THE TTALK QUOTES


On Global Trade & Investment
Published By:
The Global Business Dialogue, Inc.
Washington, DC  Tel: 202-559-9316
No.10 of 2020
WEDNESDAY, FEBRUARY 12, 2020

Click HERE for Monday's Forbes quote on the coronavirus.
ON TARIFFS AND TRADE DEALS

 "Skeptics of President Donald Trump's bold way of negotiating trade ate a bit of crow this month [January 2020]. That includes this Iowa senator."

Senator Chuck Grassley
January 28, 2020
CONTEXT
Charles “Chuck” Grassley is the senior senator from Iowa and the chairman of the Senate Finance Committee. When it comes to U.S. trade policy, his voice his among the most important. That being the case, you have probably already seen the op-ed of his that appeared in The Des Moines Register at the end of last month. Even so, we wanted to take note of it in these pages. Today’s featured quote is the first two sentences of Senator Grassley’s article. In the next paragraph, he wrote:

I am not a big fan of tariffs. So when t he president imposed tariffs as leverage in world trade talks , I was skeptical. And yet, here we are starting the fourth year of his presidency and President Trump has succeeded in securing two major trade agreements that are good for America and good for Iowa.

Those agreements are the U.S.-China Phase One Trade Agreement, which President Trump and Vice Premier Liu He signed at the White House on January 15 and the United States-Mexico-Canada Agreement Implementation Act, which President Trump signed into law on January 29. Yes, there are caveats to both. The coronavirus crisis in China has added to doubts about China’s ability to meet the commitments it made in the Phase One agreement, and we are months away from full implementation of USMCA. Canada still needs to ratify the agreement, and once it does there will still be various technical “i”s to be dotted and procedural “t”s to be crossed before USMCA enters into force. That said, the Phase One China deal and USMCA are major achievements, the significance of which Senator Grassley highlighted in his article. 

He noted, for example, that “the phase one agreement commits China to purchase $32 billion worth of [U.S.] agricultural products over the next two years.” 

Canada and Mexico are Iowa’s biggest export markets, and USMCA maintains the state’s duty-free access to those countries for key commodities. Mexico, for example, is the single most important export market for U.S. pork. USMCA assures U.S. pork producers of stable, continued access to that market, and Iowa produces more pork than any other state. Senator Grassley also praised USMA’s new provisions on digital trade and the new rules for the critical North American automobile sector. 

COMMENT - THE CHORUS
In quoting from Senator Grassley’s article above, we highlighted the phrase “the president imposed tariffs as leverage in world trade talks.”   It seems to us that that one phrase encapsulates a series of core questions about U.S. and global trade policy in the 21st Century. Before we take these thoughts any further, there is a distinction we would like to make. One could argue that the various tariffs imposed during the administration of President Donald Trump are all part of the same cloth. But consider these three broad categories:

I)   The Section 232 tariffs on steel and aluminum, for which the justification was and is Section 232 of The Trade Expansion Act of 1962.  The same legal authority has been cited in connection with the Administration’s suggestion that tariffs might be placed on imported cars.

II)   The tariffs imposed on products of China under Section 301 of the Trade Act of 1974, and

III)   The “safeguard” tariffs on washing machines and solar energy cells and panels under Section 201 of the Trade Act of 1974. 

In this very short note on the Trump tariffs, our inclination is to consider only the first two – the 232 and 301 tariffs. Whatever the merits of the President’s decisions in the cases on washing machines and solar panels, they were petitioner driven and followed from recommendations for action from the International Trade Commission. Let’s save those for another time.

As for the Section 232 and 301 tariffs, the questions they raise are numerous and critical. For example:

Were these tariffs essentially lawless actions, at least in international terms? 

Did they needlessly undermine the global trading system, while creating costly uncertainties for companies around the world? Or

Were they a response to a system that was already broken?

Were they essential to addressing major challenges, especially those posed by the often-problematic nature of the Chinese economy and Chinese policies?

Could the problems the Trump Administration was seeking to address have been dealt with effectively by less disruptive means?

***

To say the least, these questions have been met with a loud and ever louder chorus of responses over the last couple of years. Not a chorus in unison, of course. More John Cage than George Handel. Whether it will resolve to harmony or even softer discord remains to be seen. But the questions are critical, and we shall return to them soon, both here and in other settings. 


SOURCES & LINKS
USMCA Paves the Way is a link to Senator Grassley's recent op-ed in The Des Moines Register. The same material is available here on Senator Grassley's website.
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