This is a guest post from law professor David Trubek:
The media are full of announcements of a “truce” in the China-US trade war. The deal that is being finalized may halt further escalation for a time, but it does nothing to resolve the deeper issues that lie behind the struggle.
As Simon Lester noted in a recent post, some people are trying to do just that. In US China Trade Relations-A Way Forward , the ad hoc US-China Trade Policy Working Group calls for a new approach. The group is led by Dani Rodrik of Harvard, Jeff Lehman of NYU Shanghai, and Yang Yao of Peking University and includes many distinguished lawyers and economists. Others including several Nobel laurates and leading trade law scholars have joined their call.
The group fears that the debate has become polarized around two stark options: either China abandons state led growth or the two economies must be decoupled. They seek instead for a way to maintain an economic coexistence in which China can retain an economic model that has served it well and the two economies are not rent asunder to everyone’s loss.
These experts believe that the current US approach, which deals with trade friction by pressuring China to change its fundamental approach to development, is wrong. They propose a framework:
“… intended to respect each country’s ability to design and implement its own domestic policies, to promote productive negotiations about how to share the benefits and minimize the harms that attend bilateral trade, and to facilitate fair competition in the multilateral sphere of international trade.”
The key to the approach is to base trade relations on negotiations about the relative costs and benefits of policies that affect trading partners. The Statement sets out a system for identifying costs and benefits of specific policies and resolving them through a combination of negotiation and countervailing measures. The proposals are complex and it will require detailed analyses to fully understand their significance and assess whether the Statement could serve as a starting point for a new approach to the tensions underlying the current trade war.
That is --as Simon suggested-- just what the IEL community should be doing. But the question is: will this effort be heard in the US above the screeching of the trade hawks? In "Despite Trade Truce, U.S.-China Cold War Edges Closer" WSJ 10/16/19 journalist Greg Ip lays out the “ornithology” of the trade war debate:
"From China’s 2001 entry into the World Trade Organization until 2017, the U.S. and China moved toward greater integration and engagement. Skeptics of that process fell into three camps: economic hawks unhappy with China’s treatment of foreign firms, national-security hawks suspicious of its geopolitical designs, and human-rights hawks exercised by its intolerance of democracy and dissent. Historically, these three camps have been separate and only intermittently influential . . .Events in the last year have changed that. Business disenchantment with the China market and Mr. Trump’s trade war empowered economic hawks. They joined forces with national-security hawks who see China’s economic and military rivalry as inseparable. Separately, China’s treatment of its Muslim minority in Xinjiang and wayward western businesses like the National Basketball Association, and the Hong Kong protests gave human-rights hawks a voice."
Actually, there is another species of hawk: the jobs hawks, who tell US workers “the Chinese stole your jobs" and seek in vain to bring all lost manufacturing back to the US. All these hawks are noisy and they are shaping the debate. Hostility to China brings together the right (business and national security) with the left (unions and human rights advocates).
Of course, the Hawks do not agree on everything -- except their condemnation of China. But they do line up along the very convergence vs. decoupling dichotomy that the ad hoc Group is trying to dismantle. The national security and jobs hawks favor decoupling; the economic hawks want access to China’s markets and press for convergence. The human rights hawks probably don’t care which route is taken as long as pushing for either would affect China’s treatment of Uighurs, dissident lawyers, or Hong Kong. All these screeching voices make it hard to find a win-win solution to the trade war.
US China Trade Relations A Way Forward looks like a progressive effort to bring reason into the debate. But it is a complex argument while the Hawks are all telling simpler stories. Can this welcome intervention be rescued from the avian cacophony so we can have a sane discussion and outline some kind of economic coexistence with China? I hope so.
