William Krist's Blog, page 27

A Worker-Centric Trade Agenda Needs to Focus on Competitiveness, Including Robust IP Protections

While U.S. trade policy has long been contentious, until recently, the orthodox view was that it should prioritize U.S. consumer interests. But the significant decline of U.S. manufacturing jobs and output due to unbalanced trade (and weak U.S. competitiveness) has provided an opening to rethink this policy. Because of this and other factors, President Biden and key administration officials have spoken about the need to shift to a worker-centric trade agenda, turning away from the traditional approach.

But while such a pivot is overdue—for too long, trade policy prioritized lower prices for imported products over workers’ welfare—it is critical for the administration to make the right move; one that would boost U.S. global competitiveness and help U.S. firms and their workers compete in global markets. This may be difficult because significant forces in the Democrat party advocate for a trade policy that would ultimately hurt U.S. competitiveness, firms, and workers.

Many progressives see the administration’s reassessment as an opening to advance their long-standing antiglobalization and anticorporate agenda. They equate almost any trade provision or policy, including foreign intellectual property (IP) protection, that helps large U.S. corporations as inherently counter to U.S. workers’ interests. To be sure, some provisions in trade agreements that protect U.S corporations’ economic interests don’t do much to help U.S. workers, but the majority of provisions do in fact create an alignment of corporate and U.S. worker interests. This is because many trade provisions lead to greater U.S. sales, which in turn benefits U.S. jobs. For example, strong IP rights in trade agreements support workers in the many U.S. sectors that depend on IP for increased global revenues.

As such, the Biden administration should reject the anticorporate, antitrade counsel and not go down this dead-end path. Rather, it should articulate, advance, and work for a new competitiveness-focused trade approach. This agenda would not reflexively prioritize consumer interests, especially when doing so would hurt companies and workers in the United States because of unfair foreign trade practices. But it would prioritize market opening and trade enforcement to advance the interests of traded-sector firms in the United States, especially those in key, strategic industries that pay above-average wages. This approach would include, among other things, ensuring the inclusion of strong IP provisions in trade agreements.

This report discusses the debate over trade policy, articulating the three main potential plans: 1) maintaining the current approach; 2) rejecting the current approach in favor of one that views large-firm interests as antithetical to U.S. worker and national interests, and 3) evolving to a competitiveness-focused approach that works to align U.S. corporate interests with national interests. It then focuses on one aspect of such a new trade policy—IP protection—analyzing arguments made by proponents of weak IP in U.S. trade policy. It then provides a summary of the arguments and studies showing that advancing the interests of U.S. companies in trade policy, including in IP protection, usually benefits U.S. workers.

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To read the full article by the Information Technology and Innovation Foundation, please click here.

Is The Post-War Trading System Ending?

The world trading system is reeling from the trade war between China and the United States, the disabling of the World Trade Organisation Dispute Settlement Understanding and repeated rule-breaking by WTO members. This does not mean the end of the post-war system, but it is being transformed into a more complex, politicised and contentious set of trade relationships. The new framework is likely to evolve around a WTO in maintenance mode with weak and largely unenforceable rules, and three blocs built by regional hegemons. Trade within the blocs will be relatively free and predictable, but the blocs are far from cohesive, contributing to the politicisation of the system. Trade relations between the blocs, especially among the regional hegemons, will be tense and potentially unstable.

Countries across the world need to rethink their trade and foreign policies to reflect the new reality. They need to continue to lend support to the WTO but also to accelerate work on regional and bilateral deals, while entering plurilateral agreements on specific issues – within the WTO if possible, or outside it if not. Beyond these general prescriptions, the priorities of different economies vary greatly. The trade hegemons of China, the European Union and the US face vastly different challenges. Middle powers on the periphery of the regional blocs, or outside them, such as Brazil, India and the United Kingdom, face an especially arduous struggle to adjust to a less predictable system. Small nations will be forced into asymmetrical deals with the hegemons or will play them off against each other, adding to the politicisation of trade relations.

Post-war trading system

To read the full report from Bruegel, please click here. 

Global Trade Update 2022

Global trade growth remained strong during 2021, as its value continued to increase through each quarter of 2021. Trade growth was not only limited to goods. Trade in services also grew substantially through 2021, to finally reach pre-pandemic levels during Q4 2021.

Overall, the value of global trade reached a record level of about US$ 28.5 trillion in 2021, an increase of about 25 percent relative to 2020 and an increase of about 13 per cent relative to the pre-pandemic level of 2019. While most global trade growth took hold during the first half of 2021, growth continued in the second half of 2021. After a relatively slow third quarter, trade growth picked up again in Q4 2021, when the value of global trade increased by about 3 per cent relative to Q3 2021.

Trade in goods and trade in services followed similar patterns during 2021, with stronger increases during the first half of the year. Trade growth continued to be positive for both goods and services in Q3 2021 and especially in Q4 2021.

During Q4 2021, trade in goods increased by almost US$ 200 billion to reach about US$ 5.8 trillion, a new record. During the same period, trade in services rose by about US$ 50 billion to reach about US$ 1.6 trillion, a value just above prepandemic levels. On a year over-year basis, trade in goods strongly outperformed trade in services, with increase of about 27 per cent and 17 per cent respectively. 

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To read the full report from UNCTAD, please click here. 

2021 USTR Report To Congress On China’s WTO Compliance

In Part One of this report, we provide an assessment of China’s WTO membership, including the unique and very serious challenges that China’s state-led, non-market approach to the economy and trade continue to pose for the multilateral trading system. 

In Part Two, we review the effectiveness of the various strategies that have been pursued over the years to address the unique problems posed by China. In Part Three, we emphasize the critical need for new and more effective strategies — including taking actions outside the WTO where necessary — to address those problems. 

Finally, in Part Four, we catalogue the numerous problematic policies and practices that currently stem from China’s state-led, non-market approach to the economy and trade. 

2021 USTR Report to Congress on China's WTO Compliance

To read the full report from the United States Trade Representative, please click here. 

World Economic Situation And Prospects 2022

The global economic recovery is facing significant headwinds amid new waves of COVID-19 infections, persistent labour market challenges, lingering supply-chain challenges and rising inflationary pressures. After expanding by 5.5 per cent in 2021, the global output is projected to grow by only 4.0 per cent in 2022 and 3.5 per cent in 2023, according to the United Nations World Economic Situation and Prospects (WESP) 2022, which was launched today.

The robust recovery in 2021 – driven by strong consumer spending and some uptake in investment, with trade in goods surpassing pre-pandemic levels — marked the highest growth rate in more than four decades, the Report highlighted. Yet the momentum for growth – especially in China, the United States and the European Union – slowed considerably by the end of 2021, as the effects of monetary and fiscal stimuli began to recede and major supply-chain disruptions emerged. Rising inflationary pressures in many economies are posing additional risks to recovery.

“In this fragile and uneven period of global recovery, the World Economic Situation and Prospects 2022 calls for better targeted and coordinated policy and financial measures at the national and international levels. The time is now to close the inequality gaps within and among countries. If we work in solidarity – as one human family – we can make 2022 a true year of recovery for people and economies alike.”
– António Guterres

Secretary-General of the United Nations

With the highly transmissible Omicron variant of COVID-19 unleashing new waves of infections, the human and economic toll of the pandemic are projected to increase again. “Without a coordinated and sustained global approach to contain COVID-19 that includes universal access to vaccines, the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy,” noted Liu Zhenmin, Under-Secretary-General of the United Nations Department of Economic and Social Affairs.

WESP2022_web

To read the full report by the United Nations, please click here.

China’s Regulatory Crackdowns and U.S.-China Trade and Investment Relations

China’s regulatory crackdowns have affected U.S. and Chinese companies, but protectionist trade policies implemented by the Trump administration and continued by the Biden administration have severely restricted the ability of the U.S. government to protect U.S. businesses in the Chinese market. Unless the U.S. government changes course, American companies will be increasingly less able to address perceived wrongs in Chinese government policies and will be placed at a significant economic disadvantage in much of Asia.

In 2021, China launched regulatory crackdowns in many sectors, including the suspension of an Initial Public Offering (IPO) for Ant Financial, the antitrust investigation of Alibaba, the cybersecurity probe of Didi, restrictions on computer games, and a ban on private tutoring business. While these regulatory actions wreaked great havoc in the market, people normally assumed that they only affect China’s own companies and fail to appreciate the wider implications for foreign businesses. This analysis fills in the gap by discussing the potential effects on the trade and investment activities of foreign firms, especially American firms. It further discusses potential actions the U.S. government and American businesses could take to better protect their interests and minimize the negative impacts.

Chinas-Regulatory-Crackdown-and-U.S.-China-Trade-and-Investment-Relations.NFAP-Policy-Brief.February-2022

To read the full report by the National Foundation for American Policy, please click here.

Africa in the New Trade Environment: Market Access in Troubled Times

Africa faces a global trade environment that is continuously changing, bringing new challenges and opportunities for increasing growth and reducing poverty. Some of these developments include the increased fragmentation of production across borders; the proliferation of regional trade agreements; the relative rise of Asia (East and South Asia) as the new economic frontier; the Fourth Industrial Revolution and subsequent rise of labor-saving technologies; and most recently the COVID-19 (coronavirus) pandemic. Given the relatively small size of their economies, African countries’ effective participation in the ever-evolving international trade environment remains central to boosting the region’s growth and development.



Africa’s exports and imports of goods and services have achieved their fastest growth in the past decade but remain low in overall volume relative to other regions. To reduce poverty on a large scale and transform their economies, African countries must scale up and diversify their participation in international markets and global value chains (GVCs). The global economy is a source of growth that African economies cannot afford to ignore. To catch up with the rest of the world, there is no alternative: the continent must link its production and trade to the global economy to take advantage of the unlimited demand and innovation along the supply chain.



This effort calls for a comprehensive and dynamic approach that requires reexamination of existing trade to expand the region’s export market access and diversify its markets to new regions and new products while also strengthening regional trade. Such an approach is exactly what this book presents. It is the outcome of a journey started with an expert panel discussion on the future of global trade and its impact on Africa during the World Bank Africa Knowledge Fest on February 22, 2017.



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To read the full report from the World Bank, please click here.

American Protectionism And Construction Materials Costs

Building on previous work, we used data on U.S. trade remedies—antidumping, countervailing duty (anti‐​subsidy), and safeguard measures—to study the effect of protectionism on construction material prices in the United States.4 Several factors make trade remedies an ideal mechanism for examining this question: First, the United States (like many countries) uses trade remedies extensively to restrict trade in intermediate inputs (i.e., goods used in the domestic production of downstream goods and services). Second, domestic producers of important construction materials (e.g., lumber) have petitioned for and won trade remedy protection in the past three decades. Third, trade remedy data make it possible to measure import protection at a monthly frequency, making the identification of causal effects less difficult.

This analysis considers the most important trade remedy beneficiary industries (at the North American Industry Classification System [NAICS] four‐​digit industry level) among the construction sector’s material suppliers. For each industry, we determined the share of imports subject to new trade remedies measures and then identified changes to the share that are not attributable to industry‐​level economic outcomes related to the construction sector (e.g., previous employment and price dynamics). Finally, we combined these identified changes in trade remedies with disaggregated input‐​output tables to determine the exposure of the U.S. construction sector to trade remedies restrictions won by its domestic suppliers (a.k.a. “upstream protectionism”). We used this measure to estimate the dynamic effects of upstream protectionism on U.S. construction material costs—in other words, to determine how trade remedies affect U.S. prices of key construction inputs like lumber.

We found that upstream protectionism in the United States increases domestic construction material costs. In particular, a uniform 1 percentage point increase in the share of construction material imports into the United States that are subject to new trade remedies (approximately corresponding to a 1.35 percentage point uniform import tariff) increases the domestic price of those materials by 0.9 percent after six months. These results are statistically significant and confirmed by using an alternative measure of construction material costs specific to residential construction. Therefore, U.S. protectionism has increased domestic construction costs, with potentially significant consequences for American homebuyers.

American Protectionism and Construction Materials

To read the full report from the Cato Institute, please click here. 

Reflections on China and U.S.-China Relations in 2021

For nearly a decade, Chinese leadership planned for 2021 to be a pivotal year for China. It was to be celebrated as the 100th anniversary of the founding of the Chinese Communist Party in 1921. And it was therefore set as the year in which Chinese President Xi Jinping was determined that the country would reach the level of a “moderate prosperous society,” thereby accomplishing the first of two “cente- nary goals” meant to forever define his legacy as the leader who achieved the “Chinese Dream” of “national rejuvenation.”

But 2021 turned out to be a more decisive year for China – and indeed for the world – than anyone, Xi included, could have predicted. Even as the COVID-19 pandemic continued to beset humanity and isolate China from the rest of the world, 2021 also saw profound changes within China, from its politics to its economic policy settings and to its society, culture, and media.

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To read the full report from the Asia Society Policy Institute, please click here.

The Digital Trade Revolution: How U.S. Workers And Companies Can Benefit From A Digital Trade Agreement

The Digital Trade Revolution: How U.S. Workers and Companies Can Benefit from a Digital Trade Agreement underscores the promise of digital trade as a driver of dynamic growth and good jobs in the U.S. and abroad. With details on a host of industry sectors and state-by-state fact sheets, the report shows that most U.S. services exports now have the potential to be delivered to customers abroad digitally. It also reveals how companies of all sizes have the potential to benefit from digital trade and lays out principles to guide the negotiation of a digital trade agreement. Additionally, it identifies a group of economies — dubbed the “Digital Dozen” in this report — considered potentially suitable partners to join the United States in a high-standard digital trade agreement, including markets from the Indo-Pacific and the Americas to the UK.

The digital economy has become critical to the U.S. economy, driving growth, prosperity, and dynamism for every state and sector across the United States. A diverse range of firms not traditionally seen as actors in the digital economy are producing digital goods and services, including businesses in transportation and warehousing, arts and entertainment, and even mining. Nearly two-thirds of the digital economy consists of digital services, not digital goods. The digital economy is expanding nearly three times as rapidly as the economy writ large.

Digital economy jobs are proliferating in the United States. Jobs tied to the digital economy can be found in nearly every sector, and their number is growing at a faster rate than that of overall job growth over the last decade. These jobs pay well, and compensation growth for digital jobs exceeds that for all jobs generally.

Trade is key to the U.S. digital economy’s growth. The bulk of U.S. services exports are digitally tradeable, but the potential for expansion of the digital delivery of services exports remains largely untapped.[1] Developed economies — and particularly Europe — are the top markets for U.S. exports of digitally tradeable services. These exports, coming from every U.S. state, supported more than 2 million U.S. jobs in 2020. America’s small business exporters are among those with the most to gain from digital technologies that have the potential to overcome the longstanding hurdles to exporting they face.

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To read the full report from the U.S. Chamber of Commerce, please click here.