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102. U.S.-China Technological Rivalry and Its Implications for Korea
- Author:
- Wonho Yeon
- Publication Date:
- 11-2020
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- Recent developments in advanced technology are changing the concept of hegemonic competition. The key feature of technologies in the 4th Industrial Revolution is dual-use. Emerging technologies such as 5G, AI, big data, robotics, aerospace, supercomputers, and quantum computer-related technologies can be used for both civilian and military purposes. The more you invest in the development of advanced technologies, the closer you will be to economic and military hegemony. Therefore, it is no wonder that the U.S. harbors great concerns facing the rise of China in these advanced technologies. To estimate and compare the innovation productivity of the U.S. and that of China, this study constructs a structural estimation model in which each country produces international patents using R&D expenditures and R&D researchers. Empirical results have presented novel findings indicating that China’s innovation productivity has surpassed that of the U.S. since 2015. At the same time we can observe that the U.S. has the world’s largest intellectual property surplus and keeps expanding it, while China’s intellectual property deficit has been growing every year. Given the two contradictory facts - China’s high innovation productivity and low intellectual property balance - we can conclude that China is strong at “innovation” but weak at “invention.” Knowing this, the U.S. eventually began to target this vulnerability. This is the U.S.’ Tech-Decoupling strategy. To achieve U.S.-China tech decoupling, the U.S. has been strengthening trade and investment sanctions against China. In specific, the U.S. has been utilizing the Export Control Reform Act (ECRA), Section 889 of the 2019 National Defense Authority Act, and the Foreign Investment Risk Review Modernization Act (FIRRMA). In return, China is responding to the U.S. sanctions with the new “Long March” strategy rather than a tit-for-tat strategy. In other words, China has been setting long-term aims and responding to the U.S. sanctions by improving institutional arrangements, refining industrial policies, and developing its own technologies such as “Dual-circulation strategy” and “New Infrastructure Plan.” Ironically, increasing pressure from the U.S. is expected to further strengthen China’s R&D capabilities in advanced technology and accelerate its competitiveness in emerging industries. With the onset of the 4th Industrial Revolution, China is rapidly closing the quality gap and technology gap in major industries where Korea has a comparative advantage. If Korea does not adequately respond to changes, it may be difficult to maintain a comparative advantage over China. Thus, now that U.S.-China tensions are intensifying, Korea is facing a pivotal moment in determining the future path of its economy.
- Topic:
- Science and Technology, Sanctions, Investment, Innovation, Trade, and Strategic Competition
- Political Geography:
- China, Asia, North America, Korea, and United States of America
103. Turning away from globalization? Trade wars and the rules of competition in global trade: Implications for the EU
- Author:
- Jan J. Michałek and Przemyslaw Wozniak
- Publication Date:
- 03-2020
- Content Type:
- Special Report
- Institution:
- Center for Social and Economic Research - CASE
- Abstract:
- The trade war between the U.S. and China began in March 2018. The American side raised import duties on aluminum and steel from China, which were later extended to other countries, including Canada, Mexico and the EU member states. This drew a negative reaction from those countries and bilateral negotiations with the U.S. In June 2018 America, referring to Section 301 of its 1974 Trade Act, raised tariffs to 25% on 818 groups of products imported from China, arguing that the tariff increase was a response to years of theft of American intellectual property and dishonest trade practices, which has caused the U.S. trade deficit. Will this trade war mean the collapse of the multilateral trading system and a transition to bilateral relationships? What are the possibilities for increasing tariffs in light of World Trade Organization rules? Can the conflict be resolved using the WTO dispute-resolution mechanism? What are the consequences of the trade war for American consumers and producers, and for suppliers from other countries? How high will tariffs climb as a result of a global trade war? How far can trade volumes and GDP fall if the worst-case scenario comes to pass? Professor Jan J. Michałek and Dr. Przemysław Woźniak give answers to these questions in the mBank-CASE Seminar Proceeding No. 161.
- Topic:
- Globalization, European Union, Economic Growth, and Trade
- Political Geography:
- China, Europe, and United States of America
104. US Trade Policy in the Biden Administration: The Challenge of China’s Rise
- Author:
- Simon Lester and Huan Zhu
- Publication Date:
- 12-2020
- Content Type:
- Special Report
- Institution:
- Georgetown Journal of International Affairs
- Abstract:
- The Trump administration has left the Biden administration a number of difficult trade policy issues to deal with, but the biggest challenge is likely to be China. The Biden administration will need to find a way forward in the increasingly tense US-China relationship, which covers aspects of trade, as well as foreign policy, security, and human rights issues. This article describes the rise of China as a priority in US trade policy, reviews the current set of US-China trade issues, and makes suggestions for the Biden administration going forward.
- Topic:
- Foreign Policy, Grand Strategy, Multilateralism, Trade, Donald Trump, and Joe Biden
- Political Geography:
- China, Asia, North America, and United States of America
105. Japan and South Korea Can Lead Post-Pandemic East Asia
- Author:
- Fumiko Sasaki
- Publication Date:
- 06-2020
- Content Type:
- Special Report
- Institution:
- Georgetown Journal of International Affairs
- Abstract:
- The COVID-19 pandemic has advanced two trends: the US-China confrontation and the increasing importance of soft power in the networked world. These developments present Japan and South Korea in particular—caught as they are between China and the United States—not only with serious challenges but also a grand opportunity.
- Topic:
- Governance, Grand Strategy, Multilateralism, Trade, Pandemic, COVID-19, and Health Crisis
- Political Geography:
- Japan, China, Asia, South Korea, and United States of America
106. Kashmir, India, and The United States: Does Economics Trump Human Rights?
- Author:
- Maya Mirchandani
- Publication Date:
- 06-2020
- Content Type:
- Special Report
- Institution:
- Georgetown Journal of International Affairs
- Abstract:
- The cauldron of conflict in South Asia has been bubbling since August 5, 2019 when the Hindu nationalist Bharatiya Janata Party (BJP)-led Indian government diluted the provisions of Article 370 of the Constitution of India, giving special status to the disputed state of Jammu and Kashmir, control over which remains at the core of the international dispute between India and Pakistan. Three of the four wars fought between India and Pakistan have been over Kashmir, and the separatist movement (backed by Pakistan) demanding independence has spawned the growth of both insurgent and terrorist groups waging war against the Indian state. India’s sudden, unilateral decision to withdraw Kashmir’s special provisions drew sharp reactions at home and abroad. The Indian government subsequently trifurcated the state, shut down the internet in Kashmir, and detained much of Kashmir’s political leadership without charges in the interest of “public safety.” Muscular action in Kashmir, against a backdrop of what many economists are now calling a structural economic decline in India have led to strong disruptions in India’s diplomatic ties, especially with the United States.
- Topic:
- Economics, Human Rights, Business, and Trade
- Political Geography:
- South Asia, India, Kashmir, North America, and United States of America
107. The Future of US-Kazakhstan Relations
- Author:
- Wilder Alejandro Sanchez
- Publication Date:
- 05-2020
- Content Type:
- Special Report
- Institution:
- Georgetown Journal of International Affairs
- Abstract:
- Since achieving its independence after the fall of the Soviet Union, Kazakhstan has maintained warm relations with the United States. The country regards the United States both as a potential source for trade and investment and as a partner to balance the influence of Russia and China in Central Asia, a perspective which underlines the importance of US Secretary of State Mike Pompeo’s February visit to Kazakhstan and Uzbekistan. During the visit, Pompeo was generous in his praise for Kazakhstan and highlighted the importance of bilateral ties, while criticizing China’s detention of hundreds of thousands of Uyghurs, Kyrgyz, and ethnic Kazakhs in so-called “re-education” camps.
- Topic:
- Security, Terrorism, War, Bilateral Relations, Conflict, and Trade
- Political Geography:
- Russia, Central Asia, Kazakhstan, North America, and United States of America
108. Iran-South Korea Humanitarian Trade Requires U.S. Assurances
- Author:
- Katherine Bauer and Kevin Mathieson
- Publication Date:
- 07-2020
- Content Type:
- Policy Brief
- Institution:
- The Washington Institute for Near East Policy
- Abstract:
- Tehran is pressing Seoul regarding the billions in Iranian oil revenues held by South Korean banks, creating an opportunity to expand the U.S. humanitarian trade mechanism. On July 21, South Korea’s Foreign Ministry summoned the Iranian ambassador to lodge a complaint over Tehran’s heightened rhetoric regarding access to funds frozen in South Korea. The week before, Iran’s Foreign Ministry spokesperson had accused Seoul of having a “master-servant relationship” with Washington, while the governor of the Central Bank of Iran (CBI) had previously threatened legal action to access the funds, which Tehran says it plans to use for humanitarian purchases. Although the U.S. government authorized use of the funds for such purposes in February, South Korean banks appear hesitant to move forward without additional U.S. assurances—a reluctance compounded by the $86 million fine that U.S. regulators levied on the Industrial Bank of Korea (IBK) in April for failing to identify large-scale Iranian money laundering. With COVID-19 cases on the rise again in the Islamic Republic, Washington should work with Seoul to ensure that trade for medicine, equipment, and other humanitarian items moves forward—albeit with strict oversight.
- Topic:
- Foreign Policy, Government, and Trade
- Political Geography:
- Iran, Middle East, Asia, South Korea, and United States of America
109. 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:
- Working Paper
- Institution:
- Canadian Global Affairs Institute (CGAI)
- 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:
- International Trade and Finance, Multilateralism, Trade, and Donald Trump
- Political Geography:
- Canada, North America, and United States of America
110. Challenges and Prospects for the CPTPP in a Changing Global Economy: Taiwanese Accession and Canada’s Role
- Author:
- Hugh Stephens
- Publication Date:
- 12-2020
- Content Type:
- Working Paper
- Institution:
- Canadian Global Affairs Institute (CGAI)
- Abstract:
- In the past, Canada has had to deal with the matter of Taiwan very delicately. China considers Taiwan to be an integral part of the nation: a rogue province that must eventually be reunified with the mainland. Since Canada relies much more on trade with China than with Taiwan, the stakes have favoured policies that avoid engaging with Taiwan in ways that would unnecessarily irritate China. As a result, there has been little appetite here for negotiating a bilateral trade deal with Taiwan. That attitude is finally changing. One main reason is because China is already angry with Canada, and vice versa. Relations between the two countries are at an all-time low, and domestic support for accommodating China is minimal. As a result, Canada is freer than before to consider negotiating a trade agreement with Taiwan. At the same time, Taiwan is interested in joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), to which Canada is already a party. By supporting Taiwan’s accession to the CPTPP, Canada can achieve a free-trade agreement with Taiwan without having to negotiate one bilaterally. The ability to do so under the aegis of a multilateral agreement should serve to mitigate any remaining concerns that China might further retaliate against Canada directly. However, striking back at China is not a reason for Canada to support Taiwan’s accession to the CPTPP. We should do so because it is in the interest of Canada and the other members of the CPTPP to add to the strength of the organization by welcoming an economy that is an important global trader and a key player in global supply chains. In addition, Taiwan is a country that is clearly willing and able to accept CPTPP disciplines. Canada should move quickly and enthusiastically to support Taiwan’s accession. The benefits of having Taiwan join Canada in a free-trade agreement are obvious. The opportunity to make it a reality is finally here. The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which entered into force on Dec.30, 2018 for six of the 11 signatories that had completed ratification at that time (Australia, Canada, Japan, Mexico, New Zealand and Singapore),1 is a beacon of hope in a dark, protectionist landscape. Along with the Regional Comprehensive Economic Partnership (RCEP) agreement, which was signed on Nov. 15, 2020, the CPTPP advances the trade and investment liberalization agenda at a time when protectionist measures by some major trading countries are threatening to undo decades of progress. The commitments and new disciplines of the CPTPP are particularly important because of malaise infecting the World Trade Organization, where the work of the Appellate Body has now ground to a halt because of actions by the United States, and to offset the negative impact of the U.S.-China trade war now underway.
- Topic:
- Government, International Trade and Finance, Partnerships, and Trade
- Political Geography:
- China, Canada, Taiwan, North America, and United States of America