From an Obama speech today:
A healthy economy in the 21st century also depends on our ability to buy and sell goods in markets across the globe. And make no mistake, this administration is committed to pursuing expanded trade and new trade agreements. It is absolutely essential to our economic future. And each time that we have met -- at the G20 and the G8 -- we have reaffirmed the need to fight against protectionism. But no trading system will work if we fail to enforce our trade agreements, those that have already been signed. So when -- as happened this weekend -- we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism, we do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system.
I said this before, but I think it's worth repeating, because this time it is coming from Obama himself: I don't think the decision to impose tariffs on Chinese tires, or any trade remedy action for that matter, can be accurately characterized as "enforcing trade agreements." The WTO Agreement does not require that countries not export "in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products" (the language of the transitional safeguard provision). Rather, it permits importing countries to take action against imports in these circumstances. To me, "enforcing" an agreement implies that someone else is violating the agreement. Well, China is not doing anything to violate the WTO Agreement. Thus, when the U.S. imposes safeguard measures like this one, it is not enforcing a trade agreement. It may be correct to say that it is "invoking a provision of an existing agreement," as Obama also said. But "enforcing" it, which he said twice, is just not accurate.
In addition, as I also said before, I'm not sure how this action can be described as anything other than "protectionist" ("self-defeating" or otherwise).
Given all of these statements, it will be interesting to see how the administration reacts to China "enforcing trade agreements" right back at us.
ADDED: More from Obama, via Reuters:
"If we don't enforce the rules that are contained in our trade agreements, then it's very hard to have credibility," Obama told CNBC television.
...
"Here's a situation where China entered into the WTO. It had rules contained in that accession that said that, in fact, if there is a big surge like this, there is a surge breaker," Obama said.
"We have exercised it. I'm not surprised that China's upset about it. But keep in mind we have a huge economic relationship with China," he added. "But I just want to make sure that if we actually have rules written down, they mean something."
Asked whether he was confident a trade war can be avoided, Obama said, "Absolutely. I think it's in China's interest and our interest and the world's interest to avoid protectionism, particularly just as world trade is starting to bounce back from the huge decline that we have seen in the last year."
If it were me imposing the tariffs, I would have explained this a bit differently. I would have said something like this: "Our overall trade policy and the international trade agreements we have signed onto emphasize the importance of reducing protectionism. However, there are exceptions, and one of these is where a large increase in imports is causing significant economic harm to domestic producers. That's the situation with Chinese tires, and that's why we took this action."
At times, Obama seems to be saying this, such as when talks about the "surge breaker." But the "enforcing trade agreements" part gives a different impression, in my view.
