The US trade war with China has played the role of police, prosecutor and judge
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Although Steve Road Bannon has been out, Trump is still willing to take the risk of launching a trade war with China.
Now, US President Donald Luther Trump is pursuing an unconventional and controversial strategy to put pressure on China to open the door for American companies. Obviously this is a signal that although his think tank strategist Steve Road Bannon has been out, the Trump administration is still willing to take the risk of launching a trade war with China. Everyone knows that Steve Road Bannon was previously the most famous economic nationalist in the Trump administration.
According to reports, Trump’s action involves investigating whether China initiated illegal international trade law. The reason given is that China systematically steals intellectual property rights. The Trump administration also claims that China has forced a large number of foreign companies to surrender their most cherished technology in exchange for opportunities to enter the Chinese market.
In order to counter this practice, the US government is using Section 301 of its Trade Act of 1974. This provision is a legal rule that the United States has used to force other countries to open markets when restricting US exporters' access. It allows the United States to unilaterally impose tariffs on exports from other countries (for the United States, it is a tax on imported goods) or to restrict the entry of products from these countries into the US market.
In the past, the US government has tried and tested the use of Section 301, and has opened the door to other countries. For example, in the 1980s, the US government used this method to open up the semiconductor market in Japan. But in the decades that followed, this policy has been shelved by Washington. Since the establishment of the World Trade Organization (WTO) in 1995, it has been widely believed that the implementation of Section 301 is an unfair practice. If the US government launches a new round of investigations and decides to impose economic penalties on China after a period of time, it will definitely cause an uproar in the field of global trade.
The Chinese government has clearly announced that it will retaliate against any sanctions against China. Last week, Chinese Foreign Ministry spokesperson Hua Chunying once told Chinese and foreign media reporters: "The trade war has no future and no winners. Both sides will eventually be losers."
On Friday, the same day that Steve Road Bannon was forced to leave the White House, US Trade Representative Robert Lighthizer announced the new initiative. This action by the US government shows that even if Bannon leaves the White House to return to his own Bloomberg News Network, his views on China are still in the White House.
Last Friday, in an interview with American Prospect, Bannon said surprisingly that the United States should take decisive action to stop China's rapid rise. Bannon even alarmed that the rise of China is the most direct of the United States, and it is almost a threat to life and death. He also pointed out that Section 301 is the best weapon for the US government to deal with China.
In an interview with Robert Kuttner, editor of the "Left" thought magazine, Bannon said: "We will formally confront China. We have come to a conclusion that they (Chinese) are launching An economic war, and it is crushing us."
He also said: "For me, economic war with China is everything. We must focus on this."
Although Bannon has left the White House, there are still some hawks in the US government that have a tough stance on China's trade, and they are likely to let Bannong's ideas continue to survive. These hawks include US Trade Representative Robert Lulet Heze and Peter Navarro, director of the White House National Trade Commission. Trump himself believes that economic threats to China will persuade the Chinese government to take more containment measures against North Korea. He may regard this survey as a bargaining chip for future discussions with the Chinese government on the regulation of North Korea.
It is reported that Trump launches the 301 special clause is an adventure, which has two main reasons. First, in 1995, the US government had made it clear that once the international community agreed to set up the WTO, it would stop using Section 301. If the US government finally really takes action against China under this clause, it will inevitably destroy the existing global trading system – and trigger a series of economic instability and tactics between China and the United States.
On the other hand, the new round of investigations initiated by the US government is in fact the same as most of Trump's previous trade actions. The real purpose of these actions is not to protect American workers. In contrast, its main function is to make it easier for US companies to expand beyond the homeland – a process that usually means that American companies will dismiss domestic workers and instead hire cheap labor from other countries. In other words, Trump's approach is likely to punish the blue-collars in the United States, and it is their votes that sent Trump to the White House.
Rob Scott is the head of the research department in the trade and manufacturing sector at the Economic Policy Institute, a think-tank think tank. After learning that the US government announced the launch of the Section 301 investigation, Scott told the media: "The negative impact of the Trump camp on trade and trade activities has brought to American workers in changing the North American Free Trade Agreement. The same is true of his adverse effects. His intervention in trade is not to help American workers, but to help American investors and US multinationals."
In other words, Trump's 301 special clause investigation may ultimately harm the interests of American workers, not to help them.
The 301 special clause is a means of using it in a different world.
The 301 special clause is a rough tool for resolving trade disputes. It allows the US government to conduct trade investigations against other countries and then take unilateral action—a unilateral action against a country accused by the United States of using unfair market practices. For example, using strict regulations discriminates against start-ups from the country. In the Reagan administration era, Washington used this tool frequently, which meant that the US government made a unilateral decision on global trade, rather than negotiating with the international community or through a neutral agency.
Chad Bown is a senior research fellow at the Peterson Institute, a research institute that supports global trade freedom. In early August of this year, Chad Lu Bowen wrote in a memo on Section 301: "The US government plays the police (identifying the crimes of other governments), the prosecutor (determining the legal basis), the jury (evidence ruling) And the role of the judge (judging other countries for punitive retaliation by the US government)."
Understandably, most US trading partners are contemptuous of the 301 special terms. The basic principles articulated in this article may be correct, and the United States is usually the strongest party in any economic game. However, after the establishment of the WTO, Section 301 has almost disappeared. The consensus reached by the international community is that the existence of the WTO means a system that is fair, law-abiding and capable of resolving trade disputes. And it's made up of judges from around the world, so it can replace the need for a one-sided tool like the 301 clause. The WTO has also compiled a large number of trade regulations, which are also rules that the US government has been trying to implement on its own, such as trade services and intellectual property.
Before the US government announced the launch of the Section 301 investigation, Chad Lu Bowen once said to the media: "The rest of the world has agreed to adopt a broader set of rules and a binding dispute resolution mechanism. In exchange, the US government Will no longer play the role of bullying, nor will it play the role of a police, prosecutor, jury and judge."
Since the establishment of the WTO, the number of times the US government has used Section 301 has been few. In most cases, trade disputes will eventually be decided by the WTO. But now, the Trump administration has decided to restart this outdated legal clause and launch an investigation, potentially potentially hitting China against the economy. In particular, the survey is prepared to target the Chinese government's unusually cumbersome access requirements for foreign companies entering the domestic market. Because the Trump administration believes that the Chinese government only uses this to effectively obtain industry secrets.
To a certain extent, Trump is worried about the way the Chinese government treats foreign companies. China requires a large number of foreign companies to establish joint ventures with domestic companies, and therefore requires them to transfer proprietary information to the Chinese market. This practice has caused many high-tech companies to fall into a dilemma. On the one hand, these companies want to enter the Chinese consumer market - the world's largest consumer market; on the other hand, they do not want to give up their most cherished innovations to avoid losing their competitive edge in the global market.
As a whole, this dilemma has had a huge impact on the US domestic economy. In the US economy, intellectual property accounts for about 40% of its total. Randolph Kahn, an adjunct professor at the University of Washington School of Law, said in an interview with the Washington Post: "To some extent, if we can't protect intellectual property, we must sacrifice millions or thousands. Ten million jobs in the United States, and American companies should be very concerned about this."
Trump's strategy is an adventure - the result may be counterproductive.
Trump's question may be real, but the method he proposed to solve the problem may not be appropriate. For most people who advocate the establishment of a stable, rule-based trading system, Trump's approach is deeply disturbing. If Trump regains the American cowboy-style unilateral thinking in trade issues, is there any way to stop other countries from following suit? The Chinese government has promised to make a similar response, so there is no reason to believe that it is the only country that bypasses the WTO and targets other governments as sanctions.
As global countries shift toward trade protectionism, the resulting global trade war will inevitably hurt the interests of domestic consumers and exporters. By then, imported products from abroad will become more expensive, and domestic export trade will also face a sharp decline in demand.
It is unclear whether the Trump administration's investigation will lead the Chinese government to impose tariffs or restrictions on investments from the United States. But this is the threat behind the investigation – and it’s also what makes China feel uneasy. If Trump finally got what he wanted, and China did make some concessions on market behavior and used it to appease him, it was not necessarily a huge victory for American workers. After all, if big American companies realize that investing in China is easier, it could exacerbate the dynamics that Trump has been opposed for years.
In this regard, Robin Road Scott from the American Economic Policy Research Institute said: "If Trump finally succeeds, he will also make the trade problem between China and the United States even worse. Because Trump The approach will promote foreign companies investing in China – and the work of foreign-invested companies in China is entirely outsourcing.â€
If a US company realizes that its intellectual property is ultimately safe in China, then it will have more incentives to invest and produce in China. One of the important reasons is that China's domestic labor is cheaper than the domestic labor force. This, in turn, will prompt companies to start layoffs at US factories. This means that even if Trump wins a trade war with China, he will eventually lose his political future. If Trump finally forces China to make a compromise, he will advertise that this is his victory for American companies. But this victory will only cost a lot of American voters, and it is their votes that will send Trump to the White House.
The US government is still in the investigation stage. And the investigation may also bring a result, such as taking no action against China. Of course, the Chinese government can also preemptively make some concessions on the market access of foreign companies, thus making this investigation fruitless. Another situation is that the Chinese government will not give in, but the US government believes that it does not want to risk the trade war, nor does it want to take risks on the delicate North Korean nuclear negotiations. In any case, this time without a fixed-limit investigation is actually a modest action against China, rather than simply levying tariffs on products exported by China. But if the final trade conflict escalates, the United States is likely to find that it is largely reshaping global trade. (double knife)
This article was translated from the VOX website by Phoenix International iMarkets
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