Saturday, March 19, 2011

Quick Note on Trade

. Saturday, March 19, 2011

I'm still in Montreal, and behind the curve, but I don't want this place to be completely dormant so I'm going to pick on Emmanuel once again. Here he says "the US trade representative is tasked with promoting trade liberalization first and foremost". That is not true, and a political economist should know better. The US trade rep is first and foremost tasked with promoting American business interests. There is no ex ante reason to believe that always or even usually involves liberalization. In this case, it means "we're not liberalizing any more until China agrees to play by the same rules as everyone else". Remember that when China joined the WTO in 2001 it was given all sorts of exceptions that allowed it to get access to developed markets for its exports, without having to allow equal access to its markets in exchange. Given large U.S. trade deficits and high unemployment, the USTR is saying "no mas": either there's some reciprocity, or no new deal.

2 comments:

Emmanuel said...

US business interests--OK. But China receiving a lot of concessions is not quite correct. Who was it who insisted on classifying China as a non-market economy for 15 years--something that makes it vulnerable to dumping claims?

Trade followers should know the answer to that. I deal in specifics.

Kindred Winecoff said...

I didn't say concessions. I said "exceptions". China was given 5 years to transition towards full WTO-compliance, and was given many exceptions until then. In that 5 years it's done very well with tariff reductions, but much worse with IP, subsidies, financial services, export restrictions, etc. The USTR is saying that the US won't consider further liberalization until China comes into compliance with its current commitments.

This isn't exactly a secret. The USTR's position on this is easily found on its web site. Reports and fact sheets available there.

http://www.ustr.gov/countries-regions/china

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