Trade Cases

Leibowitz on Trade: Ready for Some Pragmatism?

Written by Lewis Leibowitz

Trade attorney and Steel Market Update contributor Lewis Leibowitz offers the following update on events in Washington:

The presidential campaign heats up. The impeachment investigations continue. Polarization is in the air.

Today, I note a trend that’s pertinent to all this—increasingly, pundits and commentators are discussing the futility of our current polarization. I recommend a few opinion writers who made this point in recent articles: David Brooks, of the New York Times, commented on the evils and benefits of tipping (that’s right, tipping!); George Will, of the Washington Post, commented on the futility of trying to defeat the opposition instead of achieving the goals you believe in; Rahm Emanuel, former Mayor of Chicago and White House Chief of Staff for President Obama, on why Medicare for All is a “pipe dream”; and, finally, James Freeman, of the Wall Street Journal, commenting on the damage the tariffs, countertariffs and other sanctions do to China—and the United States.

All these opinion pieces have a common theme: the perfect can be and usually is the enemy of the good. Dreaming big is fine—but the country should be run by people whose goal is progress, not the achievement of their dreams, because those dreams are not always shared by everyone. It’s helpful to apply a pragmatic approach to controversial issues, including those involving international trade. The perfect, in trade as in other things, can be the enemy of the good.

Sometimes, and perhaps more often than we like, we need to work with people we disagree with or even find odious in order to get things done. In James Freeman’s column in the Wall Street Journal, he describes some indirect evidence that the Chinese economy is hurting more from the trade war than the Chinese admit or want us to believe. He also points out the obvious fact that the trade war is hurting U.S. companies and consumers more than the administration has admitted, at least in public. Time is not necessarily on our side in the China conflict.

If China is our highest priority in international trade and foreign policy, perhaps the country needs to put other trade matters, such as steel and aluminum, on the back burner for a while and focus on China. With all the difficulties that China is facing as a result of the trade war with the United States, the tariffs, sanctions on Huawei and editorials decrying China’s treatment of Uighurs and other minorities, they are not enough to remake China’s economy. Our allies, most recently Germany, but by no means only Germany, have decided not to join us in sanctioning China. Private firms are using all available means to get around the ban. With all these machinations, the ban does not hurt Huawei sufficiently to force a fundamental deal between China and the United States. Nor are tariffs against Chinese imports likely to prove sufficient to bring China around on the fundamentals of trade, intellectual property and investment. There need to be new approaches to increase the chances for a favorable deal.

If the United States is serious about securing major changes in China’s trade behavior, it will require the cooperation of other countries. We can achieve that, but it will take some work.

The pressure we can put on China can be increased by treating our friends much better than we are treating them now, and thereby open a larger gap between China and the rest of the world. Many possibilities suggest themselves to make this happen. I have a few suggestions; no doubt others are possible.

One possibility is to exempt our best friends from steel and aluminum tariffs, including the European Union and Japan. WTO reform, engaging with the TPP member countries on issues such as digital trade and intellectual property rights, agricultural trade and other priorities will widen the gap between our test of strength with China and the rest of the world. As the differences between China and more friendly countries increase, China will have all the more reason to deal with U.S. concerns. We don’t want our principal trade battle to be compromised by less important ones.

Trying to give one side everything and the other side nothing is usually a prescription for failure, and China is no exception. In the end, a deal with China will require an agreement where both sides get something. Progress is rarely all or nothing—and the goal should be progress on our goals, not in defeating the other side.

Finally, the good news yesterday prompts me to salute the best soldiers in the world on their spectacular success in Syria. I am truly grateful that they are on our side and have our backs. Hooah!

Lewis Leibowitz

The Law Office of Lewis E. Leibowitz
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Phone: (202) 776-1142
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Lewis Leibowitz, SMU Contributor

Lewis Leibowitz

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