As pointed out by Simon, Robert Lighthizer is probably the next U.S. Trade Representative. In this regard, it is interesting to note that Lighthizer told a congressional panel in 2010 that the WTO's dispute resolution system was ineffective and that the United States “should consider aggressive interpretations of WTO provisions that might help us deal with Chinese mercantilism.” (Reuters).
It is clear that at the moment and for the next four years (in fact this began during the stalled Doha Round), you will hear frequently the word mercantilism uttered in the most pejorative way. So what does this word exactly mean?
1) In its most basic sense, at the heart of mercantilism is the view that maximizing net exports is the best route to national prosperity. This idea has important consequences for economic policy, in the sense that the best way of ensuring a country’s prosperity is supposed to involve making few imports and making many exports, thereby generating a net inflow of foreign exchange.
It is in this sense that China is frequently described as being a “mercantilist” country, i.e. using subsidies, dumping, restrictive internal regulations and currency manipulation as tools for maximizing net exports
2) There is, however, another lesser known aspect of the mercantilist doctrine. This second aspect indicates that we should stop confusing mercantilism and maximizing net exports. As underlined in an interesting Article in the Economist:
Few mercantilists were slaves to the balance of payments. In fact, they were alarmed by the idea of hoarding gold and silver. This is because many mercantilist thinkers were most concerned with maximizing employment. Nicholas Barbon—who pioneered the fire insurance industry after the Great Fire of London in 1666—wanted money to be invested, not hoarded. As William Petty...argued, investment would help to improve labor productivity and increase employment. And almost all mercantilists considered ways of bringing more people into the labor force.
It is plausible that China is also "mercantilist" in this second sense, and perhaps more than in the first sense, given the importance of full employment for the stability of the regime.
I am wondering if the Trump Administration could be considered as “mercantilist” in this second sense. Free mobility of trade in products is no more the exclusive aspect of trade policy. Free mobility of capital and investment (let alone labor) is now also an important aspect. It is clear that the Trump Administration considers that keeping jobs at home is its first priority. Is this a new “mercantilism”? Or is using this term for this aspect an abuse of words?
