International Economic Law and Policy Blog

Beto O'Rourke on Trade Policy

In a new post, he has a lot to say! Here are some snippets:

President Trump’s disastrous trade war, which he claims was designed to save American jobs, has done just the opposite. “If I’m elected,” President Trump told workers and businesses, “you won’t lose one plant.” Yet, across our country, factory after factory has shuttered its doors. Manufacturing just shrank for the first time in nearly a decade. Trump’s tariffs have amounted to one of the largest middle-class tax hikes in decades. And many farmers — already underwater from climate change — have nowhere to export their crops because President Trump’s tantrums and tweets destroyed their markets overnight.

Off to a good start! Now let's see what he wants to do instead:

Beto has a better way. ...

On day one, Beto will end Trump’s trade wars, which have not only failed to curtail China’s economic aggression, but hurt American workers. And recognizing that trade can unlock opportunity for growth for all communities and enhance small businesses across the country, Beto will aggressively pursue smart trade agreements that defend American values and interests. This will ensure American workers are not only protected, but are the most competitive in the world.

Still good. Now more details:

As President, Beto will:

• End Trump’s trade war
• Defend American values and interests against competitors like China
• Pursue trade agreements that support working families
• Work to enhance the competitiveness of U.S. workers and small businesses

Let's take these one by one:

I. End Trump’s trade war

Donald Trump has enacted tariffs on over $500 billion worth of goods from China, which amount to a $100 billion tax increase on American consumers and businesses, hitting low-income Americans especially hard.

Trump’s tariffs are an attack on U.S. exporters. They have driven up the price of imported intermediate parts, made the dollar less competitive, and caused other countries to retaliate against us with their own tariffs. And they have been a disaster for American farmers and ranchers, destroying their long-standing relationships with customers abroad and forcing many family farms into bankruptcy.

Beto recognizes that targeted tariffs are a tool that may sometimes be necessary, but they must not be used as a threat to drive anti-immigrant agendas or in a way that causes further pain to American businesses and workers. Trump started his trade war with China to reduce the U.S. trade deficit, but the deficit is rising, not shrinking. Auto plants have been closing, not opening. Manufacturing activity has declined. And as the U.S. may now be headed for a recession, it has become increasingly clear that tariffs are not part of a larger strategy, but rather part of a pattern of conducting foreign policy by tweet.

As President, Beto will:

• Suspend Trump’s tariffs immediately. On day one, Beto will end the trade war with China by eliminating the Trump tariffs. In exchange, China would revoke its retaliatory tariffs on American products like soybeans, beef, cars, and planes. 

This is all very good. There are better ways to address trade issues with China, and ending the Section 301 tariffs makes sense.

Now on to his proactive agenda:

II. Defend American values and interests against competitors like China

The failure of President Trump’s strategy is no reason to ignore China’s anti-competitive actions. China made several commitments to open up its markets in exchange for joining the WTO, but it has failed to honor them. Instead, China has used currency manipulation, subsidies, restrictions on market access, corporate espionage and other strategies to frustrate U.S. companies’ attempts to compete in China. And it is deploying these powerful tactics as part of a “Made in China 2025” initiative to dominate industries of the future like green vehicles, telecommunications, and artificial intelligence. This is not just a question of ensuring that the United States is competitive in the 21st century — American dependence on China for our robotics, aeronautics, and information technology also constitutes a threat to our national security.

As President, Beto will:

• Modernize the World Trade Organization to address 21st century trade issues. Our difficulties with China reflect the failures of the World Trade Organization (WTO) to deal with the trade issues of the 21st century. The WTO has generally been successful in reducing tariffs around the world, resulting in lower prices and higher productivity. Yet it has proven itself unable to deal with key topics of international trade disputes, such as currency manipulation and state-owned enterprises. Moreover, despite the hopes of the architects of the post-World War II trading system, the WTO still lacks robust, enforceable labor rights. And it similarly lacks strong, enforceable environmental standards despite the clear need to address global climate change. That is why an O’Rourke Administration will demand the following reforms of the WTO:
• Updating the WTO agreement to tackle currency manipulation, competition, overcapacity, industrial subsidies, and other modern trade issues. These issues are the main obstacles to a level playing field in international trade today and a global body for solving trade disputes needs rules addressing them.
• Creating enforceable labor standards. By amending WTO agreements to include the International Labor Organization’s core conventions, Beto would ensure the WTO combats child labor and protects collective bargaining rights. Countries’ failure to uphold these standards would be considered an unfair subsidy and subject to countervailing duties.
• Making “sustainable development” an explicit goal of the WTO. This would require that WTO rules be interpreted consistent with this fundamental value and ensure that any national efforts to advance the globally established Sustainable Development Goals should be considered presumptively permissible.
• Improving the WTO dispute settlement system. Beto would solve the current impasse over the WTO’s dispute settlement system while ensuring that it respects negotiated outcomes.
• Lead a global coalition to stop China’s anti-competitive behavior.Modernizing the WTO is critical for the long-term health of the global trading system. But as it does not have adequate authority or appetite to address the most pressing problems in international trade, Beto will not take action off the table to defend our values and interests.

As President, Beto will launch an aggressive WTO case with other countries against China, arguing that it has failed to live up to the specific commitments it made when it joined the WTO. If the case does not bring swift changes in China’s behavior, he will also be prepared to act unilaterally to enact a series of progressive actions that will increase pressure on China. Unlike Trump, Beto will work with our allies while bringing that pressure. Actions Beto will consider taking against China if it does not change its behavior include:

• Delisting Chinese companies from U.S. stock exchanges when they refuse to make their audit work-papers available for inspection by the U.S. Public Company Accounting Oversight Board
• Limiting access to the U.S. banking and financial system to Chinese companies that have been found — after receiving due process — to be stealing U.S. companies’ intellectual property.
• Screening and potentially limiting Chinese investment in certain U.S. sectors until it ends its most egregious anti-competitive practices.
• Working with our allies to be prepared to engage in concerted countervailing duties cases in sectors that are injured as a result of Made in China 2025 subsidies. This is in stark contrast to the broad duties Trump has announced, which cover over half a trillion dollars in imports, and which have already pushed the average tariff rate on Chinese imports from 3 percent to around 20 percent.
• Aggressively counter currency manipulation. The most effective way for a country to boost its trade balance is not tariffs — but rather by reducing the value of its currency to make its exports cheaper and imports from other countries more expensive. China recently taught President Trump this lesson when it reacted to a recent round of announced tariffs by letting its currency fall. Over the course of the “decade of manipulation” of 2003–2013, currency manipulation cost the U.S. up to 5 million jobs.

Beto will take real action to address currency manipulation when it arises including:

• Investing in the analysis needed to detect currency manipulation. Countries increasingly rely on informal forms of manipulation that are difficult to detect by, for example, using state-owned enterprises to intervene in currency markets. Beto will invest in the expertise needed to study and detect those forms of manipulation.
• Revamping the U.S. Treasury Department’s currency report to focus on countries that have large trade surpluses and substantial trade balances with the U.S.
• Enabling the federal government to engage in defensive, countervailing currency intervention in extreme cases. When countries continue to engage in currency manipulation after warning from the U.S. Treasury Department, the federal government could intervene by offsetting another country’s purchases of dollars by purchasing other countries’ currency. The U.S. would encourage other countries that have been afflicted by manipulation to participate as well.
• Consider other ways to counter currency manipulation, particularly in the case of China — which forbids the purchase of its domestic bonds by foreigners. The U.S. would consider options such as taxing its purchases of U.S. assets if the revamped currency report finds it to be a manipulator and it ignores our warnings.

Whew. There's a lot going on there. Someone put a good deal of thought into this. There are things I agree with (WTO cases against China, solving the DS crisis) and things I disagree with (labor standards at the WTO), but on balance it's a big improvement on what's happening right now.

Next up, what kind of trade agreements would he support:

III. Pursue trade agreements that support working families

Beto not only believes that trade can unlock economic growth across the country, but that trade agreements can provide opportunities to address income inequality as well as global problems that require international coordination. As president, Beto will aggressively seek trade agreements that center on the needs of working families and will prioritize labor rights and environmental standards during trade agreement negotiations. Trade agreements will not include provisions that restrict governments’ ability to regulate in the public interest, such as locking in pharmaceutical patent lengths. Beto will not sign any agreement unless its benefits for working families and the environment are clear.

As President, Beto will:

• Negotiate trade agreements with strong labor and environmental standards. This will make it easier for countries to compete with one another based on productivity and innovation instead of how successfully they suppress labor unions and how much they pollute the environment. All agreements will:
• Include the core labor rights of the International Labor Organization and other key labor protections such as strong country-specific minimum wages.
• Include the provisions of the Paris Climate Accord and other key environmental protections addressing issues such as deforestation, wildlife trafficking, and whaling.
• Prevent the race to the bottom that is international tax competition by committing to the OECD Base Erosion and Profit Shifting Project.
• Avoid net declines in union membership or increases in U.S. income inequality without offsetting changes to tax, labor and other economic policy as part of the same legislative package.
• Require major employers in industries that would benefit from an agreement to sign neutrality agreements with labor unions that will make it easier for their workers to form a union. This will help ensure that workers share in the gains of trade instead of having their voices diminished.
• Create an independent Trade Enforcement Commission. Beto will call for creating a Trade Enforcement Commission that is independent of the Office of the U.S. Trade Representative to identify violations of labor and environmental standards. It will use dedicated resources, technology, and data to dramatically increase the speed with which violations can be investigated and determined. When the commission concludes that there is a violation, the U.S. government will be required to bring a case. This will come with a commensurate increase in the number of trade prosecutors with the authority and technical tools to investigate violations — and bring cases against violators.
• Build enforcement capacity in developing countries. Recognizing the difficulty some developing countries have in enforcing labor and environmental standards, the U.S. and foreign governments would collaborate on the inspection of facilities that may be violating standards. Facilities found to be in violation would be denied preferential tariffs and, in some cases, access to the U.S. market altogether. This is modeled off the U.S.-Peru agreement’s timber annex.
• Enact strict rules of origin. Rules of origin ensure that only the parties in the agreement benefit from it, but those rules are typically weak. Under the Trans-Pacific Partnership, for example, 55 percent of the components of a car could have been made in countries that were not party to the agreement and its rules on labor and the environment. Beto will enact strict rules of origin in new trade agreements while collecting better data so that exports from countries not party to the agreement do not get the benefit of tariff reductions without playing by those rules.
• Include labor, environmental and consumer groups in trade agreement development. Beto will include representatives from each of these groups and small business in every Trade Advisory Committee to ensure that their voice is heard. U.S. International Trade Commission reports will include specific analyses of industry- and region-specific dislocations and job losses, assessments of environmental risks and opportunities, and potential effects on small and minority-owned businesses, union membership, and income inequality. The ITC will also periodically perform analyses of existing trade agreements and reciprocity evaluations to identify countries with unfair practices that could be worth addressing in future agreements such as labor rights, environmental practices, and misaligned currencies.

This mostly seems like boilerplate language from pro-trade Democrats.

And finally there is this, "IV. Work to enhance the competitiveness of U.S. workers and small businesses," which is more about domestic policy issues, so I'm going to skip it.

Overall, sounds like a reasonable, moderate statement of Democratic trade policy. I'm not sure it's going to give him the surge in the polls he needs, but we'll see. It would be nice if it got some attention at the next primary debate.

The USMCA Sunset Clause Will Not Help Much with Enforcement

A couple months ago, I pushed back on the idea that the USMCA sunset clause will help with enforcement. Now I see it popping up again. This is from Inside US Trade:

... [Tom] Vilsack also argued that the review function in the new agreement -- a watered-down version of a controversial U.S.-proposed sunset clause -- would be good for the industry.

“We’re going to have to see how the Canadians formulate their regulatory system in terms of the implementation of [the increased market access] to make sure that is indeed additional access. We’ve had situations in the past where games have been played by the Canadians,” he told Inside U.S. Trade in an interview ahead of the event. “If they were to play games, the idea that the agreement can be reviewed periodically gives us an opportunity to raise issues on a more regular basis than was the case with NAFTA.” 

In my view, Vilsack's explanation of how the sunset clause could help with enforcement is misguided. On this issue, Inu and I wrote the following last year:

While there is nothing wrong with updating agreements to keep up with changes in the economy and to fix flaws that have been discovered, this provision takes “review” of the agreement a step too far. The possibility of automatic expiration after only 16 years adds an element of uncertainty to the whole enterprise.

If the United States was looking for a way to review the agreement, there were much simpler approaches that already exist. First of all, given that the new NAFTA is a renegotiation based on a review of the old NAFTA, it is obvious that a review of the agreement is already possible. No additional provision was required.

Furthermore, there is also a permanent mechanism embedded in the original NAFTA (and carried over into the new NAFTA) through which the parties can carry out regular reviews: The Free Trade Commission.

The commission is made up of ministerial level representatives of the government, usually the United States Trade Representative, Canada’s Minister of International Trade and Mexico’s Secretary of the Economy. These ministers can and should conduct regular meetings to review the functioning of the agreement.

In addition, the commission oversees various committees, which address all of the wide ranging technical issues covered by NAFTA.

Historically, the commission has done remarkably little. The original NAFTA requires the commission to meet at least once a year, but in reality, these meetings have been rare and have accomplished little. In fact, the most recent joint statement by the commission that appears on the Government of Canada’s website dates back to 2012.

The new NAFTA makes this worse by only requiring the commission to meet within one year of the agreement’s entry into force, “and thereafter as the Parties may decide.”

If the Trump administration wants a periodic review of NAFTA, it should push for a reinvigorated commission and committees that meet regularly, rather than a high-stakes game of chicken at six-year intervals. Such a negotiating environment may produce short-term “wins,” but it will undermine the countries’ relationship over the long-term.

Waiting for the sunset clause before raising these kinds of issues makes no sense. If the United States wants to ensure that Canada provides the promised market access, it should forget about the sunset clause and instead raise the issue in the relevant committees or with the Free Trade Commission, or file dispute settlement complaints. 

News Reports About the U.S.-Japan Trade Deal Raise Some Questions

This is from the Nikkei Asian Review:

Japan and the U.S. reached a broad trade deal Saturday, with Tokyo agreeing to lower its tariffs on American beef and pork to levels set by the Trans-Pacific Partnership while letting Washington maintain its 2.5% levy on Japanese autos for now, Nikkei has learned.

Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump will confirm plans to conclude the talks in late September when the two leader meet Sunday in Biarritz, France, on the sidelines of the Group of Seven summit. The bilateral pact could take effect this year. 

...

If Abe and Trump sign an agreement in late September, the pact will be put forward for a vote in Japan's parliament in the fall, which will conclude the Japanese side of the ratification process.

In the U.S., congressional approval is not always required for a trade pact. The U.S.-Japan trade agreement thus could take effect within one to two months of Japanese parliamentary approval. 

Trump had been asking Japan to cut tariffs on agricultural products. Under the agreement, the 38.5% tariff on imported U.S. beef will be lowered to 9% in phases, according to sources close to the negotiations. Tariffs on low-grade pork are currently at 482 yen ($4.58) per kilogram but will be reduced to 50 yen per kilo. The 4.3% tariff on high-grade pork will eventually be brought to zero.

Japan has already slashed tariffs on pork and beef under the TPP, which took effect in December. If the U.S. and Japan sign a trade pact, the Japanese tariffs on American pork and beef will be immediately lowered to the rates enjoyed by TPP partners. After that the tariffs on U.S. products will be lowered at the same pace as the rates for the TPP trade group. In April, the TPP's tariff rate for beef settled at 26.6%.

...

For its part, the U.S. will set up a tariff-exempt import quota for up to 3,000 tons of Japanese beef, likely fueling the "wagyu" boom spreading in America. 

...

Japan also agreed to ease the criteria it uses to invoke emergency import curbs on U.S beef as it does not expect overall import quantities to significantly change; it intends to offset any rise in imports of U.S. beef by adjusting the same criteria it uses for beef from TPP countries like Australia. It expects to enter talks with these countries in the near future.

The U.S. had agreed to abolish tariffs on automobiles in 25 years under the TPP agreed to by then-President Barack Obama. Trump backed out of the pact in his first week of the presidency, after having promised to do so on the campaign trail.

...

... Washington did agree to abolish tariffs on some of 400 auto parts and is set to abolish tariffs on a broad range of manufactured goods, other than autos. Exports of Japanese auto parts to the U.S. reached 929.4 billion yen ($8.8 billion) in 2018, roughly 6% of total exports.

...

But there is one more hurdle: Japan will close the deal on condition that the U.S. promises not to use section 232 of its Trade Expansion Act to limit or impose further tariffs on imports of Japanese autos.

I have a few questions about all of this. The first is, how can Japan and the United States offer this liberalization consistently with WTO rules? (Let's assume for the moment this is something they care about). Usually a bilateral deal involves preferential tariff treatment, which would violate GATT Article I (MFN). The amount of goods covered here seems far too low to fall within GATT Article XXIV's "substantially all trade" requirement, so that makes an Article XXIV defense a bit difficult. My initial thought was that the Japanese tariff cuts on beef and pork and the U.S. auto parts tariff cuts could be offered on an MFN basis. Then Rob Howse suggested on Twitter that perhaps this deal would be an "interim agreement" under GATT Article XXIV. Is one of these the explanation? Something else?

The second, and related, issue is, what will other governments think of all this? For both sets of products, there are likely to be producers in other countries who will be adversely affected. Will they be aggressive about enforcing WTO rules against both Japan and the United States?

Also, with regard to a "promise not to use section 232 of its Trade Expansion Act to limit or impose further tariffs on imports of Japanese autos," isn't the GATT already a promise not to do this? What is the significance of another promise? Is it that this promise would be more specific and apply explicitly to the product at issue? Is it that it came from the current president, rather than a past president? Political scientists should try to come up with an explanation!

Finally, as described in the article, what we have here seems to be a bilateral agreement to reduce tariffs, without all the usual governance chapters that make up the bulk of the legal text of modern trade agreements. So will there be a dispute settlement chapter here? If so, what will it look like? Or is this more of a short-term, political agreement that isn't intended to be in force permanently? As the article notes, this agreement would not be approved by Congress. Presumably, if the president can enter into it without Congress having a say, the president can also withdraw from it without Congress having a say.

Perhaps these questions will be answered if and when an agreement is signed and we see some legal texts.

Humpty Dumpty and the Illusion of 'Evolutionary Interpretation' in WTO Dispute Settlement

This is a new paper from Graham Cook of the WTO:

For those interested, here is a new paper called "Humpty Dumpty and the Illusion of 'Evolutionary Interpretation' in WTO Dispute Settlement" included in Evolutionary Interpretation and International Law (which brings together authors from diverse areas of public international law to offer a comprehensive overview of the approaches to evolutionary interpretation in different international legal regimes). Here is the abstract for this paper:

This paper offers a sceptical perspective on the existence of 'evolutionary interpretation' in WTO dispute settlement. The first part distinguishes the arresting proposition that the meaning of treaty terms change over time (evolutionary interpretation) from the rather unremarkable notion that the factual circumstances to which an old rule applies necessarily change over time (evolutionary application). It then surveys WTO jurisprudence that the prism of that distinction. It seeks to show that there is to date no instance of the Appellate Body or a panel adopting an evolutionary interpretation, in the sense of rejecting the original meaning of the terms at issue, but that there are many examples of WTO panels and the Appellate Body accepting the evolutionary application of provisions to adapt to changing factual circumstances.

Can Industrial Policy Be Kept Out of the Wrong Hands?

Todd Tucker has a new paper in which he argues in favor of "industrial policy and planning." I was planning to follow a policy of industriously ignoring it, because I didn't want to call attention to it. Better just not to talk about it, I thought. But Todd is clever and cited me in his paper, which he knew would induce me to respond. Excellent trolling, Todd!

His cite is to this blog post I did. In particular, he cites one passage, which he describes as follows:

A final objection is more rooted in an observation about the nature of democratic regimes. Simon Lester at the Cato Institute writes that advocates of industrial policy “need to take into account that they are not always going to be in power…You can’t just say, we want economic statecraft but only the good kind. Once the principle has been established, it can be used for anything, and you know that in advance.” Even if one wants the tool for only progressive ends, “that also means President Trump has the power for some non-progressive thing. Given the way such power will actually be used, it’s worth considering whether it would be better if the US government simply didn’t exercise this power, or exercised it a lot less” (Lester 2019).

To clarify, I was talking about "economic statecraft" here, not industrial policy generally. My point was that once you start messing around in other countries' affairs, it inevitably goes in a bad direction at some point. Your intentions might be good (albeit misguided and probably ineffective), but those of your successors might not be good.

Todd offers this reaction:

But to some extent, these critiques could be successfully levied about any activist government policy. Why legislate at all if one’s program could be repealed or co-opted in the future? ...

My response, of course, is: Exactly! This critique CAN be made about any government policy, including industrial policy. Even assuming there is a way to make industrial policy and other activist government policies work in the hands of clever and unbiased administrators, how can you ensure that they won't be ruined later by whomever is in charge next?

Now, I don't mean to suggest that, on the basis of this concern, the government should never do anything. I just mean that people should be a bit circumspect about what governments can do effectively, and "industrial policy" is a great example. How can the government take actions that help specific companies without getting stuck in a cycle of lobbying influence? I'd like to see Todd grapple with that question a bit more. I know he puts "nationalization" out there as a possibility, but it is very unlikely this would play much of a role. In practice, industrial policy is going to involve helping particular industries. Picking the right ones (and cutting them off from aid at some point) and making the whole thing work is really difficult.

To illustrate this point, let me put one of Todd's examples out there for your consideration:

policymakers now are frustrated that China appears to be dominating so many different industrial sectors. The Washington, DC Metro system, for instance, needs new railcars—but there are no American companies left that can supply them. The system also has been stymied by poor rail infrastructure, which has led more and more commuters to switch to driving Chinese-made electric scooters. An inclusive industrial policy might ban scooter imports and fund railcar and bus construction in West Virginia (ground zero of the opioid crisis) and impoverished-majority areas like Black Southeast DC and Prince George’s County, Maryland.

If this is the model, any experiment with some sort of new and expanded industrial policy might not last long. (The flaws seem obvious to me, but we can talk about this proposal if others see things differently).

(I should also note that Todd is not limiting himself to "industrial policy" in the way that most people think of it. He includes "and planning" in the paper's title, which perhaps was a clue that he had something bigger in mind, but when I first read that I took it to mean the planning of industrial policy. In fact, he seems to have in mind economic planning and governance reform more generally. There are many elements of traditional industrial policy in the paper, but he goes much further.)

Can Party Modifications to DSU Rules on Appellate Review Help with the Appellate Body Crisis?

What is the scope of party modifications to the DSU for particular cases, and could it help with the Appellate Body appointment crisis? It may not be an ideal solution, but take a look at the following example and see if it could be applied to the Appellate Body crisis.

Article 17 of the DSU is very clear that the Appellate Body must circulate its report within 90 days:

5. As a general rule, the proceedings shall not exceed 60 days from the date a party to the dispute formally notifies its decision to appeal to the date the Appellate Body circulates its report. In fixing its timetable the Appellate Body shall take into account the provisions of paragraph 9 of Article 4, if relevant. When the Appellate Body considers that it cannot provide its report within 60 days, it shall inform the DSB in writing of the reasons for the delay together with an estimate of the period within which it will submit its report. In no case shall the proceedings exceed 90 days.

And yet the participants to an appeal have, in a number of cases, agreed to extend that period. Here's an example, from U.S. - Cotton Subsidies:

8. After consultation with the Appellate Body Secretariat, Brazil and the United States noted, in letters filed on 10 December 2004, that it would not be possible for the Appellate Body to circulate its Report in this appeal within the 90-day time limit referred to in Article 17.5 of the DSU. Brazil and the United States agreed that additional time was needed for several reasons: the issues arising in this appeal were particularly numerous and complex compared to prior appeals, which increased the burden on the Appellate Body and WTO translation services; WTO translation services were unavailable during the WTO holiday period; and the Appellate Body was likely to be considering two or three other appeals during the same period. Brazil and the United States accordingly confirmed that they would deem the Appellate Body Report in this proceeding, issued no later than 3 March 2005, to be an Appellate Body Report circulated pursuant to Article 17.5 of the DSU.

In recent years, the Appellate Body's decision to take more than 90 days without getting agreement from the participants first has been controversial. But with an agreement between the participants in place, the practice did not appear to be too controversial when it was initially used.

If extending the period for circulation beyond 90 days is acceptable, despite the clear obligations in the DSU, and such reports can be "deemed" to be "an Appellate Body Report circulated pursuant to Article 17.5," are there other DSU provisions that could be modified with the agreement of the participants? With regard to the Appellate Body appointment crisis, I'm wondering if any of the following modifications might help.

First, DSU Article 17.1 says:

A standing Appellate Body shall be established by the DSB. The Appellate Body shall hear appeals from panel cases. It shall be composed of seven persons, three of whom shall serve on any one case. ...

But perhaps the participants could agree that, in a particular appeal, it would be sufficient for one Appellate Body Member to serve on the case.

Second, DSU Article 17.2 says:

The DSB shall appoint persons to serve on the Appellate Body for a four-year term, and each person may be reappointed once. ...

Perhaps the participants could agree that, in a particular appeal, the four-year term limitation would be suspended, and a recently expired term would be extended.

Taking this even further, perhaps the participants could simply agree to have the case heard by people other than currently appointed Appellate Body Members. Former Appellate Body Members is the logical place to look for candidates, but really it could be anyone the participants want. Putting this into practice, the U.S. - Cotton Subsidies language quoted above could be adapted along the lines of the following:

After consultation with the Appellate Body Secretariat, Member 1 and Member 2 noted, in letters filed on _____, that the failure of WTO Members to agree on nominations to the Appellate Body has resulted in the inability of the standing Appellate Body to hear this appeal. Member 1 and Member 2 have therefore agreed that _______, ______, and _______ will serve as the Appellate Body Division in this appeal. Member 1 and Member 2 confirmed that they would deem the Appellate Body Report in this proceeding to be an Appellate Body Report circulated pursuant to Article 17.5 of the DSU.

There are a number of other solutions out there already, but I thought I would add these ideas into the mix.

What's the Status of Panel Blocking in the New NAFTA?

This is from Ambassador Lighthizer's responses to the questions for the record from a June 19 House Ways and Means Committee hearing:

From Representative Bill Pascrell to Ambassador Robert E. Lighthizer

1. Using Section 301 could invite retaliation. And Mexico and Canada agreed to fix panel-blocking in the Trans-Pacific Partnership. But this was not changed in the newly negotiated North American Free Trade Agreement. Senators Brown and Wyden have a proposal which sounds worthy of consideration. As we look to improve the enforcement mechanisms in the new newly negotiated North American Free Trade Agreement, can you commit to ensuring there is a binding dispute settlement system that does not allow panel blocking?

Answer: I am committed to ensuring that the agreement is enforceable. My staff and I have been working with the process set up by the Speaker and this is one of the important issues we are discussing.

,,,,,,,,

From Representative Jimmy Panetta to Ambassador Robert E. Lighthizer

.......

4. There remain strong concerns regarding state-to-state dispute settlement, and the ability for one party to block a dispute panel. You have stated to Senate Finance Ranking Member Wyden that the text of USMCA “is not meant to allow panel blocking.”

While that clarification may be helpful, is USTR willing to either update USMCA’s text or negotiate a side agreement that makes that clarification official?

Answer: I am committed to ensuring that the agreement is enforceable. My staff and I have been working with the process set up by the Speaker and this is one of the issues we are discussing.

Those responses were vague and do not inspire a lot of confidence that the panel blocking problem will be fixed. Congress may have to push pretty hard behind the scenes to get this corrected. I hope they are doing so.

Tenure-Track Position in International Economic Law at the University of Ottawa, Faculty of Law, Common Law Section

From the advertisement, hat tip to Debra Steger:  "The Common Law Section of the Faculty of Law at the University of Ottawa invites applications for a tenure-track position as an Assistant, Associate, or Full Professor in International Economic Law commencing July 1, 2020. APPLICATION DEADLINE: September 30, 2019.

International Economic Law at the Faculty of Law at the University of Ottawa: The uOttawa Faculty of Law is one of the strongest international law faculties in the world. It is home to a group of globally recognised scholars in international economic law, has the largest number of international law scholars in Canada and regularly hosts leading scholars from around the world. The Law School provides the opportunity to teach small seminars on a range of international trade and investment law issues to JD students, Master and PhD students, including a trade and investment law clinic, and offers a specialized LLM in International Trade and Investment Law attracting a select and diverse cohort of graduate students every year. The Law School is located at the heart of Canada’s international economic law community and has strong relationships with Global Affairs Canada, international trade institutions, like the Canadian International Trade Tribunal, and the private bar. For more information on international economic law at the Faculty click here."

Collateral Damages of the Trade War

Two researchers from the Kiel Center for Globalization (Haiou Mao and Holger Görg) have just published a working paper entitled “Friends like This: The Impact of the US – China Trade War on Global Value Chains.”  Based on the notion of “cumulative and indirect tariffs” in global value chains (GVCs), the paper demonstrates that higher tariffs on Chinese intermediate products (parts and components) imposed by the United States incur an additional tariff cost to third countries (such as the EU, Canada and Mexico) when they are assembled into final products and re-exported to those third countries.  Any initial tariffs imposed by the United States will continue to hurt multiple trading partners further downstream in GVCs.

This study highlights collateral damages of the U.S. – China trade war.  One might speculate that it calls for a strong “normative” response from the world trade community.  Could, or should, third parties challenge those tariffs imposed by the United States, and retaliatory tariffs imposed by China, before the WTO?

Guest Post: Tariff Authority under the U.S. Constitution and Practice

This is a guest post from Bashar H. Malkawi, Professor of Law, University of Sharjah

Under the Commerce Clause of the U.S. Constitution, the Congress has the power to regulate commerce with foreign nations. In addition, Congress has the exclusive power to regulate commerce among the several states and with the Indian Tribes. U.S. Congress also has the authority to "lay and collect Taxes, Duties, Imposts and Excises" (Article I, section 8, paragraph 1). The U.S. executive must have the authority, delegated by the Congress, in order to negotiate.

Congress later passed the Trading with the Enemy Act of 1917, the Trade Expansion Act of 1962, the Trade Act of 1974, and the International Emergency Economic Powers Act of 1977. These acts gave power to the U.S. president that the Constitution never intended. In effect, the U.S. president who wants to restrict trade enjoys almost wide and unrestricted authority. These days, imposing tariffs on imports from certain countries can implemented on "national security" concerns.

Under the Trading with the Enemy Act of 1917, during time of war, the U.S. President has power over “all forms of international commerce, plus the power to freeze and seize foreign-owned assets of all kinds.” Under the Trade Expansion Act of 1962, the president can “impose tariffs or quotas as needed to offset the adverse impact” on “national security from imports.”

Under the Trade Act of 1974, the president has the authority to “impose tariffs up to 15 percent, or quantitative restrictions, or both for up to 150 days against one or more countries with large balance of payments surpluses” and take “retaliatory actions, at presidential discretion, including tariffs and quotas,” if a “foreign country denies the United States its FTA rights or carries out practices that are unjustifiable, unreasonable, or discriminatory.” Under the International Emergency Economic Powers Act of 1977, during time of national emergency, the president has power over “all forms of international commerce, plus the power to freeze foreign-owned assets of all kinds.”

To limit the executive branch authority in this area of trade, there are several options. For instance, Congress could repeal all these Acts. However, this is not plausible for all sorts of reasons being economic or political. Other alternative would be to align these Acts with their original intent as a powerful trade remedy tool for the president and Congress to respond to "genuine threats" to national security. The alignment could mean an investigation process by the Department of Commerce whether there is increased imports that threat national security. In addition, Congress must be consulted and, in certain circumstances, must have the authority to oppose imposing tariffs.

The U.S., and other countries for that matter, cannot resolve perceived trade imbalances using "national security" rationale for imposing tariffs and other trade restrictions. Real free trade includes no trade agreements, no government subsidies, and no tariffs or quotas. There is a long road ahead before achieving true and real free trade.

New available EBOOK VERSION of my recent book about the WTO law of subsidies

Dear Blog Colleagues, 

Allow me to inform you that a new eBook version of my recent book ( The WTO law of subsidies: A comprehensive approach, Kluwer Law International, June 2019) is now available at Amazon.com. Until now, only a print version was available and a commentator on this blog inquired about this aspect. This new version  can be downloaded and read on several media, including personal computers.

Best regards. Marc

 

"Every line we succeed in publishing..." A response on the state of international law scholarship to EJIL's new co-editor in chief

Around the beginning of World War II, the Jewish-German thinker Walter Benjamin wrote to his friend Gershom Scholem: "“Every line we succeed in publishing today - no matter how uncertain the future to which we entrust it - is a victory wrenched from the powers of darkness.” Benjamin was trying to encourage his friend that, no matter how hopeless or uncertain the times seemed to be, publication was a gesture against that darkness, an implicit statement that it was possible to make a difference, "no matter how uncertain the future."

There are many colleagues who think today we also live in dark times and under radical uncertainty about the future.  But there are some who believe we are publishing too much, at least in international law. This is the view of Cambridge professor Sarah Nouwen,  recently appointed co-editor in chief of the European Journal of International Law, surely among the leading publications in our field. Recently, Joseph Weiler, the other co-editor, interviewed Nouwen, who said: 

There’s more and more and more and I think far too much is published…so much is out there…one cannot even begin to research everything that’s being written on a topic…  we should have slow writing and slow publishing. We buy into a culture of wanting to be seen everywhere…to publish everywhere.

To be precise, Nouwen made this claim about every academic discipline not just international law. Certainly, making a judgment about every academic discipline is way beyond my pay grade.  So I'll stick to international law, where like other followers of this blog, I try to read widely and, where possible, deeply. (I proposed to Nouwen we debate her proposition at some appropriate forum but she declined-understandably-citing the burden of her new responsibilities with EJIL and other heavy commitments).

Let me state several reasons for celebrating the explosion of publications in international law.

1. The expansion is rightly a reflection of the recognition that there are many many regimes/sub-fields that are real international law, not just the use of force, the UN Charter, border disputes and so on that are worthy of sustained scholarly attention.  This is a point that international economic law folks can surely appreciate. Was the world a better place when we had, basically, Bob Hudec,John Jackson with maybe an Eric Stein or Jacques Bourgeois or three?  This is not a judgment about the merits of these brave souls who dared to think that trade was a worthy subject of serious scholarly writing.  In many ways, the vast expansion of scholarship on trade, investment, and finance in international law is a tribute to their original vision. 
2. The expansion of publication has reflected an expansion of voices: developing-world voices, indigenous voices, women's voices, environmentalist and animal welfare voices, and so on.  (Nouwen herself claims to be concerned about women's voices, yet it is hard to say that returning to a more restrictive view of publication would be a positive for gender representation). 
3. By "slow writing" and "slow publishing" we international law scholars cannot reverse the tremendous acceleration of existence in these times, the digital revolution and so on.  We can only succeed in becoming a (perhaps noble) anachronism,  There are reasons to respond to tweets that reframe policy and attitudes on matters like tariffs, China, trade and national security by scholarly analysis not just other tweets. Responding slowly may make a statement for posterity but it ill serves our responsibilities to our students, to the political community, and to the world.  I therefore welcome the fast publishing of recent e books that have addressed the crisis of the WTO dispute system, and trade war with China, for instance.
4. The enemies of international law would like to reinforce their image of us as an effete clique removed from reality, a small self-admiration society fantasizing about a world where international lawyers not power politics determine the outcomes.  The more we publish, the more places we publish, the more we plausibly claim a legitimate place in the public world. 
5. "Scribere est agere," to write is to act, goes the famous Latin maxim. But this is only true where the writing is communicated. We scholars are generally overall reticent to imagine that what we write is really seen out there in the world-or that, if it is, that's it is largely because of the prestige of our institutional affiliation or of the publication venue.  But scholarly writing is a message in a bottle-and the bottle more often than we think gets found by someone in some position to learn from and give real world impact to that missive. And usually, that far away treasure-hunter being indifferent to the artificial hierarchies of the academic world, it is the message that will concern them, not the stamps of elite approval on it. I always enjoy hearing (usually long after the fact) how something I have published in a completely unknown or un-ranked outlet (even a blog!) provoked a debate in the cabinet of some government or among the high officials of an international organization- people typically indifferent to matters such as scholarly pecking-order.
6. This circles back to Benjamin's basic point to Scholem.  Publication is an affirmation that the future is open, and that we, however powerless we may feel in a world where so many forces and constraints seem to be against us, might make a difference, that our message is important.     We might worry that our manuscript is banal, descriptive-but it might just have the specialized information that a policymaker in a poor country needs to advance her country's interests in a complex process of global governance, for example. So always err on the side of publication-you respect yourself, and your belief that others might find value in what matters to you is a respect for the public world of thought and action; or, as the philosopher Immanuel Kant put it  public communication through writing is not just the entitlement but also the duty of a scholar.       

   

UNCITRAL and ISDS Reform: China’s Proposal

By Anthea Roberts and Taylor St John*

On 19 July 2019, China submitted its proposal on investor-state dispute settlement (ISDS) reform to UNCITRAL. A Chinese version is available, though an English translation is yet to be posted. China reaffirms its commitment to ISDS as an important mechanism for resolving investor-state disputes under public international law. However, it takes note of significant criticisms of ISDS and suggests various pathways for reform including, most notably, supporting the study of a permanent appellate body. In combination with the European Union’s “open architecture” approach, where the EU has signalled that it is open to working with other states that might wish to sign onto an appellate body and/or the multilateral investment court, this means that two of the world’s three biggest economies have now signalled support for significant reform of ISDS, including the possible creation of a permanent appellate body.

China’s UNCITRAL submission

China began in the investment treaty system as an ISDS sceptic but, over the years, has become an ISDS convert. In this submission, China starts from the position that ISDS plays an important role in protecting the rights of foreign investors and promoting cross-border investment, as well as helping to build the rule of law in investment governance and avoiding economic disputes between investors and states escalating into political battles. Given this, China affirms its belief that ISDS is overall a mechanism that is worth maintaining. Given China’s growing interests as a capital exporter, particularly along the Belt and Road route, this endorsement of ISDS should not come as a surprise and is in line with the evolution of China’s treaty practice toward embracing ISDS over a full range of disputes.

Despite this general affirmation, China recognizes that there have been significant criticisms made of ISDS that need to be addressed. These include that: the current system lacks an institutionalized and reasonable error-correcting mechanism; the current system of ad hoc awards lacks stability and predictability; the professionalism and independence of arbitrators has been put into question; third party funding is affecting the balance of parties’ rights; and investment arbitration proceedings are long and costly. Of note, China also states that the phenomenon that the arbitrators and lawyers of investment arbitration are limited to a few experts deserves special attention. China states that ISDS should be more open and inclusive with increased participation of experts from developing countries.

China takes the position that some of the problems with ISDS are difficult to resolve through bilateral investment agreements and instead need to be resolved through improving multilateral rules and mechanisms for the resolution of ISDS. In this way, China affirms its commitment to multilateral international economic law governance. In order to safeguard the legitimate regulatory power of host states, protect the rights of foreign investors, enhance confidence in ISDS, and promote the rule of law in investment dispute resolution, China states that it is open to suggestions for improving ISDS, including but not limited to the following options (described below using wording as close as possible to a translation from the original Chinese):

1. Permanent appellate mechanism

To solve the main problems in ISDS, China states that it supports research into a permanent appellate mechanism as a reform proposal. China believes that a permanent appellate mechanism would mean that there would be fixed procedures, institutions, staff and member states that would play an important role in promoting the rule of law in the settlement of investment disputes. China sees this as important for improving error correction and strengthening the coherence and legitimacy of the system. China points to the WTO example to suggest that an appellate body might be comparatively efficient and cost effective compared to the current situation.

2. The right of the parties to appoint an arbitrator

From the traditional practice of international arbitration, the right of the parties to appoint arbitrators is a fundamental feature of international arbitration and also reflects the will of the parties, China states. China believes that in the first instance of investment arbitration, the right to appoint arbitrators is a widely accepted institutional arrangement that is important to enhance the confidence of the parties to the dispute and should be retained in the reform process. In this way, China signals that it currently seems open to a model based on (improved) ISDS plus potentially an appellate body.

3. The qualifications and independence of the arbitrator

While retaining the appointment of the arbitrator by the disputing parties, China believes that it is necessary to improve rules governing the arbitrators’ qualifications, conflicts of interest, and selection and removal procedures. China notes that Working Group III and ICSID are both studying the possibility of a code of conduct for arbitrators. China believes that considering the public law nature of investment arbitration, arbitrators should have expertise in the field of public international law or international economic law and should avoid potential conflicts of interest and double hatting. China notes that different countries have different understandings of arbitrators’ conflicts of interest so further rules are needed to spell these issues out. There should also be more rational and transparent rules on the selection and removal of arbitrators.

4. Alternative dispute resolution

China reaffirms its commitment to mediation. According to China, alternative dispute resolution mechanisms are conducive to maintaining long-term cooperative relationships between investors and host states and reducing the cost of dispute settlement. Compared with investment arbitration, investment mediation can provide host states and investors with a high degree of flexibility and autonomy, and mediators have more opportunities to adopt creative methods to promote the settlement of investment disputes. For this reason, China endorses the establishment of a more effective mediation mechanism in order to help the parties get to win-win results, thus avoiding a lengthy period of arbitration and high costs.

5. Procedures for pre-arbitration consultation

China supports the inclusion of a mandatory three to six month pre-arbitration consultation procedure to permit notification of and consultation about potential claims before they are brought. This would be used to allow both sides to better understand the position of the other and to see if the dispute could be resolved before it is escalated to arbitration.

6. Transparency for third-party funding

China supports transparency with respect to third-party funding. Relevant parties should continue to disclose relevant funding and avoid direct or indirect conflicts of interest between arbitrators and third-party funders. If the disclosure obligation is not fulfilled, the legal consequences of the relevant party should be clarified.

The EU’s open architecture approach

China has now stepped forward as a proponent of an improved version of ISDS plus potentially an appellate body. In this way, it straddles the divide between being a proponent of “structural” reforms and “other” reforms in the UNCITRAL process. In doing so, it may better represent the current temperature of the negotiating room than any of the other declared powers.

It remains to be seen is whether China strongly stands behind this hybrid approach or whether its own practice evolves over time. It is possible that this mixed approach reflects a compromise position among different positions within the Chinese government that might shift over time. China has also taken a pragmatic approach to its negotiations in the past, accepting a wide variety of terms rather than insisting on a single model.

If China strongly stands behind this hybrid ISDS/AB approach, an important question will be whether it seeks to anchor this approach as the – or one of the – main approaches to reform in an exclusive way, or whether it works flexibly with other major players, like the European Union, to develop an overlapping approach with other proposals like the multilateral investment court and appellate body.

In projecting forward in July 2018, one of us wrote in favour of taking a flexible, open architecture approach to reform options: “Flexibility can also be built into specific reform proposals by, for instance, adopting open architectural approaches that permit differently situated states to sign up for new multilateral approaches or institutional mechanisms.” This could include using a flexible Mauritius Convention-style treaty to permit states to “decide individually whether to opt in to a court and/or an appellate body, or neither.”

As explained in an EJIL: Talk! blog in November 2018, this approach was intended to capture how negotiating dynamics and potential alliances might unfold and develop:

The European Union is unlikely to give up easily on its two-tier solution given its belief in reform and the toxicity of “private justice” in some of its domestic settings. One option would be to try to get agreement on considering an Appellate Body first and a Court second. But if you want an integrated system at the end, this seems far from ideal. Probably a better move would be to consider both at the same time but with a flexible open-architecture structure that allowed states to sign onto either the first level court and/or the appellate mechanism.

One reason for suggesting this was our reading that China’s statements on the floor in UNCITRAL seemed to be signalling that China might be “warming up to a position of supporting ISDS, with possible improvements, but subject to an Appellate Body.”

In its subsequent submission to UNCITRAL, the European Union took up this open architecture approach, citing these articles and blogs. According to its January 2019 submission:

3.16. Open architecture

39. The EU and its Member States consider … that only a two-tier permanent structure can remedy all the identified structural concerns in the current system. A certain level of flexibility would, nevertheless, need to be built into a standing mechanism. This would be necessary, for example, for countries that might want to use the standing mechanism for state-to-state dispute settlement, but which do not use investor-state dispute settlement in their agreements. It may also be the case that some countries may like to retain the flexibility to utilise only an appeal mechanism even if, in the view of the EU and its Member States, such an approach would not effectively resolve a number of the concerns which have been identified. If that is indeed the case, the open architecture of the standing mechanism could be a way of providing for such flexibility for those countries.

Arguably, the EU’s open architecture approach works like an invitation to China and other states to come on board for the creation of an appellate body without having to commit to an underlying multilateral investment court. This approach by the Europeans was smart because there was broader support in the room for the appellate body than for the underlying court and this approach potentially allows them to square the circle. With its submission to UNCITRAL, the question is whether China is embracing a potential appellate body instead of the European’s approach or whether the two could co-exist in an open architecture model.

With two of the world’s largest economies now supporting consideration of a permanent appellate mechanism, other states will need to pay increased attention to this possibility. Like ISDS reform as a whole, any appellate mechanism is likely to emerge through a mixture of multilateral innovations and bilateral actions. If the European Union and China make access to a multilateral appeals mechanism a feature of their own free trade and bilateral investment agreements, they have substantial bargaining power to shift the preferences of third states on this issue. In this way, 1 + 1 has the potential to make much more than 2 … though many discussions remain to be had to figure out what is politically feasible and how the variable geometry of ISDS reform will ultimately play out.

First published on EJIL: Talk!

*Anthea attends UNCITRAL Working Group III as part of the Australian delegation but she acts and writes in her independent academic capacity. Taylor attends UNCITRAL as an observer from PluriCourts.

Trade in the Second Night of the Democratic Primary Debate

Here is the discussion of trade in last night's Democratic primary debate:

HARRIS: First of all, Donald Trump came in making a whole lot of promises to working people that he did not keep. He said he was going to help farmers. He said he was going to help auto workers.

...

Because of this so called trade policy that this president has that has been nothing more than the Trump trade tax that has resulted in American families spending as much as $1.4 billion more on everything from shampoo to washing machines. He betrayed the American people, he betrayed American families, and he will lose this election because folks are clear ...

...

BASH: ...

I want to turn now to a question about trade and for Congresswoman Gabbard. Many saw the Trans-Pacific Partnership issue as something that would be a critical tool to deal with the rise of China. You were against it. How would you ensure that the United States is able to remain competitive against China on the world stage?

GABBARD: By pushing for fair trade, not trade deals that give away the sovereignty of the American people and our country, that give away American jobs, and that threaten our environment. These are the three main issues with that massive trade deal, the Trans-Pacific Partnership.

I think the central one was the fact that it gave away our sovereignty to a panel of international corporations whose rulings would supersede any domestic law that we would pass, either a federal law or a state or a local law. This is extremely dangerous and goes against the very values that we have as a country.

What to speak of the fact that it would have a negative impact on domestic jobs and that it lacked clear protections for our environment. These are the things that we have to keep at the forefront as we look to enact fair trade deals with other countries to make sure that we continue to be a thriving part of our global economy.

(APPLAUSE)

BASH: So to be clear, Congresswoman, would you keep President Trump's tariffs on China in place?

GABBARD: I would not, because the approach that President Trump has taken has been extremely volatile without any clear strategic plan, and it has a ravaging and devastating effect on our domestic manufacturers, on our farmers, who are already struggling and now failing to see the light of day because of the plan that Trump has taken.

BASH: Vice President Biden, would you rejoin the Trans-Pacific Partnership, which, of course, President Trump withdrew from? Please respond.

BIDEN: I'd renegotiate. We make up 25 percent of the world's economy. In order -- either China is going to write the rules of the road for the 21st century on trade or we are. We have to join with the 40 percent of the world that we had with us, and this time make sure that there's no one sitting at that table doing the deal unless environmentalists are there and labor is there.

And to make sure we equip our workers first to compete by investing in them now, in the things that make them more competitive. That's what we have to do. Otherwise, they are going to write the rules of the road. We must have the rest of the world join us to keep them in check from abusing.

BASH: Thank you. Thank you. Vice President Biden, just to be clear, would you or would you not rejoin the TPP, yes or no?

BIDEN: I would not rejoin the TPP as it was initially put forward. I would insist that we renegotiate pieces of that with the Pacific nations that we had in South America and North America, so that we could bring them together to hold China accountable for the rules of us setting the rules of the road as to how trade should be conducted. Otherwise, they're going to do exactly what they're doing, fill the vacuum and run the -- and run the table.

BASH: Thank you, sir. Mayor de Blasio, you also oppose the deal. Please respond.

DE BLASIO: Yeah, and I just want to ask this question of all the candidates, but particularly of Vice President Biden. President Trump is trying to sell NAFTA 2.0. He's got a new name for it. It's just as dangerous as the old NAFTA. It's going to take away American jobs like the old NAFTA, like it did to Michigan. And we cannot have Democrats be party to a new NAFTA.

So, Vice President, I believe you're the only person on the stage who voted for the original NAFTA. Are you ready to say here and now that you will oppose a new NAFTA and that what you will believe in, which is a lot of us hope for, is trade treaties that empower organized labor across the boundaries of the world and give working people power again, not just multinational corporations.

BASH: Mr. Vice President?

BIDEN: Yes.

BASH: Your response? Your response, sir?

(LAUGHTER)

BIDEN: Yes.

BASH: That's it?

BIDEN: No, he said, would I insist that labor be engaged?

(APPLAUSE)

The answer is yes.

Harris seems to be going for the moderate center on trade by being so critical of Trump's tariffs (while going for the progressive left on health care).

Criticizing the TPP as it stands now and saying you'll renegotiate and bring labor to the table, as Biden did, is the safe play. It's unlikely that anyone will ask a follow-up question which demonstrates that you have no idea what you mean by that. The same thing applies to the renegotiated NAFTA. He is against what exists now, and is for some new, undefined improvement.

Gabbard was also against the status quo of trade agreements, but didn't say what she would do instead (although maybe eliminating ISDS would be enough). However, she was pretty bold to say she would get rid of the China tariffs. If she stays in the race long enough, she could get a follow-up about what she would do instead.