International Economic Law and Policy Blog

What Would a Kamala Harris Trade Policy Look Like?

There was a lot of speculation last week about what Kamala Harris would do on trade policy (and various other policies). I thought this piece by Alan Beattie of the FT offered a very thoughtful and objective evaluation of where things might go on trade and industrial policy in a Harris administration.

An important aspect of this issue is who ends up advising her, both during the campaign and afterwards if she wins. My guess is that the Biden administration policy insiders and advisers are going to be pretty successful at putting themselves in positions of influence. That could signal a good deal of continuity between the Biden administration and a Harris administration. 

At the same time, the situation in 2025 would be a very different political one than what the Biden administration has been faced with. If Harris beats Trump, Trump would then have lost the popular vote in three straight elections and the electoral college vote in two. That could lead to a shift in the Republican party: How much losing will Republicans be willing to take? And if Trump's influence diminishes, and the Republican party leaders are no longer ultra-protectionist, that could change how a Democratic president approaches the issue. (Also note that the makeup of Congress will be important here, and we have no idea what that will be.)

Of course, in recent decades the Democrats have been the more protectionist party (in terms of their political leaders at least), and that remains true today even though Trump has shifted the Republicans towards the protectionist side, so I'm not expecting a Democratic president to emerge as a free trade crusader. Nonetheless, Trump having less influence could provide the basis for a President Harris to diverge at least a bit from President Biden. Biden was worried, rightly or wrongly, that Trump's protectionism could have an impact on votes in certain important swing states, but that might not be as much of an issue going forward.

What I find interesting about Harris is that she has seemed skeptical of both tariffs and trade agreements. On tariffs, she has tied them to the price of consumer goods and emphasized their impact on ordinary Americans, saying this about Trump's trade policies back when she ran for the 2020 Democratic nomination: "this President continues to push forward what I call the Trump trade tax. This is about taxing American consumers. People are going to have to pay more for washing machines, pay more for clothing, pay more for shampoo. When we look at the trade policy he is conducting in terms of China, now with Mexico, it’s going to result in people here paying billions of dollars more a year for consumer products." More recently, she said this about Trump's proposed 10% baseline tariffs: "On the issue of the cost of living, Donald Trump says he will implement a ten percent tariff on all imported goods. Well understand, independent economists agree, his tariffs would increase the cost of everyday expenses for families, the cost of gas, groceries, and clothing." (More broadly, at a primary debate in September 2019, she said: "I am not a protectionist Democrat.")

The logic of her arguments about the impact of tariffs apply beyond Trump's tariffs, and her explicit and consistent recognition of their negative impact could extend to other tariffs. For example, although it is not focused on consumer goods, the Biden administration's push to convert the Section 232 steel and aluminum tariffs into a tariff-centered carbon emissions reduction regime has not been received well by U.S. trading partners, and isn't likely to reduce carbon emissions anyway (if you think it will reduce carbon emissions, feel free to walk me through how you see this happening!). That's the kind of trade policy I can imagine Harris revisiting, as there are many ways to reduce carbon emissions that are more effective options here.

On the other hand, she has opposed all the trade agreements she has been asked about:

• She said this about NAFTA: "I would not have voted for NAFTA, because I believe that we can do a better job to protect American workers."

• She said this about the USMCA: "after careful study and consultation with environmental and conservation leaders, I have concluded that the USMCA’s environmental provisions are insufficient—and by not addressing climate change, the USMCA fails to meet the crises of this moment. Californians know that the climate crisis is already here. Communities across our state have experienced exacerbated fires, storms, floods, and drought, and the devastation will only get worse if we fail to take bold and immediate action to address it. This agreement will set the standards for decades, and I believe Californians and all Americans deserve better and more immediate action. For these reasons, I oppose this deal."

• And there was this about the TPP: "As I’ve long said, I will oppose any trade deal that doesn’t look out for the best interests of American workers and raise environmental standards, and unfortunately the TPP didn’t pass either test. I also raised concerns at the time about the lack of transparency in the process.

So is there any kind of trade agreement she would approve of? She might not be interested in backing any brand new trade agreements, but I can imagine she might be proactive with some existing ones. For example, in the 2026 USMCA review, she could argue for adding a climate change provision to the agreement. And there has been a push from progressives to remove ISDS from existing FTAs and BITs, and I can see her supporting that.

It's worth noting that trade is not something most voters care about, so from a domestic politics perspective, it's probably not that important an issue and there won't be an incentive to do things. Politically speaking, there isn't much to be gained from a big new trade initiative, so why aggravate the small group of people who get aggravated by this? I suppose she could use it as a way to demonstrate that she is on the center left rather than the far left, but there are obvious downsides and she may not think it's worth the risk and hassle.

As to what her advisers might think, I've seen Mike Pyle mentioned several times as someone who is likely to be a top economics adviser in a Harris administration. Pyle was an adviser to Harris as VP, and then later served in the NSC with the Biden administration. He said the following back in June of 2023: "in a lot of respects, we don't see tariffs as being at the core of trade policy. We don't see trade policy as being at the core of international economic policy." (You can hear a recent discussion with Pyle on "The Rise of Economic Statecraft" here. He responded to the question, "Could you let us know how [Harris's] views on economic policy potentially differ from Biden's views?" at around 34:45; also check out the question on responses to China at 48:10.)

At the same time, many U.S. trading partners do care a lot about trade policy, so their views might be something that could influence a Harris administration in a particular direction. She's going to be looking for things from them on various international and foreign policy issues, and giving them something they want on trade policy -- especially if it benefits, or at least doesn't harm, the U.S. as well -- seems like a possibility.

Summing up, there's a lot of uncertainty about what a Harris administration would do on trade policy. Early speculation is fun, but it's hard to say what the world will look like in January 2025, so I won't be shocked if things go in a different direction than I suggested above.

WTO Member Statements on Appeal/Review in the DS Reform Process

The WTO Dispute Settlement Reform Process is underway. The WTO website provides brief overviews of the meetings as they happen, but for those of us who want more than just a short summary, we can follow it a few weeks behind the actual current developments as meeting minutes are derestricted. The Minutes of the Heads of Delegation meeting from May 30 are now available.

The Facilitator of the process is Usha Dwarka-Canabady of Mauritius, who has been a panelist herself several times. For this meeting, Dwarka-Canabady had "encouraged Members to share ideas on how experts could take technical work forward on" the issues of "appeal/review and accessibility." On appeal/review, her specific question for Members was: "Being mindful of the interest-based negotiating modality that Members have been using to make progress on dispute settlement reform, describe your delegation's interest on appeal/review, including possible characteristics and ideas for developing convergence." Here's a sampling of what delegations said on the issue of appeal/review, which is obviously one of the most important elements in getting the dispute settlement mechanism fully functioning again:

Australia:

"Turning to Question 1, the right to appeal/review is fundamental to meeting Australia's interests in a dispute settlement system that produces coherent, robust and legally sound outcomes. Such outcomes reinforce the security, predictability, legitimacy and credibility of the rules-based multilateral trading system in the WTO. Appeal/review also provides an important check and balance to mitigate against legal error and encourage consistent decision-making. This is vital to maintaining confidence in the system. Retaining an appeal/review tier in a reformed system is therefore important to Australia. We do, however, acknowledge that the Appellate Body was not functioning, in some respects, as intended under the Dispute Settlement Understanding and that we need to address the concerns that arose. To do this, we will need to focus on ways to change the behaviour of both Members and adjudicators so that appeal/review works in the interests of all Members. For Members, we need to incentivise a more disciplined approach to appeals. For example, we could explore options for streamlining appeal processes to ensure adherence to time limits, including by setting word limits on submissions. We could also consider options to make better use of interim review at the panel stage. For adjudicators, we need appropriate guardrails around their role. This could include reforms that go to the standard and scope of review, and clarifying our expectations that adjudicators should focus on resolving the dispute between the parties. We will also need to think about the type of institutional structures that will support Members' interests, including the proper role of the Secretariat. Some of these ideas have already been raised in the informal process, so we should build on that work.

Switzerland:

"On appeal/review, for Switzerland, a reformed dispute settlement system must preserve the right of Members to have an appeal or review of panel reports. It is also essential to preserve the rules-based nature of the system, that it is protected from power dynamics and ensures predictability for Members. It is key for us that the appeal/review process allows for the final and binding resolution of trade disputes. We also believe that the procedural rules for appeal/review rules should not be overly prescriptive or too detailed, and leave some degree of flexibility. That being said, we find it useful to discuss possible "filters" in order to have a more selective number of issues going to appeal/review. In this regard, we are in particular open to discuss how the interim review phase of the panel process could be strengthened. Given the little time that we have, it may be efficient to focus our discussions in a first step on principles, before turning to more detailed rules. It may also be useful to approach the discussion on appeal/review based on different sub-topics. In our view, the following topics would deserve particular focus: First, access to appeal/review – how do we make sure that the most significant legal issues go to appeal/review. The scope of the review is also an important topic – for instance, with regard to the objective assessment of facts. On these topics, very useful discussions have taken place last year and at the beginning of this year, and we should really build on those discussions. Further, discussions on other issues such as the standard of review, institutional aspects, monitoring of the mechanism, and the interplay with the panel process may also be useful.

EU:

"At the outset, I would like to recall that, for the European Union, a fully functioning dispute settlement system is crucial. The system has not been fully functioning for over four years. The more time passes without a solution, the more we undermine the rules underpinning the WTO system and its credibility. At MC13, the Ministers instructed us "to accelerate discussions in an inclusive and transparent manner, build on the progress already made, and work on unresolved issues, including issues regarding appeal/review and accessibility to achieve the objective by 2024 as we set forth at MC12." It is clear that, if we want to achieve our objective, this process must be strictly focussed on resolving the outstanding issues. We must avoid ending up in an exercise similar to that of the DSU review process – those discussions have lasted for over two decades and did not lead to a result. To that end, we must build on the progress already achieved through interest-based discussions in the informal process. That work is reflected in the text contained in the report of the DSB Chair in JOB/GC/385. It is against this background that I will address the two questions asked by the Facilitator.

As for the first question, in relation to appeal/review, we have heard at MC13 that the overwhelming majority of Members wants to preserve a two-tier system. The EU explained its interests at the outset of the informal process. I will not repeat all of those interests today but let me recall and clarify the EU's interest in the right to appeal review before a standing adjudicative body. This interest supports our broader, overarching interests.

a. Firstly, we are interested in a system that effectively preserves the WTO rights and obligations, which implies correctness of decisions, and the therefore the right to review legal errors on appeal.

b. Secondly, we have an interest in a dispute settlement that supports the rules-based multilateral trading system. In order for the dispute settlement system to do that, it must guarantee a degree of consistency, security and predictability.

c. Thirdly, dispute settlement must be legitimate and fair.

The consolidated text only contains a placeholder on the issue of appeal/review but detailed discussions on this issue already took place. Some ideas have emerged to try to reconcile the interest of Members in having a two-tier system and the interest to avoid that this leads to "law-making" or overreaching by adjudicators. The interests of Members were discussed in detail in the informal process. While the discussions should remain "interest-based", we now need to focus on solutions. Going forward, we propose that the experts pick up discussions on appeal where they were left off before MC13. Building on the work done already, the task should be to identify solutions that meet the interests of all Members. In doing so, they should be mindful about the package of reforms that is being developed, including those reforms that are part of the consolidated text and go towards addressing the concern with law making and overreaching by adjudicators. The EU will continue its constructive engagement and openness to reform. We will seek to preserve the right to appeal review, the adjudicators' ability to review and correct legal errors, and a standing adjudicative body. We believe it is possible to reconcile these characteristics with the interests of all Members, including the interests in avoiding law-making by adjudicators and in focussing the dispute settlement function on resolving disputes.

Antigua and Barbuda, on behalf of the ACP Group:

"On appeal/review, the ACP's core interest remains the full restoration of a binding two-tier dispute settlement system in the WTO. Recourse to appeal/review of panel decisions should be automatic. Rather than diminishing the role of such a mechanism, our reform efforts should strengthen it by focusing on the following:

a. shielding appointed members to any appeal/review mechanism from any attempt by any Member to unduly influence their decisions.

b. guaranteeing the right of due process for all WTO Members.

c. institutionalizing reasonable timelines for the appeal review mechanism to conclude its work.

d. ensuring that the appeal/review mechanism Secretariat has the necessary resources – human, technical and financial – to do its work adequately and easily. 

e. keeping open the possibility of expanding the number of members appointed to any appeal/review mechanism and also keeping open the possibility of making adjustments to the duration of their tenure so as to ensure continuity and reduce the chances of collapsing the entire system.

Under the informal process, we are aware of a number of ideas which have emerged to reform what is currently the Appellate Body. Members have floated ideas with respect to standards of review for example. However, what we do not want is any outcome which would create a chilling effect for any Member to avail itself of its right to appeal a panel decision. It is also important that we look at the overall balance of issues. For instance, if Members want to establish an accountability mechanism, improve panel composition, implement word limits and time limits for written and oral submissions respectively, along with a host of other new reforms, then the antecedents are there for a new system to emerge which addresses some of the longstanding issues of some Members. Therefore, we anticipate that in the context of overall improvements to the system, restoring two-tier dispute settlement is certainly not a difficult ask.

Singapore:

"In response to your first question, Singapore's interests as a small developing country who attaches the highest importance to a rules-based multilateral trading system, are two-fold. One, Singapore values the security and predictability of a dispute settlement system that is underpinned by (i) compulsory jurisdiction, (ii) automaticity and (iii) binding and enforceable outcomes. The appeal stage of the dispute settlement system, served by a standing body, is a key feature of the rule of law which is critical for instilling confidence in the system. For sovereign nations to accept and implement the Dispute Settlement Body's rulings and recommendations, they must have confidence that these recommendations are "right" in that legal errors have been corrected and WTO rules had been consistently and fairly applied. The right to appeal ensures this. From discussions in the past year, we note that many other Members share these interests, and we have also heard other interests, including those articulated by the United States. Experts have been exploring promising ideas to address all interests in a balanced way and we support continuing discussions on two specific issues: (i) a proposed standard of review called "material impact on implementation" to filter claims that would be eligible for appeal; and (ii) make better use of the interim review stage of the panel process to correct egregious errors of fact."

United Kingdom:

"You asked two questions, the first of them on appeal and review. We have four overriding interests on appeal and review. The first is that we have high quality prompt decision-making from adjudicators in the system. The second is that we have a system which promotes a coherent and predictable set of rules and therefore secures a predictable and stable trading environment for businesses and the Members who represent them. The third is that we have an appeal review mechanism which does not have an overweighted influence on the substantive rules themselves, i.e. there is no gap filling. And fourth, that we have a reduction in the number of appeals because we are concerned that, to an extent, appeals have become routine, rather than something more significant and substantive. Beyond those four points, we are flexible and pragmatic. We have tried to remain so through the rather excellent informal process that we have had over the last year or so. We have tried to engage substantially in it and in good faith through that interest-based approach and we hope to continue to do so.

You asked about particular ideas for trying to develop convergence. So again, four points. First, as I mentioned, we put forward a paper – some of you may have seen it, some of you may have even read it – back in October, a non-paper which set out a few ideas – not an attempted solution, merely an attempt to generate ideas and stimulate discussion. Second, we have had various discussions on that non-paper and the ideas it contains during the Marco Molina process. Third, we are pleased to see that others have engaged with those ideas and that some of those ideas have now developed and evolved thanks to that interaction. That is something we should try and continue – which brings me to my last point. We welcome further discussions on the ideas put forward and we do think that this is a potential landing zone with room for developing those ideas further.

Japan:

"On the first issue, appeal/review, this is a proposal for enabling our experts to most effectively work at an outcome of this file, rather than this delegation's interest. We tend to consider the form of mechanism issue like standing two-tier system or a single tier system as the entrance question of this file. This issue, however, will tend to end up with being a binary choice issue. Instead, we should start with discussing the substance of the system design, like (i) concrete ideas on defining the scope and reducing the number of cases which are eligible for appeal, and (ii) the issue of the standard of review. We could also include in the priority agenda (iii) streamlining of the appeal procedure."

China:

"On appeal review, like many others, it is China's core interest to retain an independent, impartial, binding, two-tier dispute settlement system. This is the central element in providing security and predictability to the multilateral trading system as enshrined in the DSU. Based on the intensive discussions of the past two years, I detect two elements that are crucial for our further work.

a. First, the imperative to take a holistic approach to address the appeal review issue. We should also bear in mind that Members have collectively explored tools to balance and improve a mutually supportive system as reflected in the consolidated text. For example, treaty interpretation, no precedential effect, focus on what is necessary to resolve dispute, and advisory working group to review interpretations in particular, as well as strengthened panel stage and accountability mechanism in a more general sense.

b. Second, the value of a "filter and focus" approach to explore a more focused and efficient appeal review mechanism. Under this approach, Members have conceptually discussed what I summarize as a "seven-element framework", which covers Interim Review, material impact on implementation (MII), admissibility check, order of analysis, streamlined process, output of appeal, and incentives to reduce frivolous appeals. The above elements, in our view, could serve as a good basis for finding balanced and comprehensive solutions to this critical issue."

Of course, the key to all of this is the U.S., whose statements at this meeting seemed to reflect its previously stated views:

United States:

"With respect to the first question, we have heard today some interests – though many more positions – on the issue of appeal/review. The United States has an interest in a dispute settlement system that supports parties in the resolution of their disputes and that has legitimacy, not just here but also at home. In that context, we would like to explore further with delegations whether appeal/review is a necessary feature of a system that supports parties in resolving their disputes. We have heard points made about the need for consistency and the ability to correct legal errors. We do not view a standing Appellate Body as the only way of achieving those objectives. Consistency, if wrong, does not serve anyone's interests. In addition, you can have a binding system without having a second tier – and by "binding," we mean finality in the dispute. We have seen how an appeal/review mechanism – and by extension the dispute settlement system – can stray from this foundational purpose. USTR published a report on the Appellate Body in 2020 that identified several U.S. concerns with that appeal mechanism. I encourage my colleagues to look at that report if you are not familiar with it – even if just the Executive Summary. It is a useful document in understanding the U.S. perspective and is available on the USTR website. Notwithstanding these concerns, we have made clear our commitment to work towards a system that meets the interests of all delegations."

More from the Biden Administration on Chinese Overcapacity

A couple months ago, I did a post on "Subsidies, Overcapacity, and Domestic Demand/Savings," in which I argued that, in the context of concerns about Chinese overcapacity, it would be better to focus on Chinese subsidies than on differences in U.S./China domestic demand and savings rates.

At a recent CFR event, U.S. Treasury Under Secretary for International Affairs Jay Shambaugh spoke about the Biden administration's position on macroeconomic imbalances, savings rates, and Chinese overcapacity, elaborating on earlier statements by Secretary Janet Yellen. First, in his prepared remarks, Shambaugh said:

As an international macroeconomist, I have studied the economic relationship between the United States and China for decades – both as an academic and as a policy official.  And throughout this time, perhaps the defining characteristic of this relationship has been macroeconomic imbalances and their effects. 

Take, for example, China’s savings rate. China has maintained an exceptionally high savings rate for decades and over the past 20 years it has been roughly 45 to 50 percent of GDP.  That is more than twice the historical OECD average and about 10-20 percentage points above comparator East Asian economies.  China comprises 28 percent of total global savings, while only 18 percent of global GDP.  The corollary of high savings is low levels of household consumption.  At less than 40 percent of GDP, China’s consumption is low relative to other countries at similar levels of income. 

It is textbook economics that these savings must be channeled somewhere, which leaves the Chinese economy reliant on a combination of domestic investment and foreign demand to drive growth.  The mix between these two factors has fluctuated over time.  Twenty years ago, China relied on foreign demand and had large growing current account surpluses.  In the last decade, Chinese investment in infrastructure and real estate has absorbed much of the savings.  But the recent downturn in China’s property sector and the underperformance of its domestic economy raises questions about the drivers of future growth – and, in particular, China’s likely reliance on foreign demand to sustain its growth going forward. 

...

China’s large imbalances have spillovers on their own, but China’s non-market policies and practices amplify this effect by distorting markets, undercutting fair competition, and concentrating the spillovers into certain sectors.  In particular, the combination of China’s enduring macroeconomic imbalances and large-scale government support to specific industrial sectors drive industrial overcapacity. 

The scale of this support is striking: China’s industrial subsidies are simply much larger than those of other countries.  ...

Then during the Q & A, someone asked the following question:

I want to go back to the overconsumption discussion, and in particular, what I would call the China savings rate dilemma. Because I just spent two months back in Beijing, so I have a very narrow Beijing China sample, but there's still issues with healthcare, cost of healthcare, so that's why you save. The lack of adequate government pensions, an unstable stock market, and gold is looking pretty good to my Chinese friends. So how do you deal with this excess in manufacturing at the same time of needing a Chinese economy that is stable, but yet not having anything in place that's going to really juice consumption at this point in time. So I think that's the dilemma, and I'm interested in what is your policy recommendations from that point of view.

Shambaugh responded:

So the policy recommendations that I would give, transparently, aren't ones that are new, they're ones I think the US Treasury and US government has had for a while, is that we think China should do more to strengthen the social safety net. That would be better for Chinese citizens and better for their economy. It would lower the need for precautionary savings, as you said. I think actually shifting more income to households is an essential part of that also. So a lot of the savings you see in China is actually from the corporate sector, and some of that is because not enough of the revenues are going back to households through higher wages or profits being distributed. And so that would be another way that would help increase the consumption. It would make people maybe need to save a little less. But there are a number of other things beyond that. I think one of the things I mentioned in the speech is a reform of the internal migration system, or the Hukuo system, which would actually be really helpful, because if people had more legal rights to where they are, they have better access to whatever healthcare or education systems there are where they live, it also would make it easier for them to buy property, buy homes, which you then start to buy other stuff because you have that. So I actually think there are a lot of things that we see as very, very good for China that would also then help deal with the issues that we're concerned about. I agree that the reason we started, or I started the speech with the savings rate is because, from our perspective, that is, in some ways the starting point of these issues. It then gets filtered through a government focus on manufacturing and non-market policies and practices that steer those savings towards particular sectors. But you're right that the fundamental issue there is the savings rate. And I think there are a number of things China could do that I think would be really good for China that would help in this way.

There was then this follow-up question:

Can I just follow up and ask, do you talk to the Chinese about these things, and do they appreciate it when you talk about their internal migration system or their healthcare system?

Shambaugh replied:

So the internal migration one is one I don't usually raise with them ... because that gets a little into things that I know cross out of economics purely, but I have had it raised with me by Chinese interlocutors. I mean, they know that ... I didn't just come up with these, like they're well aware that that is a way to increase consumption. They're well aware that there's precautionary savings because social security and pension and healthcare systems aren't good enough. They know these things. And so, yes, I mean, we have extensive conversations about this. This is the whole point of the economic working group, is to be able to have conversations like this and go back and forth in detail around issues of overcapacity. And not just starting with, we're worried that you have overcapacity in industry X, but we're worried about the macroeconomic imbalances and where that takes us. And this is something that Secretary Yellen, given her career and her stature as an economist, is very well placed to make these arguments to the Chinese. And she does every time we talk to them, she starts talking about savings rate and how you could reduce it in a way that would be good for China.

I found all of this discussion helpful, and for me it supports the thinking in my earlier post: It's going to be extremely difficult for the U.S. to push China to change its domestic policies related to the level of demand/savings. It's possible that, on its own, China will some day adopt policy changes that affect demand and savings, such as by reforming the social safety net. But it's hard for me to see how unilateral U.S. pressure is going to have much of a positive impact here.

On the other hand, on subsidies and other non-market practices, China agreed to a set of international rules to discipline these domestic measures. That provides an opportunity to push China to comply with its international obligations, which is the kind of pressure that has, at least in some instances, been effective at inducing policy change.

Safeguards Without Compensation -- A New Normal?

Mexico’s push for exclusion from the United States’ solar safeguard measure, which jumped into the news this week, raises a point of potential interest for the IELP Blog audience.

The escape clause / efficient breach theory of safeguards holds that a WTO Member can temporarily retract a trade concession, hiking tariffs and thereby providing an opportunity for orderly adjustment by its domestic producers, while preserving the balance of concessions by compensating affected trading partners during the time the tariff umbrella is up.  There is a general 3-year grace period for compensation, but that has long since lapsed in the case of the solar safeguard measure which has been in place for nearly 7 years without compensation being provided to anyone.  The silence on this point, both from governments and from trade geeks, has been rather odd.

While all WTO members have been entitled to compensation for their trade losses resulting from the solar safeguard measure since Day 1 of Year 4, Mexico – by virtue of the NAFTA and the USMCA – has been entitled to compensation (or else exclusion from the measure) since Day 1 of Year 1.

According to the news reports, Mexico is currently seeking not compensation but exclusion from the measure … consistent with instructions President Biden included in his February 2022 proclamation extending the measure for four additional years.  The issue has taken on increased importance with the measure’s recently-restored coverage of bifacial solar modules, which dominate Mexico’s solar exports to the United States.  Suddenly, the measure has, in respect of intra-North American trade, a more painful bite.

If an exclusion is not quickly implemented, the compensation which Mexico could demand (and lawfully help itself to) would not be trivial.  During the four-year reference period prior to the safeguard measure, 2013-2017, Mexico accounted for roughly 10% of U.S. solar panel imports.  During the safeguard measure’s time in force, Mexico’s share of U.S. imports has fallen dramatically.  Switching to absolute numbers and looking at the last calendar year (2023), if Mexico had been supplying 10% of U.S. imports (as during the reference period), the value of its solar exports would have been about $1.4 billion.  Actual Mexico-to-U.S. shipments in 2023 were roughly $400 million.  So the current run rate, in regard to Mexico’s trade losses as traditionally measured, is about $1 billion/year.  Suspension of concessions on south-bound trade flows of that magnitude could be expected to cause a bit of a stir.

There are many contested items in the Mexico-U.S. bilateral trade agenda at the moment.  This solar issue sticks out as one where Mexico has undisputable legal (treaty-based) rights, which its neighbor to the north is not respecting.  A simple exclusion would be good for Mexico but also – given the $1 billion/year price tag if Mexico should decide to stop sleeping on its rights – would avoid an awkward problem for Uncle Sam.

The broader question of compensation's disappearance from the public discussion on safeguards merits attention in its own right.  Is this the new normal?  And if so, what aspect of the safeguard system might disappear next ... adjustment plans?  I had always thought -- and have been telling law students for the last ~22 years -- that these elements of the safeguard system were fundamental ones, even if it is the safeguard tariffs themselves that garner most public attention.

The Trade Section of the GOP 2024 Platform

I'm not sure how important party platforms are, but they probably have at least some relevance. Here's the section of the Republicans' 2024 platform on trade policy, which has been shaped by Trump's protectionist views on trade:

CHAPTER FIVE: PROTECT AMERICAN WORKERS AND FARMERS FROM UNFAIR TRADE

Our Commitment:

The Republican Party stands for a patriotic “America First” Economic Policy. Republicans offer a robust plan to protect American Workers, Farmers, and Industries from unfair Foreign Competition. We commit to rebalancing Trade, securing Strategic Independence, and revitalizing Manufacturing. We will prioritize Domestic Production, and ensure National Independence in essential goods and services. Together, we will build a Strong, Self-reliant, and Prosperous America.

1. Rebalance Trade

Our Trade deficit in goods has grown to over $1 Trillion Dollars a year. Republicans will support baseline Tariffs on Foreign-made goods, pass the Trump Reciprocal Trade Act, and respond to unfair Trading practices. As Tariffs on Foreign Producers go up, Taxes on American Workers, Families, and Businesses can come down.

2. Secure Strategic Independence from China

Republicans will revoke China’s Most Favored Nation status, phase out imports of essential goods, and stop China from buying American Real Estate and Industries.

3. Save the American Auto Industry

Republicans will revive the U.S. Auto Industry by reversing harmful Regulations, canceling Biden’s Electric Vehicle and other Mandates, and preventing the importation of Chinese vehicles.

4. Bring Home Critical Supply Chains

Republicans will bring critical Supply Chains back to the U.S., ensuring National Security and Economic Stability, while also creating Jobs and raising Wages for American Workers.

5. Buy American and Hire American

Republicans will strengthen Buy American and Hire American Policies, banning companies that outsource jobs from doing business with the Federal Government.

6. Become the Manufacturing Superpower

By protecting American Workers from unfair Foreign Competition and unleashing American Energy, Republicans will restore American Manufacturing, creating Jobs, Wealth, and Investment.

Compare this platform to the Republicans' 2016 platform (there was no new platform in 2020), which offered the more traditional mix of pro-trade and trade-skeptical sentiments that has characterized U.S. trade policy over the last several decades:

International trade is crucial for all sectors of America’s economy. Massive trade deficits are not. We envision a worldwide multilateral agreement among nations committed to the principles of open markets, what has been called a “Reagan Economic Zone,” in which free trade will truly be fair trade for all concerned.

We need better negotiated trade agreements that put America first. When trade agreements have been carefully negotiated with friendly democracies, they have resulted in millions of new jobs here at home supported by our exports. When those agreements do not adequately protect U.S. interests, U.S. sovereignty, or when they are violated with impunity, they must be rejected

We cannot allow foreign governments to limit American access to their markets while stealing our designs, patents, brands, know-how, and technology. We cannot allow China to continue its currency manipulation, exclusion of U.S. products from government purchases, and subsidization of Chinese companies to thwart American imports. The current Administration’s way of dealing with these violations of world trade standards has been a virtual surrender.

Republicans understand that you can succeed in a negotiation only if you are willing to walk away from it. A Republican president will insist on parity in trade and stand ready to implement countervailing duties if other countries refuse to cooperate.

At the same time, we look to broaden our trade agreements with countries which share our values and commitment to fairness, along with transparency in our commercial and business practices. In pursuing that objective, the American people demand transparency, full disclosure, protection of our national sovereignty, and tough negotiation on the part of those who are supposed to advance the interests of U.S. workers. Significant
trade agreements should not be rushed or undertaken in a Lame Duck Congress.

There's a lot to critique in the 2024 version of the trade platform, and others may weigh in with responses to things I left out, but here are a few thoughts.

Starting with a general point, I think that having someone like Trump lead the party is very useful for certain big businesses and other interest groups: He gives them what they want without any need to lobby for it, because he actually thinks tariffs and other forms of protectionism are good policy. The benefits mainly accrue to those groups, but Trump mistakenly believes there is an overall benefit to the economy. For corporations that want to limit the competition they face, you can't ask for anything better than this.

Turning to some of the specifics of the platform, first, even with all the protectionism and industrial policy being tossed around recently, I haven't heard anyone try to come up with a plan for making the U.S. a "manufacturing superpower," as mentioned it item 6 above. There's no question that the U.S. government could, at a cost to the overall economy, protect U.S. production from import competition in the U.S. market. That market is a big one, so U.S. producers can be profitable just by selling in their home market. But I would think that being a "superpower" means exporting to foreign markets too, and on that issue, I'm not sure what the plan is. Limiting competition in the home market has not been enough to help other countries become world market leaders. All of the countries who have achieved this in recent decades (e.g. Germany, Japan, South Korea, China) had an approach that did more than just limit imports. So what is the plan for selling lots of U.S. manufactured goods abroad?

Second, the part about stopping China from "buying American Real Estate and Industries" is interesting, because Trump himself has suggested he would be happy to have Chinese companies build cars in the U.S. This is an area where I think it would be useful to push Trump and other Republicans on exactly what they think. It seems like there is a split here, and it's not clear where they would end up if they tried to reconcile the different views.

And finally, the platform offers a concern with the trade deficit: "Our Trade deficit in goods has grown to over $1 Trillion Dollars a year." It then states, "Republicans will support baseline Tariffs on Foreign-made goods, pass the Trump Reciprocal Trade Act, and respond to unfair Trading practices," suggesting that the platform's authors think these actions will reduce the trade deficit. But unless there is a plan to address the macroeconomic causes of the trade deficit, I don't see how there will be any significant change in the status quo.

The Passing of Frederick Ikenson

My friend and former colleague Dan Ikenson informs me of the sad news of the passing of his father, Frederick Ikenson, who was a long-time Washington, DC-based trade and customs lawyer. Fred practiced in this field for over five decades, so many of this blog's readers probably got to know him at some point. 

An obituary is here. There will be a service on Wednesday, July 10 at 10 a.m. in Olney, Maryland. Details are at the link.

Multiple Permissible Interpretations under Chevron and AD Agreement Article 17.6(ii)

Here's an excerpt from the majority opinion in the recent Loper Bright U.S. Supreme Court decision that puts an end to Chevron deference, in which the majority says that it does not make sense to talk about "permissible" interpretations because there is always a "single, best" interpretation:

Courts, after all, routinely confront statutory ambiguities in cases having nothing to do with Chevron—cases that do not involve agency interpretations or delegations of authority. Of course, when faced with a statutory ambiguity in such a case, the ambiguity is not a delegation to anybody, and a court is not somehow relieved of its obligation to independently interpret the statute. Courts in that situation do not throw up their hands because “Congress’s instructions have” supposedly “run out,” leaving a statutory “gap.” Post, at 2 (opinion of KAGAN, J.). Courts instead understand that such statutes, no matter how impenetrable, do—in fact, must—have a single, best meaning. That is the whole point of having written statutes; “every statute’s meaning is fixed at the time of enactment.” Wisconsin Central Ltd. v. United States, 585 U. S. 274, 284 (2018) (emphasis deleted). So instead of declaring a particular party’s reading “permissible” in such a case, courts use every tool at their disposal to determine the best reading of the statute and resolve the ambiguity.

In an agency case as in any other, though, even if some judges might (or might not) consider the statute ambiguous, there is a best reading all the same—“the reading the court would have reached” if no agency were involved. Chevron, 467 U. S., at 843, n. 11. It therefore makes no sense to speak of a “permissible” interpretation that is not the one the court, after applying all relevant interpretive tools, concludes is best. In the business of statutory interpretation, if it is not the best, it is not permissible.

In the WTO law context, we are all familiar with the idea of permissible interpretations as set out in AD Agreement Article 17.6(ii):

In examining the matter referred to in paragraph 5:

...

(ii) the panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law. Where the panel finds that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the authorities' measure to be in conformity with the Agreement if it rests upon one of those permissible interpretations.

In Colombia - Frozen Fries, the MPIA arbitrators, when discussing Article 17.6(ii), emphasized the possibility of there being multiple permissible interpretations, rather than having to reach a single "final" or "correct" interpretation in every case:

4.13. Reading these provisions together, we aim to integrate the elements of interpretation under Article 17.6(ii). As a result, we will begin by asking ourselves whether Colombia's proposed interpretation of the phrase "where appropriate" in Article 5.2(iii) – reflected in MINCIT's decision to initiate its investigation, in part, on the basis of third-country sales prices – is a "permissible" one. As a yardstick for "permissibility", the first sentence of Article 17.6(ii) refers us to the customary rules of treaty interpretation. However, we will not engage in our own, de novo interpretation of the terms "where appropriate" so as to arrive at what we consider to be the "final" or "correct" application of Articles 31 and 32 of the Vienna Convention. Instead, we will ask whether a treaty interpreter, using the method for treaty interpretation set out in the Vienna Convention – that is, an interpretation "in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose" and, where appropriate, "supplementary means of interpretation" – could have reached Colombia's interpretation. And this even though we, as de novo treaty interpreters, might have reached a different conclusion.

4.14. Our approach assumes, as the second sentence does, that different treaty interpreters applying the same tools of the Vienna Convention may, in good faith and with solid arguments in support, reach different conclusions on the "correct" interpretation of a treaty provision.43 This may be particularly true for the Anti-Dumping Agreement, which was drafted with the understanding that investigating authorities employ different methodologies and approaches. Treaty interpretation is not an exact science and applying the Vienna Convention's method does not magically and inevitably lead to a single result. In most cases, treaty interpretation involves weighing, balancing, and choice.

4.15. Thus, the ultimate question for us when testing a proposed interpretation is to draw a line beyond which an interpretation is no longer "permissible" under the Vienna Convention method for treaty interpretation. Dictionary meanings support the idea that the search for "permissible" interpretations differs from an attempt to find one's own – "final" and "correct" – interpretation.44 Rather, the question is whether someone else's interpretation is "permitted", "allowable", "acceptable", or "admissible" as an outcome resulting from a proper application of the interpretative process called for under the Vienna Convention. Obviously, not just any interpretation put forward by an authority can be accepted as "permissible". The interpretative process under the Vienna Convention sets out an outer range beyond which meanings cannot be accepted. Just as permissible interpretations cannot be limited to a single "final" and "correct" answer as determined by a given tribunal, not all interpretations have the required degree of solidness or analytical support for them to be given deference as "permissible" within the bounds of the Vienna Convention method for treaty interpretation.

The approach set out by the MPIA above can be distinguished from earlier WTO decisions that seemed wary of a standard that was open to multiple permissible interpretations.

(Jackson and Croley laid out the connection between Chevron and the Article 17.6(ii) standard here).

I'm not sure I understand the reluctance to accept that statutes or treaties may be vague or ambiguous enough that there are multiple permissible interpretations. In some instances, the choice between one interpretation or another is a very close call. If a court is considering multiple interpretations, and one is slightly better than another (say, 55% to 45%, to put concrete figures on this), I'm not convinced that declaring the 55% interpretation to be the "best" one, which therefore must be followed, is always the right approach. At some degree of uncertainty about which interpretation is best, I would have no problem saying, in the circumstance where an agency is crafting an implementing regulation based on its interpretation of the statute, that there are multiple permissible interpretations.

Of course, if you do adopt a "best" interpretation approach, the statute or treaty drafters can step in to correct the interpretation if they don't like how the court came out. But in practice, that's often difficult for practical political reasons, and the court's interpretation is likely to govern. It's worth noting in this context that there are policy implications from these interpretive choices, and we should think about which government actors are best placed to take responsibility for these policy decisions.

I suspect that many people will consider this suggestion to be a bit off the wall, but to deal with the political and policy-making concerns, I would be interested in thinking about a process through which courts could say to the legislators/treaty drafters something to the effect of: "We're not sure what you meant with regard to how this ambiguous provision should be interpreted in the context at hand. Could you please clarify?" I haven't given any deep thought to how this might work in practice, but perhaps something along the lines of this, this, this, or this in the U.S. domestic context.