-of-the-Dispute-Settlement-Provisions">dispute settlement mechanism</a> — particularly relative to <a href="https://www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html">anti-dumping or countervailing duties</a>. This is known as Chapter 19 in the current NAFTA pact.</p>
<p>Currently, each government can review the actions of others and make a determination of whether trade action against a sector is warranted. These determinations can be appealed to the relevant court in each country.</p>
<p>If the dispute is not resolved, it can be appealed to the <a href="http://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/fta-ale/celeb2.aspx?lang=eng">NAFTA Free Trade Commission</a> and further to a bilateral panel to arbitrate the dispute. The panellists (two from each country and an alternating chair) are appointed by the disputants. The decisions of these panels are binding. It is this last provision that apparently is <a href="https://cuellar.house.gov/uploadedfiles/draft_nafta_notification_3.29.17.pdf">the sticking point for U.S. negotiators</a>.</p>
<p>It is worth noting this aversion to dispute resolution is not specific to the Trump administration. When the original Canada-U.S. free trade agreement was negotiated 30 years ago, Brian Mulroney’s Conservative government also threatened to <a href="https://www.cba.org/Publications-Resources/CBA-Practice-Link/Business-and-Corporate/2017/Chapter-19-again">walk away without a deal over the issue on how to resolve disputes</a>. In 1988, U.S. negotiators only conceded at the 11th hour.</p>
<h2>Leave it to the courts</h2>
<p>The United States believes domestic court systems should be able to effectively determine the legality of specific actions and, as such, these panels are an affront to national sovereignty. Canada feels Chapter 19 is an essential element to ensure the fair implementation of freer trade.</p>
<p>Those who believe the panels are not necessary or effective point to the fact that Canada has won several findings in the <a href="https://www.cigionline.org/articles/lumber-fuels-us-effort-axe-resolution-panels">softwood lumber dispute</a> without actually getting a positive resolution. Past U.S. administrations have also ignored panel findings and forced the Canadians to strike compromise deals or face continued countervailing duties. The U.S. lumber industry remains one of the most vocal opponents of these dispute settlement panels. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/beyond-nafta-canada-must-find-new-global-markets-98430">Beyond NAFTA: Canada must find new global markets</a>
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<p>But others in all three countries argue the panels are an <a href="https://theconversation.com/the-big-challenge-of-the-nafta-renegotiations-dispute-settlement-82394">essential protection</a> despite not being frequently used in the past 10 years. There is little sign of bias because these panel findings are frequently unanimous.</p>
<p>In the end, there will be a mechanism to resolve disputes. Canada will have to decide whether retaining the panels is worth not making a deal. The U.S. will have to decide how far it wants to go on making concessions, balancing its desire for more sovereignty with the political reality of striking a deal that Congress will approve — a critical step in the final implementation of any new agreement.</p>
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<img alt="" src="https://images.theconversation.com/files/234552/original/file-20180902-195307-i2lvp0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/234552/original/file-20180902-195307-i2lvp0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/234552/original/file-20180902-195307-i2lvp0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/234552/original/file-20180902-195307-i2lvp0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/234552/original/file-20180902-195307-i2lvp0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/234552/original/file-20180902-195307-i2lvp0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/234552/original/file-20180902-195307-i2lvp0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&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">Canada’s Foreign Affairs Minister Chrystia Freeland speaks during a news conference at the Canadian embassy after talks at the Office of the United States Trade Representative in Washington, D.C., on Aug. 31, 2018.</span>
<span class="attribution"><span class="source">(AP Photo/Jose Luis Magana)</span></span>
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<h2>Canada’s dairy policies a major issue</h2>
<p>Canada’s supply management system uses quotas supported by tariffs to stabilize its dairy markets. Many countries have support programs for agriculture generally and the dairy market specifically.</p>
<p>While there is some criticism within Canada of supply management — most notably <a href="https://www.theglobeandmail.com/politics/article-maxime-bernier-quits-to-launch-new-party-criticizes-morally-corrupt/">Maxime Bernier’s split from the Conservatives</a> — there is <a href="https://nationalpost.com/news/politics/after-supply-management-cut-from-debate-at-conservative-convention-some-members-ponder-backing-bernier">strong support among both the Liberal government and the opposition Conservatives</a> for protecting the dairy industry.</p>
<p>Access to the Canadian dairy market has been somewhat of an irritant in past trade negotiations.</p>
<p>From the beginning, supply-managed commodities were protected by tariffs, but some product has been allowed in (based on historical import shares) using import quotas. Products coming in under these import quotas are not subject to the high tariffs. The U.S. also uses <a href="https://www.brookings.edu/blog/up-front/2018/06/13/a-trumped-up-charge-against-canadian-dairy-tariffs/">import quotas and high tariffs to protect its dairy</a> and other industries.</p>
<h2>Canada has opened access for others</h2>
<p>As part of other new trade agreements, Canada has provided additional access (through import quotas) to the market.</p>
<p>The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union provided for additional access for European dairy products. The Trans Pacific Partnership (TPP) agreement also had provisions for additional market access — including the U.S. market, until the Trump administration withdrew from TPP.</p>
<p>Dairy became a specific irritant early in the Trump administration.</p>
<p>Shifting demand for milk components meant surpluses for milk protein, used to create a product called <a href="https://www.agweb.com/article/why-canadian-producers-arent-happy-with-imports-of-us-milk-proteins-naa-fran-howard/">diafiltered milk</a>. Because it’s a new product, U.S. diafiltered milk is not covered under previous trade agreements. This meant it could come in to Canadian processors, particularly cheese manufacturers, tariff-free. </p>
<p>In retaliation, Canadian milk protein producers first lobbied the government for protection and when none was forthcoming, changed pricing to protect their market. That in turn caused disruption in some U.S. markets — particularly in Wisconsin, an important state for Trump politically.</p>
<p>Even with the decreased volume in diafiltered milk, the U.S. still has <a href="https://www.washingtonpost.com/news/politics/wp/2018/06/11/what-u-s-trade-with-canada-actually-looks-like/?noredirect=on&utm_term=.4548a798aeef">an export surplus with Canada in dairy products</a>. Regardless, it appears that this issue is a particular irritant for Trump.</p>
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<h2>Over-production, low prices</h2>
<p>The U.S. dairy industry, like many others around the world, is struggling with over-production and low prices. The U.S. also has a number of programs in place to support the dairy industry, which would need to be taken into consideration in any NAFTA negotiations around dairy trade.</p>
<p>The irony is the structure of some of the U.S. dairy support programs may actually be contributing to the over-production — surplus products are bought to support prices, which sends a signal to keep producing too much. </p>
<p>Completely open trade with Canada will not solve the issues facing the U.S. dairy industry, not least because the Canadian market is much smaller than the U.S. domestic market.</p>
<p>In the end, Canada is unlikely to yield on supply management. If a concession is made, it is likely to be in increased access. Canada had already provided an increase in access in the TPP negotiations.</p>
<p>This would seem to be an area of potential concession that would provide Trump with a “win” for farmers and allow the Canadians to sustain their domestic program. It would not be without pain for the Canadian industry, but may be the path to an agreement.</p>
<p>The final chapter of these lengthy NAFTA talks will come down to one key point: Is compromise possible?</p><img src="https://counter.theconversation.com/content/102545/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael von Massow 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>Canada and the United States are back at the table to try to save NAFTA negotiations. Two key issues need to be resolved.Michael von Massow, Associate Professor, Food Economics, University of GuelphLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1023272018-08-28T21:18:54Z2018-08-28T21:18:54ZNAFTA negotiations: Two’s company, three’s a crowd?<figure><img src="https://images.theconversation.com/files/233978/original/file-20180828-86132-1ijundj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The national flags of Canada, from left, the U.S. and Mexico, are lit by stage lights before a news conference at the start of North American Free Trade Agreement renegotiations in Washington. But Canada's status is now unsure after the U.S. and Mexico announced progress on a bilateral deal.</span> <span class="attribution"><span class="source">AP Photo/Jacquelyn Martin</span></span></figcaption></figure><p>Two’s company, three’s a crowd. The third wheel. There’s no good term for someone who jams a couple, seemingly invited in out of pity.</p>
<p>Is that the position Canada finds itself in with the United States and Mexico, <a href="https://www.cbc.ca/news/politics/tasker-freeland-nafta-talks-trump-1.4801706">brought back in to the negotiations</a> to conclude a new continental trade pact at the 11th hour after Washington and Mexico City have made a deal of their own?</p>
<p>And, if so, how did it get to the point that the United States’ most important trading partner appears to be essentially an afterthought in talks fundamental to Canadian national interests?</p>
<p>The Trudeau government said for weeks that Ottawa wasn’t frozen out of the negotiations. It was normal for two parties in a three-way negotiation to huddle and work on issues fundamental to them alone, Ottawa said.</p>
<h2>Fundamental issues</h2>
<p>But the U.S.-Mexico agreement initialed this week didn’t deal solely with bilateral issues, but with issues fundamental to Canada too, such as the <a href="https://www.nafta-sec-alena.org/Home/Dispute-Settlement/Overview-of-the-Dispute-Settlement-Provisions">dispute-resolution mechanism </a>that was Canada’s most important trade objective when Ottawa first signed a free-trade pact with the United States in 1987.</p>
<p>If anyone traditionally worried about being the third wheel in the North American relationship, it was Mexico.</p>
<p>Mexico was only invited to negotiate its way into the free-trade zone after Canada and the United States had done their deal and put it into effect. Once those trilateral negotiations began in 1991, the three parties were scrupulous in ensuring they remained three-way talks.</p>
<p>Certainly, there were issues that concerned Canada only, such as cultural protections. And there were issues that concerned Mexico only, such as protections for its energy industry. But Canada and Mexico maintained a common interest in engaging the United States. And Washington didn’t try a divide-and-conquer strategy, recognizing that NAFTA involved continent-building as much as trade facilitation.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/233979/original/file-20180828-86135-1zusv6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/233979/original/file-20180828-86135-1zusv6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=416&fit=crop&dpr=1 600w, https://images.theconversation.com/files/233979/original/file-20180828-86135-1zusv6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=416&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/233979/original/file-20180828-86135-1zusv6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=416&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/233979/original/file-20180828-86135-1zusv6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=523&fit=crop&dpr=1 754w, https://images.theconversation.com/files/233979/original/file-20180828-86135-1zusv6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=523&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/233979/original/file-20180828-86135-1zusv6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=523&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. Trade Representative Robert Lighthizer, left, and Mexican Secretary of Economy Idelfonso Guajardo, right, walk to the White House on Monday August 27, 2018. President Donald Trump says the prospects are ‘looking good’ for an agreement with Mexico that could set the stage for an overhaul of the North American Free Trade Agreement.</span>
<span class="attribution"><span class="source">(AP Photo/Luis Alonso Lugo)</span></span>
</figcaption>
</figure>
<h2>Behind the eight ball</h2>
<p>Not so now. Canada now finds itself behind the eight ball in these negotiations, possibly faced with a choice between a bad deal and no deal at all, precisely what the Trudeau government was determined to avoid.</p>
<p>In particular, the price of signature may include a humiliating climb-down on protections for the supply-managed dairy and poultry sectors.</p>
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Read more:
<a href="https://theconversation.com/in-trade-war-with-trump-canada-should-stop-defending-the-indefensible-on-dairy-products-98127">In trade war with Trump, Canada should stop defending the indefensible on dairy products</a>
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<p>Much of this is the fault of the Trump administration. The White House has been singular in its contempt for its trading partners and in its dismissal of any concept of a North American community.</p>
<p>Canada and the United States have fought over trade since before Canada was a country (the first dispute over softwood lumber trade dates to shortly after the American Revolution), but Ottawa and Washington always sought to make those disputes about those disputes alone.</p>
<p>U.S. President Donald Trump, in contrast, talks as if Canada’s dairy tariffs are symptomatic of Canada’s trading practices rather than the exception.</p>
<h2>Unrealistic expectations</h2>
<p>But Ottawa deserves plenty of blame too. The Trudeau administration went into the NAFTA talks with unrealistic expectations.</p>
<p>It’s demand for a progressive pact, worthy as that goal might have been, simply turned off the White House, just as it did the Chinese government in putative trade talks last year.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/233980/original/file-20180828-86120-1mmrykf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/233980/original/file-20180828-86120-1mmrykf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=414&fit=crop&dpr=1 600w, https://images.theconversation.com/files/233980/original/file-20180828-86120-1mmrykf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=414&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/233980/original/file-20180828-86120-1mmrykf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=414&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/233980/original/file-20180828-86120-1mmrykf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=520&fit=crop&dpr=1 754w, https://images.theconversation.com/files/233980/original/file-20180828-86120-1mmrykf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=520&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/233980/original/file-20180828-86120-1mmrykf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=520&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 Minister of Foreign Affairs Chrystia Freeland headed to Washington a day after the U.S. and Mexico announced progress on a bilateral trade deal.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
</figcaption>
</figure>
<p>More costly still was Ottawa’s determination to show no flexibility on <a href="https://www.cbc.ca/news/politics/canada-supply-management-explainer-1.4708341">supply management</a>. More than one prime minister over the past three decades has wished quietly for an opportunity to reform this protectionist throw-back, even as they mouthed fealties to it.</p>
<p>This negotiation was the opportunity to act but, instead of doing it proactively and strategically, the Trudeau government may be forced into it as the price of saving Canada’s most important trade pact. </p>
<p>It’s now widely accepted that Canada is too dependent on the U.S. market given the wave of protectionism washing over U.S. politics. But, if anything, it may be more accurate to say that Canada didn’t do enough to protect its North American advantage by building a community of interest and institutional ties in the United States.</p>
<p>Instead, Canada took the U.S. market — as big as the entire European Union and right on our doorstep — for granted.</p>
<p>The White House, having finally grabbed Ottawa’s attention, may now agree to a deal that Ottawa can live with. Or it may work to drive a very hard bargain with the clock ticking. If so, another European comparison comes to mind: Canada just might have been sleepwalking to its own Brexit.</p><img src="https://counter.theconversation.com/content/102327/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Drew Fagan 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>An announcement that the United States and Mexico were close to a new trade deal came as a surprise to many. How did Canada become an afterthought during the NAFTA negotiations?Drew Fagan, Professor of Public Policy, Munk School of Global Affairs and Public Policy, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/964062018-05-17T21:36:11Z2018-05-17T21:36:11ZThe China-U.S. conflict is about much more than trade<figure><img src="https://images.theconversation.com/files/219227/original/file-20180516-155616-1cu5qrn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In this November 2017 photo, U.S. President Donald Trump, left, and Chinese President Xi Jinping prepare to shake their hands after a joint news conference at the Great Hall of the People in Beijing. The China-U.S. trade conflict is about far more than trade; it's about American efforts to change how China deals with the world.</span> <span class="attribution"><span class="source">(AP Photo/Andy Wong)</span></span></figcaption></figure><p>The recent unprecedented, <a href="https://www.cnbc.com/2018/05/03/mnuchin-leads-us-trade-delegation-in-beijing-china.html">high-level U.S. delegation to Beijing</a> has left China highly dissatisfied. </p>
<p>The group included U.S. Treasury Secretary Steve Mnuchin and America’s toughest China critics, including Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and presidential trade adviser Peter Navarro. </p>
<p>In the weeks after the trip, reports emerged <a href="https://www.axios.com/scoop-peter-navarros-sharp-words-for-steven-mnuchin-8a2cb365-9ede-4213-9a88-7ca758d62a06.html">about a “screaming match”</a> between Navarro, a hardline protectionist where China’s concerned, and Mnunchin, who met one-on-one with his Chinese counterpart, angering Navarro. </p>
<p>But regardless of tensions among American officials, the United States wants to see active measures from China to unconditionally reduce America’s US$375 billion annual trade deficit by US$100 billion this coming year, and another US$100 billion the year after. If not, <a href="https://www.reuters.com/article/us-usa-trade-china/trade-dispute-escalates-as-trump-threatens-100-billion-more-in-china-tariffs-idUSKCN1HC1RW">the U.S. says it will impose tariffs</a> on a total of US$150 billion in Chinese imports.</p>
<p>In March, Lighthizer’s office produced a detailed <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/march/section-301-report-chinas-acts">182-page document</a> with 1,139 footnotes and five appendices detailing China’s unfair trade practices in the areas of technology transfer, intellectual property and innovation. </p>
<p>In response, China has offered dialogue and hazy promises of further opening of the country’s automotive and financial sectors and tightening protections for intellectual property and proprietary manufacturing processes. </p>
<h2>Guess who’s not coming to dinner?</h2>
<p>There was no banquet hosted for the Americans by Xi Jinping, a sign of how unhappy the Chinese president is with the U.S. demands. Those demands were denigrated politely in person and ridiculed in print. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/219068/original/file-20180515-195305-1hm3tw3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/219068/original/file-20180515-195305-1hm3tw3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=488&fit=crop&dpr=1 600w, https://images.theconversation.com/files/219068/original/file-20180515-195305-1hm3tw3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=488&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/219068/original/file-20180515-195305-1hm3tw3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=488&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/219068/original/file-20180515-195305-1hm3tw3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=613&fit=crop&dpr=1 754w, https://images.theconversation.com/files/219068/original/file-20180515-195305-1hm3tw3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=613&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/219068/original/file-20180515-195305-1hm3tw3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=613&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In this April 2017 photo, U.S. President Donald Trump hosts Chinese President Xi Jinping at Mar-a-Lago in Palm Beach, Fla. The Chinese leader did not return the favour for a U.S. delegtion that recently travelled to Beijing to talk tough on trade.</span>
<span class="attribution"><span class="source">(AP Photo/Alex Brandon)</span></span>
</figcaption>
</figure>
<p>A recent <a href="http://usa.chinadaily.com.cn/a/201805/02/WS5ae8fc24a3105cdcf651b6ae.html"><em>China Daily</em> opinion piece</a> penned by a <a href="https://www.project-syndicate.org/bigpicture/why-pick-on-china">Yale professor</a> concluded that “the USTR case is an embarrassing symptom of a scapegoat mentality that has turned the U.S. into a country of whiners.”</p>
<p>The delegation, Navarro in particular, will not take kindly to this kind of thing. China may not fully appreciate that its conventional diplomatic countermeasures are unlikely to be effective with Trump’s team in the end.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/219056/original/file-20180515-195308-1uovfi3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/219056/original/file-20180515-195308-1uovfi3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/219056/original/file-20180515-195308-1uovfi3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/219056/original/file-20180515-195308-1uovfi3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/219056/original/file-20180515-195308-1uovfi3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/219056/original/file-20180515-195308-1uovfi3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/219056/original/file-20180515-195308-1uovfi3.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">White House trade adviser Peter Navarro, second from left, is seen in Beijing on May 4, 2018 during talks with Chinese officials on defusing trade tensions.</span>
<span class="attribution"><span class="source">(AP Photo/Mark Schiefelbein)</span></span>
</figcaption>
</figure>
<p>The main challenge with U.S.-China negotiations is that the Chinese have no viable demands to make of the Americans in exchange for Chinese concessions. So the Chinese government’s assertion that “<a href="https://www.cnbc.com/2018/05/01/global-times-china-daily-editorials-on-us-china-trade-talks.html">the dialogue must be held on an equal footing</a>” and “<a href="http://www.globaltimes.cn/content/1100309.shtml">will hardly work if the U.S. persists in pressing China to accept its conditions</a>” does not bode well for success. </p>
<p>As the Xinhua official news agency put it, China also requires that “<a href="http://www.xinhuanet.com/english/2018-05/03/c_137151878.htm">the U.S. delegation has to come with sincerity</a>.” As a onetime counsellor in the Canadian embassy in Beijing, I know that phrase — it’s standard Chinese code that demands foreigners humbly agree to whatever China offers. But by the Chinese definition, “sincerity” will not be characteristic of the U.S. approach this time because the Americans view the requirement as a diplomatic trap. </p>
<p>The current U.S. team believes <a href="https://www.brookings.edu/blog/order-from-chaos/2017/12/22/was-pre-trump-u-s-policy-towards-china-based-on-false-premises/">a lack of principled determination in negotiations with China</a> is the weakness that resulted in the failure of past administrations to capitalize on American interests in China. </p>
<h2>Past Chinese techniques won’t work</h2>
<p>China’s tried-and-true techniques for putting off foreign delegations seeking to persuade the Chinese to comply with the fair trade principles of the World Trade Organization and international convention are not likely to go very far this time. </p>
<p>Ross indicated in an interview that the trade deficit is “<a href="https://www.cnbc.com/video/2018/05/01/sec-ross-i-go-to-china-with-some-hope-for-progress.html">too big, too continuing, too chronic and too inspired by evil practices</a>.” A <em>Global Times</em> editorial opines that “<a href="http://www.globaltimes.cn/content/1100309.shtml">China won’t abandon its principles despite pressure</a>.” But the U.S. delegation’s ascription of “evil” to Chinese practices leaves little room for compromise.</p>
<p>During a meeting hosted by President Donald Trump with governors and members of Congress whose constituencies are likely to be hit particularly hard by a trade war, Lighthizer commented: “<a href="https://www.reuters.com/article/us-usa-trade-china/trump-trade-chief-wants-to-open-china-not-change-its-economic-system-idUSKBN1I23TE">It is not my objective to change the Chinese system</a>.” But it’s increasingly evident that’s exactly what the U.S. is demanding.</p>
<p>The U.S. has tied their demands to concerns about cyber-espionage and argues that Chinese telecommunications giants Huawei and ZTE, acting as agents of the Chinese state, threaten the national security of the United States, including by <a href="https://www.cnbc.com/2018/04/22/chinas-zte-says-its-seeking-a-solution-to-us-tech-ban.html">violating sanctions against Iran and North Korea</a>. </p>
<p>That’s why Trump’s recent tweet about ZTE has confounded the president’s friends and foes alike.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"995680316458262533"}"></div></p>
<p><a href="https://www.cnn.com/2018/05/15/politics/zte-china-trade-trump-jobs-politics/index.html">Whatever the president’s playing at,</a> officials in his administration are also concerned that China’s “Made in China 2025” policy — aimed at achieving global domination of 10 next-generation industries including biotech, aerospace, artificial intelligence and robotics — will be built on purloined U.S. technology. </p>
<p>To this end, the U.S. is <a href="https://www.nytimes.com/2018/04/30/us/politics/trump-china-researchers-espionage.html">considering enacting measures</a> to deny Chinese scholars and graduate students access to U.S. labs engaged in cutting-edge research in areas with military and advanced technologies.</p>
<h2>Seeking fundamental transformation</h2>
<p>The American delegation that travelled to China in early May was ostensibly negotiating trade, but ultimately what the U.S. wants from China is a fundamental transformation to the way the Chinese engage internationally.</p>
<p>This extends to all bilateral and multilateral obligations as far-reaching as implementing United Nations Security Council resolutions to bringing North Korea to heel and complying with the UN Convention on Law of the Sea, which requires the <a href="https://www.asiasentinel.com/politics/south-china-sea-grab-complete-report/">Chinese to acknowledge that their land reclamation in the South China Sea is illegal.</a></p>
<p>Essentially, the U.S. regards the common principles that sustain global order and peaceful relations among nations as good, and China’s flaunting of them as evil.</p>
<p>China’s move to establish its own new global order — “<a href="http://www.globaltimes.cn/content/1028911.shtml">the community of the common destiny of humankind</a>” —is based on its deeply held conviction that the U.S. is in rapid decline as a global power. </p>
<p>China’s intention is to “resume its rightful place” as the leader of global civilization, <a href="https://www.washingtonpost.com/news/monkey-cage/wp/2017/10/25/xi-jinping-just-made-it-clear-where-chinas-foreign-policy-is-headed/?noredirect=on&utm_term=.5f229ccdc124">finally redressing its deep humiliation at the hands of Western and Japanese imperialism in the 19th century</a>. </p>
<p>Under Trump, however, the U.S. seeks to stymie Xi Jinping’s enactment of this meta-plan for global domination.</p>
<p>Of course, there are alternative readings of Chinese history and culture that support a liberal democratic alternative path for Chinese development. Remaking the Chinese Communist Party state paradigm will not come easily.</p>
<p>The U.S. trade mission failed, allowing no space for future compromise. What follows will likely be much more than a simple trade war.</p><img src="https://counter.theconversation.com/content/96406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Burton 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 recent U.S. trade mission to China failed, allowing no space for future compromise. What follows will likely be much more than a simple trade war.Charles Burton, Associate Professor of Political Science, Brock UniversityLicensed as Creative Commons – attribution, no derivatives.