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21. Trade in Trouble: How the Asia Pacific Can Step Up and Lead Reforms

Author:
Wendy Cutler, Peter Grey, Kim Jong-Hoon, Mari Pangestu, Yoichi Sozuki, and Tu Xinquan
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
The U.S.-China trade dispute has dominated headlines over the past year, disrupting trade and investment flows and increasing uncertainty at a time when the global economy is already facing headwinds. The conflict has left many countries in the Asia Pacific feeling caught in the crossfire seeking to navigate the tensions without alienating either country. While the World Trade Organization (WTO) would ideally help reduce the frictions, it has not been up to the task. The paralysis at the WTO points to a deeper problem: it’s inability to keep up with the pace of change or address the challenges of new developments in advanced technologies and the digital economy. Simply put, the trade regime is in trouble and in need of reform. At this dynamic and uncertain time in trade, the Asia Society Policy Institute (ASPI) convened a group of leading trade experts and former trade officials from across the Asia Pacific, led by ASPI Vice President Wendy Cutler. In this issue paper, the authors examine the major developments in the international trading system, including the U.S.-China trade dispute, FTA activity in the Asia Pacific, and efforts to reform the WTO. In this challenging environment, the authors find that the Asia Pacific is uniquely well-positioned to lead reforms to get the system back on track. This paper is the latest product of the ASPI initiative, “Building a High Standard and Inclusive Asia-Pacific Trade Architecture.” It builds on the work of two previous reports published in March 2017 and January 2018.
Topic:
Economy, Trade Wars, Trade, and WTO
Political Geography:
China, Asia, North America, and United States of America

22. Tariffs will ultimately harm US economy

Author:
Dong Yan and Zang Chengwei
Publication Date:
07-2019
Content Type:
Policy Brief
Abstract:
That Vice-Premier Liu He talked with US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin on the phone on Monday raises hope that China and the United States would resume the bilateral trade negotiations.
Topic:
Bilateral Relations, Economy, Tariffs, Trade Wars, and Trade
Political Geography:
China, Asia, North America, and United States of America

23. Trade trends show China should take the opportunity to diversify its market

Author:
Dong Yan, Ma Yingying, and Xu Tingting
Publication Date:
05-2019
Content Type:
Policy Brief
Abstract:
The China-US trade row has been drawing a lot of attention. A detailed review of the bilateral trade situation between China and the US from January through April is a good reference for the future trend. Also, as uncertainties loomed amid tariff hikes, some related US industries were afflicted, such as plants, minerals and precious metal in the first quarter.
Topic:
Markets, Tariffs, Trade Wars, Diversification, and Trade
Political Geography:
China, Asia, North America, and United States of America

24. Opinion: What Is China’s Core Economic Interest in Trade War?

Author:
Qiyuan Xu
Publication Date:
02-2019
Content Type:
Policy Brief
Abstract:
The trade conflict between China and the U.S. has lasted for more than half a year. The two sides have held several rounds of consultations, but agreements were later broken and tensions have only intensified. The spat will likely be protracted, with frictions to continue and possibly escalate for a period of time, given the two countries’ diverging interests, public opinions and historical experiences. A broad range of issues are involved in the trade dispute. For example, the U.S. has pressured China on forced technology transfer, talent strategy and industrial policy issues, as well as issues the two sides have long been at odds over, such as intellectual property rights, labor, environmental protection, stateowned enterprise reform and foreign exchange rates. Meanwhile, the U.S. has targeted products and sectors that go well beyond those in which China has a competitive advantage. The U.S. tariffs also target industries that the country plans to focus on for future development.
Topic:
Development, Tariffs, Trade Wars, Trade, and Strategic Competition
Political Geography:
China, Asia, North America, and United States of America

25. The Art of Diplomacy

Author:
Bruce A. Heyman
Publication Date:
03-2019
Content Type:
Journal Article
Journal:
The Ambassadors Review
Institution:
Council of American Ambassadors
Abstract:
Seeing the words “U.S.-Canada Trade War” in headlines is hard to imagine in any year, but to see them in 2018 was jarring. How is it possible that best friends and neighbors who have had the most successful trading relationship in the world now could have an association characterized by the word war? This is hard enough for the average American or Canadian to conceive of, but it was particularly hard for me to do so, as the U.S. Ambassador to Canada until January 20, 2017. When I left Ottawa, I was confident that the U.S.-Canada relationship was strong—indeed, perhaps never stronger. In March 2016, we had a state dinner in Washington for Prime Minister Justin Trudeau, the first in nearly 20 years. Then-President Barack Obama later repaid the favor and addressed the Canadian Parliament for the first time in more than 20 years. Our two-way trading relationship was valued at a huge $670 billion per year, and while no longer our largest, it was the most balanced, with the United States having a slight but rare trade surplus in goods and services. Through an integrated supply chain, our companies and citizens worked together. On average more than 400,000 people legally crossed our 5,525-mile non-militarized border daily for work and tourism. But the U.S.-Canada relationship was and is much larger than trade. Canadian and American troops have fought and died together from the beaches of Normandy to the mountains of Afghanistan, and our countries are founding members of the North Atlantic Treaty Organization (NATO). The North American Aerospace Defense Command (NORAD)—a unique Canadian-American partnership—patrols the skies above our shared continent. Our intelligence and law enforcement agencies constantly exchange information on threats from terrorism, nuclear proliferation, espionage and complex crimes. Our two countries work together to protect the environment and provide stewardship of the magnificent Great Lakes, where cities such as Toronto and my own Chicago are located. This dense web of mutually beneficial cooperation is based on a shared set of values. Both our countries settled the vast North American continent, providing undreamt-of opportunities to millions of immigrants. Both our countries have an abiding commitment to democracy and the rule of law, and when we fall short, we make the needed changes. Beyond our countries’ being next-door neighbors, the largest number of Americans living abroad live in Canada and the largest number of Canadians living abroad live in the U.S. We are best friends, but more important, we are family.
Topic:
Diplomacy, Regional Cooperation, Culture, Trade Wars, and Trade
Political Geography:
United States, Canada, and North America

26. Trump’s Trade Wars: A New World Order?

Author:
James M Dorsey
Publication Date:
11-2019
Content Type:
Special Report
Institution:
The Begin-Sadat Centre for Strategic Studies (BESA)
Abstract:
President Donald Trump’s declared economic protectionism has taken the US’s international relations with several foes and allies into uncharted territory. His open-ended trade wars with several nations have triggered criticism among conservatives and liberals alike in the US. He has justified his actions by arguing for a downturn of America’s trade deficit, but the American people don’t seem to be on board with his logic. A recent Harvard CAPS/Harris Poll survey shows 63% of registered voters believe tariffs imposed on Chinese products ultimately hurt the US more than China, while 74% said American consumers are shouldering most of the burden of those tariffs. The political network funded in part by billionaire libertarian Charles Koch has contested Trump’s approach toward China and is trying to shape an alternative strategy for 2020, the year of the US presidential election. One Koch senior official has acknowledged, “It doesn’t penetrate with the people that are willing to go along with the argument that you have to punish China.” There is now a pursuit of a “two steps back strategy,” which will involve putting together a team of almost 100 business leaders to call on the Trump administration and lawmakers to end the trade war with China. This paper examines the ramifications of President Trump’s policy of economic sanctions and tariffs vis-à-vis several nations and international groupings. It also looks at China’s counter-strategy and considers whether Middle Eastern countries like Saudi Arabia will be caught in the web of the current trade wars.
Topic:
International Relations, Economy, Trade Wars, Trade, and Donald Trump
Political Geography:
North America and United States of America

27. Did Trump's Trade War Impact the 2018 Election?

Author:
Emily Blanchard, Chad P. Bown, and Davin Chor
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Republican candidates lost support in the 2018 congressional election in counties more exposed to trade retaliation but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue. A counterfactual calculation suggests that the trade war and health care can account for five and eight of Republicans' lost House seats, respectively.
Topic:
Politics, Elections, Trade Wars, Trade, and Donald Trump
Political Geography:
North America and United States of America

28. US-China Trade War: Both Countries Lose, World Markets Adjust, Others Gain

Author:
Sherman Robinson and Karen Thierfelder
Publication Date:
11-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The terms of the US-China trade war change often, but the tariff escalations have inflicted documented economic damage on both countries. Expanding the conflict will only increase the damage and reverberate across the world economy. This Policy Brief uses a computable general equilibrium model of the global economy to analyze three scenarios that could unfold in coming months. The first scenario is the current situation (as of June 2019). Two additional scenarios assume implementation of proposed US tariffs and Chinese responses. The models project the situation after the two countries and the rest of the world adjust across a time horizon of three to five years. For the United States, higher tariffs raise prices and reduce demand for consumers and producers. For China, the tariffs raise the prices of consumer goods but have less direct impact on producers, because the Chinese have exempted some intermediate inputs. US exports and imports decline under all three scenarios. But China can successfully divert its exports away from the United States and escape maximum economic damage.
Topic:
Economics, Global Markets, Finance, Trade Wars, and Trade
Political Geography:
China, Asia, North America, and United States of America

29. EU Trade Policy amid the China-US Clash: Caught in the Cross-Fire?

Author:
Ana González and Nicolas Véron
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
China's rapid rise and unique economic system and the increasingly aggressive and disruptive US trade policy are posing an unprecedented threat to the global rules-based trading and economic system. The European Union has critical interests at stake in the current escalation, even as it has so far been comparatively spared from US trade policy belligerence and China's reactions. In this context, the European Union should adopt an independent and proactive stance, building on recent efforts and going beyond them. The European Union, even more than the United States or China, has a strategic interest in the preservation of the global rules-based order embodied by the World Trade Organization (WTO). It must play a leading role in steering WTO reform and modernization, working closely with broadly aligned third countries such as Japan and other players. It should expand its outreach beyond its immediate negotiating counterparts in both the United States and China, and leading European officials at both the EU and member state levels should work at better understanding China. While strengthening its domestic policy instruments to address new challenges, such as the screening of foreign direct investment for security purposes, the European Union must also resist its own temptations of protectionism and economic nationalism. In support of these objectives, the European Union should prepare itself for difficult decisions, which may involve revising some of its current red lines in international trade negotiations. Conversely, the European Union should stand firm on principles such as refusing one-sided agreements and rejecting abusive recourse to national security arguments in trade policies. The European Parliament, in working with the European Council and the European Commission, will have a critical role to play in steering the European Union through these challenging times.
Topic:
Bilateral Relations, Economy, Trade Wars, and Trade Policy
Political Geography:
China, Asia, North America, United States of America, and European Union

30. The 2018 US-China Trade Conflict after 40 Years of Special Protection

Author:
Chad P. Bown
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
In 2018, the United States suddenly increased tariffs on nearly 50 percent of its imports from China. China immediately retaliated with tariffs on more than 70 percent of imports from the United States. This paper assesses what happened in 2018 and attempts to explain why. It first constructs a new measure of special tariff protection to put the sheer scope and coverage of the 2018 actions into historical context. It then uses the lens provided by the 2018 special tariffs to explain the key sources of economic and policy friction between the two countries. This includes whether China’s state-owned enterprises and industrial subsidies, as well as China’s development strategy and system of forcibly acquiring foreign technology, were imposing increasingly large costs on trading partners. Finally, it also examines whether the US strategy to provoke a crisis—which may result in a severely weakened World Trade Organization—was deliberate and out of frustration with the institution itself.
Topic:
Economics, International Trade and Finance, World Trade Organization, Bilateral Relations, Trade Wars, Donald Trump, and Imports
Political Geography:
China, Asia, North America, and United States of America