In an era when who trades, what is traded, and how it’s trade are in constant flux, the only constant for international trade rules is the potential for obsolescence. Technological innovations are testing the limitations — and rationale — of the old rules.
Since 1947, the global trade rules have contained a “national security exception.” WTO members operate on the presumption that their fellow members will exercise the exception rarely and in good faith.
As the President engages with Congress, the public, and his Mexican and Canadian counterparts to renegotiate NAFTA, he may find it useful to consider his own 11-step formula for success. Step two: “Protect the downside, and the upside will take care of itself.”
Currency exchange rates have affected the terms of international trade since the beginning of floating exchange rates, and for nearly as long, politicians have accused trading partners of manipulating exchange rates to gain an unfair advantage. What does it mean to engage in “currency manipulation,” how do governments determine whether and when it happens, and what can be done about it?
Confirmation of Robert Lighthizer as USTR is still pending but some of his views on China were revealed at his hearing. The WTO may not have all the tools needed to address China’s industrial policies so the Trump Administration may look for additional new ones.
Americans like to play to win. When it comes to international trade, however, we shouldn’t use the size and trend of the national trade deficit as a way of scoring trade policy. It’s like using the size of players’ salaries to evaluate whether you had a winning season.
Sure, it’s good when American companies export goods and services to the world. But imports make many American-made products more competitive as well as enriching our lives as consumers – they are part of the secret sauce of what makes our economy work so well.
The United States is the only industrial economy to maintain a worldwide tax system, which encourages American corporations to move their headquarters operations out of the country, and discourages them from bringing their foreign-earned profits home for re-investment. The alternatives being considered by Congress could trigger challenges by our trading partners.
The UK has opted to leave the EU. Now it must figure out a new trade architecture for itself that keeps its global commercial relationships in tact.
Every trade negotiation is an exercise in pushing the government-imposed cronyism out of the way and freeing up space for markets to work, which is good for consumers and for economic freedom.