Our So-Called Foreign Policy: A Call to Return to Failed U.S. China Strategies

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alliances, allies, Barack Obama, Biden, China, Donald Trump, engagement, FOREIGNPOLICY.com, George W. Bush, Indo-Pacific, intellectual property theft, Michael J. Green, national security, Our So-Called Foreign Policy, Paul Haenle, tech transfer, TPP, Trans-Pacific Partnership, World Trade Organization, WTO

When it comes to China-related issues in particular, supposed American experts who have long completely missed the mark have developed a head-exploding habit of assuming that they have anything useful to say on the matter going forward. Here’s a recent example.

Now these failed economic and foreign policy establishmentarians have hit new heights (or is is “depths”?) of chutzpah. As laid out in this article last week on FOREIGN POLICY magazine’s website, two typical figures are now attacking President Biden’s approach to the People’s Republic for taking too Trump-ian a turn, and blaming his alleged mistakes on learning the wrong lessons from the records of pre-Trump Presidents.

Whereas both the Biden and Trump teams, they write, have accused their predecessors of naively assuming that “engagement would lead to a democratic and cooperative China,” in fact, since the initial Nixon Era opening to Beijing, American leaders have fully understood that China’s democratization could never be a foregone conclusion, and have always “combined engagement with strategies to counterbalance China through alliances, trade agreements, and military power.” In other words, far from being disastrously pathetic failures, America’s pre-Trump China policies were actually as successful as was humanly possible,  And current leaders should emulate some of their principal choices. 

Even the administrations of George W. Bush and Barack Obama, they continue, which faced a China whose wealth and power had begun growing stunningly, had foreseen the possibility of Beijing turning more aggressive, and responded to warning signs exactly as events prescribed. Further, their decisions to stay on an engagement track as well were entirely shrewd and responsible. After all, major potential benefits could still plausibly be expected – because during those years, “the question of how China would use its growing power was open to shaping.”

Indeed, say authors Michael Green (a former Bush-ie) and Paul Haenle (previously both a Bush-ie and Obama-naut), a harder line at that time would have amounted to a policy of “strangling China” that also would have been opposed by major allies and the American people, “both of whom mainly saw China as a partner [and] would not have supported containment and decoupling.“

All that went wrong was that that darned current Chinese dictator Xi Jinping assumed power and, well, just ruined everything with his belligerently expansionist aims and actions, and his reversal of much Chinese economic liberalization. The 2008-09 financial crisis didn’t help, either, according to Geen and Haenle, because it convinced Beijing that “the West was declining and the East is rising.”

All the same, say Green and Haenle, the Biden administration should

>recognize that the two immediate pre-Trump presidents had the security side of China policy fundamentally right with their strategy of maintaining and strengthening U.S. alliances with major Asian countries (an odd recommendation since that’s what Mr. Biden is already trying to do); and

>on the economic side, “reconstruct some of the economic statecraft that underpinned U.S. strategies toward China in the past” – principally reviving the World Trade Organization (WTO) as “an important tool to hold China to account” for its predatory practices and joining the current version of the Trans-Pacific Partnership (TPP), which can “bring the weight of almost two-thirds of the world economy to the table in demanding reciprocal agreements from China” and “force Beijing to play by the rules or lose hundreds of billions of dollars in trade as tariffs and market barriers among the rule-abiding economies went down.”

But these arguments only strengthen the case that Green, Haenle and their ilk should be kept as far away as possible from U.S. policymaking toward China.

Regarding security issues, their contention that Bush-Obama hedging was responsible and understandable ignores all the ways in which China had been undercutting U.S. national security interests long before the Age of Xi began in 2012. For example, it played a key role in creating Iran’s nuclear weapons program starting in the mid-1980s. It’s been a major supporter of North Korea’s economy – and therefore an enabler of Pyongyang’s nuclear weapons development for decades. And it’s beefed up its military presence in the South China Sea – including island grabs that violate international law – for nearly as long.

And Green and Haenle seem to need some improved calendar-reading skills, as financial crisis-borne hubris to which they attribute much of Beijing’s recent bellicosity dates from 2008-09 – three to four years before Xi became China’s top leader. Against this backdrop, it’s glaringly obvious that, judged by actual results, the various hedging statements and even counter-measures mentioned by Green and Haenle counted for exactly squadoosh.

In addition, there’s compelling evidence that the Chinese thought so, too. As I reported in 2018, a former U.S. Chief of Naval Operations (the Navy’s senior-most officer) has stated that his Chinese counterpart told him that “he thought the United States would have a more forceful reaction when China began” one of its key island-building phases during the former’s tenure – during the Obama years.

P.S. – this behavior doesn’t exactly jibe with the notion that Beijing was blown away by Bush-Obama alliance-rallying, either.    

If anything, the Bush and Obama China economic policies were worse, at least in terms of long-run security impact. Both presided virtually passively as

>China’s economic predation helped produce trade surpluses that put literally trillions of dollars at Beijing’s disposal to devote to its military buildup and prevent any guns versus butter tensions from emerging;

>China stole intellectual property seemingly at will, which supercharged weapons development, too; and

>U.S. multinational companies felt perfectly free to transfer cutting-edge defense-relevant technology to Chinese partners that were first and foremost agents of the Chinese state, and to teach perhaps hundreds of thousands of Chinese employees and students how to use this knowhow – and ultimately how to develop more on their own.

As for the authors’ economic recommendations, they’re simply laughable. The TPP, after all, contained a wide-open back door through which goods with lots of Chinese content could enter the proposed free trade – largely because none of the other TPP signatories wanted to disrupt production chains in which China plays a key role.

Meanwhile, that robust China-Asia/Pacific trade and investment, plus the difficulty that Mr. Biden has run into in mobilizing support outside Europe against Russia’s invasion of Ukraine is telling all but the willfully deaf that the United States will suddenly become able to increase the WTO’s effectiveness against China’s mercantilism. 

As Green and Haenle suggest, being able to learn from both mistakes and successes is one of life’s most valuable skills.  Sadly, all that their article demontrates is either that they can’t tell the difference, or that they stubbornly refuse to.

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(What’s Left of) Our Economy: Now Biden’s Gone America First on the World Trade Organization

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America First, Biden administration, GATT, General Agreement on Tariffs and Trade, globalism, international law, national security, sovereignty, Trade, Trump administration, World Trade Organization, WTO, {What's Left of) Our Economy

If someone told you that the U.S. government has outsourced to an international organization the legal authority to decide when American national security is endangered – and inevitably how it can respond – you’d probably think they were pretty out there, or shamelessly lying.

Except that’s exactly what happened in 1947, when globalist U.S. leaders agreed to the body of rules aimed at governing international trade in the post-World War II world, and what remained the case for decades afterward. And although last week, the Biden administration moved decisively to restore sanity to U.S. trade policy in this respect, it didn’t make the complete policy about face that’s still needed.

Since protecting a country’s security is by far the Number One responsibility of any national government, such governments need to be the supreme deciders of how to carry out this mission on an ongoing basis. Further, the legitimacy of this authority logically goes double when democratic national governments like the United States’ are concerned. Why should any other power or organization hold any ability to veto or even influence choices made by the American people’s duly elected representatives to ensure their system’s safety, much less survival? Indeed, on what valid basis could such an ability actually exist? The kindness of strangers? Their superior wisdom?

These maxims are so self-evident (as America’s Declaration of Independence might put it), that even the main body of international law (a system not known for its pragmatism) recognizes them as fundamental attributes of a country’s sovereignty – its bedrock right to take whatever steps it considers needed to keep itself in existence. And how can this security be maintained if its leaders lack the unfettered ability to figure out when threats are present and what they consist of, and if they constantly need to be worrying about is whether the policies they choose pass international muster or not?

But the crucial importance of national sovereignty wasn’t so self-evident to American leaders in World War II’s aftermath. For in the bylaws of the General Agreement on Tariffs and Trade (GATT) – the global trade regime that was turned into the World Trade Organization (WTO) at the beginning of 1995 – they agreed to an article that safeguarded a member state’s right to take “any action [to restrict trade] which it considers necessary for the protection of its essential security interests.” Crucially, however, this same Article XXI then proceeded to set out three criteria that such actions needed to meet in order to pass the legality test – including the specification that trade restrictions take place “in time of war or other emergency in international relations.”

These U.S. leaders might have had some decent excuses. First, this was an age when the United States bestrode the world like a titan. How could it be plausibly threatened by mere words on paper? Further, countries outside the Communist camp (none inside signed onto the new trade pact until the mid-1960s) were hardly likely to want to tie America’s military hands since most relied so heavily on U.S. protection.

Second, the GATT lacked effective procedures for enforcing its rules. And third, Washington has always assumed that the Article XXI’s reference to actions that members “consider necessary” means that the entire measure (including the insistence that trade restrictions are legal only in certain types of international conditions) is “self-judging” – i.e., that members’ have the final say over whether it can both define its security interests and the situations in which they can be invoked to override the GATT/WTO’s ban on trade curbs.

But however understandable the U.S. position might have been in 1947, dramatic changes in national and global circumstances over decades should have alerted Washington long ago that Article XXI was bound to cause trouble. Chiefly, America’s predominant global military and economic role inevitably eroded. Many of its allies became formidable economic competitors. The line between military goods and civilian goods – never completely clear – became thoroughly blurred as products incorporating “dual use” technologies proliferated. And the birth of the WTO gave the world trade system a much more effective enforcement system.

Here it’s important to be really specific. It’s not that the WTO can muster a police force, march into the District of Columbia, and compel U.S. officials to follow its dictates. The effectiveness of this dispute resolution system is based on its authority to permit countries claiming to be harmed by U.S. (or any members’) trade practices to respond with retaliatory tariffs – which can be strategically targeted on the kinds of domestic industries powerful enough to launch lobbying campaigns able to force their governments into compliance.

So it’s easy to see why many WTO members – most of which rely heavily on net exporting to the U.S. market to achieve satisfactory levels of growth and employment) would want to use Article XXI to undercut American sovereignty in order to gain advantages for their own industries – including allies who had learned that the United States would continue protecting them and tolerating their defense free-riding even after serious provocations.

Earlier this month, this gambit paid off in spades, as the WTO declared illegal the U.S. tariffs avowedly imposed on steel and aluminum imports for national security reasons by former President Trump in spring, 2018.

Fortunately, in reality, none of the plaintiff countries can legally counter-tariff these U.S. curbs – because that same former President Trump effectively neutered the WTO dispute-resolution system by leaving seats on its appeals panels empty and preventing that body from convening to handle any next legal steps. And to his credit, President Biden has declined to appoint replacements as well.

Also to its credit, though, his administration “strongly rejected” these WTO rulings, and declared that “The United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement and the WTO has no authority to second-guess the ability of a WTO Member to respond to a wide-range of threats to its security….The United States will not cede decision-making over its essential security to WTO panels.”

Unfortunately, the Biden administration didn’t take this position when it should have – once these foreign suits were filed to begin with. In fact, the administration not only (weirdly) agreed that the WTO does have jurisdiction when national security concerns come into play, but only in the sense that it was required to approve of members’ freedom to invoke these considerations to justify trade barriers. It also went to ridiculous lengths to defend the U.S. position as if WTO members were not able to self-judge their national security claims – to the point of trying to show grammatically that the plaintiffs were misreading Article XXI grammatically.

Think I’m kidding? Here’s how the one of the WTO reports presenting the anti-U.S. ruling described the U.S. effort, including direct quotes from the American brief:

“A premise of the United States’ characterization of Article XXI (b) as ‘self-judging’ is that, based on ‘the text and grammatical structure’ of the provision, ‘the phrase ‘which it considers’ qualifies all of the terms in the single relative clause that follows the word ‘action’. According to the United States, this ‘single relative clause’ in Article XXI(b) ‘begins with ‘which it considers necessary’ and ends at the end of each subparagraph’ and ‘describes the situation which the Member ‘considers’ to be present when it takes such ‘action’. The United States argues from this premise that, ‘[b]ecause the relative clause describing the action begins with ‘which it considers’, the other elements of this clause are committed to the judgment of the Member taking the action.’ The United States thus posits an ‘overall grammatical structure’ of Article XXI(b) according to which a panel may not ‘determine, for itself, whether a security interest is ‘essential’ to the Member in question, or whether the circumstances described in one of the subparagraphs exists'”.

For their part, the plaintiff countries, along with the WTO tribunals, dredged up copies of The Shorter Oxford English Dictionary, Strunk and White’s classic The Elements of Style, and Merriam-Webster’s Guide to Punctuation and Style, among other such sources, to undercut such claims.

But even though the plaintiffs’ complaints are stuck in international legal limbo, the U.S. decision to legitimize and play this game has resulted in an international organization still proclaiming, without challenge, its absolute right to tell American leaders when they are or are not in a war (dictionary definitions are used as the ultimate standard), and even when they or any part of their national economy do and do not face an “international emergency” (a decision the panel specifically arrogates to WTO judges).

Dispositive substantive arguments can be raised against all the WTO tribunals’ conclusions. For example, as stated above, ensuring a nation’s security adequately is a challenge that doesn’t only arise during especially fraught times in international politics. It typically requires steps taken during more tranquil periods to ensure that military capabilities are adequate the moment trouble starts. WTO rules that prevent these measures from being taken until crises break out could simply ensure that they’re not in effect in time for the United States to prevail.

Yet making these points amounts to falling into the same trap into which the Biden administration’s trade litigators ensnared themselves and the country. Instead, Washington should both make emphatically clear that once U.S. authorities justify a trade-restricting measure, the WTO is irrelevant (as the Biden administration eventually declared) and then boycott whatever proceedings are convened.

Plaintiff countries would still be free to try to address these problems either through standard bilateral diplomacy, or counter-measures of their own, or some combination of the two, and let the party with the most leverage come out on top. Trade purists dismiss these practices as descending into a dangerous economic “law of the jungle,” but the United States and the European Union resorted to just this approach to resolve a long dispute about aircraft production subsidies outside WTO auspices. And freed of the cumbersome and inflexible adversarial framework imposed by the trade body’s legalistic procedures, they reached an agreement that satisfied all major stakeholders – including U.S. unions.

Handling these disputes bilaterally will strongly tend to produce lasting results and work in the U.S.’ favor because (a) agreements will reflect real world power balances – not the rulings of a system whose only raison d’etre is to define power out of existence in favor of an abstract equitism that’s completely divorced from global circumstances on the ground – and (b) because the United States enjoys an abundance of such power.

That the globalist Biden administration is acting as willing as the America First-y Trump administration to recognize that, at least when it comes to national security, tinternational trade law is “an idiot” (to quote Dickens) signals an encouragingly fundamental turn in America’s approach to the global economy. Even better would be for the President to make the break as clean and unmistakable as possible.

Following Up: Podcast Now On-Line of National Radio Interview on a Dawning U.S.-China Trade Policy 2.0

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CBS Eye on the World with John Batchelor, China, decoupling, Following Up, Gordon G. Chang, manufacturing, tariffs, Trade, U.S-China Economic and Security Review Commission, World Trade Organization, WTO

I’m pleased to announce that the podcast of my interview last night on the nationally syndicated “CBS Eye on the World with John Batchelor” is now on-line.

Click here for a timely discussion, with co-host Gordon G. Chang, about the latest evidence that both Democrats and Republicans in Washington believe that America’s approach to economic relations with China needs a total rethink.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

Making News: Back on National Radio Talking Big Changes in U.S. China Trade Policy

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Biden administration, CBS Eye on the World with John Batchelor, China, decoupling, Making News, Trade, U.S-China Economic and Security Review Commission, World Trade Organization, WTO

I’m pleased to announce that I’m scheduled to be back tonight to the nationally syndicated “CBS Eye on the World with John Batchelor.” Our subject: a major new sign of bipartisan consensus in Washington that America’s China trade policy needs to get back to Square One.

The segment is scheduled to to start at 10:30 PM EST, but John’s entire show – on between 9 PM and midnight EST – is always a great listen, and you can tune in live at links like this. As always, moreover, I’ll post a link to the podcast as soon as one’s available.

And keep on checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: The IMF Strikes Out on Supply Chain Security

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antitrust, Biden administration, Buy American, CCP Virus, competition, coronavirus, COVID 19, health security, IMF, International Monetary Fund, manufacturing, national security, reshoring, supply chains, Ukraine, Ukraine-Russia war, World Trade Organization, WTO, {What's Left of) Our Economy

An impressive body of evidence (see, e.g., here and here) is now shedding light on the dangers of letting specialists in a single field (in this case, public health) dictate policy toward a multi-dimensional challenge like the CCP Virus. For all their supposed expertise on virology and epidemiology, the leaders of the U.S. Centers for Disease Control and Prevention and the National Institutes of Health simply weren’t qualified to take into account the affects of indiscriminate lockdowns and mandates on measures of well-being like economic growth, employment and living standards; educational attainment; and even other dimensions of physical and psychological well-being like opioid use and childhood development.

The best outcomes were always likeliest to come from elected leaders able to see the bigger picture (at least in theory) by drawing on the views of experts from all relevant disciplines.

Just recently, the International Monetary Fund (IMF) has unwittingly exposed the dangers of letting economists dictate national responses to the varied perils underscored first by the pandemic and now by the Ukraine war of over-reliance on problematic suppliers of critical goods in a wide range of industries.

According to a chapter in its new forthcoming World Economic Outlook, the kinds of “Policy proposals to reduce dependence on foreign suppliers, especially in strategic sectors [that] have gained prominence…including in major markets such as Europe and the United States…may be premature, if not misguided.” Instead, “greater diversification in international sourcing of inputs and greater substitutability in input sourcing” would be a much better approach to strengthening supply chain resilience and ensuring adequate access to these products.

But at least when it comes to the United States, the IMF doesn’t even describe the situation accurately. It’s true that during his presidential campaign, Joe Biden set a goal of boosting U.S. manufacturing output, that a principal aim has been improving supply chain security, and that one element of his plan has been to replace imports with U.S.-made goods via better enforcement of the federal government’s Buy America programs. Moreover, the President has been following through.

But it’s also true, as I’ve pointed out repeatedly, that the Biden approach also includes exactly the kind of supplier diversification urged by the IMF – specifically to countries like treaty allies that supposedly deserve to be “trusted.”

And even though these new supply chain policies are mainly intended to achieve crucial goals like enhanced national security and health security, the Fund’s study defines these aims out of existence. As observed in the Wall Street Journal‘s coverage, “The analysis didn’t address that some countries are seeking to bolster domestic supply chains as a national-security issue, and not strictly as the most economically efficient option.”

In fact, like the Biden administration, the IMF study also overlooks a major lesson on the reliability of diversity that became glaringly obvious during the worst days of pandemic. During that terrible first wave in early 2020, no fewer than 80 countries imposed limits on their exports of healthcare goods. These countries – which clearly prioritized the health of their own citizens over that of foreign populations, much less over global trade rules – included all the major economies of Western and Central Europe (even the United Kingdom), along with South Korea.

Yet this IMF study fails on some major purely economic grounds, too. Most important, it ignores the United States’ vast and distinctive degree of self-sufficiency in a wide range of goods and services, and its impressive potential to achieve more. As I wrote in this 2019 article, there’s no reason to doubt that the huge and already highly diverse U.S. economy can handle the great majority of its own economic needs while maintaining entirely satisfactory degrees of the benefits of competition (e.g., low prices, high quality, continuous innovation) by taking anti-trust enforcement much more seriously.

In short, I noted, what’s essential for keeping pressure on businesses to keep getting better isn’t “international competition.” For an economy the scale of the United States, domestic competition should nearly always suffice if government policies help maintain its intensity.

In fact, some confirmation of this claim just appeared in a new study by the World Trade Organization (WTO) on how the Ukraine war could well affect global trade and economic development. Looking further down the road, the WTO examined five possible post-Ukraine scenarios for global trade, with the most extreme being the splitting of the world “into two hypothetical blocs with only low trade barriers remaining within each bloc. This means that trade between blocs would be replaced by trade within blocs in this scenario.”

The WTO’s economists believe that this outcome would reduce global output of goods and services by five percent as compared with a future in which world trade patterns remain basically the same. But the cost to the U.S. economy was much less – just one percent.

The WTO calls all these projections under-estimates because trade within these blocs probably won’t increase, and because for several other reasons, such decoupling would create a much messier and even less efficient structure for global trade.

Yet the United States, for its part, has ample incentive to replace its imports of relatively unsophisticated manufactures from East Asia with purchases from Mexico and Central America – curbing immigration. In fact, the American textile industry has just informed us that this scenario is beginning to play out.

Moreover, there’s no reason to think that even WTO’s relatively optimistic decoupling projections for the United States have taken into account America’s extensive possibilities for replacing imports with domestic goods if competition levels within the country are ratcheted up by breaking up monopolies and oligopolies.

Finally, both the IMF and the WTO completely overlook the enormous purely economic advantages the U.S. economy would reap from decoupling – like better chances of preventing and mitigating the staggering economic costs of future pandemics, and the greater certainty businesses would enjoy from reduced vulnerability from geopolitical turmoil abroad, or from the caprice that even allied countries displayed during the pandemic. Think of decoupling as insurance – which businesses and individuals alike seem to view as a pretty economically sensible investment, even if the IMF and the WTO apparently have never heard of the concept.

(What’s Left of) Our Economy: Lots to Like in Biden’s (Trump-y) China Trade Policy Vision

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allies, Biden, Biden administration, Center for Strategic and International Studies, China, Comprehensive and Progressive Agreement for Trans-Pacific Partnership, CPTPP, decoupling, Donald Trump, economics, economists, exports, Katherine Tai, managed trade, multilateralism, multinational companies, Phase One, tariffs, U.S. Trade Representative, USTR, Wall Street, World Trade Organization, WTO, {What's Left of) Our Economy

Despite my strong interest in U.S.-China trade issues, I’d originally decided not to post on chief U.S. trade official Katherine Tai’s Monday speech on the Biden administration’s strategy for these challenges for two main reasons. One, her remarks were widely (and reasonably well) covered by major news organizations; and two, the big news they revealed was, as expected (including by me), making clear that the Trump administration’s sweeping and often steep tariffs on Chinese goods would remain in place for the foreseeable future.

Since then, however, the think tank that hosted the event (the Washington, D.C.-based Center for Strategic and International Studies) has posted not only her presentation as delivered, but the transcript of a lengthy Q&A session that followed. And those exchanges, along with passages from her speech that have received little attention, shed lots of new light on a great many other significantly promising points about the Biden China trade approach that Tai only touched on in her speech, and one-and-a-half points that are still worrisome.

The grounds for encouragement?

First, Tai made an especially forceful and pointed argument that the pre-Trump China trade and broader economic policies (which Biden strongly supported as a Senator and as Barack Obama’s Vice President) had been a major failure. In her prepared text’s words, “For too long, China’s lack of adherence to global trading norms has undercut the prosperity of Americans and others around the world.”

In addition, China’s predatory policies (my term, not hers)

“have reinforced a zero-sum dynamic in the world economy where China’s growth and prosperity come at the expense of workers and economic opportunity here in the U.S. and other market-based democratic economies. And that is why we need to take a new, holistic, and pragmatic approach in our relationship with China that can actually further our strategic and economic objectives for the near term and the long term.”

In other words, after decades of promises and hopes that commerce between the two countries would become a winning proposition for both (as mainstream economists also insisted), the Biden administration has officially declared such interactions to have been win-lose – with the United States and especially its workers the losers.

Indeed, Tai wasn’t even close to being finished horrifying the economic mainstream or the corporate China Lobby. She pointedly refused to call Trump’s January, 2020 Phase One trade deal a “failure,” and declared that even though it “did not meaningfully address the fundamental concerns that we have with China’s trade practices and their harmful impacts on the U.S. economy,” it ”is useful and has had value in stabilizing the relationship.”

In addition, going forward, Tai told her audience that more trade Trump-ism was likely. She indicated that the administration might approve a new Trump-like initiative to impose new tariffs to enforce Phase One more effectively. She also poured decidedly cool water on the idea that the President would move to join a Pacific Basin trade deal (now called the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership” or CPTPP) touted as a means of containing China, but nixed by Trump partly because its rules created wide open backdoors for goods with lots of China content.

More broadly, Tai signalled that the United States was now perfectly fine with dispensing with free trade orthodoxy in practice much of the time in favor of “managed trade” – which a questioner defined correctly as “governments setting targets [for exports and imports] and trying to achieve them” and which was embodied in China’s Phase One commitments (not yet satisfied) to boost buys of U.S. imports. ‘

Tai depicted such arrangements as having “evolved out of a frustration with the previous model. [which she described as “let’s seek market access and then, you know, let the chips fall where they may.”] And so the question that I bring to this issue that you’ve presented is not ideologically how do I feel about it, but what is actually going to present results and what is actually going to be effective.”

And she plainly portrayed them in a much more favorable light than the notion of relying on the World Trade Organization (WTO), which trade policy traditionalists have fetishized as the globe’s best hope for creating an international trade system that promoted free and fair competition through a set of detailed rules and regulations, along with a supposedly impartial legal system for resolving disputes.

In Tai’s words, however, “We brought 27 cases against China, including some I litigated myself, and through collaboration with our allies. We secured victories in every case that was decided. Still, even when China changed the specific practices we challenged, it did not change the underlying policies, and meaningful reforms by China remained elusive.”

As a result, Tai said, “as much as we will continue to invest and commit and try to innovate in terms of being a member at the WTO and seeking to bring reform to the WTO…we also need to be agile and to be open-minded and to think outside of the box with respect to how we can be more effective in addressing the concerns that we really have been struggling to address with China on trade.”

In addition,Tai also surely shocked her audience (and yours truly – pleasantly) by openly questioning the decades-long bipartisan push to increase U.S. exports to China:

“I think that part of the story of the U.S.-China trade relationship over these recent few decades has been about this thirst on the part of our business sector in particular for increased market access to China. In business sector I include our agriculture sector, obviously. You know, I think along the traditional lines of the way we’ve thought about trade and how benefits come from trade, it has been very focused on securing market access. I think that what we’ve seen is our traditional approach to trade has run into a lot of realities that are today causing us to open our eyes and think about, is what we’re looking for more liberalized trade and just more trade or are we looking for smarter and more resilient trade?”

With China facing mounting economic troubles due largely to its Ponzi-like real estate housing system and a stagnating population, that’s a valuable warning for American producers who still expect China to keep growing spectacularly and to offer gigantic, ever-expanding new markets for their goods and services.

Nonetheless, Tai specified that the Biden administration isn’t on board with widespread calls to decouple America’s economy from China’s:

“I think that the concern, maybe the question is whether or not the United States and China need to stop trading with each other. I don’t think that’s a realistic outcome in terms of our global economy. I think that the issue perhaps is, what are the goals we’re looking for in a kind of re-coupling? How can we have a trade relationship with China where we are occupying strong and robust positions within the supply chain and that there is a trade that’s happening as opposed to a dependency?”

I understand Tai’s reluctance to embrace decoupling openly. It runs too great a risk of making life in China for U.S. companies doing entirely ordinary, unobjectionable business there even harder than it’s already become, especially lately. But the reference to “re-coupling” struck me as totally unnecessary – and as unrealistic as the notion that Washington is skilled enough to preserve just as many connections to make sure that bilateral commerce does serve mutual legitimate interests, but not so many as to maintain or worsen dangerous dependencies on China, or increase its economic and technological power.

And Tai’s speech lauded the Biden aim of dealing with the China economic and technology challenges in concert with U.S. allies way too enthusiastically. As I’ve written, my prime worry has always been that priotizing this kind of multilateral approach will force the US to accept lowest-common-denominator measures that will always be sorely inadequate because so many of these allies depend so heavily on trading with and investing in China.

Nevertheless, Tai declared that “vitally, we will work closely with our allies and likeminded partners towards building truly fair international trade that enables healthy competition,” and even called this approach “the core of our strategy” on China and trade generally.

As I’ve written, U.S. Trade Representatives are rarely the last word on trade policy. So whatever Tai’s just said, I’m still not ruling out the possibility that the President will use some pretext (promises of climate change progress?) to bring back the bad old days. Certainly, that’s what Wall Street and multinational businesses want. But these Tai observations have made such a U-turn much more difficult politically. And if you agree with my cynical view that politics (mainly due to growing American public hostility toward China) and not principle is what’s produced Mr. Biden’s unexpectedly Trumpy positions toward the People’s Republic, that ain’t bean bag.

(What’s Left of) Our Economy: Why That China Competitiveness Bill Urgently Needs Trade Fixes

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China, competitiveness, consumers, health security, inflation, Robert E. Lighthizer, Section 301, Senate, supply chains, tariffs, technology, Trade, Trade Act of 1974, U.S. Innovation and Competition Act, World Trade Organization, WTO, {What's Left of) Our Economy

Nearly two months ago, I complained here on RealityChek that Congress was working way too slowly on legislation aimed at helping restore the U.S. competitiveness needed to reopen a wide lead over China in the dust in the race for future global technological competitiveness. Now I see that more time to pass the bill is needed after all – because the version approved by the Senate June 8 contains some fatal trade policy flaws that urgently need fixing.

Trade policy, as I’ve explained previously is a vital dimension of beating back the China challenge. But as reported yesterday in a New York Times article by former Trump chief trade official Robert E. Lighthizer, key amendments to the U.S. Innovation and Competition Act

“would harm U.S. interests in three important ways: It would cut tariffs on medical supplies needed in a pandemic; reauthorize the so-called Miscellaneous Tariff Bill to cut tariffs on Chinese and other imports; and amend our enforcement laws in a way that will make it more difficult to battle predatory trade practices by our foreign competitors.”

And if you read the (2,300-page) bill, you see that he’s right. For example, a section titled “Facilitating Trade in Essential Supplies” (beginning on p. 1588) refers to America’s need “to maintain readiness and to surge production of essential supplies in response to an emergency” in national security and public health and safety, or in the security and functioning of “critical infrastructure.”

But consistent with an approach taken to this challenge by President Biden, the act makes clear that achieving these goals includes developing “a whole-of-government strategy to ensure that the United States has reliable access to essential supplies from its trading partners….” In other words, it will be equally fine if the nation remains dependent on imports of such goods. These two objectives clash with each other directly and violently.

If Washington could count on lots of reliable trade partners out there to step in in a pinch and fill supply gaps, this strategy of defining “Made in America” as “Made Overseas, Too” would be defensible (if not, in my view, optimal). But although the legislation directs federal officials to “identify unreliable trading partners,” its authors seem oblivious to just how many foreign governments qualified for this label with their bans and other curbs on vital medical goods during the height of the pandemic. It was 80 according to no less than the World Trade Organization (WTO).

According to Lighthizer, the bill would also undercut American industry’s broader ability to compete with China by renewing a Miscellaneous Tariff Bill that would reduce duties on more than 900 goods produced and exported by the People’s Republic. The list – which also includes hundreds of other goods, begins on p. 1526 and goes on (in tiny type) for thirty pages.

And the text also supports Lighthizer’s claims that the bill would “gut a provision that President Trump used to impose tariffs on Chinese goods in 2018,” and “also effectively surrender sovereignty over our own trade policy to the World Trade Organization by permanently weakening Section 301 unless the United States first wins a multiyear litigation before that body.”

Possibly, the most disturbing feature of the bill’s treatment of these so-called “301 tariffs” (named after the section of the 1974 Trade Act that initially authorized suc measures is the measure that bars the imposition of these duties without an analysis of their impact “on United States entities, particularly small entities, and consumers in the United States” (p. 1607), and additionally of whether they would “unreasonably increase consumer prices for day-to-day items consumed by low- or middle-income families in the United States” (p. 1609).

Although numerous RealityChek posts have documented (see, e.g., here) that none of the 301 tariffs had lasting effects on U.S. retail or wholesale price levels (largely because importers absorbed the higher costs), there’s no guarantee that significant time frames would be examined. In addition, there’s never any shortage of businesses or business organizations in particular ready to predict disastrous price hikes from any tariff increases regardless of the historical record. So the most powerful tool possessed by Washington to enforce trade agreements and combat foreign protectionism could well be neutered unless changes are made.

Finally, Lighthizer’s contention about permanently weakening America’s Section 301 authority appears borne out by pp. 1610-1611, which states that the process for excluding certain goods from that measure’s tariffs “shall not apply” in cases under consideration by the “dispute resolution process under the World Trade Organization [WTO].” In other words, if such U.S. tariffs are challenged at the WTO, they can’t legally be imposed until the WTO decides they’re kosher.

There shouldn’t be any doubt in anyone’s mind that time is not on America’s side as it tries to raise its competitiveness game, both against the Chinese and in general. But it’s also true that haste makes waste — and even worse. And these trade policy flaws in this China competitiveness bill aren’t eliminated, Americans will see a crucial economic and national security opportunity squandered.     

(What’s Left of) Our Economy: The Public Outscores the Experts on China Trade Policy

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(What's Left of) Our Economy, allies, America First, Blob, Center for Strategic and International Studies, China, CSIS, elites, globalism, multilateralism, tariffs, Trade, trade war, Trump, World Trade Organization, WTO

So many big takeaways from a new poll on U.S. and global attitudes toward China and U.S. China policy (both the economic and national security dimensions), I hardly know where to begin! But if I could only write a lede paragraph for a single news article (or blog item), here’s what I’d say: The American public is a great deal more sensible on how to deal with the People’s Republic than so-called “thought leaders.” And what I mean by “more sensible” is more “America First-y” and less globalist.

The survey was conducted by the Center for Strategic and International Studies (CSIS), a Washington, D.C.-based think tank not only squarely in the globalist camp, but a charter member of the globalist, bipartisan U.S. foreign policy “Blob” (which includes a sizable trade and economic sub-Blob) that exerted dominant influence over America’s course in world affairs until Donald Trump came along, and whose supposed expertise still mesmerizes the Mainstream Media.

Of special interest, CSIS sampled opinion from everyday Americans, those so-called thought leaders (whose follower-ship, as implied above, is greatly diminished), and thought leaders from countries that are U.S. allies or “partners.”

The gap between public and elites on China policy views seems widest on the economic and trade issues that President Trump has made so central to his approach towards the People’s Republic, and the CSIS survey contains decidedly good news for him and his fans in this area: The general public is much more supportive of the “go-it-alone,” unilateral sanctions and tariffs imposed by Mr. Trump to combat and/or eliminate Chinese transgressions in this area than the Blob-ers.

Although a multilateral approach (using “international agreements and rules to change China” economically) won plurality backing among the general public (34.8 percent), fully 69 percent of the U.S. thought leaders favored this route. Yet nearly a third of the U.S. public (32.8 percent) endorsed employing “U.S. government tools like sanctions and tariffs”, versus only three percent of the deep thinkers.

As I’ve written repeatedly, (e.g., here and here) a multilateral China trade strategy is bound to fail because international institutions (like the World Trade Organization) are too completely filled by countries that either rely heavily on China-style predation to compete in the global economy, and because even (or especially?) longstanding U.S. treaty allies had been doing business so profitably with the People’s Republic that the last development they wanted to see was a disruption of the pre-Trump status quo. So support for multilateralism in this case can legitimately be taken as support for do-nothing-ism – especially since the vast majority of these elites so enthusiastically pushed for the reckless U.S. expansion of commerce with China that’s lined many of their pockets, but that’s undermined American prosperity and national security.

The CSIS poll, moreover, provides some indirect evidence for this argument: Nearly as high a share of the foreign thought leaders backed a multilateral approach for dealing with China economically (65 percent) as their U.S. counterparts. And their support of U.S.-only approaches (seven percent) was only slightly higher than that of the U.S. thought leaders’ three percent. (The foreign thought leaders may be slightly more gung ho for America going it alone due to confidence that their own products will fill any gaps in the China market left by U.S. producers shut out by the trade wars. On a net basis, though, their countries are coming out losers this year.)

At the same time, one surprising (at least to me) economics-related finding emerged from the survey: Whether we’re talking about the American people generally, or thought leaders at home or abroad, just under 20 percent favor substantial decoupling from China as the best economic approach for the United States.

When it comes to messaging, however, the survey isn’t such great news for Mr. Trump – and Trumpers – on China trade issues. On the one hand, answers to the question on evaluating his performance in this area can – although with a stretch – be interpreted to show majority support for the view that his record has achieved noteworthy gains. Principally, 27.8 percent of U.S. public respondents agreed that the President’s China measures have “been effective in producing some tactical changes in Chinese economic policy” and 9.9 percent believe they have “been effective in forcing long-term changes.” Those groups add up to 37.7 percent of the sample.

Another 20.5 percent checked the box stating that Trump policies have “hurt U.S. consumers and exporters but protected important U.S. industries.” A case can be made that at least some members of this group would give these policies good grades, or that many would give them partly good grades, possibly bringing the total for positive views somewhere in the mid-40 percent neighborhood.

Much more certain, however, is that the most popular single answer (with 41.8 percent support) was that the trade war “has damaged U.S. economic interests without achieving positive change in China.”

Also signaling a Trump China messaging problem – as with much other commentary, the CSIS survey mostly measures China policy success as changing Chinese behavior. In my view, that goal is much less important – because it’s much less realistic, at least in terms of producing verifiable reform – than protecting U.S.-based producers from China’s economic predation. The relative resilience shown by domestic industry both throughout the trade war and into the CCP Virus-induced recession indicate that this goal is being achieved. But neither the President nor his economic nor his campaign team mentions it much, if at all.

CSIS’ polling also found that fully 71 percent of U.S. thought leaders gave Trump’s China economic policies the big thumbs down – and although they don’t vote, their aforementioned influence in the Mainstream Media could partly explain why broader American opinion on the Trump record seems so divided. (For the record, foreign thought leaders weren’t asked to rate the Trump strategy.)

But having established that everyday Americans have a good deal to teach the experts on China trade and economic policy, how do the two compare on China-related national security policies? As indicated above, the gap here isn’t nearly so wide, but worth exploring in some detail – as I’ll do in a forthcoming post!

Our So-Called Foreign Policy: Evidence that the Multinationals Really Did Sell the U.S. Out to China

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capital spending, chemicals, China, computers, electronics, health security, healthcare goods, information technology, investment, Lenin, manufacturing, multinational companies, national security, offshoring, offshoring lobby, Our So-Called Foreign Policy, pharmaceuticals, research and development, supply chains, tech, tech transfer, U.S-China Economic and Security Review Commission, USCC, World Trade Organization, WTO

RealityChek readers and anyone who’s familiar with my work over many years know that I’ve often lambasted U.S. multinational companies for powerfully aiding and abetting China’s rise to the status of economic great power status – and of surging threat to U.S. national security and prosperity. In fact, the dangers posed by China’s activities and goals have become so obvious that even the American political and policy establishments that on the whole actively supported the policies – and that permitted money from this corporate Offshoring Lobby to drive their decisions – are paying attention.

If you still doubt how these big U.S. corporations have sold China much of the rope with which it’s determined to hang their own companies and all of America (paraphrasing Lenin’s vivid supposed description of and prediction about the perilously shortsighted greed of capitalists), you should check out the latest report of the U.S-China Economic and Security Review Commission (USCC). As made clear by this study from an organization set up by Congress to monitor the China threat, not only have the multinationals’ investments in China figured “prominently in China’s national development ambitions.” They also “may indirectly erode the United States’ domestic industrial competitiveness and technological leadership relative to China.”

Worst of all, “as U.S. MNE (“multinational enterprise) activity in China increasingly focuses on the production of high-end technologies, the risk that U.S. firms are unwittingly enabling China to achieve its industrial policy and military development objectives rises.”

And a special bonus – these companies’ offshoring has greatly increased America’s dependence on China for supplies of crucial healthcare goods.

Here’s just a sampling of the evidence presented (and taken directly by the Commission from U.S. government reports):

> U.S. multinationals “employ more people in China than in any other country outside of the United States, primarily in the assembly of computers and electronic products.” Moreover, this employment skyrocketed by 574.6 percent from 2000 to 2017.

> “China is the fourth-largest destination for U.S. MNE research and development (R&D) expenditure and increasingly competes with advanced economies in serving as a key research hub for U.S. MNEs. The growth of U.S. MNE R&D expenditure in China is also comparatively accelerated, averaging 13.6 percent yearon-year since 2003 compared with 7.1 percent for all U.S. MNE foreign affiliates in the same period. This expenditure is highest in manufacturing, particularly in the production of computers and electronic products.”

> “U.S. MNE capital expenditure in China has focused on the creation of production sites for technology products. This development is aided by the Chinese government’s extensive policy support to develop China.”

> The multinationals’ capital spending on semiconductor manufacturing assets “has jumped 166.7 percent from $1.2 billion in 2010 (the earliest year for which complete [U.S government] data is available) to $3.2 billion in 2017, accounting for 90 percent of all U.S. MNE expenditure on computers and electronic products manufacturing assets in China.”

> “China has grown from the 20th-highest source of U.S. MNE affiliate value added in 2000 ($5.5 billion) to the fifth highest in 2017 ($71.5 billion), driven primarily by the manufacture of computers and electronic products as well as chemicals. The surge is especially notable in semiconductors and other electronic components.”

> “[P]harmaceutical manufacturing serves as the largest chemical sector in terms of value-added [a measure of manufacturing output that seeks to eliminate double-counting of output by stripping out the contribution of intermediate goods used in final products]…” And chemicals – the manufacturing category that include pharmaceuticals – has become the second largest U.S-owned industry in China measured by the value of its assets (after computers and electronic products).

Incidentally, the report’s tendency to use 2000 as a baseline year for examining trends is no accident. That’s the year before China was admitted into the World Trade Organization (WTO) – and the numbers strongly reenforce the argument that the multinationals so avidly sought this objective in order to make sure that the value of their huge planned investments in China wouldn’t be kneecapped by any unilateral U.S. tariffs on imports from China (including those from their factories). For the WTO’s combination of consensus decision-making plus the protectionist natures of most of its members’ economies created a towering obstacle to Washington acting on its own to safeguard legitimate American domestic economic interests from Chinese and other foreign predatory trade and broader economic activity.

At the same time, despite the WTO’s key role in preserving the value of the multinationals’ export-focused China investments, the USCC study underestimates how notably such investment remains geared toward exporting, including to the United States. This issue matters greatly because chances are high that this kind of investment (in China or anywhere else abroad) has replaced the multinationals’ factories and workers in the United States. By contrast, multinational investment in China (or anywhere else abroad) that’s supplying the China market almost never harms the U.S. domestic economy and in fact can help it, certainly in early stages, by providing foreign customers that add to the domestic customers of U.S.-based manufacturers.

There’s no doubt that the phenomenal growth of China’s own consumer class in recent decades has, as the China Commission report observes, generated more and more American business decisions to supply those customers from China. In other words, the days when critical masses of Chinese couldn’t possibly afford to buy the goods they made in U.S.- and other foreign-owned factories are long gone.

But the data presented by the USCC does nothing to support this claim, and the key to understanding why is the central role played by computer, electronics, and other information technology-related manufacturing in the U.S. corporate presence in China. For when the Commission (and others) report that large shares of the output of these factories are now sold to Chinese customers, they overlook the fact that many of these other customers are their fellow entities comprising links of China-centric corporate supply chains. These sales, however, don’t mean that the final customers for these products are located in China.

In other words, when a facility in China that, for example, performs final assembly activities on semiconductors sells those chips to another factory in China that sticks them into computers or cell phones or HDTV sets, the sale is regarded as one made to a Chinese customer. But that customer in turn surely sells much of its own production overseas. As the USCC documents, China’s consumer market for these goods has grown tremendously, too. But China’s continually surging share of total global production of these electronics products (also documented in the Commission report) indicates that lots of this output continues to be sold overseas.

Also overlooked by the USCC – two other disturbing apects of the multinationals’ activities in China.

First, it fails to mention that all the computer and electronics-related investment in China – which presumably includes a great deal of software-related investment – has contributed to China’s economic and military ambitions not only by transferring knowhow to Chinese partners, but by teaching huge numbers of Chinese science and technology workers how to generate their technology advances. The companies’ own (often glowing) descriptions of these training activities – which have often taken the form of dedicated training programs and academies – were revealed in this 2013 article of mine.

Second, the Commission’s report doesn’t seem to include U.S. multinationals’ growing investments not simply in high tech facilities in China that they partly or wholly own, but in Chinese-owned entities. As I’ve reported here on RealityChek, these capital flows are helping China develop and produce high tech goods with numerous critical defense-related applications, and the scale has grown so large that some elements of the U.S. national security community had been taking notice as early as 2015. And President Trump seems to be just as oblivious to these investments as globalist former President Barack Obama was.

These criticisms aside, though, the USCC has performed a major public service with this survey of the multinationals’ China activities. It should be must reading in particular for anyone who still believes that these companies – whose China operations have so greatly enriched and therefore strengthened the People’s Republic at America’s expense – deserve much influence over the U.S. China policy debate going forward.

Im-Politic: A World Trade Organization Pull-Out Proposal that Falls Sadly Short

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America First, CCP Virus, China, conservartives, coronavirus, COVID 19, export bans, GATT, General Agreement on Tariffs and Trade, health security, Im-Politic, Josh Hawley, Marco Rubio, national treatment, nationalism, non-discrimination, Populism, protectionism, reciprocity, Republicans, rules-based trade, sovereignty, Trade, unilateralism, World Trade Organization, WTO, Wuhan virus

I can barely describe how much I wanted to like Missouri Republican Senator Josh Hawley’s May 6 op-ed piece in The New York Times calling for a U.S. withdrawal from the World Trade Organization (WTO). That’s why I can also barely describe the growing disappointment I felt as I read through it.  At best, it deserves only an “A for effort” grade.

First, let’s give Hawley (considerable) credit where it’s due. As I’ve been arguing since it went into business at the start of 1995, and in fact was predicting during the national debate preceding Congress’ approval of the idea the fall before, the WTO has gravely harmed crucial American economic interests. (This recent post briefy summarizes my views.)

Let’s also give The Times op-ed page credit for running an article that’s even more strongly opposed to the pre-Trump U.S. trade policy status quo than President Trump has been – because although he’s approved policies that have thrown the WTO’s future into doubt, he’s never explicitly called for a pull-out, and in fact his administration has portrayed these measures as vital steps toward WTO reform.

Hawley, moreover, articulates many powerful indictments of the WTO’s failure to defend or advance U.S. interests satisfactorily – notably, the cover it’s given to China and other protectionist economies. 

Unfortunately, Hawley’s anti-WTO case and recommendations for going forward are fundamentally basedsed on two big misunderstandings. The first is that the pre-WTO global trading order set up by the United States was based on reciprocity, and therefore adequately safeguarded the interests of American workers. Absolutely not. In fact, the concept of reciprocity – holding that a country has no obligation to reduce its trade barriers any more than those of its partners – was explicitly rejected by the pre-WTO rules, which were known collectively as the General Agreement on Tariffs and Trade (GATT).

Instead, this global trade regime was based on two principles that actually entitled protectionist countries to maintain higher trade and related economic barriers than those of freer trading countries. The first was called non-discrimination. It simply urged all member countries to treat all other countries the same trade-wise. So if, say, Japan largely closed its markets to one country, all it needed to do to satisfy GATT rules was to treat other countries just as badly.

The second core GATT principle was called national treatment. Under its terms, member countries agreed to treat foreign-owned companies the same as their own companies. So if, say, a country like (again) Japan, which was is still known for fostering cartel-like arrangements that favored some of its own companies over others wanted to discriminate against whatever foreign companies it wished, that was OK according to the WTO.

Some limited exceptions were permitted to both principles. But they explain in a nutshell why Japan’s trade predation (among others’) inflicted so much damage on U.S.-based manufacturing during the WTO period, and why its own economy (among others’) remained so hermetically sealed throughout.

The GATT’s only saving grace – as I just tried to hint by using terms like “urged” and “agreed”  – was that its rules were essentially unenforceable. All told, though, it’s a lousy model for post-WTO U.S. trade policy.

The WTO has featured a strong enforcement mechanism, which is why Hawley (and other critics, like me) have rightly argued that the organization has eroded U.S. national sovereignty. But at the same time, Hawley wants to replace it with “new arrangements and new rules, in concert with other free nations, to restore America’s economic sovereignty and allow this country to practice again the capitalism that made it strong.”

If the rules are for all intents and purposes voluntary, as with the GATT, then fine – although the question then arises of why the rules are needed in the first place. And the question becomes particularly pointed when it comes to the United States, whose longstanding role as the world’s importer of last resort has long given it more than enough unilateral leverage to create all by itself whatever terms of trade it wishes with any trade partner.

At the same time, this business about creating new arrangements with “other free nations” reveals a second major flaw in Hawley’s argument: a belief that there are lots of other countries out there that agree with the United States on defining what is and isn’t acceptable in international trade and commerce. That kind of consensus is a sine qua non of any rules-based system. In fact, it needs to predate the formal creation of that system. The existence of the system itself can’t summon it into existence – unless one or a group of members can force holdouts to accept the consensus, which brings us back to the question of why countries with those capabilities need a system in the first place.

But if anyone really believed in the required preexisting consensus before the CCP Virus struck, their conviction should lay in smoking ruins now. Because as of March 21, no fewer than 54 countries worldwide had been imposing export curbs of some kind on medical supplies, and the same think tank that compiled this data reported that, as of early April, that number had risen to 70. And their ranks included many U.S. allies. So it should be obvious that, when major chips are down, global trade becomes more of a free-for-all than ever.

Hawley has been among those leading U.S. conservatives and Republicans who are trying to develop a nationalist and populist approach to both domestic and international U.S. policy-making that can survive President Trump’s departure from the White House. (Another has been Florida Republican Senator Marco Rubio.) And I’ve been very impressed by much of their work so far.

But if they’re genuinely concerned about transforming U.S. trade policy, they’ll recognize the need not only to pull the United States out of the WTO, but to replace that organization with a unilateral strategy incorporating the street smarts and the flexibility to free up America to handle its trade policy needs on its own. If others want to sign on and accept U.S. rules and unilateral enforcement, so much the better. But that kind of “America First” arrangement is the only kind of international regime that can adequately serve the national interest.