Hello, and welcome back to dc, where the event of the week will certainly be tuesday nights first presidential debate between donald trump and joe biden, who keeps holding on to a steady but not quite totally comfortable lead in the polls. the initial 30 minutes before viewers start to tune out could be crucial, and we will certainly be on the lookout for any trade angles to share with you.
Last week, my brussels colleague alan beattie told you to cheer up about eu-us trade relations in a biden administration after antony blinken, his main foreign policy adviser, vowed to end the artificial trade war with the eu (assuming of course that biden wins and trump relinquishes power in an orderly transition, gulp!) but it may come as no surprise to readers that we have a broad church of opinion here at trade secrets, and having given the matter some thought, i have some doubts. it may not be quite so quick and simple to unwind all the damage to transatlantic trade done over the past four years and thats my column for today. our tit for tat guest is todd tucker, director of governance studies at the roosevelt institute, while our chart of the day looks at us auto imports from china.
Instead of hurting our own citizens, and fighting with our democratic allies, we ought to be working on a fair approach to international trade and investment. tony blinken, the former deputy secretary of state under barack obama, is joe bidens leading foreign policy adviser, but he spoke at length about trade at a us chamber of commerce event last week, and it made some waves, in a good way.
The message to the eu was particularly reassuring, because it signalled that washingtons gripes with brussels had been blown out of proportion by the trump administration, and were solvable. it also indicated that repairing relations on the economic front was part of the broader strategic goal of a biden presidency.
But lets not get too carried away.
There are a number of practical and political obstacles to burying the hatchet with european countries that could slow or stall any progress early in a hypothetical biden administration. the good news is that one of the thorniest issues may be the easiest to take off the table.
Since he arrived at the white house, trump has been threatening to impose tariffs on foreign autos and auto parts on national security grounds, posing a big threat to germany and other european suppliers. but there was never any real political constituency in favour of car tariffs, and even trump, for all his bluster, demurred.
So there would arguably be little political cost and plenty of economic benefit in terms of preserving investment in america by the likes of bmw for biden to definitively rule out car tariffs. the next two problems are more tricky, because they will require negotiations. trump has imposed tariffs on a series of european imports because of last years world trade organization ruling that european subsidies to airbus were illegal. we are keenly awaiting genevas decision on us support for boeing.
The lifting of the levies will almost certainly depend on a resolution to the dispute through negotiations,and we cannot count on a settlement. after all, the eu and us have been arguing about planes for decades, so why stop now?
Then theres the matter of digital services taxes and the tariffs imposed and threatened on a range of eu countries, starting with france. a biden administration may not necessarily want to throw big tech under the bus in its first months in office, at least not on trade, so a unilateral removal of tariffs and threats doesnt seem likely. instead, it would probably spur talks at the oecd for a multilateral tax deal, and may be more serious about it compared with trump, but a compromise may take some time, and until then, the tariffs could well remain.
Last but not least, theres the question of the levies imposed by the us on steel and aluminium imports from around the world, which still apply to the eu. many us manufacturers despise the metals tariffs for raising their input prices, but there is still an influential coterie of rustbelt-based companies and union leaders who strongly back them. if biden wins wisconsin, michigan and pennsylvania back, his first move may not be to reward their loyalty by lifting those tariffs.
Once those four issues have been resolved, it may be time for us and eu officials to pick up where they left off a few years ago and see if theres scope to liberalise some trade, as opposed to simply clearing the field from the mines left by trump. and there too, the eu may have to be extremely patient. not only has biden announced a huge buy america federal procurement agenda, which has always irritated the europeans but, more importantly, he has said that any new trade deals could come only after he has secured large public investments in education, healthcare and green energy to make the us economy more equal and resilient. i doubt that will happen in a few weeks or months.
Theres still a lot we dont know about the biden trade agenda, starting with the identity of a future us trade representative. but it may take more than a snap of the fingers to get commercial relations back on track between the eu and the us.
Hmtx, a tile supplier, filed a claim on september 10 arguing that trumps list 3 tariffs on chinese imports, which came into effect in september 2018, were unlawful. more than 3,300 importers have launched similar complaints including tesla, which is demanding a refund on the tariffs, calling them arbitrary and capricious. chinese auto exports to the us have been hit as a result, though the pandemic has led to us car imports from other countries slumping even more.
Todd tucker, political scientist and director of governance studies at theroosevelt institute, joins us for three blunt questions.
Can trade tariffs ever really be moral as opposed to economic?
Earlier this month the wto ruled that us tariffs on chinese imports broke global trade rules. the trump administration had argued that its tariffs on chinese goods were motivated by moral concerns one of 10 general exceptions that can be raised as a defence. to the chinese, this was malarkey: a countrys laws dont necessarily reflect its moral values, and even if they did, the tariffs were applied on the basis of economic objectives rather than morals.
But it isnt so far-fetched to think that tariffs could have a moral foundation. tariffs are, at the end of the day, a policy tool, and we see all sorts of other policy tools being talked about morally. it would be cynical in the extreme to not take the entirety of the us legal code as having some relationship to moral values. as the anti-monopoly crusader barry c lynn argues in liberty from all masters, guarding against predation (foreign and domestic) and insisting on rule-following not only achieves desirable economic outcomes as measured by income or productivity growth: it also furthers equality, community trust, and freedom from domination.
What are the importers filing cases against trumps 301 tariffs on chinese goods likely to achieve?
The trump administration is not only getting hammered in geneva; its having trouble back home in the new york-based court of international trade. since september 10, more than 3,300 us importers have launched legal complaints over trumps tariffs on china. the importers know that, with the appellate body in a shambles, the wto cant do much to de-escalate the us-china conflict. so, they do what any good lawyer would advise them to do: reach for the remedy you have. according to some trade lawyers, the chances of victory are 50 per cent at best, but the costs of filing are low enough to merit a shot. the problem for them: presidents benefit from a lot of discretion under section 301 to deal with evolving disputes, which the past three years with china have certainly been. thats on top of the general judicial reluctance to scrutinise foreign policy strategies.
Nonetheless, its another headache for the administration, and an interesting parallel to the wto case. in geneva, the us morals claim was faulted for exempting too many importers from duties and engaging in too much cost-benefit analysis (how can a country put a number on its morals?) in new york, the us claim is being faulted by beneficiaries of those exemptions who allege too little quantification.
What do you think whoever becomes the next wto director-general needs to do first?
This conversation points the way: show that theyre open to reform of the bodys process and rules. a growing bipartisan chorus in washington is frustrated with the seeming inability of the trading body to address structural challenges stemming from chinas economic model. the disruptions of the trump era have also created more receptivity to root and branch reform of the wto among other advanced economies. the new director-general can gain a lot of political capital by showing how modernised trading rules can help countries attempts to address existential threats such as climate change and rising inequality.
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