"...Each of these three pieces benefits the United States. Therefore, so does the package taken as a whole. Trump thinks that the trade deficit means that the United States has somehow lost in international trade. But he would never go so far as to say that other nations should shut down their trade with the United States because we run a trade surplus with them. In both domestic and international markets, we shouldn’t impose any external “fairness” constraint on the outcome of voluntary transactions.
The situation with China is far different, because the Chinese only pay lip service to free trade in setting their trade policy. Their chief misdeed is to engage in the widespread theft of intellectual property, which includes the theft of trade secrets, the infringement of patents, and the shipment of counterfeit goods into international markets. The second vice is that China often ties the entrance of American firms into the Chinese market to the willingness of those firms to share their intellectual property with their local Chinese partners who can, of course, use that property in unrelated transactions to obtain an illicit comparative advantage.
These classic hold-up games often lead to a major decline in trade. No state inside the United States is allowed to condition the entry of out-of state businesses into their market on the condition that they surrender intellectual property or agree to special taxes, or to sacrifice access to federal courts. The dominant nondiscrimination rule under the United States Constitution precludes the states from taking these one-sided actions. The result is that the domestic market is free from counterproductive trade wars among the states.
The hard question is what to do in response to outright theft and these illicit tie-in arrangements. Trump has threatened to initiate an enforcement action under Section 301 of the Trade Act of 1974 to unilaterally “impose trade sanctions on foreign countries that either violate trade agreements or engage in other unfair trade practices.” The problem here is that proceeding under this section puts the United States at risk of violating the World Trade Organization’s elaborate system of adjudication to sort these matters out. Stopping unilateral action cuts out the risk of abuse by home countries in favor of their own goods. But the flip side here is that it allows chronic abusers like the Chinese to string out proceedings, which in turn allows them to reap gains from their illicit practices for an indefinite period.
The Chinese insist that any sanctions from the Trump administration would lead to a trade war that neither side could win, given the certainty that the Chinese would retaliate in kind against any unilateral American action. But doing nothing is an implicit ratification of the status quo ante of China’s ongoing trade abuses. At the same time, the Trump administration needs China at the table to discuss its actions in the South China Sea and how best to contain North Korea...."
http://www.hoover.org/research/trumps-flawed-protectionism?utm_source=hdr&utm_medium=email&utm_campaign=2017-08-22
AEI staff and Claude Barfield | AEIdeas Last week, the first round of NAFTA renegotiation began. Since its passage, AEI experts have played an important role in shaping the debates on the social and economic impacts of NAFTA and other trade issues. Claude Barfield, a resident economics scholar and trade policy expert, has examined whether an expanded NAFTA or other trade agreements will become building blocks or stumbling locks on the future path of trade.
In his 2015 working paper, Barfield provides detailed background analysis and policy recommendations for the area of economics and trade. Specifically, Barfield assesses the objectives that underpin the Global Internet Strategy (GIS) program goals, such as protecting and promoting freedom of expression and combating fragmentation of the Internet. He urges future US administrations to uphold and prioritize the vital digital agenda in order to maintain a free and open internet.
Recently, Barfield has discussed the possible opportunity for NAFTA renegotiations to set precedent for e-commerce rules. He argues that the administration should take advantage of its opportunity to regain some of the initiative for a future pro-market digital trade regime.
Fix NAFTA Once and for All – Richard Trumka, USA Today