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81. Export controls: America’s other national security threat

Author:
Chad P. Bown
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
While the public was transfixed by the Trump administration’s policies alleging that imports were a threat to America’s national security during 2017–20, there was a concomitant and more quiet US policy shift on the export side. Addressing the national security threat presented by exports posed different economic and institutional challenges from those associated with import policy, including the acknowledgment that export controls for legitimate national security reasons can be the first-best policy to confront the problem at its source. Yet, export controls could also be misused as a beggar-thy-neighbor policy to redistribute economic well-being across countries, even from one ally to another. This paper describes how US export control policy evolved over 2017–20, as well as the international institutions—first the Coordinating Committee for Multilateral Export Controls (COCOM), then the Wassenaar Arrangement—historically tasked with multilateralizing US export restrictions used to protect national security. With the potential for US export control policy to brush up more frequently against WTO rules designed to limit the use of export restrictions, the paper also highlights new challenges for the WTO’s system of resolving trade disputes. Overall, a US failure to strike the right balance for its export control policy would result in it being ineffective at addressing national security risks, costly for the economy, and problematic for trade and diplomatic relations.
Topic:
Economics, Government, National Security, Exports, and Trade
Political Geography:
North America and United States of America

82. Why Trump shot the sheriffs: The end of WTO dispute settlement 1.0

Author:
Chad P. Bown and Soumaya Keynes
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
On December 10, 2019, the World Trade Organization’s (WTO) 25-year-old system of resolving disputes broke down. This paper explains why. It describes the dysfunctional system that preceded the WTO, when the United States dealt with politically troublesome imports by using voluntary export restraints and increasingly resorted to the “aggressively unilateral” Section 301 policy to resolve trade concerns. The WTO was a compromise between the rest of the world and the United States, whereby the latter accepted some constraints with the expectation that the new system of binding dispute settlement would serve its interests. But although the creation of the WTO resolved some concerns about American unilateralism in the short term, its system of handling disputes turned out to be politically unsustainable.
Topic:
Economics, World Trade Organization, Trade, and Donald Trump
Political Geography:
North America and United States of America

83. Court of Justice of the EU Ruling on Products from Territories Occupied by Israel

Author:
Michał Wojnarowicz and Szymon Zaręba
Publication Date:
01-2020
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
On 12 November 2019, the Court of Justice of the EU (CJEU) issued a judgment on products from Jewish settlements in the Israeli-occupied West Bank and Golan Heights. It states that EU members are required to ensure that the origin is properly marked. The implementation of this requirement may cause disputes in the EU because of differences in Member States’ policies towards Israel. Tensions in relations with the U.S. are also possible, especially in the context of that country’s recent change in policy favouring the Israeli position on settlements. Hence, it is advisable for the EU to develop a uniform policy regarding imports and labelling of products from all occupied territories.
Topic:
International Law, Territorial Disputes, European Union, Occupation, Judiciary, and Trade
Political Geography:
Europe, Middle East, Israel, Palestine, North America, United States of America, West Bank, and Golan Heights

84. Preferential Trade Agreements vs. Multilateralism: In the New Trump-World, Does Canada Face an Impossible Choice?

Author:
Judit Fabian
Publication Date:
03-2020
Content Type:
Policy Brief
Institution:
Urban Institute
Abstract:
International trade is often framed in starkly divergent terms: either countries choose multilateral trade agreements (MTAs) and advance the cause of global economic liberalization, or they choose preferred trade agreements (PTAs) and put the entire system at risk. Canada has a long track record of pursuing PTAs and with the Trump administration’s opposition to multilateralism, and longstanding opposition in elements of the Republican and Democratic parties, this trend will likely continue. The question is whether progress will come at the expense of the global trade system. Some economists believe PTAs to be trade-diverting, reducing trade with more efficient producers outside the agreement. Others insist that PTAs can create trade by shifting production to lower-cost producers in one of the participating countries. One prominent contrary argument holds that PTAs lead to discontinuities in tariff regimes between countries and regions, increasing transaction costs, disrupting supply chains, creating opportunities for corruption and harming global welfare, especially in developing nations. While debate continues about the effects of PTAs, a closer examination suggests that worries are overblown about their negative impacts on global trade flows. Evidence indicates that they support rather than harm the international trading system. Countries shut out of PTAs are more motivated to seek out agreements in new markets, increasing liberalization overall. They may also seek a reduction in most-favoured nation (MFN) tariffs, which would deprive PTAs of their major tariff benefits. Studies have found complementarity between preferential and MFN tariffs, revealing that PTAs promote external trade liberalization. Even if a PTA reduces a given country’s incentive to push for multilateral liberalization, it raises the odds of that country liberalizing its trade to avoid getting left behind. PTAs are a response to the difficulties of securing sweeping multilateral agreements. The World Trade Organization (WTO) Agreements authorize them under GATT Article XXIV, GATS Article V, and the enabling clause, and the WTO facilitates a degree of governance over PTAs through its dispute settlement process. Over the past 25 years, countries have adopted these deals at a rapid pace. Between 1994 and 2005, the number of PTAs increased from 50 to 200. By April 2018, 336 were in effect. At the same time, global trade has increased significantly. Between 1994 and 2010, the volume of world merchandise exports more than doubled. The proliferation of PTAs has resulted in a rise in international trade governance, because the countries involved shape their relationships in line with the WTO agreements. This juridification makes PTAs subordinate to the international system rather than giving them room to dissolve it. Canada should therefore have no fear of pursuing PTAs within the larger framework of the effort to achieve multilateral trade liberalization.
Topic:
Economics, International Trade and Finance, Governance, Trade, and Donald Trump
Political Geography:
Canada, North America, and United States of America

85. Reflections on the U.S.–Mexico Relationship

Author:
Gerónimo Gutiérrez Fernandez
Publication Date:
03-2020
Content Type:
Journal Article
Journal:
Brown Journal of World Affairs
Institution:
Brown Journal of World Affairs
Abstract:
Gerónimo Gutiérrez Fernández served as Mexico’s Ambassador to the United States (2017-2018). He played a prominent role in the negotiation of the United States of America, Mexico and Canada Agreement (USMCA). Currently, he is managing partner of BEEL Infrastructure, a specialized advisory & asset management firm focused on the infrastructure sector in Latin America. He also provides strategic advice to businesses and governments on political risk, public affairs and communications and business development; and serves in the Board of Directors of U.S. – Mexico Business Association (AEM) and the Advisory Board of the Woodrow Wilson Center’s Mexico Institute.
Topic:
Foreign Policy, Diplomacy, Bilateral Relations, and Trade
Political Geography:
North America, Mexico, and United States of America

86. Stronger Together: A Strategy to Revitalize Transatlantic Power

Author:
Cathryn Clüver Ashbrook, Daniela Schwarzer, Christian Mölling, and Sophia Becker
Publication Date:
12-2020
Content Type:
Special Report
Institution:
German Council on Foreign Relations (DGAP)
Abstract:
The Harvard Kennedy School (HKS) and the German Council on Foreign Relations (DGAP) convened a strategy group of experts and former government officials from the United States and Europe over the past year to discuss the crisis in the transatlantic relationship and to propose a strategy to revive and strengthen it.
Topic:
Security, Foreign Policy, Economics, Energy Policy, Government, Science and Technology, Partnerships, Democracy, Trade, and Transatlantic Relations
Political Geography:
Russia, China, Europe, Middle East, North Africa, North America, and United States of America

87. The U.S.–China Trade Imbalance and the Theory of Free Trade: Debunking the Currency Manipulation Argument

Author:
Anwar Shaikh and Isabella Weber
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The U.S.–China trade imbalance is commonly attributed to a Chinese policy of currency manipulation. However, empirical studies failed to reach consensus on the RMB misalignment. We argue that this is not a consequence of poor measurement but of theory. At the most abstract level the conventional principle of comparative cost advantage suggests real exchange rates will adjust so as to balance trade. Therefore, the persistence of trade imbalances tends to be interpreted as arising from currency manipulation facilitated by foreign exchange interventions. By way of contrast, the absolute cost theory explains trade imbalances as the outcome of free trade among nations that have unequal real costs. We argue that a disparity in real costs is the root cause of the U.S.–China trade imbalance.
Topic:
Exchange Rate Policy, Free Trade, Trade, and Purchasing Power
Political Geography:
China, Asia, North America, and United States of America

88. An International Intellectual Property and Digital Trade Strategy for Canada

Author:
Jeremy de Beer
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
To remain competitive on a global scale, Canada needs to enhance its domestic intellectual property (IP) and digital trade strategies with an international approach that can respond to constantly changing global economic conditions. Although Canada launched its Intellectual Property Strategy in 2018 — focusing on IP awareness, strategic tools and legislation — its data initiative, known as the Digital Charter, remains a work in progress. Both policies would benefit from an outward-looking, interconnected, international strategic vision. As a member of various international trade agreements, Canada has framed its IP laws to align with these agreements and its trade partners. Canada should expand its trade relationships with Africa before other countries, such as China, take advantage of the continent’s rapidly growing economies and trade opportunities. Building strategic alliances with the right global partners, combined with the use of hard and soft laws to promote Canadian interests, will help Canada strengthen its international IP and digital trade strategy.
Topic:
International Cooperation, Intellectual Property/Copyright, Digital Economy, and Trade
Political Geography:
China, Canada, Asia, and North America

89. Making U.S. Foreign Policy Work Better for the Middle Class

Author:
Salman Ahmed, Wendy Cutler, Rozlyn Engel, David Gordon, Jennifer Harris, Douglas Lute, Daniel M. Price, Christopher Smart, Jake Sullivan, Ashley J. Tellis, and Tom Wyler
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Carnegie Endowment for International Peace
Abstract:
If there ever was a truism among the U.S. foreign policy community—across parties, administrations, and ideologies—it is that the United States must be strong at home to be strong abroad. Hawks and doves and isolationists and neoconservatives alike all agree that a critical pillar of U.S. power lies in its middle class—its dynamism, its productivity, its political and economic participation, and, most importantly, its magnetic promise of progress and possibility to the rest of the world. And yet, after three decades of U.S. primacy on the world stage, America’s middle class finds itself in a precarious state. The economic challenges presented by globalization, technological change, financial imbalances, and fiscal strains have gone largely unmet. And that was before the novel coronavirus plunged the country into the worst economic crisis since the Great Depression, exposed and exacerbated deep inequities across American society, led long-simmering tensions over racial injustice to boil over, and launched a level of societal unrest that the United States has not seen since the height of the civil rights movement.
Topic:
Foreign Policy, Economy, Class, and Trade
Political Geography:
North America and United States of America

90. Economic Diplomacy in the 21st Century: Principles and Challenges

Author:
Linda Yueh
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
Economic diplomacy in the 21st century will face a different set of challenges stemming from the changed global economy, US-China tensions, as well as a backlash against globalisation, among others. Therefore, the conduct of economic diplomacy, i.e., how a country manages its foreign economic relations including trade and investment, must adapt. The framework for economic diplomacy should seek to balance commercial openness with strategic foreign policy aims, broadly defined. It should situate a country within the 21st century global economy with its new drivers, promote a rules-based system in order to mitigate Great Power tensions, and recognise that all foreign economic policy is ultimately also domestic. There is no one general approach but there are several principles, each with their own challenges, for governments to consider, which is set out in this Strategic Update.
Topic:
Foreign Policy, Investment, Trade, and Economic Diplomacy
Political Geography:
China, Asia, North America, and United States of America