At least some of incoming Trump team—to repeat again—believe the US is already engaged in a trade war. They want manufacturing to take place inside the United States and will do whatever they think it takes to make it so. Many of the key players seem to be stuck in the 1980s and are pulling out the playbook from that era when the United States could dictate terms and insist on mechanisms like voluntary export restraints. The retaliation this time around will be different. The coming year is going to be very challenging for firms. Trump is not going to change his mind on trade. He really means business.
A Looming US Trade War with China? Really?
Normally, we would not do CNBC interviews or roll out a blog post on the eve of Christmas, New Year’s celebrations and the end of the year “dead time” in the office. But our friends in Washington DC are continuing to make trade and trade policy too interesting to ignore. The latest is the elevation of Peter Navarro to a newly created post of trade “czar” in the White House. Navarro started life as a fairly normal Harvard-trained economist, but has gained a reputation as an economic nationalist and a strident anti-China proponent. The terms may sound too strong. Watch the opening 30 seconds of his video documentary in which he urges viewers to “defend America and protect your family” by not buying Chinese products. The film is called “Death by China: How America Lost Its Manufacturing Base.”
RCEP: Looking Ahead to 2017
RCEP has therefore been negotiating with an unusual approach. First, the ten countries of ASEAN meet to determine their position in any given chapter. Sometimes, the ASEAN Foreign Partners (AFPs) also caucus. Then, all 16 parties come together to talk. This multi-stage approach has helped keep ASEAN “in the driver’s seat” in RCEP thus far. But heading into 2017, with the hope that only four rounds remain, a few things suggest that RCEP will have to reconsider its strategy and approach if members intend to reach a satisfactory conclusion. There are, fortunately, a number of trends that suggest that pressures are building to drive various member states to be more ambitious and aggressive.
Reprint: Trump's Trade Policy Revisited
This is a reprint of our September 28, 2016, post outlining Donald Trump's trade policy paper, written by Wilbur Ross and Peter Navarro. Wilbur Ross has just been named by Trump to be Commerce Secretary. Ross has not been backing away from this document. Since his name surfaced, Ross has said the US has been following "dumb" trade policies. He dismissed efforts to pass the TPP in the US as"a figment of people's imagination." . . . Navarro and Ross believe that the United States is already engaged in an economic war that it has lost because the US has failed to engage properly. The Trump economic plan places blame for economic damage squarely at the feet of poorly negotiated trade deals and the failure to enforce them. The “bad deals” include NAFTA, China’s entry into the World Trade Organization, and the US-Korea free trade agreement (KORUS).
RCEP and TPP Compared
This post is a comprehensive overview of the different provisions in the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP) trade agreements to allow a side-by-side comparison of the two deals. Of course, since the RCEP negotiations are not yet finished and officials are meeting next week for the 16th round, the situation in Asia may still change.