Which is more important: Trade negotiations or trade enforcement? Writing in the Washington Times, Dan Griswold argues:
The Obama administration has vowed to ramp up enforcement of existing trade agreements in an effort to open markets further to U.S. exports. The pledge is popular with members of Congress who blame job losses on trading partners that "cheat," especially China, but the tactic could backfire easily.
The U.S. government is certainly within bounds to expect other governments to follow the letter of international commitments, whether on trade, arms control, extradition or a host of other areas where international treaties apply. But an obsession with enforcement at the expense of trade liberalization would be a mistake. Such an approach exposes American producers to countermeasures and undermines efforts to open markets further in the United States and abroad.
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Besides the obvious risk of retaliation, the enforcement-only strategy ignores the simple truth that Americans are better off participating in trade agreements that are imperfectly adhered to than not participating at all. Even when either party fails to adhere fully to an agreement, the glass is usually still well more than half full.
For example, the accession agreement that China signed to enter the WTO in 2001 committed it to a major opening of its economy. While critics rightly can point to some foot-dragging and backsliding, the Chinese economy is much more open to U.S. exports than it was 10 years ago and more open than it would have been without the accession agreement. Getting tough with China over its less-than-perfect compliance exposes American hypocrisy while at the same time putting in jeopardy our rapidly growing exports to China.
When it comes to trade agreements, the U.S. government should seek the most comprehensive and ambitious deals it can with our major trading partners but then exercise patience and restraint when those agreements are not always fully implemented. As the ancient warning goes, by the measure you use to judge, so you will be judged.
The basic argument seems to be that we should focus more on negotiating new trade agreements than on enforcing existing ones. The specific points in support are:
-- if we bring complaints against others, they will bring complaints against us
-- negotiation achieves a lot more than enforcement
On the first point, one response is that complaints against our own protectionism should be encouraged and celebrated, as that will lead to more liberalization. But I suppose his deeper argument is that trade disputes undermine support for new trade agreements, which, as the second point indicates, are the most important. So, let's focus on the second point.
Let's say you have have a trade agreement that lowers tariffs on thousands of items, prohibits discrimination against foreign goods, and puts limits on subsidies. (I'm going to ignore issues such as IP protection, which, it could argued, aren't really about liberalization.) I don't know how to quantify the liberalization precisely, but let's just assign a number to it: 100. Now, let's say there is a dispute about whether a party is complying with a particular obligation in relation to a specific product. Again, quantification is difficult, but let's assign the number 5 as the amount of liberalization involved with that product. Is it worth bringing a complaint in the hopes of achieving those 5 units of liberalization, if doing so might undermine (e.g., through retaliatory trade measures against us which turn certain groups against trade agreements) efforts to obtain another 100 units through the signing of a trade agreement with another country?
Some related questions: If we never enforced trade agreements, would there be a significant increase in non-compliance? Is there an optimal level of enforcement? How many complaints per year need to be filed in order to prevent non-compliance from getting to unacceptable levels? Should we only bring trade complaints if the degree of non-compliance is very high, and ignore small violations?
On a different point, how do you factor into all this the fact that most "free trade agreements" being negotiated right now are preferential trade agreements, and thus, some would argue, not really free trade at all?
