Fireside Chat: “Tarrified” of Trade Talks?

By: Madelyn Cunningham

On February 4th, 2020, the WITC featured a fireside chat from Chad Bown, Senior Fellow at the Peterson Institute for International Economics, and Soumaya Keynes, the Trade and Globalisation Editor for the Economist, hosts of the trade podcast, Trade Talks. Keynes started the discussion by pointing out that trade has been a pressing issue in politics recently, so talks about trade issues and policy have never been more important.

Bown and Keynes introduced the main topic of their session: the dissolution of the appellate body of the World Trade Organization. Keynes started with the current state of the WTO, she stated that the appellate body was no longer functioning and about to be reformed, arguing that the prospects of an actual reform are slim given there are no pressing U.S. cases. By taking a historical perspective on the issue, Keynes and Bown set out to understand the problems of the appellate body.

The 1980’s, according to Bown, was the start of this issue’s prevalence in foreign affairs with the creeping protectionism policies in the form of voluntary export restraints. In the 90’s, the competition with the Japanese auto, steel, and technology industries brought imports coming into the U.S. covered by voluntary export restraints up to 12%. Additionally, many American export interests were not covered by GATT, particularly services and intellectual property rights, combined with a lacking dispute settlement system led to the height of the Section 301 era.

Ultimately, Bown explained, the rest of the world disliked this combination, leading the WTO and the Appellate Body to emerge as the negotiator between the United States and the rest of the world in exchange for GATT coverage of services and IP heavy industries. Keynes added that voluntary export restraints do not entirely disappear, but the 12% of imports declined. The idea was to lower them as they created problems, instead relying on safeguards.

Keynes went on to describe the negative implications of anti-dumping, explaining economists are reluctant to these policies. Bown then added that last week, the Trump administration decided to extend the tariffs placed on steel and aluminum for steel-using companies, known as “cascading protection.” While not that much, when analyzing anti-dumping data, it adds up to $5 billion worth of trade coverage. Keynes summed this point up by stating that the tariffs set in place are influenced more so by internal demand instead of a new anti-competitive practice being set up.

Moving on, Keynes discussed that the new system of the WTO came along with a new expectation for dispute settlement through a more technocratic approach. American negotiators felt there was a certain amount of protection for anti-dumping, but this system was eventually used against the U.S., as other countries accused the United States of over-using this system. Keynes added that more than half of the disputes brought against the U.S. were in regards to its trade remedies.

Bown then switched the conversation to discuss “zeroing”, a method of calculating anti-dumping degrees to find evidence of dumping at a higher margin. During the Uruguay round of negotiation, countries wanted the U.S. to lessen their use of zeroing, and when nothing on the matter was stated, both sides assumed victory. Thus complicating dispute settlement even further. Zeroing cases started flooding into the WTO and became the most litigated issue.

Towards trade remedies, Keynes went over the official USTR complaints about the appellate body was not with the rules, but with how the judges handled said rules, especially with maintaining precedence. This could be attributed to problems with personnel in Geneva, but another diagnosis Keynes mentioned was the disconnect between what they were actually doing versus what dispute settlement meant, as many issues were not litigated in documents, thus complicating negotiations.

When looking at the data for trade remedies, Bown stated that there has been a decline in U.S. use of functions like tariffs, and overall the United States has been more open than ever. Thus, the use of trade remedies in the WTO has possibly been pushed too far, starting the problem with the appellate body. There is a common feeling among countries on the hesitance and problems with the litigation approach of the WTO and the current dispute settlement process.

To conclude, Bown discussed how the issues were put off, while the tactics of the Trump administration are new, the concerns have been apparent. Now, we do not have a functioning appellate body, there are a few mini-deals towards an interim appellate body while the issue is being fixed. However the interim solution may last for longer than previously thought.

Featuring:

Chad Bown, Reginald Jones Senior Fellow, Peterson Institute for International Economics

Soumaya Keynes, Trade & Globalisation Editor, The Economist

To view more details about the event, visit the event page here.

The post WITC 2020: “Tarrified” of Trade Talks? appeared first on WITA.

The event began with remarks from Andrew Gelfuso, Vice President of Trade Center Management Associates and Kenneth I. Levinson, Executive Director of WITA. We were fortunate enough to hear Roberto Azevêdo, Director-General of the World Trade Organization, as he discussed the dissolution of the appellate body and his thoughts on global dispute settlements going forward. This was followed by an armchair discussion with Ambassador Rufus Yerxa, president of the National Foreign Trade Council.

The U.S. China panel was primarily focused around how China had changed its own image within the last 20 years and the radical shifts it has made from being relatively closed off to countries who were not direct allies to joining the WTO in 2001. From joining the WTO to now, China has significantly increased its dominance in global trade, economic, and financial markets and has now become a credible threat to U.S. hegemony due to large economic pressure.

Since the Trump administration’s Phase One deal, China has become more cautious as to its approach to its relationship with the United States and there were voiced concerns from all panelists as to China’s willingness to follow through with their end of the agreement let alone get to a Phase Two before the end of the coming general election cycle. The panelists were Wendy Cutler, Vice President of the Asia Society Policy Institute, Professor Ann Lee, author of  “What the US Can Learn from China” and “Will China’s Economy Collapse?”, Ambassador Kurt Tong, Partner at The Asia Group, Clete Willems, Partner at Akin Gump Strauss Hauer & Feld LLP, and Douglas M. Bell, Global Trade Policy Leader at Ernst & Young.

The NextGenTrade panel was centered around the evolution of trade due to advanced technologies such as AI, blockchain, 3D printing, as well as financial technology developments. While 3D trade was not as disruptive of an invention as was expected with regards to its ability to rapidly manufacture and place highly developed countries over developing ones, the ability of AI to do that was discussed in depth. Another issue that was brought up was blokchain’s ability to carry out anonymous, financial transactions that could skew U.S. financial markets with disruptive, malicious financial technologies from China, Russia, and Iran.

While illegal and purposefully harmful technologies were discussed, there could also be a market for legal and productive digital trade surrounding financial tools bolstered by AI and insured in its ability to be untampered with by blockchain based networks. Which type of digital trade economy develops over the next few years is dependent on which country holds dominance in both financial and economic markets. The panelists were Susan Lund the Director of Research at the McKinsey Global Institute, Julia Nielson the Head of the Development Division at the Trade & Agriculture Directorate, OECD, Paul Triolo the Practice Head of Geo-Technology at the Eurasia Group, and Jake Colvin, Executive Director of the Global Innovation Forum.

The next morning panel was the press roundtable, “Meet the [Trade] Press.” With trade on the forefront of many news outlets, this year was particularly interesting to hear from members of the press. From senior experts to junior correspondents, Ambassador Susan C. Schwab of Mayer Brown LLP moderated a discussion between prominent reporters on current trade topics and trends. Not only were the discussants able to share their experiences with the press, but they also gave their personal insight and predictions for how key trade issues will progress and be resolved. The featured panelists were Jenny Leonard, a junior reporter at Bloomberg News, David Lynch, the Global Economics Correspondent at the Washington Post, James Politi, the World Trade Editor of the Financial Times, and Ana Swanson, a Trade and Economics Correspondent at the New York Times.

Rich Thau, President and Co-Founder of Engagious, started our afternoon sessions with a presentation on his research, “The Swing Voter Project,” which analyzes the thinking and opinions of swing voters of the past two presidential elections. In addition to discussing trends and the demographics of the voters interviewed, he also touched on the issues they found to be most important and most decisive for the upcoming 2020 Presidential Election. He found that in regard to trade policy, it was not necessarily the concept of open trade that these voters were wary about, but more so immigration policy that might accompany it. This was followed by a conversation with Kimberly Ellis, Principal at the Monument Policy Group. They discussed the implications of his research, as well as his predictions for the upcoming election cycle.

Next on the afternoon agenda was, “A Fireside Chat: ‘Tarrified’ of Trade Talks?” Hosts of the Trade Talks podcast Chad Bown, Reginald Jones Senior Fellow, Peterson Institute for International Economics and Soumaya Keynes, the Trade and Globalization Editor for the Economist gave commentary on the troubles of the appellate body of the World Trade Organization. Using a more historical lens, Bown and Keynes analyzed policy of the WTO and gave insight as to what could be done to restore a balanced dispute settlement system in trade.

Ambassador Robert Zoellick gave his remarks in the next session. Zoellick discussed both his pessimism towards the Trump Administration’s global trade plans as well as the degradation of U.S. relations to a multilateral system. Ambassador Zoellick also spoke on the strategic harnessing of all types of trading systems, specifically that the best and most strategically competent trade policy measures would be the ones that can harness regional, bilateral, and multilateral trade networks together instead of dogmatically chasing one. He also advised business owners to innovate supply chains that are more rigid and flexible to the coming era of trade uncertainty. His remarks were followed by a conversation with Ambassador Rufus Yerxa, president of the National Foreign Trade Council.

The concluding panel, “Trade Around the World,” featured a conversation between foreign ambassadors to the United States on both the conflict surrounding the dispute settlement process of the WTO as well as their take on relations between their countries and the U.S. From discussing the need to establish a rules-based system in trade relations to their countries’ stakes in the global market and foreign direct investment from and into the United States, the panelists gave interesting insight as to the climate of trade policy in years to come. Moderated by Laura Lane, President of Global Public Affairs at UPS, the featured panelists were H.E. Ashok Kumar Mirpuri, Ambassador of Singapore, H.E. Stavros Labrinidis, Ambassador of the European Union, H.E. Rosemary Banks, Ambassador of New Zealand, and H.E. Fitsum Arega, Ambassador of Ethiopia.

The post 2020 Washington International Trade Conference Recap appeared first on WITA.

Featuring:

Ambassador Darci Vetter, Former Chief Agricultural Negotiator, USTR; Vice Chair of Agriculture, Food and Trade, Edelman

David Dollar, Senior Fellow, Brookings Institution’s John L. Thornton China Center

Bonnie Glaser, Senior Advisor for Asia and Director, China Power Project, CSIS

David Goldman, Principal, Asia Times

To view more details about the event, visit the event page here.

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Featuring:

Clete Willems, Deputy Assistant to the President for International Economics and Deputy NEC Director at The White House in a discussion with Michael J. Smart, Managing Director, Rock Creek Global Advisors

To view more details about the event, visit the event page here.

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WITA hosted an expert panel to discuss the economic and political issues underlining the U.S.-China relationship, to provide context for current trade tensions, and priorities for reform in China.

Featuring

Evan Feigenbaum, The Paulson Institute at the University of Chicago

Melanie Hart, American Progress

Chris Johnson, CSIS

Paul Triolo, Eurasia Group

For more information on the event and information on the speakers, visit the events page here

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