issue: Trade

Press Release: PPI Urges Support for Bipartisan Legislation to Ensure Congressional Review of National Security Tariffs

Posted on by The Progressive Policy Institute

WASHINGTON— Ed Gerwin, Senior Fellow for Trade and Global Opportunity at the Progressive Policy Institute (PPI), today released the following statement in response to the introduction of the bipartisan, bicameral Congressional Trade Authority Act:

PPI welcomes the introduction of the Congressional Trade Authority Act by Representatives Ron Kind (D-WI) and Michael Gallagher (R-WI) and Senators Pat Toomey (R-PA) and Mark Warner (D-VA). We urge Congress to enact this responsible and balanced legislation.

The bill would amend the Trade Expansion Act of 1962 to provide Congress with new tools to oversee and either approve or reject the use of tariffs or other trade restrictions for national security purposes. Under the bill, national security trade restrictions proposed by the president would require congressional approval under an expedited, 60-day procedure. National security tariffs imposed within the past four years would also, retroactively, be subject to congressional review. Other reforms in the bill would include tightening the definition of “national security” to prevent the abuse of congressionally delegated powers to restrict trade for security reasons.

As PPI has explained in a recent policy brief, legislation like the Congressional Trade Authority Act is needed to restore an appropriate balance between Congress and the president in the exercise of trade and tariff powers. 

Article I, Section 8 of the U.S. Constitution empowers Congress to “lay and collect . . . duties” and “regulate commerce with foreign nations.” For almost a century, in exercising these powers, Congress has delegated significant authority to the president, including the power to restrict import trade for national security reasons. 

Past presidents have generally used these delegated security powers prudently. The Trump Administration has not. Instead, it’s imposed “national security” tariffs and quotas on imports of aluminum and steel from longstanding U.S. allies with scant security justification. And the President has threatened to impose “national security” tariffs—to be paid ultimately by American drivers—on imported autos, as well. As PPI has detailed, the Administration’s unfocused tariffs and trade restrictions have cost jobs for American workers, raised prices for American families, increased costs for businesses and state and local governments, and led to crushing retaliation against American exports.

When he signed the Trade Expansion Act of 1962, President Kennedy advocated building stronger trade alliances and warned against “stagnating behind tariff walls.” At the same time, as PPI has  explained in the context of China’s technology theft, smart and targeted trade restrictions are sometimes required to address critical national security threats. Congress has crucial roles to play in both promoting open trade and protecting national security. The balanced reforms contained in the Congressional Trade Authority Act would help Congress better exercise these important responsibilities.

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PPI Launches Series of New Ideas for a ‘Do-Something’ Congress

Posted on by The Progressive Policy Institute

Dear Democratic Class of 2018,

Congratulations on your election to the U.S. House of Representatives! In addition to winning your own race, you are part of something larger – the first wave of a progressive resurgence in U.S. politics.

The midterm elections gave U.S. voters their first opportunity to react to the way Donald Trump has conducted himself in America’s highest office. Their verdict was an emphatic thumbs down. That’s an encouraging sign that our democracy’s antibodies are working to suppress the populist virus of demagoguery and extremism.

Now that Democrats have reclaimed the people’s House, what should they do with it? Some are tempted to use it mainly as a platform for resisting Trump and airing “unapologetically progressive” ideas that have no chance of advancing before the 2020 elections. We here at the Progressive Policy Institute think that would be huge missed opportunity.

If the voters increasingly are disgusted with their dissembling and divisive president, they seem even more fed up with Washington’s tribalism and broken politics. For pragmatic progressives, the urgent matter at hand is not to impeach Trump or to embroil the House in multiple and endless investigations. It’s to show Democrats are determined to put the federal government back in the business of helping Americans solve their problems.

We think the House Democratic Class of 2018 should adopt this simple mantra: “Get things done.” Tackle the backlog of big national problems that Washington has ignored: exploding deficits and debt; run-down, second-rate infrastructure; soaring health and retirement costs; climate change and more. And yes, getting things done should include slamming the brakes on Trump’s reckless trade wars, blocking GOP efforts to strip Americans of health care, as well as repealing tax cuts for the wealthiest Americans.

PPI, a leading center for policy analysis and innovation, stands ready to help. We’re developing an extensive “Do Something” Agenda. Today, we are releasing the first in a series of concrete, actionable ideas designed expressly for Democrats who come to Washington to solve problems, not just to raise money and smite political enemies.

As you get settled into your new office, we’ll look for opportunities to acquaint you and your staff with these pragmatic, common-sense initiatives, and to discuss other ways we might be of service to you. That’s what we’re here for.

Regards,

 

 

Will Marshall
President
Progressive Policy Institute

New Ideas for a Do-Something Congress No. 1: “A Check on Trump’s Reckless Tariffs”

First and foremost, it’s time for Congress to start doing its job on trade. A key step is enacting the Trade Authority Protection (TAP) Act. This balanced legislation would rein in Trump’s abuse of delegated trade powers, require greater presidential accountability, and enable Congress to nullify irresponsible tariffs and trade restrictions.

A Radically Pragmatic Idea for the 116th Congress: Take “Yes” for an Answer on Net Neutrality

For the last two decades, different versions of net neutrality have bounced between Congress, the Federal Communications Commission, the courts – and most recently the states – but the issue remains unresolved.

It is time for Congress to solve this problem for good by enacting a strong, pro-consumer net neutrality law – an outcome that is politically possible even in this era of maximalist gridlock and deeply divided government, given the broad consensus that has formed around the vital issue of ensuring an open internet.

New Ideas for a Do-Something Congress No. 2: “Jumpstart a New Generation of Manufacturing Entrepreneurs”

The number of large U.S. manufacturing facilities has dropped by more than a third since 2000, devastating many communities where factories were the lifeblood of the local economy.

One promising way to revive America’s manufacturing might is not by going big but by going small – and going local. Digitally-assisted manufacturing technologies, such as 3D printing, have the potential to launch a new generation of manufacturing startups producing customized, locally-designed goods in a way overseas mega-factories can’t match. To jumpstart this revolution, we need to provide local manufacturing entrepreneurs with access to the latest technologies to test out their ideas. The Grassroots Manufacturing Act would create federally-supported centers offering budding entrepreneurs and small and medium-sized firms access to the latest 3D printing and robotics equipment.

New Ideas for a Do-Something Congress No. 3: “End The Federal Bias Against Career Education”

As many as 4.4 million U.S. jobs are going unfilled due to shortages of workers with the right skills. Many of these opportunities are in so-called “middle-skill” occupations, such as IT or advanced manufacturing, where workers need some sort of post-secondary credential but not a four-year degree.

Expanding access to high-quality career education and training is one way to help close this “skills gap.” Under current law, however, many students pursuing short-term career programs are ineligible for federal financial aid that could help them afford their education. Pell grants, for instance, are geared primarily toward traditional college, which means older and displaced workers – for whom college is neither practicable nor desirable – lose out. Broadening the scope of the Pell grant program to shorter-term, high-quality career education would help more Americans afford the chance to upgrade their skills and grow the number of highly trained workers U.S. businesses need.

New Ideas for a Do-Something Congress No. 4: “Expand Access to Telehealth Services in Medicare”

America’s massive health care industry faces three major challenges: how to cover everyone, reduce costs, and increase productivity. Telehealth – the use of technology to help treat patients remotely – may help address all three. Telehealth reduces the need for expensive real estate and enables providers to better leverage their current medical personnel to provide improved care to more people.

Despite its enormous potential, however, telehealth has hit legal snags over basic questions: who can practice it, what services can be delivered, and how it should be reimbursed. As is the case with any innovation, policymakers are looking to find the right balance between encouraging new technologies and protecting consumers – or, in this case, the health of patients.

Telehealth policy has come a long way in recent years, with major advances in the kinds of services that are delivered. Yet a simple change in Medicare policy could take the next step to increase access and encourage adoption of telehealth services. Currently, there are strict rules around where the patient and provider must be located at the time of service – these are known as “originating site” requirements – and patients are not allowed to be treated in their homes except in very special circumstances. To expand access to Telehealth, Congress could add the patient’s home as an originating site and allow Medicare beneficiaries in both urban and rural settings to access telehealth services in their homes.

New Ideas for a Do-Something Congress No. 5: Make Rural America’s “Higher Education Deserts” Bloom

As many as 41 million Americans live in “higher education deserts” – at least half an hour’s drive from the nearest college or university and with limited access to community college. Many of these deserts are in rural America, which is one reason so much of rural America is less prosperous than it deserves to be.

The lack of higher education access means fewer opportunities for going back to school or improving skills. A less educated workforce in turn means communities have a tougher time attracting businesses and creating new jobs. Congress should work to eradicate higher education deserts. In particular, it can encourage new models of higher education – such as “higher education centers” and virtual colleges – that can fill this gap and bring more opportunity to workers and their communities. Rural higher education innovation grants are one potential way to help states pilot new approaches.

New Ideas for a Do-Something Congress No. 6: Break America’s Regulatory Log-jam

Regulation plays a critical role in refereeing competition in a free market economy. But there’s a problem: Each year, Congress piles new rules upon old, creating a thick sludge of regulations – some obsolete, repetitive, and even contradictory – that weighs down citizens and businesses. In 2017, the Code of Federal Regulations swelled to a record 186,374 pages, up 19 percent from just a decade before. PPI proposes a Regulatory Improvement Commission (RIC), modeled on the highly successful Defense Base Realignment and Closure (BRAC) process for closing obsolete military installations. Like the BRAC process, the proposed RIC would examine old rules and present Congress with a package of recommendations for an up-or-down vote to eliminate or modify outdated rules.

New Ideas for a Do-Something Congress No. 7: Winning the Global Race on Electric Cars

Jumpstarting U.S. production and purchase of Electric Vehicles (EVs) would produce an unprecedented set of benefits, including cleaner air and a reduction in greenhouse gas emissions; a resurgence of the U.S. auto industry and American manufacturing; the creation of millions of new, good, middle class manufacturing jobs; lower consumer costs for owning and operating vehicles; and the elimination of U.S. dependence on foreign oil. U.S. automakers are already moving toward EVs, but the pace of this transition is lagging behind our foreign competitors. A dramatic expansion of tax credits for EV purchases could go a long way toward boosting the U.S. EV industry as part of a broader agenda to promote the evolution of the transportation industry away from carbon-intensive fuels.

New Ideas for a Do-Something Congress No. 8: Enable More Workers to Become Owners through Employee Stock Ownership

More American workers would benefit directly from economic growth if they had an ownership in the companies where they work. To help achieve this goal, Congress should encourage more companies to adopt employee stock ownership plans (ESOPs), which provide opportunities for workers to participate in a company’s profits and share in its growth. Firms with ESOPs enjoy higher productivity growth and stronger resilience during downturns, and employees enjoy a direct stake in that growth. ESOP firms also generate higher levels of retirement savings for workers, thereby addressing another crucial priority for American workers.

 

New Ideas for a Do-Something Congress No. 9: Reserve corporate tax cuts for the companies that deserve it

Americans are fed up seeing corporate profits soaring even as their paychecks inch upward by comparison. Companies need stronger incentives to share their prosperity with workers – something the 2017 GOP tax package should have included.

Though President Donald Trump promised higher wages as one result of his corporate tax cuts, the biggest winners were executives and shareholders, not workers. Nevertheless, a growing number of firms are doing right by their workers, taking the high road as “triple-bottom line” concerns committed to worker welfare, environmental stewardship and responsible corporate governance. Many of these are so-called “benefit corporations,” legally chartered to pursue goals beyond maximizing profits and often “certified” as living up to their multiple missions. Congress should encourage more companies to follow this example. One way is to offer tax breaks only for high-road companies with a proven track record of good corporate citizenship, including better wages and benefits for their workers.

New Ideas for a Do-Something Congress No. 1: “A Check on Trump’s Reckless Tariffs”

Posted on by The Progressive Policy Institute

Article I, Section 8 of the Constitution sets out Congress’s job description on international trade, empowering it “to lay and collect . . . duties” and “to regulate commerce with foreign nations.”

For the past two years, Congress hasn’t been doing its job. Instead, it’s stood by while President Trump has hijacked its constitutional trade powers and recklessly imposed damaging tariffs. Trump’s abuse of trade powers delegated to him by Congress is destroying U.S. jobs, hammering large and small businesses, increasing prices for American families, and prompting foreign retaliation against American manufactured and farm exports.

It’s time for Congress to start doing its job on trade. A key step is enacting the Trade Authority Protection (TAP) Act. This balanced legislation would rein in Trump’s abuse of delegated trade powers, require greater presidential accountability, and enable Congress to nullify irresponsible tariffs and trade restrictions.

 

THE CHALLENGE: PRESIDENT TRUMP’S ABUSE OF DELEGATED POWERS ON TARIFFS AND TRADE IS HARMING AMERICAN BUSINESSES, WORKERS, AND CONSUMERS.

President Trump’s reckless tariffs are damaging America’s economy and U.S. trade relations.
From Maine lobstermen(1) to West Coast dockworkers (2), and for countless workers, farmers, manufacturers (3), and consumers nationwide, President Trump’s tariffs—and resulting foreign retaliation—are causing serious and growing economic pain. Workers are losing jobs (4), manufacturing is being offshored (5), and farmers worry about rotting crops and lost export markets (6). America’s families are paying more for everything from washers and dryers to couches, clothing, canned beer, Christmas lights, and car insurance, while higher costs for infrastructure projects are straining local budgets (7). And unfocused tariffs against allies make it harder for America to mount joint action against serious trade threats, especially China’s technology theft and state subsidies (8).

In taking these irresponsible actions, the President is abusing trade powers delegated to him by Congress. Congress has done nothing to rein in Trump’s reckless trade wars and his hijacking of its constitutional trade authority.

Past presidents have prudently used trade powers delegated by Congress.
The Constitution provides Congress with primary authority over tariffs and foreign trade (9). For the first 145 years under the Constitution, Congress employed these powers directly through legislation. After the disastrous Smoot-Hawley tariffs deepened the Great Depression, Congress wisely adopted a different approach (10).

Beginning with the Reciprocal Trade Agreement Act of 1934,11 Congress increasingly delegated authority to the president to negotiate trade deals, adjust tariffs, and enforce U.S. trade rights (12). In effect, while retaining its constitutional trade powers and oversight authority, Congress has “subcontracted” key trade functions to the president.

These delegations make sense under America’s constitutional system. A 535-member Congress isn’t particularly well equipped to set tariffs, bargain on trade agreements, or enforce trade rules.

Presidents of both parties have largely exercised delegated trade powers responsibly, working constructively with Congress to expand trade (13). When President Kennedy signed the Trade Expansion Act of 1962—which authorized the president to impose trade restrictions to address “national security” threats—he emphasized building alliances and reducing trade barriers, and warned against “stagnating behind tariff walls” (14).

President Trump has abused delegated tariff and trade powers.
Unlike his bipartisan predecessors,15 Donald Trump hasn’t been a prudent steward of delegated trade powers. Rather, he’s cynically abused delegated authority, believing, for example, that simply invoking “national security” enables him to take virtually any action to restrict trade (16).

In imposing tariffs on imports of steel and aluminum, President Trump has used “national security” as little more than a pretext. Long-time trade experts note that the Administration’s investigations in these cases were “extremely non-transparent” and that its security and economic analyses were “embarrassingly feeble” and “absurd” (17).

Since adopting the metals tariffs, the Administration has implemented an exemption process that’s been chaotic, opaque, and lacking essential due process—especially for thousands of small businesses harmed by the tariffs. Applicants rarely get relief. The process seems designed, instead, to preserve tariffs for the Administration’s well-connected cronies in the primary metals sector (18).

Trump is doubling down on abusive “national security” cases, pushing for national security duties on auto imports from U.S. allies, despite near-universal opposition. The Administration’s public hearing in this investigation has been called a “show trial” intended to justify the President’s pre-ordained auto tariffs (19).

The Administration is abusing other delegated trade authorities. In a vital “Section 301” investigation of China’s theft of U.S. hi-tech, Trump initially sought to change China’s conduct by imposing unilateral tariffs on $50 billion in Chinese imports—based on faulty advice that China wouldn’t retaliate. When China retaliated, Trump impulsively increased the tariffed imports by another $200 billion and has threatened duties on all $500 billion in U.S. imports from China (20).

Trump’s irresponsible actions regarding China appear to be driven more by whim than any real strategy. It’s no surprise that his unfocused tariffs haven’t caused China to budge (21).

 

THE GOAL: REIGN IN PRESIDENT TRUMP’S ABUSE OF DELEGATED POWERS WHILE PRESERVING A RESPONSIBLE BALANCE BETWEEN CONGRESS AND THE PRESIDENT ON TRADE

President Trump is seriously abusing trade powers “subcontracted” to him by Congress. Accordingly, like any responsible general contractor, Congress must step in and better oversee how the president uses delegated trade powers.

Most importantly, Congress needs an effective procedure for stopping reckless trade restrictions by the president—and reversing damaging tariffs on hundreds of billions in imports that Trump has already enacted. Any new mechanism should apply to the full range of trade restrictions—including tariffs, quotas, and import prohibitions—and to the full list of laws that authorize the president to restrict trade.

At the same time, Congress shouldn’t return to the role of setting tariffs, negotiating trade deals, or enforcing trade rules. And, the president must still have authority to take initiative to restrict trade for legitimate reasons, subject to effective congressional oversight.

 

THE SOLUTION: ENACT THE TRADE AUTHORITY PROTECTION ACT

The bipartisan Trade Authority Protection Act would establish a process to enable Congress to evaluate and, if necessary nullify, the president’s use of trade powers delegated by Congress. (The TAP Act was introduced in May 2018 by Reps. Ron Kind (D-WI), Gregory Meeks (D-NY), Ralph Norman (R-SC) and Charles Dent (R-PA)) (22).

Under the TAP Act, 60 days before any “congressionally delegated trade action” could go into effect, the president would be required to submit a report to Congress on the proposed action. The report would describe the proposed action and its economic impacts, including the impacts of potential foreign retaliation. The Act would also require the Government Accountability Office—the investigative arm of Congress—to report on whether the proposed action complies with applicable law.

The TAP Act defines “congressionally delegated trade actions” broadly, to include tariffs, quotas, and import prohibitions under a range of laws that empower the President to restrict trade (23).

The Act would establish a procedure—like the Congressional Review Act (24) process for reviewing major regulations—to enable Congress to nullify the President’s proposed trade action. To do so, Congress would use an expedited process to pass a resolution disapproving the President’s proposed action within the 60-day review period.

The TAP Act would also require, in the first year after any trade action takes effect, that the U.S. International Trade Commission conduct a comprehensive assessment for Congress of the economic effects of the action on U.S. producers and consumers.

Finally, since the TAP Act was introduced in May 2018, President Trump has used delegated powers to impose reckless and damaging tariffs on hundreds of billions of dollars of imports, often using highly questionable legal and economic justifications. To assure these past actions are fully evaluated and reviewed by Congress, it’s vital that the original TAP Act be amended to assure that its reporting and nullification requirements apply retroactively to past Administration actions.

 

ENDNOTES

1 Shawn Donnan, Even Lobsters Can’t Escape Trump’s Trade War, Bloomberg, Nov. 7, 2018, https://www.bloomberg.com/news/features/2018-11-07/even-lobsters-can-t-escape-trump-s-trade-war?cmpid=socialflow-twitter-businessweek&utm_source=twitter&utm_content=businessweek&utm_medium=social&utm_campaign=socialflow-organic.

2 Jeff Stein, ‘People are worried and people are scared.’ These workers are hurt by Trump’s trade war, but ineligible for his bailout, Washington Post, Oct. 24, 2018, https://www.washingtonpost.com/business/economy/hurt-by-trumps-trade-war-ineligible-for-a-bailout/2018/10/24/7f30d866-ce67-11e8-a360-85875bac0b1f_story.html?utm_term=.5d8bc2ddefd.

3 Keith Naughton and Joe Deaux, Ford’s Hinrichs says Trump tariffs make U.S. steel costliest in the world, Automotive News, Oct. 22, 2018, https://www.autonews.com/article/20181022/OEM01/181029915/trump-tariffs-ford-hinrichs-stel; Rick Barrett, As tariffs continue, panic begins to sink in among Wisconsin manufacturers, Journal Sentinel, Oct. 22, 2018, https://www.jsonline.com/story/money/2018/10/22/tariffs-boats-cribs-bourbon-more-rattle-wisonsin-manufacturers/1686445002/.

4 Trump Trade War—Mid Continent Nail facing closure over tariffs, Steel News, Oct. 16, 2018, https://steelguru.com/steel/trump-trade-war-mid-continent-nail-facing-closure-over-tariffs/523502.

5 Bob Bryan, A Chicago-area manufacturer is laying off 153 workers and moving to Mexico partly because of Trump’s tariffs, Business Insider, Aug. 15, 2018, https://www.businessinsider.com/trump-tariffs-trade-war-causes-150-layoffs-at-chicago-manufacturer-2018-8.

6 Binyamin Appelbaum, Their Soybeans Piling Up, Farmers Hope Trade War Ends Before Beans Rot, New York Times, Nov. 5, 2018, https://www.nytimes.com/2018/11/05/business/soybeans-farmers-trade-war.html#click=https://t.co/iTW7QnQWbT.

7 Ed Gerwin, The ‘Trump Trade Tax’ Strikes Out America’s Baseball Fans, Progressive Policy Institute, Jul. 17, 2018, https://www.progressivepolicy.org/blog/the-trump-trade-tax-strikes-out-americas-baseball-fan//; Doug Palmer, Trump’s tariffs put pressure on insurance companies and premiums, Politico Morning Trade, Nov. 5, 2018, https://www.politico.com/newsletters/morning-trade/2018/11/05/trumps-tariffs-put-pressure-on-insurance-companies-and-premiums-400272; Infrastructure Construction Projects Stalled on Trump Tariffs, Yahoo, Jul. 18, 2018, https://www.forconstructionpros.com/business/news/21014043/infrastructure-construction-projects-stalled-on-trump-tariffs.

8 Ed Gerwin, Confronting China’s Threat to Open Trade, Progressive Policy Institute, Jun. 20, 2018, https://www.progressivepolicy.org/publications/confronting-chinas-threat-to-open-trade/.

9 U.S. Constitution, Art. I, Sec. 8, https://www.law.cornell.edu/constitution/articlei.

10 Bill Krist, Did the Smoot-Hawley Tariff Cause the Great Depression? America’s Trade Policy, Washington International Trade Association, Jun. 16, 2014, https://americastradepolicy.com/did-the-smoot-hawley-tariff-cause-the-great-depression/#.W-xJ3y2ZOCQ.

11 U.S. House of Representatives, Historical Highlights: The Reciprocal Trade Agreements Act of 1943, https://history.house.gov/HistoricalHighlight/Detail/36918.

12 Office of the U.S. Trade Representative, Eighty Years After the Reciprocal Trade Agreements Act, Tradewinds, Jun. 2014, https://ustr.gov/about-us/policy-offices/press-office/blog/2014/June/Eighty-years-of-the-Reciprocal-Trade-Agreements-Act.

13 Rep. Ron Kind, Congress must defend role in international trade, The Hill, Jun. 7, 2018, https://thehill.com/blogs/congress-blog/economy-budget/391230-congress-must-defend-role-in-international-trade.

14 John F. Kennedy, Remarks Upon Signing the Trade Expansion Act, Oct. 11, 1962,
https://www.presidency.ucsb.edu/documents/remarks-upon-signing-the-trade-expansion-act.

15 Previous presidents, for example, responsibly limited their use of “national security” trade powers to matters that raise legitimate security concerns. David Wassel, Section 232: A splendid little trade war, The Hill, Mar. 17, 2018, https://thehill.com/opinion/finance/378290-section-232-a-splendid-little-trade-war.

16 Paul Krugman, Trump’s Manchurian Trade Policy, New York Times, May 28, 2018, https://www.nytimes.com/2018/05/28/opinion/trump-china-trade-policy.html; It’s telling that President Trump often ignores the pretext of “national security,” and admits that the real purpose of his purported security tariffs is to provide leverage against trade partners on other trade priorities. Michael C. Bender, Rebecca Ballhaus, Peter Nicholas, and Alex Leary, Trump Steps Up Attacks on Fed Chairman Jerome Powell, Wall Street Journal, Oct. 12, 2018, https://www.wsj.com/articles/trump-steps-up-attacks-on-fed-chairman-jerome-powell-1540338090?mod=hp_lead_pos.

17 Chad P. Bown, Trump has announced massive aluminum and steel tariffs, Here are 5 things you need to know. Washington Post, Mar. 3, 2018, https://www.washingtonpost.com/news/monkey-cage/wp/2018/03/01/trump-has-announced-massive-aluminum-and-steel-tariffs-here-are-5-things-you-need-to-know/?utm_term=.c88a87214dda; Phil Levy, The Commerce Department Makes A Feeble National Security Plea For Steel Protection, Forbes, Feb. 16, 2018, https://www.forbes.com/sites/phillevy/2018/02/16/the-commerce-departments-feeble-national-security-plea-for-steel-protection/#40bbede842dc.

18 Megan Keller, Commerce Department IG to audit Trump’s tariff exemptions, The Hill, Nov. 1, 2018, https://thehill.com/policy/finance/414193-commerce-department-inspector-general-audits-tariff-exemption-process; Ed Gerwin, Off-the-rails trade policy shows how America loses under Trump, The Hill, Sept. 18, 2018, https://thehill.com/opinion/finance/407179-off-the-rails-trade-war-shows-how-america-loses-under-trump.

19 Ana Swanson, On Trump’s Car Tariffs, Companies are United in Dissent, New York Times, Jul. 19, 2018, https://www.nytimes.com/2018/07/19/us/politics/trump-car-import-tariffs.html; Jennifer Jacobs and Jenny Leonard, U.S. Car-Import Probe Advances as Trump Plans Trade Meeting, Bloomberg, Nov. 12, 2018, https://www.bloomberg.com/news/articles/2018-11-12/u-s-car-import-probe-advances-as-trump-plans-trade-team-meeting.

20 Louis Nelson, Victoria Guida, and Adam Behsudi, Trump threatens tariffs on all $500 billion worth of Chinese imports, Politico, Jul. 20. 2018, https://www.politico.com/story/2018/07/20/trump-china-tariffs-734938.

21 Anna Fifield, China’s trade surplus with the U.S. hit a record $34.1 billion in September amid trade war, Washington Post, Oct. 12, 2018, https://www.washingtonpost.com/world/chinas-trade-surplus-with-the-us-hit-a-record-341-billion-in-september-amid-trade-war/2018/10/12/acdb7412-cdd9-11e8-a360-85875bac0b1f_story.html?utm_term=.f9d7beaa6bda.

22 Trade Authority Protection Act, H.R. 5760, 115th Cong., 2nd Sess., https://www.congress.gov/bill/115th-congress/house-bill/5760/text; Congressman Ron Kind, Bipartisan Group of Lawmakers Call for Implementation of Congressional Review Act Procedures on Trade Measures, Press Release, May 10, 2018, https://kind.house.gov/media-center/press-releases/bipartisan-group-lawmakers-call-implementation-congressional-review-act.

23 Ibid.

24 U.S. Government Accountability Office, Congressional Review Act, https://www.gao.gov/legal/other-legal-work/congressional-review-act.

America’s Resilient Center and the Road to 2020 – Results from a New National Survey

Posted on by The Progressive Policy Institute

The Progressive Policy Institute (PPI) today released a national opinion survey that highlights the surprising resilience of America’s pragmatic political center two years into Donald Trump’s deeply polarizing presidency. The poll reinforces a key takeaway from the 2018 midterm elections: Suburban voters – especially women – are repelled by the president’s racial and cultural demagoguery and are moving away from a Trump-dominated GOP.

“Our poll suggests that Donald Trump’s election in 2016 is more likely to be an aberration than any permanent shift in America’s political course,” said Anne Kim, PPI Director of Social and Domestic Policy and PPI President Will Marshall. “The defection of suburban voters creates a political landscape that favors Democrats in 2020 – if they stick to the ‘big tent’ approach that proved so effective in the midterm.”

The poll conducted by Pete Brodnitz at Expedition Strategies contains findings about what’s top of mind for voters, their ideological outlook and leanings, and their views on health care, trade, growth and inequality, the role of government, monopoly and competition, and other contentious issues.

“The agenda that could help Democrats sustain a governing majority, our poll suggests, is one that is progressive yet pragmatic—one that’s optimistic, aspirational and respects Americans’ beliefs in individual initiative and self-determination; one that broadens Americans’ opportunities for success in the private sector and strengthens the nation’s global economic role; one that demands more from business but doesn’t cross the line into stifling growth; and one that adopts a practical approach to big challenges such as immigration reform and climate change,” write Kim and Marshall.

“For Democrats to maintain and expand this near-majority advantage, they must craft a broadly appealing agenda that brings or keeps independents and less committed partisans—the majority of whom call themselves ‘moderate’—under the tent.”

PPI-Expedition-Strategies-2018-Poll-PPT

PPI_Americans-and-The-Economy2018

Gerwin for The Wall Street Journal, “Trump’s Tariffs Give Democrats a Chance to Lead on Trade”

Posted on by The Progressive Policy Institute

‘We lost $817 billion a year, over the last number of years, in trade,” President Trump said at a summer rally. “In other words, if we didn’t trade, we’d save a hell of a lot of money.”

Mr. Trump’s bombast has flipped the Republican pro-trade script. For Democrats, this change offers a significant political opening and a pivotal choice: Should Democrats echo Mr. Trump’s 1930s-era protectionism, or reclaim the tradition of global engagement sustained by FDR, JFK, and Bill Clinton?

Continue reading at The Wall Street Journal.

Gerwin for New York Daily News, “Trump’s NAFTA revision actually reaffirmed open regional trade”

Posted on by The Progressive Policy Institute

Donald Trump huffed, and he puffed, but he couldn’t blow NAFTA down.

Like the Big Bad Wolf in the fairy tale, President Trump presumed that NAFTA — which he’s called the “worst trade deal ever” — would collapse before his bluster like a house of straw. Trump’s bombast may have knocked a few shingles off the agreement’s free trade edifice. And it’s caused serious collateral damage to America’s neighborhood and beyond. But, in the end, NAFTA’s structure — like the Three Pigs’ house of bricks — still stands.

Trump, of course, tells a different fable. At a recent rally, Trump declared “[w]e are replacing the job-killing disaster known as NAFTA, with the brand new U.S.-Mexico-Canada trade agreement.”

Continue reading at New York Daily News.

Marshall for New York Daily News, “New Old Labour: The U.K. party’s tight embrace of retrograde ideas, and what it might mean for Democratic Socialists in the U.S.”

Posted on by The Progressive Policy Institute

Democrats, like progressive parties across the transatlantic world, are struggling to find an answer to populist nationalism. Could that answer lie in reviving another old political creed, socialism?

Some young Democratic activists, inspired by Sen. Bernie Sanders, are flirting with “democratic socialism.” But they have nothing on Britain’s Labour Party, which consummated its on-again relationship with socialism in Liverpool last week.

The occasion was the party’s annual conference, which I attended when not wallowing in Liverpool’s trove of Beatles memorabilia. The gathering presented an oddly incongruous picture: a reinvigorated party with lots of young faces hawking old ideas.

The Merseyside Conference also capped Jeremy Corbyn’s improbable odyssey from Labour’s hard-left fringe in the early 1980s to party leader today. Having survived media ridicule for his retro views, several attempted ousters and a recent imbroglio over charges that he’s tolerated anti-Semitism among left-wing Labour members, Corbyn at last seems to have his party firmly in hand.

Continue reading at New York Daily News.

PPI Statement on NAFTA Reform Announcement

Posted on by The Progressive Policy Institute

“President Trump has called the new USMCA ‘the most important trade deal that we’ve ever made, by far.’ To the extent that the Administration is backing away from Trump’s earlier threats to blow up or emasculate NAFTA, that may be true. To the extent that the USMCA is largely an elaborate rebranding exercise, it seems that the Administration could have accomplished that—and usefully modernized NAFTA—without repeatedly threatening the very foundations of North American trade.

“At first glance, the USMCA hardly seems groundbreaking. It would modernize NAFTA by adding provisions derived from the Trans Pacific Partnership deal that the President abandoned, and would increase U.S. access to Canada’s dairy sector. But it’s far from clear whether its highly complex rules of origin for autos and other sectors would have the transformative economic effects that the Administration claims.

“It’s noteworthy that the new agreement doesn’t eliminate U.S. ‘national security’ tariffs on aluminum and steel from Canada or Mexico—or the retaliatory tariffs that those countries continue to impose on American manufacturers and farmers. And the Agreement’s reliance on the threat of ‘national security’ tariffs on Canadian and Mexican cars is a particular concern. As it reviews the new deal, Congress needs to push back against these and other abusive efforts by the Administration to restrict trade and hijack trade powers that are vested by the Constitution in Congress.”

Gerwin for The Hill, “Off-the-rails trade war shows how America loses under Trump”

Posted on by The Progressive Policy Institute

Donald Trump promised that America would start “winning big on trade.” Trump vowed to keep “special interests” from rigging U.S. trade, pledged trade decisions would “benefit American workers and families,” and promised to confront trade violations by China.

For the former Apprentice host, winning means that Trump picks the winners, tilting the scales for his favored trade interests. He’s imposed tariffs on washers and dryers, steel and aluminum and is pursuing 25-percent “national security” duties on imported cars.

Trump’s new taxes on $200 billion in imports from China, which led to the inevitable retaliatory tariffs of $60 billion on U.S. exports, are the latest in a series of impulsive choices that have turned a vital investigation of China’s technology theft into an out-of-control tariff war.

Trump’s trade edicts have helped some companies and workers. But many more Americans — and America as a whole — are losing under Trump’s trade policies.

Continue reading at The Hill.

A Scalpel, Not an Axe: Updating Antitrust and Data Laws to Spur Competition and Innovation

Posted on by The Progressive Policy Institute

Americans justifiably have long taken great pride in the unmatched ability of the U.S. economy to enable entrepreneurs to launch and grow highly innovative companies that drive growth and advance living standards. Bold entrepreneurs and the companies they founded brought us modern communications, airplanes, automobiles, computer software and hardware, and electricity and other forms of energy to power them all.

These innovations and others have constantly reshaped and remade our economy – displacing less efficient technologies and ways of doing business in a process of “creative destruction” that economist Joseph Schumpeter, many decades ago, singled out as the most important feature of capitalist economies.

The most innovative and valuable companies of our time are the leading “technology platform” companies: Amazon, Apple, Facebook and Google – a group New York University Professor Scott Galloway simply labels “The Four.” Except for Apple, none of these companies existed before 1990. That they have eclipsed in the public mind – in such a relatively short amount of time – such other tech giants as Microsoft, Oracle, Cisco and Intel is a testament to the remarkable acumen of the founders and leaders of The Four, their highly skilled workforces, and to the economy and society that have enabled them to flourish.

The EU-Japan Economic Partnership Agreement: Boosting Trade, Highlighting America’s Isolation

Posted on by The Progressive Policy Institute

On July 17, 2018, the European Union and Japan formally signed a landmark agreement on trade. This watershed agreement underscores the strong desire of the EU and Japan to benefit their citizens and economies by aggressively pursuing open, rules-based trade.

When ratified by their respective legislatures, the Economic Partnership Agreement (EPA) signed in Tokyo by European Commission President Jean-Claude Juncker and Japanese Prime Minister Shinzo Abe will create a largely free-trade zone, covering a third of global GDP. The EPA is the largest ever signed by both parties, and reflects shared values that they agree should govern their future trade and economic relations.

The Agreement also sends a clear and forceful message that the parties reject the protectionist policies pursued by the United States under Donald Trump. Negotiation of the deal started long ago (in 2013) and were delayed and extended for political and other reasons, including deadly floods in Japan. Trump’s election—and his growing attacks on open trade—provided new momentum for the negotiations and helped to push them over the finish line.

The EPA’s many benefits come not only from the wide variety of issues that it includes, but also from the creation of an almost completely tariff-free zone[1]. The deal’s extensive reforms will boost import-export trade in a massive market covering more than 600 million people.

The EPA’s starting point is the removal of trade barriers to promote market access for EU goods and services to Japan. Japan is the EU’s second biggest trading partner in the Asian region after China, and boosting EU trade further will support economic growth and jobs. Japan, which already sends 10 percent of its trade to the European zone[2], will similarly benefit from the EPA’s reforms.

Eliminating tariffs is not the only means the EPA uses to achieve its comprehensive objectives. The parties also agreed to pare down the costs of compliance with Japanese rules and standards[3], and to remove Japanese barriers that keep foreign firms from bidding for government contracts in certain sectors. Those two reforms alone will eliminate major obstacles to selling more EU goods and services in the Asian area.

The EPA promotes greater competition[4] for European products in Japan and easier access to Japan’s market, especially for EU agricultural goods, pharmaceuticals, medical devices and motor vehicles. The Agreement’s benefits also extend the service sector, particularly financial services, e-commerce and communications. As a whole, the EPA is forecast to increase EU exports to Japan by some 13,5 billion euros annually.

The accord also makes important changes in the field of data protection. It recognizes the two parties’ data protection systems as “equivalent,” and thereby creates the biggest jointly secured data flow in the world.

This strategic development is the latest in growing foreign opposition to Trump’s nationalism and protectionism, which have sparked a movement by many countries towards negotiating new market-opening agreements. As a result of these new agreements, American companies will increasingly be excluded from favorable trade treatment, illustrating how neglecting open trade and reneging on longstanding policies can be economically damaging on a global level.

Trump’s recent actions have only made things worse for the United States. Two major examples are his recent aluminum and steel taxes, which the international community has widely condemned, and the refusal of the U.S. government to cooperate in re-appointing judges to the Appellate Body in the World Trade Organization[5]––mostly because its members’ decisions did not seem to comply with the U.S. perspectives. These and other actions by the Trump Administration illustrate the perils of limiting trade, closing borders and refusing to cooperate in the multi-lateral system, embodied by the WTO.

While the overall impact of the EU-Japan Agreement may not be immediately visible, its political weight is. Both parties are, most importantly, emphasizing a strong message of shared democratic values and respect for the rule of law at an especially precarious moment in global affairs. In particular, they are underlining the substantial importance of cooperation in trade. By contrast, Trump’s zero-sum protectionism is blinding him to the economic damage his misguided policies are causing for the United States, which is careening toward isolation while the rest of the world is heading steadily towards shared prosperity.

[1] Starting from 90% at the beginning of the implementation of the Agreement, and gradually increasing up to 97%.

[2] According to the European Commission data, EU firms export roughly over €58 billion of goods and €28 billion of services to Japan exclusively every year.

[3] These obstacles make it 10-30% more expensive to export to Japan.

[4] For example, there will be zero tariffs on processed pork, and an elimination of the ones on cheese (currently 29.8%) and on wine (currently 15%).

[5] The WTO system provides a legal forum in Geneva for states in order to file complaints against other members, for alleged violations of WTO law. A three-member arbitration panel can hear each appeal and issues its decision, with the possibility of appeal to the WTO’s Appellate Body, a seven-member independent court that makes the final decision on the meaning of WTO law and its application.

An Economic Analysis of Japan’s Current Mobile Communication Policy from the Competition and Innovation Perspective

Posted on by The Progressive Policy Institute

Since 2016, the Ministry of Internal Affairs and Communications (MIC) and the Japan Fair Trade Commission (JFTC) have tried to promote more competition in the mobile market in order to encourage economic growth and promote fairness. In particular, the government agencies have restricted handset subsidies in an effort to lower rates.

The results of these policies have fallen short of expectations. Mobile service prices in Japan have dropped by 10 percent over the past two years, far less than the 25 percent decline in the United States in the same period.

One piece of good news for competition is the impending entry of Rakuten Mobile as the fourth mobile network operator. However, we show in this paper that the restriction on handset subsidies makes it significantly harder for Rakuten to attract customers from the incumbents, since the challenger will be forced to charge customers for the “privilege” of switching to a new network.

日本語の記事：PPI_JapanMobile_Japanese

Summary: PPI on Trade Policy

Posted on by The Progressive Policy Institute

Here are a selection of PPI’s recent reports, op-eds and blog posts on global trade

2018

 “Confronting China’s Threat to Open Trade,” (Ed Gerwin) (June 2018)

Op-Ed in The Hill: “It’s time for Congress to step in and stop Trump’s trade abuses,” (Ed Gerwin) (June 2018)

Op-Ed in The Hill: “’Go-it-alone’ trade strategies are neither wise nor effective,” (Ed Gerwin) (March 2018)

Op-Ed in The Wall Street Journal: “In America’s Absence, the TPP Goes on,” (Ed Gerwin) (March 2018)

 

2017

“How to Modernize and Strengthen NAFTA,” (Will Marshall and Ed Gerwin) (with University of California, Tecnológico de Monterrey, and COMEXI) (November 2017)

Op-Ed in U.S. News: “Trump the NAFTA Terminator,” (Ed Gerwin) (November 2017)

Op-Ed in The Hill: “Democrats’ trade plan tries to ‘out-Trump’ Trump – bad idea,” (Ed Gerwin) (August 2017)

Op-Ed in The Hill: “The bitter harvest of Trump’s protectionist stance,” (Ed Gerwin) (August 2017)

“Moving Beyond the Balance Sheet Economy,” in Policy Choices for a Digital Age, Friends of Europe,( June 2017). (Michael Mandel)

Op-Ed in The Hill: “Congress has provided a workable framework for renegotiating NAFTA,” (Ed Gerwin) (April 2017)

Op-Ed in CNBC: “How the US economy could suffer-bigly-under Trump’s trade agenda,” (Ed Gerwin) (March 2017)

 

2016

Op-Ed in U.S. News: “Trade Works: Populists like Trump and Sanders Ignore How Trade Benefits Workers,” (Ed Gerwin) (November 2016)

“Trade and Good Jobs for the 99 Percent: Debating Trade, the Elites, and Jobs,” (Ed Gerwin) (October 2016)

PPI President Will Marshall Trade Debate: “Marshall Take on Trump Senior Policy Advisors,” (Will Marshall) (October 2016)

Op-Ed in The Hill: “Facing the future on trade: Democrats must reject anti-trade obstructionism,” (Ed Gerwin and Will Marshall) (September 2016)

“A Big Deal for Small Business: Seven Stories of How the Trans-Pacific Partnership Would Boost America’s Small Exporters,” (Ed Gerwin) (September 2016)

Op-Ed in RealClearPolicy: “Trump’s Wrong on Trade Policy & Maybe Trade Politics, Too,” (Ed Gerwin and Will Marshall) (June 2016)

Op-Ed in The Daily Beast: “Donald Trump and Bernie Sanders are Delusional on Trade Policy,” (Will Marshall and Ed Gerwin) (April 2016)

 

2015 and selected earlier reports

“The Trans-Pacific Partnership and Small Business: Boosting Exports and Inclusive Growth,” (Ed Gerwin) (November 2015)

Op-Ed in The Wall Street Journal: “Small Businesses With a Big Stake in the Pacific Trade Deal,” (Ed Gerwin) (November 2015)

PPI Blog Post: “How the Ex-Im Bank Serves Main Street,” (Ed Gerwin) (October 2015)

“Should the United States Adopt an Innovation Box?: The Post-BEPS Landscape,”  (Michael Mandel and Michelle Di Ionno) (October 2015)

Op-Ed in The Daily Beast: “Hillary’s Fatal Trade Flip-Flop,” (Will Marshall) (October 2015)

“TPP and the Benefits of Freer Trade for Vietnam: Some Lessons from U.S. Free Trade Agreements,” (Ed Gerwin) (September 2015)

“Uncovering the Hidden Value of Digital Trade,” (Paul Hofheinz and Michael Mandel) (July 2015)

PPI Blog Post: “Lebron James and the Do-Something Democrats: Support for Democrats “In the Arena” on Trade,” (Ed Gerwin) (June 2015)

The BEPS Effect: New International Tax Rules Could Kill US Jobs,” (June 2015) (Michael Mandel)

“The Blame Game: Multinational Taxation in an Era of Knowledge,” (May 2015) (Michael Mandel, Paul Weinstein & Sarah O’Byrne)

”The Digital Opportunity: Democratizing Trade for the 99 Percent,” (Ed Gerwin) (May 2015)

Op-Ed in Republic 3.0: “The Digital Economy, Trade Agreements and the 99 Percent,” (Ed Gerwin) (May 2015)

Op-Ed in CNN: ”Why trade is in the national interest,” (Will Marshall) (April 2015)

Op-Ed in The Hill: “How the Obama Trade Agenda can Advance Progressive Goals,” (Ed Gerwin) (April 2015)

“The Obama Trade Agenda: Five Things for Progressives to Like,” (Ed Gerwin) (February 2015)

“Data, Trade, and Growth,” in Measuring Globalization: Better Trade Statistics for Better Policy – Volume 2. Factoryless Manufacturing, Global Supply Chains, and Trade in Intangibles and Data, Susan N. Houseman and Michael Mandel, eds. W.E. Upjohn Institute for Employment Research (2015).

Bridging The Data Gap: How Digital Innovation Can Drive Growth and Jobs,” (April 2014) (Paul Hofheinz and Michael Mandel)

“Manufacturing in the App Economy: How Many Jobs Should We Aim For?,” (May 2012) (Michael Mandel and Diana Carew)

“Hidden Toll: Imports and Job Loss Since 2007,” (March 2012) (Michael Mandel and Diana Carew)

“Measuring the Real Impact of Imports on Jobs,” (March 2012) (Michael Mandel and Diana Carew)

“Taxing Capital in a Supply-Chain World,” (November 2010) (Michael Mandel)

 

The Trump Trade Tax Strikes Out America’s Baseball Fans

Posted on by The Progressive Policy Institute

For millions of American fans, baseball’s All-Star Game is a welcome respite from the day-to-day challenges of budgeting for their families. But, as they watch tonight’s Summer Classic, it will be hard for American consumers and taxpayers to avoid the many reminders of the “Trump Trade Tax” — the higher costs that they’ll pay because of the Trump Administration’s misguided fixation with imposing and proposing damaging import tariffs.

  • Building Costs. The construction cranes looming beyond the outfield at Nationals Park will remind fans that Trump’s tariffs on steel, aluminum, and lumber have raised construction costs—not just for big buildings—but for new homes and home remodeling projects too. And, as taxpayers, they’ll be on the hook as their local and state governments grapple with higher costs for construction and infrastructure.
  • Refrigerators. As they go to their leaky old refrigerator for a pre-game snack, fans will be reminded that a new one will cost more because of the Trump Trade Tax. On top of higher costs from Trump’s aluminum and steel tariffs, his proposed 10 percent tariff on refrigerators from China would raise prices even more.
  • Beers and Cokes. Cold cans of Bud Light and Diet Coke will likely cost more because of Trump’s 10 percent duties on aluminum—a major cost item for American beverage companies.
  • Furniture. As they plop down on their old couch, fans will be reminded that their plans to refurnish the family room will be more expensive if Trump’s proposed duties on furniture and lamps from China go into effect.
  • Washers and Dryers. As they rush between innings to switch laundry from their 15-year-old washer and to their equally old dryer, fans will be reminded that replacing them will cost a lot more—Trump’s tariffs on washers, dryers, steel, and aluminum have caused washer and dryer prices to spike by some 17 percent in just three months.
  • Baseball Gloves and Caps. Even the game itself won’t be an escape from the Trump Trade Tax. As they watch Mike Trout adjust his batting glove, Max Scherzer pound his pitcher’s mitt, or the All-Star players tip their baseball caps to the crowd, fans be reminded that batting gloves, baseball mitts, and baseball caps are among the hundreds of consumer items covered by Trump’s proposed duties on $200 billion in imports from China. Trump’s fans might save a few dollars by wearing their “Make America Great Again” caps. But, if they need a new one, it will likely cost more because of the Trump Trade Tax too.

Enjoy the game!

PPI Proposes Countering China with Smart, Targeted Strategy-Not Tariffs & Trade Wars-to Secure American Competitiveness

Posted on by The Progressive Policy Institute

The President’s blunt goal of reducing America’s trade deficit with China won’t address the threat of China’s high-tech mercantilism

WASHINGTON —The Progressive Policy Institute (PPI) today released a new report by Ed Gerwin, Senior Fellow for Trade & Global Opportunity, proposing a smart, targeted long-term U.S. strategy to combat China’s state-directed technology mercantilism, instead of the unfocused protectionist approach being pursued by the Trump Administration.

“The Trump Administration is right to highlight the threat that China’s state-directed technology mercantilism poses to America’s economic future,” says Gerwin. “But the Administration’s strategy—based on duties that damage the American economy and ‘America First’ policies that alienate our allies—is flawed, and won’t change China’s bad behavior. Neither will doubling down on that ill-considered strategy through this week’s announcement of additional trade taxes on $200 billion in Chinese-origin goods.”

“Instead of tariffs and trade wars, the United States needs to pursue a tough, targeted, long-term strategy that enlists allies, enforces rules and writes new ones, focuses negotiations, and ratchets up pressure on China—all while advocating aggressively to keep global markets open. We detail such a strategy in our new report.”

According to Gerwin, the linchpin of China’s future-oriented mercantilism is an extensive array of plans, policies, rules, and practices to enable the transfer and assimilation of foreign technology and intellectual property for China’s benefit. To achieve these goals, China is employing many unfair or illegal measures, including using foreign ownership restrictions and licensing approvals to compel American companies to transfer their technology, and directing and funding a highly coordinated effort by Chinese state-owned and private firms to acquire foreign tech firms. China’s conduct poses a threat to the United States, Gerwin notes, where IP-intensive industries alone support more than 45 million jobs and represent 39 percent of U.S. GDP.

But threatening duties on Chinese products is unlikely to upend China’s innovation mercantilism, Gerwin argues. Duties are likely to increase American consumer prices and reduce vital technology investments, while a tit-for-tat tariff war with China could cost an estimated 455,000 American jobs, most in less-skilled sectors. The Administration’s “go-it-alone” approach to trade is also alienating allies in Europe, Japan, Korea, and elsewhere who should be natural allies in opposing China’s technology mercantilism. Finally, there’s significant concern that President Trump may undercut the long-term effort required to address Chinese mercantilism by, instead, focusing on short-term “wins.”

America should keep all options on the table in opposing China’s abusive innovation practices, including targeted and intensifying trade sanctions, writes Gerwin. But these tactics must be part of a smarter, focused, long-term U.S. strategy that includes:

  • Working more closely with—and not needlessly alienating—trade partners who also face threats from China’s unfair technology practices;
  • Using the WTO much more aggressively to launch a bold series of WTO challenges to China’s multiple rules violations;
  • Leading a global effort to establish new rules and norms to address China’s unfair innovation practices that aren’t covered by existing global trade rules, including new rules to limit digital protection-ism and unfair competition by SOEs; and
  • Designating a single, high-level official to lead focused negotiations to seek specific and verifiable commitments from China on ending China’s use of abusive practices that harm American competitors in innovative industry sectors

Gerwin calls on Congress to play a more active role in confronting China’s high-tech mercantilism by:

  • Establishing a clear set of negotiating objectives for China that underscore the primacy of eliminating China’s abusive innovation policies;
  • Providing additional resources to support ramped-up investigation, consultation, and enforcement related to China’s unfair trade and technology practices;
  • Amending current law to broaden Executive Branch authority to use national security reviews, export controls, and other tools to address security and industrial base threats posed by China’s acquisitions and technology demands; and
  • Establishing an escalating series of sanctions that would kick in if China fails to make verifiable progress in eliminating abusive innovation practices, potentially including reciprocal restrictions on Chinese technology licensing, the withdrawal of U.S. scientific and technical cooperation, and/or targeted sanctions on Chinese products based on stolen or unfairly obtained American know-how.

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read more here:PPI_China_2018

Confronting China’s Threat to Open Trade

Posted on by The Progressive Policy Institute

A Smarter Strategy for Securing America’s Innovation Edge

In early April, reportedly after “zero substantive internal debate,” President Trump ordered the U.S. Trade Representative (USTR) to consider imposing additional tariffs on $100 billion in Chinese products. Trump’s order claimed that new tariffs were needed to retaliate against China’s threatened retaliation for tariffs that Trump had announced earlier.

Trump’s impulsive escalation was denounced by farmers, retailers, tech organizations, and others, and by bipartisan political leaders. Sen. Ben Sasse (R-NE) put things bluntly: “This is nuts. China is guilty of many things, but the President has no actual plan to win right now.”