One of the most notable things about Elizabeth Warren's trade policy plan is what she doesn't talk about. She doesn't talk about the WTO. She doesn't talk about "national security" tariffs. She doesn't have much to say about U.S.-China trade relations. The lack of detail is perhaps a sign that despite any misgivings free traders might have about what she does say about trade agreements, there would be room to improve on Trump's trade policy in a Warren administration. With that in mind, here are a few suggestions for Warren and her advisers as to what might make us pro-trade folks less critical.
Let's start with the WTO. The Trump administration has raised three big issues: The role of the Appellate Body; the treatment of developing countries; and the inadequacy of the notifications provided by many countries. (There is also the ability of WTO rules to deal with China, but I'll address China issues separately.)
In my view, the issues related to developing countries and notifications are real and challenging, and it's worth continuing to pursue them. By contrast, the Trump administration's approach to the Appellate Body has been flawed and needs to be abandoned. The first step the Warren administration should take is to stop blocking appointments to the Appellate Body. That would demonstrate a good faith effort to participate in WTO affairs, and to support neutral adjudication procedures and the international rule of law (rather than unilateralism).
The second step would be to articulate a vision of how the Warren administration sees the role of the Appellate Body. It's not just the Trump administration political appointees who have had concerns about the Appellate Body. There are a wide range of U.S. actors who have been critical of some of the Appellate Body's decisions and behavior. The question is, what do they want the Appellate Body to be instead? They need to figure this out, articulate it clearly, and make the case for it to other WTO Members. For example, do they want to get rid of DSU Article 11 appeals? I don't think that's an unreasonable position. But if that is their position, they need to convince everyone else of the merits. A number of remarks from Trump administration officials have been along the lines of, "We need to go back to what we agreed in the DSU in 1995." But there are different interpretations of what was agreed, so spell out what you think the Appellate Body should be doing.
Now let's move to the Section 232 national security tariffs, which of course involves the WTO as well. The best option here is to repeal the steel and aluminum tariffs, and to explicitly rule out imposing tariffs on autos. There isn't a reasonable justification for these tariffs under the terms of the statute, and imposing them has caused serious trade conflict in the form of tariff wars and abuse of the GATT Article XXI security exception (as well as the safeguards provisions invoked in response). Repealing the Section 232 tariffs would be a great way to start working with our allies again, which will be relevant to the China issues discussed below.
It's worth noting that there are plenty of legal ways to impose tariffs (trade remedies, for example), so there is no need for Section 232 in this regard. Of course, someone might point out that certain WTO rulings have made using trade remedies more difficult. Here, I would go back to what I said about the role of the Appellate Body. If there are specific concerns (e.g., the Appellate Body's rulings on "unforeseen developments") the answer is to make the case to other Members for a particular alternative approach.
And then there's China. I never had much hope for Section 301 tariffs as an effective way to change China's behavior, but the Trump administration has some time left before the election, and we'll see how it goes. But if it hasn't worked by the time there is a President Warren, perhaps then we could consider an alternative. One possibility is something along the lines of what President Obama tried, which is to negotiate liberalization with others in order to force China to behave better. Obama's broad strategy made some sense, but in my view the execution was botched, in two ways. First, the TTIP expectations were unrealistic. And second, the domestic politics of TPP were handled badly, and as a result Congress did not ratify it.
But it's not hard to imagine a President Warren joining a version of the TPP (without ISDS, etc.) and negotiating a trade deal with the EU. She'll have to compromise on a bunch of the conditions she set out in her trade policy plan, but that's OK. It's my understanding that politicians sometimes do this sort of thing.
In addition, governments should bring a wide range of WTO complaints against China. China's accession protocol has some pretty broad obligations in it. In my view, it's worth testing them out in dispute settlement.
And then finally on China, if we want China to make significant structural changes to its economy, there needs to be a negotiation that offers China something as well. Otherwise, for political reasons, China simply won't be able to sign on. For example, given how potent normal anti-dumping rules are, it seems to me that trading off the extra bad treatment China gets in anti-dumping in exchange for some significant Chinese reforms would be worth it. But I know that's a sensitive issue, and I'm open to other possibilities.
