International Economic Law and Policy Blog

Trump the China Trade Deficit Hawk and China Security Dove?

Trade policy came up at last week's presidential debate, with a somewhat traditional discussion of tariffs at the start, and then a shift at the end to security-related issues.

Kamala Harris started it off by referring to Trump's proposed universal baseline tariffs as a sales tax:

... My opponent has a plan that I call the Trump sales tax, which would be a 20% tax on everyday goods that you rely on to get through the month. Economists have said that Trump's sales tax would actually result for middle-class families in about $4,000 more a year because of his policies and his ideas about what should be the backs of middle-class people paying for tax cuts for billionaires.

She has been consistent in criticizing his tariffs, going all the way back to when she was running for president in 2019.

Trump then responded as follows:

First of all, I have no sales tax. That's an incorrect statement. She knows that. We're doing tariffs on other countries. Other countries are going to finally, after 75 years, pay us back for all that we've done for the world. And the tariff will be substantial in some cases. I took in billions and billions of dollars, as you know, from China. In fact, they never took the tariff off because it was so much money, they can't. It would totally destroy everything that they've set out to do. They've taken in billions of dollars from China and other places. They've left the tariffs on. When I had it, I had tariffs and yet I had no inflation. 

(Let me interject a couple points here: 1) Trump continues to misrepresent who pays tariffs; 2) I would like to hear what Harris has to say about keeping some of Trump's tariffs in place; and (3) saying there was "no inflation" is a distraction from that fact that prices rose for the goods on which the tariffs were imposed.)

Moderator David Muir then asked this follow-up:

Mr. President, I do want to drill down on something you both brought up. The vice president brought up your tariffs, you responded, and let's drill down on this because your plan is what she calls ... essentially a national sales tax. Your proposal calls for tariffs as you pointed out here, on foreign imports across the board. You recently said that you might double your plan, imposing tariffs up to 20% on goods coming into this country. As you know many economists say that with tariffs at that level costs are then passed onto the consumer. Vice President Harris has argued it'll mean higher prices on gas, food, clothing medication arguing it costs the typical family nearly four thousand dollars a year. Do you believe Americans can afford higher prices because of tariffs?

Trump responded with more of the same:

They aren't gonna have higher prices, what's gonna have and who's gonna have higher prices is China and all of the countries that have been ripping us off for years. ... I was the only president ever, China was paying us hundreds of billions of dollars and so were other countries and you know if she doesn't like 'em they should have gone out and they should have immediately cut the tariffs but those tariffs are there three and a half years now under their administration. We are gonna take in billions of dollars, hundreds of billions of dollars. I had no inflation, virtually no inflation, they had the highest inflation, perhaps in the history of our country because I've never seen a worse period of time. ...

Muir then asked Harris the question I had in mind about Biden keeping some of the tariffs: 

Vice President Harris, I do want to ask for your response and you heard what the president said there because the Biden administration did keep a number of the Trump tariffs in place, so how do you respond?

In response, Harris criticized Trump's tariffs in general terms, and then, interestingly, turned this into more of a China security issue:

Well, let's be clear that the Trump administration resulted in a trade deficit, one of the highest we've ever seen in the history of America. He invited trade wars, you wanna talk about his deal with China, what he ended up doing is under Donald Trump's presidency he ended up selling American chips to China to help them improve and modernize their military, basically sold us out when a policy about China should be in making sure the United States of America wins the competition for the 21st century. Which means focusing on the details of what that requires, focusing on relationships with our allies, focusing on investing in American based technology so that we win the race on A.I. and quantum computing, focusing on what we need to do to support America's workforce, so that we don't end up having the, on the short end of the stick in terms of workers' rights. ...

Trying to figure out what Trump thinks can be a challenge, but it seems to me that his big concern on trade is the trade deficit, and the fix he wants to use is tariffs. (He misunderstands both of these issues, but let's put that aside). By contrast, he does not appear to be particularly concerned about the security issues related to China that most Republicans and many Democrats in Washington are worked up about these days. For example, Trump has said several times that if Chinese companies want to sell autos in the U.S., they should produce them here. But I'm not sure many other national Republican politicians would want to let such investments happen. And while a lot of people in Washington are focused on winning the technology race with China, Trump seems to envision the economic contest as one over older industries such as steel and traditional autos, rather than advanced tech. I don't think I've ever heard him talk about the Chinese accessing Americans' data, which many other people in Washington worry about and which is why there are concerns with Americans driving Chinese autos full of software that can gather data.

More broadly, I'm not sure Trump thinks of China as much of a security threat. The main threat that he sees -- from China, the EU, and others -- is a trade threat. He thinks their trade policies and our trade policies, working together, have cost American jobs. His analysis is all wrong here, but that seems to be what he thinks.

Having said all that, I wouldn't say this means a Trump administration would not have a security focus. In all likelihood, Trump will hire a lot of people who share the security concerns that most Washington policymakers have.

Tariff History Emerges as a Key Issue in the U.S. Presidential Contest (Just Kidding!)

As the culture wars have dominated the political debate in recent years, it feels as though the quality of the economic policy discussion has suffered. Some of the economic topics that keep coming up are of little interest to most voters, and are being talked about in a way that is disconnected from reality. Here's an illustration from a recent speech by former president Trump, in which he makes reference to some events in U.S. tariff and economic history:

Under my leadership, America will encourage domestic production instead of punishing it. As you know, our country's vast manufacturing wealth was created at a time with very little domestic taxation, few regulations, and most revenue came from tariffs from other countries. That was when we were at the wealthiest ever. Proportionately, we were the wealthiest country ever during those days. That was before income tax came along. Now we foolishly do the opposite. We impose lower tariffs and no tariffs on foreign producers. We have the lowest tariffs of any nation in the world, and we relentlessly punish our own companies for doing business in America. You do business in America, you're punished tremendously. I had many, many companies come to me, sir, I can't compete. They're sending kitchen cabinets, washers and dryers, everything ... motorcycles, they're sending them here, sir, we can't compete. And I made it so they could compete and thrive. Every one of those people, we should get them up and talk to you one day, because every one of those people comes up to me, and every time I see them, they hug me, they kiss me, they love me, because I saved their businesses.

I intend to reverse this model and once again turn America into the manufacturing superpower of the world. We can do that just with being intelligent. The key to this effort will be a pro-American trade policy that uses tariffs to encourage production here and bring trillions and trillions of dollars back home. ... My plan is that if you open your factory in Wisconsin, Pennsylvania, Michigan, Minnesota, anywhere else in our country, you don't pay a tariff tax, you don't pay a tax. You make the product here. But if you move your production outside of the United States and send it back here, which people are doing now, and I stopped it, stopped it cold. But they've changed that already. Then you'll have to pay a very substantial tariff to get your product back into the country. The result will be that everybody in the world will want to be here, and they'll want to produce here. They're going to want to produce their product in America. It's going to say made in the USA. We will be able to build ships again. We will be able to build planes again. We will be able to build our military again from within, all from within. We will create the biggest, greatest and strongest middle class in the history of our country. We will have 10s of millions of high paying jobs in manufacturing, transportation, defense, as well as all of the sales and support of export jobs. Our auto industry will be the biggest beneficiary.

In short, it will be a national economic renaissance just by using our heads, by being smart, by not letting other countries take advantage of us. They've been doing it for so long. It's so sad to see, and I know them all, and they laugh at us behind our back. They can't believe how stupid our leadership has been for so many years.

We will ensure that the United States has a giant steel industry, and aluminum industry, a manufacturing base and a defense base. We want a industrial base that can take care of our defense needs 100%.

And you can call it what you want. Some might say it's economic nationalism. I call it common sense. I call it America first. This is the policy that built this country, and this is the policy that will save our country. In the words of a great but highly underrated president, William McKinley, highly underrated, the protective tariff policy of the Republicans has ... made the lives of our countrymen sweeter and brighter. It's the best for our citizenship and our civilization, and it opens up a higher and better destiny for our people. We have to take care of our own nation and her industries first, in other words, take care of our country first. This is when we had our greatest wealth. He was assassinated, and he left his group of people that followed him. Teddy Roosevelt became a great president spending the money that was made by McKinley. So McKinley got a bad deal on that one. He built tremendous wealth.

They had the Tariff Act of 1887, and they had a committee that studied, what are we going to do? They had a big problem, a problem like I hope to have with this country someday, so much money was coming in from foreign countries that they didn't know how to spend it. They had no idea. So they set up a committee. We'll set one up with the people in this room. How do we distribute the wealth that we have? And Roosevelt built dams and built railroads and did national parks, but he did it with the money that was made with tariffs from McKinley. So you have to remember that very highly underrated, a very underrated president, let's give them both credit. Smart tariffs will not create inflation. They will combat inflation. I had almost no inflation, and I had the highest tariffs that anyone seen. They were going a lot higher. Foreign nations will pay us hundreds of billions of dollars, reducing the deficit and driving inflation down to largely reduce our deficit. In my first term, we imposed historic tariffs with no effect on consumer prices or inflation.

The anti-tariff people, many of them, I believe, honestly, work for these other countries in some form, get tremendous amounts of lobbying money and other money, because it doesn't make sense what they're saying.

As you might expect, I have some reactions. It's hard to know where to start with this, but maybe let's go with McKinley's tariffs, which Trump has been talking about for many years. One thing to note here is that the McKinley Tariff took effect in October of 1890 while McKinley was in Congress, whereas during McKinley's presidency the big tariff increase was implemented through the Dingley Act in 1897. It's not clear whether Trump realizes this. Anyway,  some people have studied these issues in great depth. In Clashing over Commerce, Doug Irwin points out that Teddy Roosevelt, who Trump mentions, was not happy about the impact the McKinley Tariff had on the tariff-supporting Republican party in the 1890 midterm elections, saying: "The overwhelming nature of the disaster is due entirely to the McKinley bill." (Irwin also notes that "[t]he perception that high tariffs protected monopolistic big businesses and trusts also contributed to the unpopularity of the McKinley Act.")

With regard to Trump's references to the relative wealth of the U.S. during that period, for anyone who has this sort of nostalgia, there are some things you may want to consider because they complicate the more simplistic hot takes. For those on the right who are anti-immigration as well as being protectionist, keep in mind that this was a period of very open immigration, which helped drive economic growth. And for anyone who likes Social Security and Medicare, note that those programs didn't exist at the time, which is why the relatively low amount of revenue brought in by tariffs could fund the much smaller level of government spending from this period. If Trump wants the tax system to rely on tariffs for revenue rather than on income taxes, that would almost certainly mean the end of those programs.

Turning to the impact of Trump's first term tariffs on U.S. prices, Trump says they had no impact, but numerous economic studies show otherwise. (And obviously "foreign nations" don't pay tariffs, but rather importers do.)

As to whether the U.S. has the "lowest tariffs in the world," the WTO tracks this data. I would first note that New Zealand, Australia and a few others actually have lower MFN applied average tariffs. In addition, it's worth noting here that trade remedy tariffs don't get tracked as part of this calculation, and with the U.S. being such an active user, I'm not sure the U.S. tariffs would look as low in relative terms if trade remedy tariffs were included, although I haven't seen a calculation that takes this into account (it would be great if someone did one!)

On the issue of the role of lobbyists in trade policy, just about all policies have lobbyists on both sides, but I don't think there is much doubt that it is lobbyists (corporate and union) that are the driving force pushing for tariffs. It's nice for them that Trump believes in their cause, and may save them some lobbying money, but it's pretty clear that lobbying is and has always been the main source of support for tariffs.

And finally, there's the matter of retaliation by other countries, which happened before with Trump's tariffs and will happen again. Trump seems to think the U.S. could start exporting more manufactured goods such as autos (which does not seem particularly likely at the moment), but regardless of whether the U.S. production and export mix shifts away from agriculture, natural resources, and services and towards manufacturing, U.S. trading partners will have plenty of possible targets for retaliation.

There was also this:

China was built on doing exactly what we're going to be doing, and what I started doing four years ago.  What we're putting forward is the most pro-American manufacturing and jobs policy in modern history for any country. This plan will bring jobs and growth into our country at levels never seen before. Every business on earth will flock to America, from Europe, Asia, the Middle East and all over the world. By contrast, comrade Kamala Harris wants to sacrifice our wealth, kill the economy and drive jobs overseas to punish businesses, more businesses will leave.

So on the one hand, Trump admires what he thinks are the tariff policies of the Chinese Communist Party and wants to emulate them (although in reality, China actually reduced its tariffs considerably as part of its accession to the WTO), but on the other hand he is suggesting that "comrade Kamala" is a communist. That's a hard one to get my head around.

Why the US Should Respond Honestly to China's WTO Complaint

Why the US Should Respond Honestly to China's WTO Complaint

Comments by Steve Charnovitz

Federal Register m0n-2px7-nq3f

3 September 2024

China has properly lodged a lawsuit (DS623) against the United States (US) at the World Trade Organization (WTO) regarding the domestic content conditions of US subsidies granted in 2022 in US Public Law 117-169.  Such unfair, discriminatory regulations are a blatant violation of the law of the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement).  SCM Article 3.1(b) prohibits "subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods."  During the Biden-Harris Administration, the US has increased its reliance on nonmarket economic nationalism to the detriment of the US economy and the broader interests of all WTO Members.

Environmental instruments need not be, and should not be, protectionist.  In 1992, Rio Declaration reiterated the norm that governments should use economic instruments "without distorting international trade and investment" (Principle 16).  For the climate regime, the United Nations Framework Convention on Climate Change (UNFCCC) articulated the climate law principle that "Measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade" (Article 3.5). Thus, the discriminatory US measures detailed in China's complaint are anathema to both world trade law and global climate law. 

Although subsidies can be appropriate policies to lessen climate change, subsidies are much less likely to reduce emissions than first-based policies of carbon taxes.  Unilateral subsidies are also inferior policies because climate change is a global problem that necessitates multilateral solutions. Without effective transborder environmental solutions, trade disputes can ensue.

The US overcapacity in dollars allows the US to engage in excessive subsidization. Most other countries with their budget constraints cannot afford to bestow subsidies on the same scale that the US does.  Yet because the effectiveness of any US climate measure depends on the measures being taken by the rest of the world, the US overreliance on subsidization sets a bad example for other countries, particularly developing countries.  This dysfunction could be corrected in part by more generous US government funding of climate investments in developing countries, but those US programs are pathetically small. 

Whatever unilateral US climate subsidies could accomplish will be further diminished when US subsidies are conditioned on import substitution policies.  Such a beggar-thy-neighbor scheme raises the costs of clean energy domestically while making it more difficult for many other countries to grow their clean energy input sectors through exports.  Supply chain resiliency — even for the largest economies — is more likely achievable through economic integration than through dogmas of autarky. 

Although the Office of the US Trade Representative (USTR) has falsely claimed that China's lawsuit "seeks to undermine US efforts to address the global climate crisis...", the truth is that the protectionist US efforts in dispute make it harder for the US and other countries to address the global climate crisis.  China seeks to challenge the lack of cooperation by the US to use nondiscriminatory measures in addressing the worsening global climate crisis. China is right to seek to hold the US accountable to respect both international trade law and international climate law.  China recognizes that the effectiveness of US climate efforts (and indeed the efforts of all countries) is impeded by unjustified US trade discrimination.  While WTO law does not prohibit a government from lavishing financial benefits on politically favored beneficiaries, WTO law does prohibit granting subsidies in a manner that externalizes costs on other countries. 

In lodging this WTO case against the US, China seeks to encourage US policymakers to respect the rule-based international order.  China (but not the US) appears to understand that governments need not violate international trade law to achieve multilateral environmental objectives.   Thus, China's cause of action against the US functions as a public good in the international legal system. China's bold lawsuit should be applauded by everyone who supports the transnational rule of law

With China's overdue litigation against the US now going forward, the Biden-Harris Administration should stop undermining the WTO judicial system by blocking the appointment of WTO appellators.  If the US is unwilling to stop despoiling the Appellate Body —even though the lack of effective judicial review continues to imbalance the WTO — USTR should pledge to the WTO Dispute Settlement Body that the US will (join China to) support immediate adoption of the panel report.  During its time in office, the Biden-Harris Administration has shown bad faith in appealing four (!) WTO cases that the US has properly lost knowing full well that the appeal cannot be heard because of the US sabotage of the WTO appellate tribunal (see DS 539, 544, 552, 556, 562, 564, 597).

Because China's SCM Art. 3.1 claim against the US is correct in WTO law, the US should not engage in facetious (and time-wasting) defenses as USTR frequently does.  Since the SCM Agreement does not contain an environmental exception, USTR should not assert an environmental defense which, in any event, would be unjustified because the UNFCCC makes clear that discriminatory trade measures must not be used.  Since the SCM Agreement does not contain a national security exception, the US should not assert a national security defense as the US did unsuccessfully in the Steel and Aluminum Products case.  (That bogus US claim was rightly dismissed by the WTO panel.)  Since the SCM Agreement does not provide for reverse SCM Article 29 defenses, the US should not assert that it needs to discriminate against China because the US is in the process of transformation from a market, free enterprise economy into a centrally planned economy. 

Because China is acting responsibly to uphold the multilateral trading system and to challenge US illegality in a peaceful way, the US should cooperate by facilitating the rapid response mechanism envisioned in the DSU for the adjudication of trade complaints.  Let the panel do its job to call out the US for engaging in a cadence of protectionism that flagrantly violates WTO law.  

If the US stopped treating China unfairly in trade — including for example, cancelling the WTO-illegal US Sections 301 and 232 tariffs — China might become more willing to act cooperatively to address the most pressing global problems. 

Guest Post: A Tribute to Frieder Roessler from Ernst-Ulrich Petersmann

This is a guest post by Ernst-Ulrich Petersmann, emeritus Professor at the European University Institute, Florence (Italy), and legal consultant at the World Trade Organization (Geneva); former professor of European law at Geneva University, and of international economic law at Geneva’s Graduate Institute of International Studies

Frieder Rössler (1939-2024): International civil servant, academic teacher, and Socratic explorer

Frieder and I met in 1981 in the GATT Secretariat following my appointment as first ‘assistant legal officer’ ever employed by the GATT Secretariat, and Frieder’s return to his GATT office (as Secretary of GATT’s Balance-of-Payments-Committee) from an academic leave at Washington University. We realized commonalities in our careers: both of us had studied law and economics at Freiburg University and at Geneva’s Graduate Institute of International Studies; we admired the ‘Austrian school of economics’ (like G.Haberler, F.A.Hayek) and ‘constitutional economics’ (like J.Buchanan, J.Tumlir); we had both published on international monetary, trade and economic development law using our professional experiences in international organizations like the World Bank. As both of us were sailors (notwithstanding my lack of ambition to emulate Frieder’s repeated crossings of the Atlantic and the Mediterranean Seas in his own yacht together with his family) and enjoyed our GATT offices overlooking Lake Geneva, we started a tradition (lasting more than four decades) of joint ‘philosopher walks’ along the Lake of Geneva discussing our shared belief in the need for transforming the ‘anti-legal pragmatism’ cultivated among GATT diplomats into a rules-based multilateral trading, legal and dispute settlement system. Yet, our two worldviews often differed, which transformed our regular discussions into mutual learning processes: both of us admired Hayek’s theory of knowledge (e.g. using markets and competition as decentralized information, coordination, sanctioning and ‘cybernetic steering mechanisms’) and Hayek’s arguments for ‘evolutionary constitutionalism’ (e.g. in his books on The Constitution of Liberty and his three volumes on Law, Legislation and Liberty); but Frieder had been less engaged than myself in the successful ‘construction’ of European integration law and of its ‘ordoliberal foundations’ justifying systemic legal limitations of ‘market failures’ (e.,g. through competition, environmental and social rules and institutions), ‘governance failures’ (e.g. to protect human rights, democratic input-legitimacy and republican output-legitimacy of multilevel governance of public goods), and ‘constitutional failures’ (e.g. justifying Europe’s multilevel democratic, republican and cosmopolitan constitutionalism protecting transnational public goods like Europe’s common market, ‘social market economy’ and ‘democratic peace’).

Frieder as an international civil servant

Frieder belonged to the post-1945 generation of young Germans traumatized by two World Wars and committed to public service protecting human rights, constitutional democracy and transnational rule-of-law among ‘open societies’. As his professional work inside the World Bank at Washington had not satisfied these ambitions, he returned to Geneva’s Graduate Institute of International Studies and accepted an offer by Professor O.Long to work inside the GATT Secretariat. Like the first GATT Director-General W.White, the second GATT Director-General Long had been a lawyer emphasizing the ‘limits of GATT law’ and the need for ‘pragmatic dispute settlements’ in view of the only ‘provisional application’ of the General Agreement on Tariffs and Trade (GATT 1947). After the US Congress had refused ratifying the 1948 Havana Charter for an International Trade Organization (including GATT 1947), the 1947 Protocol on the Provisional Application of GATT 1947 continued to include ‘grandfather clauses’ exempting legally binding ‘existing legislation’ from the GATT disciplines, thus creating only a legally weak framework for reciprocal trade liberalization and politicized ‘trade diplomacy’ subject to GATT-inconsistent trade legislation and power politics (like ‘voluntary export restraints’ for cotton, textiles, agricultural and steel products). When the parliamentary ratification and entry into force of the 1979 Tokyo Round Agreements transformed this ‘soft law’ into a ‘hard law’ trade regime with increasing criticism of its ‘pragmatic diplomat’s jurisprudence’ and legally inconsistent GATT dispute settlement findings, the third GATT Director-General A.Dunkel succeeded in persuading the major trading countries to consent to the establishment of a GATT Office of Legal Affairs in 1983. An experienced GATT diplomat (A.Lindén) was nominated director, and Frieder and myself offered legal advice as legal counsellors in GATT dispute settlement panels (e.g. in the drafting of their legal findings) and, since 1987, in the Uruguay Round Negotiating Groups mandated to elaborate the new WTO agreements, the WTO Dispute Settlement Understanding, and the transition from the old GATT to the new WTO legal system. As the first Director of the new GATT Legal Division established in 1989 as well as of the new WTO Legal Division since 1995, Frieder was rightly credited as one of the intellectual founding fathers of the successful GATT and WTO dispute settlement systems and related jurisprudence of GATT and WTO dispute settlement panels.

Cooperating with Frieder inside GATT’s Legal Office and Legal Division remained an intellectual adventure based on mutual trust, frank criticism and decentralized, independent work of the small group of GATT lawyers assisting GATT dispute settlement panels, other GATT institutions and negotiating groups. The dozens of GATT and WTO agreements include numerous rules with indeterminate terms and principles (like GATT Article XXIII:1 differentiating between ‘violation complaints’, ‘non-violation complaints’ and ‘situation complaints’ with diverse state responsibilities and dispute settlement procedures). Interpreting and clarifying indeterminate trade rules and the more than 60’000 pages of WTO law coherently required good knowledge of general international law (like the customary rules of treaty interpretation and state responsibility), which most GATT/WTO diplomats lacked. The political pressures leading to the establishment of a new ‘Rules Division’ in 1991 (notably for administering anti-dumping, subsidy and countervailing duty rules and disputes) curtailed the jurisdiction – and politicization - of the GATT Legal Division; the establishment of the WTO Appellate Body in 1995 and its ‘appellate jurisprudence’ changed the dynamics of the WTO dispute settlement system and promoted its progressive ‘judicialization’. Frieder’s independent and self-assured leadership and cooperation with both the Rules Division and the Appellate Body ensured mutual synergies promoting the transformation of the GATT/WTO dispute settlement system into the world’s most frequently used, worldwide dispute settlement system. When Frieder retired from the WTO and accepted to serve as Executive Director of the Advisory Center on WTO Law at Geneva (2001-2015), he enjoyed serving the WTO legal and dispute settlement system from a different perspective enabling Frieder to devote also more time to teaching WTO law and policies to trade diplomats from all over the world.

Frieder as an academic teacher and professor of law

Frieder regularly combined his practical work as international legal advisor with academic teaching of students, for instance as visiting professor at the University of Lyon and during repeated ‘academic leaves’ at George Washington University and Georgetown Law School in Washington. As director of the GATT and WTO legal divisions, he cultivated close contacts with all academic researchers in the field of international trade law and policies, notably with his friends Professors Robert Hudec and John Jackson from the USA. During his work in the World Bank, as secretary of GATT’s Balance-of-Payments Committee, and as director of the GATT and WTO Legal Services, Frieder published a large number of articles and book contributions criticizing problematic legal practices and ideologies (e.g. for a ‘New International Economic Order’). His close cooperation with GATT Director-General Arthur Dunkel and with the successive directors of GATT’s Economic Research Division (like J.Tumlir, R.Blackhurst) prompted Frieder to emphasize the ‘Constitutional Functions of International Economic Law’ for improving domestic policy-making, as illustrated by the legal ranking of ‘optimal policy instruments’ in some GATT/WTO agreements, or by the ‘domestic policy functions’ of international legal guarantees of equal freedoms, non-discriminatory conditions of competition, transnational rule-of-law and national sovereignty for promoting transparent policy-making, non-discrimination, legal accountability, welfare-enhancing policies and rule-of-law protecting general consumer welfare.[1] During his studies of law at Freiburg University, Frieder had not attended the economics lectures of Professor F.A.Hayek; he never perceived himself as a disciple of the ordoliberal Freiburg school of law and economics. His views on the need for protecting democratic input-legitimacy and republican output-legitimacy in trade policies (e.g. by judicial protection of rule-of-law in conformity with the WTO agreements ratified by parliaments) were rather informed by insights from ‘constitutional economics’ and ‘public choice’ explanations of the risks of welfare-reducing interest group politics redistributing domestic income through discriminatory import restrictions undermining democratically ratified trade agreements.[2]

In his recent book on Vienna – How the City of Ideas Created the Modern World (2024), the historian R.Cockett acknowledged the historical contribution of Frieder to the transformation of the ideas of G.Haberler and F.A.Hayek for a liberal trading system into GATT/WTO law. Contrary to Q.Slobodian’s description of Frieder (in his 2018 book on Globalists – The End of Empire and the Birth of Neoliberalism), Frieder was never a ‘neoliberal advocate’ for a self-regulatory market order but shared the ordoliberal belief in the need for legally limiting the ubiquity of market failures, governance failures and constitutional failures so as to better protect citizens and their human rights. Many international trade lawyers and trade diplomats openly acknowledge their intellectual debt to Frieder’s deep insights into the economic, political and legal logic underlying world trade law. As the WTO’s Centre William Rappard and Geneva’s Graduate Institute of International Studies are located only a few hundred meters apart, Swiss trade diplomats (like W.Rappard, O.Long, A.Dunkel, F.Blankart) and GATT/WTO officials (like Frieder) promoted a vibrant ‘Geneva school of ordoliberalism’. The history of this close intellectual cooperation in creating the post-war world trading system remains to be written. After Frieder’s death, finding an informed author will become more difficult.[3]

Frieder as a ‘Socratic explorer’

Most people having discussed with Frieder recall his Socratic method of explaining problems by asking pertinent questions and demonstrating why the arguments of his interlocutors may not be fully convincing. Similarly, when Frieder was informed of his illness, he practiced Socrates’ Stoic approach by accepting what he could not change; and by detaching from other life projects (like his hope to follow the example of his father who died at the biblical age of 99). As a sailor, Frieder loved his personal freedom to cross the Mediterranean Seas with his family on his sailing boat. The family went ashore also on the island of Ithaca, the home of the legendary Greek king Odysseus; Frieder’s eldest daughter Tina called her son ‘Ulysse’, and Frieder undertook his last sailing trip together with Tina laying to rest some of their earlier family disputes. Homer’s epic poem ‘The Odyssey’ – describing the conflict between Odysseus’ desire to return to a happy family life and the forces impeding him to realize this goal during many years – symbolizes also Frieder’s heartbreak following his divorces from his first and second spouses; marrying Kristina Schellinski enabled Frieder to enjoy a happy family life during his last two and a half decades in their wonderful home at Perroy. In April 2024, in the vineyard in front of their home, Frieder and I continued our last discussions on a little wooden bench. Breathing the fresh wind, overlooking the Alps and the Lake of Geneva, and ‘reconnecting’ with this uniquely beautiful landscape reflecting all building elements of life helped us understand the Latin term ‘re-ligio’ underlying the word religion. Frieder felt privileged by the beauty and harmony surrounding his family home at Perroy, and by his decades of exploring and promoting sustainable development in the near-by Centre William Rappard. He was an intellectually inspiring friend and engaged advocate for international rule-of-law and more social justice, albeit fully aware of our human weaknesses and disagreements in constructing a liberal rules-based international order. Frieder’s kindness, intellectual curiosity and courage to defend his views for making this world a better place will be missed by all of us. My last personal advice to Frieder was to listen to, and reflect on, the wise ‘Anthem’ sung by Leonard Cohen a few years before his death: 

            ‘The birds they sang at the break of day. Start again I heard them say. Don't dwell on what has passed away or what is yet to be. Ah, the wars they will be fought again. The holy dove, she will be caught again. Bought and sold and bought again. The dove is never free. Ring the bells that still can ring. Forget your perfect offering. There is a crack, a crack in everything. That's how the light gets in.’

Frieder had the courage to ring many bells; he enjoyed seeing the light entering through the many cracks in our imperfect human lives.

[1] Cf Frieder’s seminal contribution on The Constitutional Function of the Multilateral Trade Order to: M.Hilf/ E.U.Petersmann (eds), National Constitutions and International Economic Law (1993), 53-62 (based on a joint publication by A.Dunkel and F.Rössler in French language and citing publications by GATT’s former chief economist J.Tumlir explaining the economic theory of ‘optimal intervention’ justifying the legal ranking of policy instruments in GATT law). As market failures and governance failures can be corrected most effectively by non-discriminatory domestic regulation, GATT and WTO legal restraints on non-transparent, discriminatory trade policy instruments tend to strengthen democratic constitutionalism rather than to circumvent democracy; nor does GATT law impose laissez faire policies and free trade, or prevent social policies redistributing income. As GATT rules regulate primarily conflicts of interests within - not among – nations, their ‘constitutional functions’ can be rendered more effective by making precise and unconditional GATT rules legally and judicially enforceable inside domestic legal systems.

[2] Rössler’s conception of GATT/WTO law was strongly influenced by GATT’s chief economist J.Tumlir, who explained the need for protecting non-discriminatory trade and market competition through democratic constitutionalism and multilateral trade and economic integration rules limiting market failures, governance failures and constitutional failures. For a summary of Tumlir’s work on ‘economic policy as a multilevel constitutional problem’ see the contributions by H.Hauser and E.U.Petersmann to: ORDO Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft 39 (1988), 219-255 (in German with English summaries).

[3] On the ‘Geneva school of ordoliberalism’ promoting an interdisciplinary ‘Geneva consensus’ for political, legal and economic cooperation among the UN and GATT/WTO institutions at Geneva see E.U.Petersmann,  Transforming World Trade and Investment Law for Sustainable Development (2022, chapters 4-5); P.Lamy, The Geneva Consensus. Making Trade Work for All (2013). William Rappard’s initiatives for founding Geneva’s Graduate Institute of International Studies (IHEI, 1927), for inviting Austrian economists and lawyers (like von Mises, Haberler, Hayek, Kelsen), German ordoliberals (like Röpke), British liberals (like Gerard and Victoria Curzon) and other members of the Mount Pèlerin Society to teach at the IHEI on the need for promoting liberal international trade, human rights and labor laws and policies (e.g. as explained in Rappard’s book on The Future of Peace according to Cordell Hull, 1944) were continued since the 1960s by the Swiss GATT Directors-General O.Long and A.Dunkel, and by other Swiss politicians (like F.Blankart) and lawyers (like T.Cottier), for instance by promoting the teaching of GATT economists (like J.Tumlir, R.Blackhurst) and GATT lawyers (like E.U.Petersmann) at the IHEI. The ‘Geneva ordoliberals’ cooperated closely with other Swiss institutions like the University of Geneva, the World Trade Institute at the University of Bern, and the Institute for International Economic Relations at the University of St. Gallen.

Call for Papers: Geoeconomics, Trade and Investment: What role for Latin American countries?

This is from the Latin American Network of International Economic Law:

Third Edition of the Global Jurist Award

Call for Papers (CfP) - Deadline extension

Geoeconomics, Trade and Investment: What role for Latin American countries?

The Law Faculties of Universidad Externado (Colombia) and the Federal University of São Paulo, along with the Latin American Network of International Economic Law (Red LATDEI), with the support of the World Trade Institute at the University of Bern, are pleased to present the 3rd Edition of the Global Jurist Award under the title Geoeconomics, Trade, and Investment: What Role for Latin American Countries?

...

The 3rd edition of the Global Jurist Award seeks to receive papers contributing to developing International Economic Law (IEL) and exploring its response to current world dynamics. With a temporal perspective spanning a decade, the award aims to acknowledge authors providing precise assessments of the current institutional status of IEL and offering compelling proposals on the role of Latin American countries in this new geopolitical landscape.

The deadline for submissions is September 6. More details here: https://redlatdei.blogspot.com/2024/04/third-edition-of-global-jurist-award.html 

Call for Submissions: Trade, Law and Development

The journal Trade, Law and Development has issued a call for submissions for its Winter 2024 issue (Vol. 16, no. 1). The theme is: "Navigating the Murky Waters of Economic Treaties in International Trade."

The deadline is October 1, 2024.