WITA’s Friday Focus on Trade | March 3, 2023




2023 Trade Policy Agenda and 2022 Annual Report of the President of the United States on the Trade Agreements Program

The Biden Administration promised to build the economy from the bottom up and the middle out, and we are doing just that. Unemployment is at its lowest rate in over 50 years. This Administration has seen more jobs created in two years than any other Administration has seen in four. Manufacturing is rebounding faster than it has in almost 40 years, while wages are rising, and rising even faster for lower- and middle-income workers. The American Rescue Plan, the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act were historic investments in America, and they are working.
The Biden Administration continues to believe that trade can—and should—be a force for good. Done right, and in coordination with other policy disciplines, it can grow the middle class, address inequality, tackle the climate crisis, and level the playing field by promoting fair competition. We remain committed to upholding a fair and open global trading system—one that puts working families first, raises living standards, ensures full employment, and promotes sustainable development.
We are continuing to rewrite the story on trade by bringing more people into the process and developing policies and initiatives that are resilient and sustainable and create broad-based growth. In 2023, our trade agenda will continue to focus on unlocking new opportunities for American workers and families—while also supporting and strengthening the middle class, driving decarbonization, and creating good-paying jobs across the American economy. In the aftermath of the COVID-19 pandemic and Russia’s brutal, illegal attack on Ukraine, it also means fortifying relationships with our partners and allies and strengthening critical supply chains to withstand shocks and disruptions to the system and to defend democratic values.
To realize this vision, we are continuing to forge the partnerships necessary to update and enforce the rules governing the global economy and trade.
03/01/2023 | Office of the United States Trade Representative



Friends, Allies, and the Trade Dilemma

The 20th century was America’s century. From recovering from the devastation of war to promoting prosperity and the rule of law worldwide, it was the United States’ capital and values that came to define much of the world’s military, political, social, and economic road map, even into the 21st century. Since 1945, it became clear that it was in Washington’s interest to ensure that the global economy recovered steadily, and that it should stimulate demand worldwide. Boosting global growth was not simply an altruistic goal, nor was it guided solely by the fear of communism’s rise—it was also a means to further US corporate interests. Access to global markets, operating under clear rules driven by US standards, also became part of the US national interest. Global trade enjoyed clear prioritization across US public and private sectors.
Clarity about the United States’ commitment to global trade no longer holds.
To be sure, grinding poverty persists in much of the world. Currently, 46 nations are deemed the least developed countries, representing 12 percent of the world’s population. Of these, 33 are in Africa and 9 are located in Asia, including Bangladesh, Cambodia, Laos, and Afghanistan. But from Japan and the earlier Asian Tigers of South Korea, Singapore, and Taiwan, to rapidly rising India, Malaysia, Indonesia, the Philippines, and beyond, the Indo-Pacific region is home to the world’s most dynamic, populous, and ambitious countries, which have emerged as economic rivals to the United States. In short, Washington’s 20th-century goal of lifting all boats to greater prosperity out of the ruins of war has largely been achieved—not only in Europe but also in most of Asia. As a result, market access to the Indo-Pacific has become more lucrative, and more competitive, with Washington’s voice no longer dominating the field as countries look to redefine and enhance the rules of trade that better meet the needs of the 21st century.
The fact that China has emerged as the single biggest trading partner for all countries in the Indo-Pacific, with the exception of Afghanistan, has also caused US economic influence in the region to falter. At the same time, Beijing is steadily investing in matching its military might to its economic influence, both within and well beyond Asia—not simply by building up its arms but also by making strategic use of advanced technology to enhance its military capabilities. With Washington increasingly aware of the multifaceted threat posed by Beijing’s economic and technological advancements, the Biden administration is going on the offense and developing its own economic strategy that resets US trade ambitions and prioritizes national security in defining economic relations with like-minded countries. The question, however, is whether the United States can succeed in bringing its allies and partners in line with its own reassessment of the international economic challenges that lie ahead.
02/13/2023 | Shihoko Goto | The Wilson Quarterly



A Resounding Maybe on Fleeing China

Excerpts from Dan Harris’ China Law Blog.
In China, the United States and the New Normal, I called the US-China trade war the “New Normal” and I predicted a “diminished future for foreign companies” manufacturing in China. I also said that since “the inception of the US-China trade war we have been saying that we do not see its end because we have always seen it as more than a trade war.” That was in 2018 and I still believe China’s relations with the West will continue to decline.
…But when China’s spy balloon illegally entered U.S. territory I started feeling like my views on China have become the majority in the United States, Canada, Australia, Japan and the EU, among other places. Since the U.S. government and the EU started talking last week about how China likely would start arming Russia, I’ve been feeling like pretty much “everybody” agrees with me on the big risks involved with doing business in or with China, but they are raising me one. I am increasingly hearing from people who are convinced that the world has ZERO use for China and we should expect it to return to the stone age within a year or so.
…I do not doubt that China would love to arm Russia. Russia is doing poorly in its war against Ukraine, and this not only makes China look like a sucker for having supported it, it also weakens China’s ability to threaten Taiwan. Most importantly, Russia’s Ukraine debacle is weakening Russia and a weak Russia is not in China’s interest. Russia is a bulwark for China against the West and China this makes the weakening of Russia very bad for China. This is especially true since China has very few true allies and what true allies it has other than Russia — Belarus, Cuba, Iran, North Korea, Syria, Myanmar, and Venezuela — are not doing well themselves. This is why China would love to arm Russia
But China isn’t stupid. It knows that arming Russia will infuriate the countries on which it economically depends and it knows that crossing this line will likely lead to sanctions, trade restrictions and tariff escalations. China cannot afford for these sorts of things to happen, especially now. I do not think China will take the risk of arming Russia now.
Most importantly, I do not think a decision to leave China should be based on the China arming Russia issue. We should know within the next few months whether China will arm Russia or not, and if China does not arm Russia, this issue will become irrelevant. And if China does arm Russia, not starting a move out of China now will only mean a few months in delay.
The far bigger and important geopolitical China risk is Taiwan. I would be guessing if I were to predict whether China will invade or blockade China, but I’m not guessing when I say that if that does happen, any and all bets regarding China will be off. To me the only big question at that point is how much a China-Taiwan war will impact manufacturing and logistics in other Asian countries, and I have no prediction on that either. I will say though that many of those companies moving their production from China to Latin America (as opposed to elsewhere in Asia) list minimizing their China-Taiwan risks as A reason, but not usually THE reason.
Anyway, the above is my long-winded way of saying to expect an increase in the gloom and doom about China over the next few months, but to not let that impact you making your decisions based solely on what makes sense for your company. China is getting riskier and all of the data points point to that continuing. Nonetheless, there are still some companies that should not leave China. If you are making money from China or you cannot yet move your manufacturing out of China and the benefits of you staying in China outweigh whatever harm to your reputation you might face by doing so, you should stay. There are a surprising number of these companies and many of my firm’s lawyers are still kept busy helping them navigate China’s legal landscape.
02/23/2023 | Dan Harris | Harris Bricken Sliwoski LLP



Setting the Record Straight on a ‘Worker-Centered’ Digital Trade Agenda


Last week, WITA’s Friday Focus included a paper by the AFL-CIO titled “A Worker-Centered Digital Trade Agenda.” This week, the U.S. Chamber published a response.
he AFL-CIO recently offered recommendations to the administration on how to extend its worker-centered approach to digital trade. The report claims the U.S. digital trade agenda has prioritized big technology firms at the expense of workers, consumers, and society, and that current U.S. digital trade policies encourage harmful activities.
These charges are unfounded. On the contrary, digital trade is critical to the success and growth of the American economy, a recent U.S. Chamber study found, and American workers have benefitted tremendously as the digital economy has generated high-wage jobs, innovative products, and market opportunities at home and abroad. Considering the benefits of digital trade:
Companies of all sectors and sizes are benefiting from digital trade. One of the chief claims in the AFL-CIO’s report is that large technology companies are the main beneficiaries of digital trade. Ask almost any company operating in today’s economy, and they are likely to disagree.
Industries of all sectors and sizes have reaped benefits of digital innovation. The U.S. Chamber study, entitled The Digital Trade Revolution: How U.S. Workers and Companies Can Benefit from a Digital Trade Agreement, found that a diverse range of firms, from transportation, warehousing, and agriculture to arts and entertainment have been empowered to seize new market opportunities abroad as a result of advances and investments in new digital technologies.
Services, which make up a majority of digital exports​ and the majority of U.S. jobs​, have experienced strong growth in the U.S., but the potential for further expansion internationally is vast. U.S. digital exports — often called ICT-enabled or potentially ICT-enabled services in government reports — have more than doubled in the past 10 years, making it one of the country’s fastest growing export sectors, unleashing new opportunities for huge numbers of workers.​​ ​More than 20 million Americans work in the business and professional services sector, a majority of which can be traded digitally.​
03/01/2023 | Mary Kate Carter and John G. Murphy | U.S. Chamber of Commerce



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