Monday Asia Events December 5, 2021

2021 GLOBAL FORUM ON COMPETITION. 12/6, 6:00-10:00am (EST), Noon-4:00pm (CET), WEBINAR. Sponsor: Organisation for Economic Co-operation and Development (OECD). Speakers Include: Kristalina Georgieva, Managing Director, IMF; Mathias Cormann, Secretary-General, OECD; Frédéric Jenny, Chair, OECD Competition Committee; Ngozi Okonjo-Iweala, Director General, WTO; Rebeca Grynspan, Secretary-General, UNCTAD; Joseph E. Stiglitz, Professor, Columbia University.  

JOINING DEMOCRACY AND PEACE: HARNESSING THE INEXTRICABLE LINK BETWEEN THE DEMOCRATIC PROCESS AND PEACEBUILDING. 12/6, 9:30-11:00am (EST), WEBINAR. Sponsor: U.S. Institute of Peace Institute (USIP). Speakers: Uzra Zeya, Under Secretary of State for Civilian Security, Democracy, and Human Rights, U.S.; Farhad Alaaldin, Chair, Iraq Advisory Council, Iraq; Maria Jimena Duzan, Host, “A Fondo” Podcast, Colombia; Glenda Gloria, Executive Editor, Rappler, Philippines; Idayat Hassan, Director, Centre for Democracy and Development, Nigeria; Oleksandra Matviychuk, Chair, Center for Civil Liberties, Ukraine; Moderator: Lise Grande, President and CEO, USIP. 

ADVOCATES FOR DEMOCRACY IN CLOSED SPACES. 12/6, 10:00-11:30am (EST), ZOOM WEBINAR. Sponsor: CSIS. Speakers Include: Sen. Chris Coons (D-DE), Chairman, Senate Appropriations Subcommittee on State and Foreign Operations; Rep. Michael McCaul (R-TX), Ranking Member, House Foreign Affairs Committee; Amb. Isobel Coleman, Deputy Administrator for Policy and Programming, USAID; Anna Dobrovolskaya, Executive Director, Memorial Human Rights Center; Glacier Kwong, Political and Digital Rights Activist, Hong Kong; Sopheap Chak, Executive Director, Cambodian Center for Human Rights; Luciano Garcia, President, Hagamos Democracia.   

STEPHEN HABER ON THE BATTLE OVER PATENTS: HISTORY AND POLITICS OF INNOVATION. 12/6, 10:00-11:00am (PST), WEBINAR. Sponsor: Hoover. Speakers: Stephen Haber, Author, Senior Fellow, Hoover; Alexander Galetovic, Research Fellow, Hoover; Gerardo Con Diaz, Former William C. Bark National Fellow, Hoover. PURCHASE BOOK: https://amzn.to/3E8AtfR

FORTIFYING THE FUTURE: BUILDING RESILIENCE IN THE AGE OF DISINFORMATION SESSION 2. 12/6, 10:00-11:00am (EST), ZOOM WEBINAR. Sponsor: National Committee on American Foreign Policy. Speakers: Benjamin Haddad, Senior Director, Europe Center, Atlantic Council; Dominika Hajdu, Policy Director, Centre for Democracy and Reslience, GLOBSEC Policy Institute; Jakub Janda, Director, European Values Center for Security Policy; James Pamment, Associate Professor, Lund University; Moderator: Nicholas Thompson, CEO, The Atlantic. 

REBOOTING THE EU-U.S. DEFENSE RELATIONSHIP. 12/6, 11:00am-Noon (EST), ZOOM WEBINAR. Sponsor: American Institute for Contemporary German Studies (AICGS), Johns Hopkins. Speaker: Sophia Besch, Research Fellow, AICGS, Johns Hopkins. 

VICIOUS CYCLE OF ELECTORAL VOLATILITY IN KYRGYZSTAN. 12/6, 11:00am-Noon (EST), LIVESTREAM. Sponsor: Carnegie. Speakers: Dr. Aijan Sharshenova, Postdoctoral Research Fellow, OSCE Academy; Bruce Pannier, Senior Correspondent for Central Asia, Radio Free Europe/Radio Liberty; Amb. Kadyr Toktogulov, former Kyrgyzstan Ambassador to the U.S.; Paul Stronski, Senior Fellow, Russia and Eurasia Program, Carnegie. 

PROGRESS AT THE WORLD TRADE ORGANIZATION AND US TRADE POLICY IN THE BIDEN ADMINISTRATION. 12/6, 11:00am-12:30pm (EST), WEBINAR. Sponsor: American Enterprise Institute (AEI). Speakers Include: Angela Ellard, Deputy Director-General, World Trade Organization; Joshua P. Meltzer, Senior Fellow, Brookings; Jennifer A. Hillman, Professor, GU; Moderators: Neena Shenai, Nonresident Fellow, AEI.

2021 HILLARY RODHAM CLINTON AWARDS: WOMEN'S RIGHTS ARE HUMAN RIGHTS. 12/6, 11:00am-Noon, Washington, DC. Sponsor: Georgetown Institute for Women, Peace and Security. Speakers: H.E. Hillary Rodham Clinton, 67th Secretary of State, U.S.; H.E. Madeleine K. Albright, 64th Secretary of State, U.S.; Patricia Espinosa, Executive Secretary, UN Framework Convention on Climate Change (UNFCCC); Dr. Marina Pisklakova, Founder & Chair, ANNA – National Center for the Prevention of Violence; Guo Jianmei, Founder, Center for Women’s Law Studies and Legal Services; Dr. Nyaradzayi Gumbonzvanda, African Union Goodwill Ambassador on Ending Child Marriage; Palwasha Hassan, Director, Afghan Women’s Educational Center. Location: Gaston Hall, Georgetown University, 3700 O Street Northwest, Washington, DC 20007.

CONGRESS AND WAR: RECLAIMING ARTICLE I POWERS. 12/6, Noon-1:00pm (EST), LIVESTREAM. Sponsor: Cato. Speakers: Chris Murphy, Senator for Connecticut, United States Senate; Jordan Cohen, Policy Analyst, Cato; Gene Healy, Senior Vice President for Policy, Cato; Moderator: Eric Gomez, Director of Defense Policy Studies, Cato. 

HOW CAN CARBON MINERALIZATION HELP FIGHT CLIMATE CHANGE? 12/6, Noon-1:30pm (EST), WEBINAR. Sponsor: Center on Global Energy Policy, Columbia University. Speakers: Dr. S. Julio Friedmann, Senior Research Scholar, Center on Global Energy Policy, Columbia University; Dr. Peter Kelemen, Arthur D. Storke Professor, Department of Earth and Environmental Sciences, Columbia University; Sasha Wilson, Associate Professor, Faculty of Science, Earth & Atmospheric Sciences Administrator, University of Alberta. 

INTERNATIONAL AFFAIRS MEETING. 12/6, Noon-1:30pm (EST), WEBINAR. Sponsor: Gold Institute for International Strategy (GIIS). Speakers: Monica Crowley, Assistant Secretary of the Treasury; David P. Goldman, President, Macrostrategy LLC, Asia Times, Economist, WSJ; Ambassador Hisham ElNakib, Advisor to Egyptian Mission to U.N.; Marc Black, Senior Law Enforcement Fellow, GIIS; Adam Lovinger, Vice President of Strategic Affairs, GIIS.

CHINA’S POWER: UP FOR DEBATE 2021 - DEBATE 2: BEIJING’S CRACKDOWN WILL STIFLE CHINESE TECHNOLOGY AND SCIENTIFIC INNOVATION. 12/6, 4:00-5:15pm (EST), ZOOM WEBINAR. Sponsor: CSIS. Speakers: Rui Ma, China Tech Analyst, Main Writer and Co-Host, Tech Buzz China; Matt Sheehan, Fellow, Asia Program, Carnegie; Moderator: Bonny Lin, Director, China Power Project, CSIS. 

NATIONAL READINESS FOR GREAT POWER COMPETITION. 12/6, 5:00-6:00pm (EST), WEBINAR. Sponsor: Institute of World Politics. Speaker: General Joseph L. Votel (Ret.), Commander, U.S. Central Command. 

SPECIAL SCREENING OF UK DOCUMENTARY “JAPAN’S WARTIME SEX SLAVES” AND PANEL DISCUSSION. 12/6, 7:30pm (GMT), 2:30pm (EST), IN PERSON (University of Oxford) and VIRTUAL. Sponsors: Institute of Digital Archaeology (IDA); Comfort Women Action for Redress and Education (CARE). Speakers: Krishnan Guru-Murthy, Journalist, Unreported World; Dr. Maki Kimura, Lecturer in Gender and Politics, University College London; Christina Lamb, Journalist, Sunday Times; Moderator: Dr. Alexis Dudden, Professor, University of Connecticut. Location: Magdalen College Auditorium, University of Oxford. Request link from info@digitalarchaeology.org.uk; https://digitalarchaeology.org.uk/
https://www.yna.co.kr/view/AKR20211129120700075 [article about Japanese rightwing harassment]

duplicate? SPECIAL INTERVIEW OF UK DOCUMENTARY “JAPAN’S WARTIME SEX SLAVES” COMFORT WOMAN SURVIVOR YONG-SOO LEE. 12/6, 10:00am (GMT), 5:00am (EST), ZOOM WEBINAR. Sponsors: Institute of Digital Archaeology (IDA); Comfort Women Action for Redress and Education (CARE). Speaker: Yong-soo Lee. Request link from info@digitalarchaeology.org.uk. [https://www.youtube.com/watch?v=BZyYyXKG51s&t=105s]

SHEDDING TAIWAN'S 'INVISIBILITY CLOAK': GLOBAL AND REGIONAL PROSPECTS. 12/6, 8:00-9:00pm (EST), WEBINAR. Sponsor: Sigur Center, Elliot School, GW. Speakers: Liang-Yu Wang, Deputy Representative, Taipei Economic and Cultural Representative Office in the U.S.; Pasha L. Hsieh, Associate Professor and the Associate Dean (Faculty Matters & Research), Singapore Management University Yong Pung How School of Law; Michael Mazza, Nonresident Fellow, Global Taiwan Institute and German Marshall Fund of the United States; Moderator: Deepa Ollapally, Associate Director, Sigur Center, Elliot School, GW. 

TOWARDS POST-COVID-19 FISCAL POLICY AND DIGITALIZATION IN ASIA. 12/6, 10:00pm-12:00am (EST), 12/7, Noon-2:00pm (JST), WEBINAR. Sponsor: Asian Development Bank Institute (ADBI). Speakers Include: Odd-Per Brekk, Deputy Director, Asia and Pacific Department, IMF; Paolo Mauro, Deputy Director, Fiscal Affairs Department, IMF; Ruud De Mooij, Assistant Director, Fiscal Affairs Department, IMF; Dharitri Panda, Finance Ministry, India; Sangwook Nam, Ministry of Economy and Finance, Republic of Korea; John Beirne, Research Fellow, ADBI.

The China Challenge

America’s big China question Resetting relations will be near the top of Joe Biden’s agenda — three new books look at the challenge 

by James Kynge, The Financial Times, JANUARY 20, 2021 

Before his death in 1994, Richard Nixon reflected that his much-acclaimed diplomatic masterstroke — the opening of US relations with China — might have been a mistake. “We may have created a Frankenstein,” the former US president said in an interview. 

The comment represented an early inkling of what has become a deep foreboding. As Joe Biden takes office as America’s 46th president, a huge China challenge is sitting in his inbox. 

The new president will have little time to read books. The militarisation of downtown Washington, a raging pandemic and a global tilt toward authoritarianism are just some of the issues on his plate. Nevertheless, his staff should take the time to delve into three perceptive guides — written from a western perspective — that provide insight and suggestions on how to grapple with China. 

Things have moved on a lot since Nixon’s “Frankenstein”, a comment that was made in the aftermath of the Tiananmen massacre in 1989. Then it was China’s own citizens who paid the price for defying the Chinese Communist party. Now the fate of the free world is at stake, if these three timely and thought-provoking books are correct. 

Clyde Prestowitz, who worked for President Ronald Reagan and has advised subsequent US administrations since then, offers particularly stark judgments in The World Turned Upside Down. He also offers pithy advice for the new American president. 

“The first thing [the new] president must do is to use his inaugural address as a wake-up call to the nation and the free world . . . to recognise the China challenge,” Prestowitz writes. “He must explain and emphasise that we are talking about the most difficult and dangerous external challenge the United States and the free world have ever faced.” 

Many in the US have lambasted China for a litany of supposed sins, not least during Donald Trump’s administration. What makes Prestowitz’s book refreshing is that he also takes aim much closer to home. He skewers corporate America and the coterie of Washington’s China lobbyists for perpetuating what he sees as systemic failures in US policy toward Beijing. The ire of a former insider crackles with an undisguised alarm. 

He identifies a “siren song” that seduced US policy and to which, he ruefully admits, he also fell prey. The tragic delusion that Washington allowed itself to buy into was “constructive engagement”, a notion that investing in China would somehow foster greater freedoms in the world’s largest communist country. 

This fantasy’s most influential adherent was President Bill Clinton, who negotiated China’s accession to the World Trade Organization in 2001. The agreement, Clinton said at the time, would mean that China imported “one of democracy’s most cherished values, economic freedom”. And this, he added, “may lead to very profound change. The genie of freedom will not go back into the bottle.” 

With hindsight, it is clear that that particular genie was imaginary. 

The China of Xi Jinping, its leader since 2012, is considerably more authoritarian than it was when Clinton, his cabinet, national security advisers, trade representatives and most of Washington’s leading think-tanks placed their faith in “constructive engagement”. Indeed, President Xi in 2013 expressly banned the promotion of universal values, a free press and economic privatisation. 

Thus it is now obvious, Prestowitz says, that the US-led west has lost a big bet. The free world had wagered that globalisation would not only open China’s markets to free trade and competition but would also liberalise that country’s political environment. Beijing remained unmoved, using the surge of inward investment to bolster its technological base and strengthen its economy without liberalising its society or politics one iota. 

So what should the US do now? Before getting to his policy prescriptions for a new administration, Prestowitz provides an unsparing analysis of how Washington’s elite fell into the grip of their China delusion. 

“The answer, I think, is that they desperately wanted to believe for two reasons,” he writes. “One was that the corporations that largely run Washington saw huge business opportunities in China and were determined to cash in. The second was that the leading pundits and academics of the time told them it was all true.” 

In one of the book’s best sections, he gives a long list of former US officials from Henry Kissinger onward who found a second career lobbying for corporate America in China. But in their efforts to ingratiate themselves with Beijing, these influential US figures soon found themselves also doing China’s bidding back in Washington. 

Ultimately, corporate America has become Beijing’s most potent force in Washington. When the representatives of US companies that do extensive business in China are called on to testify before Congress, for instance, they “do not necessarily present what is best for America”, writes Prestowitz. “They are often thinking of what is best for their business in circumstances under which Beijing has them by the balls while they, by dint of their legally unlimited political donations to US politicians, have Washington by the balls,” he adds. Prestowitz names Maurice Greenberg, ex-head of the insurance giant AIG, and Fred Smith, the boss of FedEx, the US parcel delivery company, among the corporate titans that played this game. 

“[Smith] became a master at playing Washington, putting ex-senators and congresspersons on his board, donating to all the influence makers just as [Greenberg] did and making big contributions to political campaigns,” Prestowitz writes. 

The captive nature of corporate America is also seen in its subservience to Beijing. When China was disenchanted in 2019 with an app that Hong Kong demonstrators were using to track the Hong Kong police, Apple deleted it from its app store (though the company said it did so as it contravened internal guidelines). Google also deleted from its Play Store a game that echoed the Hong Kong protest movement. The list goes on: Delta Air Lines, Gap, Activision Blizzard, Medtronic, Marriott and others have all moderated their behaviour, apologised or taken other steps to appease Beijing. 

In his advice to the new administration, Prestowitz suggests a series of actions directed not so much at China as at the behaviour of American companies and institutions. Businesses that comply with China’s interference in their freedom of speech should be fined by Washington, he says. When US company spokespeople opine on China, they should have to divulge their company’s track record in the People’s Republic. 

The author also recommends new policies on political donations, tax, market access, monetary policy, manufacturing investment and several other areas with the aim of maintaining America’s position as the “world’s most competitive economy”. 

In case the reader is left in any doubt over how Prestowitz sees his call to action, he writes the new president a script. The White House must make clear that national interests outweigh those of multinationals and investment banks, the author argues, adding, “and he must explain that the cold war with the Soviet Union was just a warm-up game for the main match now coming”. 

Visions of a chilling future also feature in Nigel Inkster’s The Great Decoupling. Though his tone is more measured than that of Prestowitz, it reinforces a sense that the US-led west and China are locked in a desperate struggle not only for technological supremacy but also — in the case of the west — to preserve its liberal system. 

“China’s emergence as a powerful modern state with a different ideology and values and a long-term strategy pursued through a centralised, state-driven all-of-nation approach has raised serious questions about how fit for purpose the western liberal democratic order is in the 21st century,” writes the former director of operations and intelligence for the British Secret Intelligence Service (also known as MI6). 

The stage is thus set for a contest between China and the west that will define this century and shake up relations in trade, economics, finance, technology and other areas. In the process, global rules will need to be rewritten as globalisation regresses to give way to a system based more on regional trading arrangements. 

Like Prestowitz, Inkster does not appear at all certain that the west will prevail in the contest that he describes. He observes mounting speculation about the US and China becoming embroiled in a new cold war, something he sees as inappropriate. “A better analogy might be the relationship between Britain and Imperial Germany in 1914 that involved strategic rivalry but also an entanglement so deep that commentators at the time believed it would make war between them inconceivable,” writes Inkster. “In the event, it did not.” 

Inkster does not predict conflict but says the odds for it are shortening. The commercial decoupling between the US and China is driving the two sides further apart and generating a climate of distrust in which each side’s behaviour is interpreted in worst-case terms. Each side is therefore incentivised to maximise espionage and covert efforts to undermine the other, he writes. 

There is, however, a middle ground, according to Luke Patey. In How China Loses he writes that if Beijing loses in a contest with the west, the fallout would be so widespread that the world itself would lose. His argument is that China’s co-operation is crucial to the future of the global commons, particularly at a time when climate change threatens the livelihood of all humanity. 

For this reason, Patey, a researcher at the Danish Institute for International Studies, says that middle powers such as India, Japan, Germany and France (the UK goes unmentioned) have an obligation to make their influence felt so that the world’s destiny is not reduced to the outcome of belligerence between superpowers. 

His prescription is classic balancing. He calls for a push-back against Chinese assertiveness, for example in the East and South China Seas. But he says that the aim of such resistance should not be to contain Beijing but to deter it from going too far. The aim of such a policy would be to “advance multilateralism to establish common rules and norms in world affairs”. 

It is hard to give up on the hope that such a comforting future might still be possible. But Prestowitz and Inkster can muster little, if any, faith that accommodation between the west and China towards a shared prosperity is still workable. Nixon’s foreboding is starting to look more prescient, at least from a western perspective. China exhibits little inclination to take its place in a US-led international order that was not of its making. 

President Biden may be obliged to accept that the days of US co-operation with China are waning and prepare to set about protecting the west’s democracy while there is still a chance. 

This Week in Washington, December 17, 2018

The member's only Asia Policy Calendar is on hiatus until January 7, 2019.

Here are a few Washington events this coming week. Congress will be in session this week in order to vote on funding bill to keep the government running past Friday, December 21.

MONDAY, DECEMBER 17TH

CHINA'S BELT AND ROAD IN CONTEXT. 12/17, 10:00am-Noon. Sponsor: Heritage. Speakers: Daniel Kliman, Senior Fellow, Asia-Pacific Security Program, Center for New American Security (CNAS); Yun Sun, Co-Director of East Asia Program, Director of China Program, Stimson; Jeff M. Smith, Research Fellow, South Asia, Heritage; moderator, Walter Lohman, Director, Asian Studies Center, Heritage.

OUTLOOK FOR THE GLOBAL TRADING SYSTEM AND THE WTO. 12/17, 12:15-1:30pm. Sponsor: Peterson Institute. Speaker: Alan Wm. Wolff, Deputy Director-General, World Trade Organization.

BUILDING TRUST THROUGH MUSIC DIPLOMACY ON KOREA PENINSULA. 12/17, 5:00-8:00pm. Sponsor: National Committee on North Korea; GWU Institute for Korean Studies. Speaker: Hyung Joon Won, South Korean violinist; Moderator: Jisoo M. Kim, Director, GW Institute for Korean Studies. 

TUESDAY, DECEMBER 18

AWIC AND FUTURE FORCE DESIGN. 12/18, 9:30-10:30am. Sponsors: Mitchell Institute for Aerospace Studies, Air Force Associations. Speakers: Maj Gen Clint Crosier, USAF, Director, Air Force Warfighting Integration Capability.

U.S. CHINA 2018 YEAR IN REVIEW: A NEW COLD WAR? 12/18, 10:30am-Noon. Sponsor: Kissinger Institute, Wilson Center. Speakers: Amb. J. Stapleton Roy, Kissinger Institute; Meredith Oyen, UMBC; Robert Daly, Kissinger Institute; Yun Sun, The Stimson Center, Moderated by Katie Stallard-Blanchette, History and Public Policy Program.

WEDNESDAY, DECEMBER 19

INNOVATION, PARTNERSHIP, AND SELF-RELIANCE: HEALTH POLICY LESSONS FROM INDIA’S BIHAR STATE. 12/19, 8:00am-1:30pm. Sponsors: CSIS; CARE. Speakers: Sara M. Allinder, Executive Director, Senior Fellow, Global Health Policy Center, CSIS; Sushil Kumar Modi, Deputy Chief Minister, Government of Bihar; Usha Kiran, India Country Lead, State Health and Community Systems, Bill & Melinda Gates Foundation; Mangal Pandey, Health Minister, Government of Bihar; Hemant Shah, Chief of Party, Bihar Technical Support Program; Heather Higginbottom, Chief Operating Officer, CARE; Sanjay Kumar, Principal Health Secretary, Government of Bihar; Kenney Ng, Manager, Health Analytics Research Group, IBM; Macon Phillips, Chief Digital Officer, CARE; Gary Darmstadt, Associate Dean for Maternal and Child Health, Stanford University School of Medicine; Kerry Pelzman, Deputy Assistant Administrator, Bureau for Global Health, USAID; J. Stephen Morrison, Senior Vice President and Director; Global Health Policy Center, CSIS.

WHEN GIANTS QUARREL: THIRD COUNTRY REACTIONS TO THE US-CHINA TRADE DISPUTES. 12/19, 9:00-10:30am. Sponsor: Global Business Dialogue. Speakers: Elisabeth Bowes, Embassy of Australia; Shige Watanabe, Embassy of Japan; Tami Overby, McLarty Associates; Philip Houlding, Embassy of New Zealand.

COMPARATIVE MISSILE BALANCE IN EAST ASIA. 12/19, Noon-1:30pm. Sponsor: Global Taiwan Institute (GTI). Speakers: Brendan Mulvaney, Director, China Aerospace Studies Institute, National Defense University, Former Director of the Commandant’s Red Team, USMC; Rick Fisher, Senior Fellow, Asian Military Affairs, International Assessment and Strategy Center; Eric Gomez, Policy Analyst for Defense and Foreign Policy Studies, Cato; moderator, David An, Senior Research Fellow, GTI, Former Political-military Affairs Officer, US State Department.

DENIED FROM THE START: HUMAN RIGHTS AT THE LOCAL LEVEL IN NORTH KOREA. 12/19, 2:00-4:00pm. Sponsor: Committee for Human Rights in North Korea (HRNK). Speakers: Robert Collins, Author; David Maxwell, Senior Fellow, Foundation for Defense of Democracies, Board Member, HRNK; Jung Pak, Senior Fellow and SK-Korea Foundation Chair in Korea Studies, Brookings; Moderator: Greg Scarlatoiu, Executive Director, HRNK. 130-page report.

If Trump Launched a Trade War on Asia

U.S. stocks swooned during China’s mild summer slowdown.
Imagine what 45% tariffs would do.

By RICHARD KATZ, editor of the Oriental Economist Report and APP member
Wall Street Journal, March 29, 2016

If Donald Trump becomes U.S. president, will he wreak havoc on world trade? Or is he bluffing when he proposes a 45% across-the-board tariff on manufactured imports from China, and 35% on goods made in Mexico by U.S. firms such as Ford Motor?

No one knows, perhaps not even Mr. Trump himself. But here’s what we do know.

First, U.S. law enables Mr. Trump to carry out his threats. Second, while such steps would damage the U.S. economy, perhaps sending it into recession, that damage would be dwarfed by the havoc created among U.S. friends such as South Korea, Taiwan and Thailand.

Even if Mr. Trump loses in November, his candidacy could spark a dangerous sea change. Since World War II, neither major party in America has nominated an outright protectionist. Many Congressional Republicans will no doubt look at his triumph and shift their own stance on trade out of fear of losing their party’s primary elections.

Mr. Trump’s threats violate the rules of the World Trade Organization, but there’s nothing in U.S. law to block a president who cares nothing for WTO rules. According to several respected trade lawyers, including Warren Maruyama, the former general counsel of the Office of U.S. Trade Representative, Mr. Trump can find authorization in Section 301 of the US Trade Act of 1974. It authorizes the president to impose sanctions, including tariffs, on any country that, in his view, undertakes an “act, policy, or practice” that is “unjustifiable” and/or “unreasonable” and “burdens U.S. commerce.”

Mr. Trump could decide that any economic inducements given by Mexico to Ford and other firms constitute an “unjustifiable” act. He’d likely ignore that his rival, Gov. John Kasich, provided special tax cuts to Ford to get it to return some assembly jobs to Ohio. Mr. Trump could call China “unreasonable” for “manipulating” its currency, even though the International Monetary Fund says China’s currency is no longer undervalued.

Mr. Trump says he’s not afraid of U.S. exports being hit in a trade war because China and Mexico would have more to lose. But when China is hit, as it was back in 2009 with an antidumping duty on tires, it hits back and does so quickly. U.S. exports to China and Mexico add up to 2% of U.S. gross domestic product, and 5% of manufacturing sales.

But the U.S. would also be hurt by a cut in imports. Mr. Trump’s tariffs would amount to a tax on American companies and households equal to 1.5% of GDP—1.2 points from his 45% tariff on Chinese products and another 0.3 points from a 35% tariff on goods made in Mexico by American firms. A hit of that size could cause a recession, such as the 1.4% peak-to-trough decline in U.S. GDP seen in 1990. Two years later, “It’s the economy, stupid,” got President George H.W. Bush evicted from the White House.

Beyond that, more than one-half of U.S. imports from China and three-quarters of U.S. imports from Mexico are capital goods and intermediate goods that American firms need for their own production. It’s impossible to abruptly shrink imports from China and Mexico without damaging U.S. firms, reducing long-term growth and destroying jobs. American-based auto plants forced to pay more for steel, for example, would suddenly find themselves less able to compete with imports from Europe, Japan and Korea.

Mr. Trump claims any damage will be swamped by benefits as his tariffs force firms to “bring the jobs back” from China and Mexico. In the case of China, that’s impossible because the growth of imports from China didn’t “take” jobs from the U.S., but from elsewhere in Asia.

During the quarter century from 1990 to 2014, the share of U.S. manufactured imports that came from China soared to 26% from 3.6%. But during that same period, according to the Congressional Research Service, the share of U.S. factory imports coming from all of East Asia stayed the same (47% in 1990 and 46% in 2014).

Imports from China didn’t add to U.S. imports; they mostly replaced imports that previously came from other countries. Computer chips once imported directly from Japan now come inside products assembled in China and are labeled “Made in China.”

While the U.S. would suffer, America’s friends and allies in Asia would suffer far more. The ratio of total China-bound exports to domestic GDP ranges from 3.5% in Japan to 10% in Thailand, Singapore and Vietnam to 13%-15% in Korea and Taiwan. Considering that around 40% of the value of these exports consists of imported inputs from the U.S. and other countries, the global damage from the ripple effects would be enormous.

Mr. Trump may not think this matters. But consider how U.S. stocks swooned in 2015 in reaction to a relatively mild deceleration in China. How much more severe would the impact be on currency and stock markets from the economic and geopolitical maelstrom Mr. Trump proposes to let loose—not to mention the anxiety of having such a reckless character at the helm in Washington.

Monday in Washington, July 27, 2015

9:00am - Undersecretary of State for Civilian Security, Democracy, and Human Rights Sarah Sewall briefing for the release of the 2015 Trafficking in Persons Report

10:00am - Secretary of State John Kerry hosts a launch ceremony to release and discuss the 2015 Trafficking in Persons Report, which assesses government efforts around the world to combat modern slavery.

11:15am - Korean War Veterans Association events for the International Korean War Armistice ceremony to include South Korean Ambassador to the United States Ahn Ho-young remarks and the ringing of the Freedom Bell to honor the end of the Korean War at the Korean War Veterans Memorial, National Mall, 10 Daniel French Drive SW, Washington, DC.

EUROPE AT SEA: MEDITERRANEAN AND BALTIC SECURITY CHALLENGES. 7/27, 9:00-10:30am. Sponsor: Hudson Institute. Speakers: Retired British Royal Navy Rear Adm. Chris Parry and Seth Cropsey, director of the Center for American Seapower at Hudson.

click to order

RUSSIAN MILITARY FORUM: THE INTERMEDIATE NUCLEAR FORCES (INF) TREATY AT A CROSSROADS. 7/27, 10:00-11:30am. Sponsor: CSIS, Russia and Eurasia Program. Speakers: Steven Pifer, Director, Arms Control and Non-Proliferation Initiative, Brookings; Amy Woolf, Specialist, Nuclear Weapons Policy, Congressional Research Service; Paul Schwartz, Senior Associate, Russia and Eurasia Program, CSIS.

KAZAKHSTAN'S ACCESSION TO THE WTO. 7/27, 2:00-3:30pm. Sponsor: CSIS. Speakers: Ambassador William H. Courtney, President, U.S.-Kazakhstan Business Association; Former U.S. Ambassador to Kazakhstan; Cecilia Leahy Klein, Senior Director for WTO Accessions, Office of the United States Trade Representative; Aitolkyn Kourmanova, Visiting Fellow, Russia and Eurasia Program, CSIS; Michael Lally, Executive Deputy Assistant Secretary for Europe, the Middle East, and Africa, Global Markets, International Trade Administration, U.S. Department of Commerce.


UNDERSTANDING ISIS AND THE NEW GLOBAL WAR ON TERROR: A PRIMER. 7/27, 6:30 pm. Sponsor: Busboys & Poets. Speaker: Author Phyllis Bennis, director of the New Internationalism Project at The Institute for Policy Studies (IPS).

It’s time to update our thinking on trade

IT’S TIME TO UPDATE OUR THINKING ON TRADE 

by William H. Overholt, President, Fung Global Institute, Senior Fellow at Harvard’s Asia Center, and APP Board Member

First published by the East Asian Forum, August 3 2014

Our institutions for governing world trade and our thinking about world trade date back to a simpler era. Without a radical rethink, we risk the gradual decay of our most valuable international institutions, loss of extraordinary opportunities to improve global living standards and possibly the sidelining of the West in developing modern institutions.

The GATT and the WTO were devised for a simpler era, when it was possible to think about world trade in the way Ricardo taught — namely that a good is produced in one country and consumed also in a single country. If Portugal was adeptat making wine and England at cloth, it would benefit both to reduce barriers and enhance trade. That two-country model worked relatively well until about 1978, when China started opening its economy by establishing special economic zones across the border from Hong Kong.

By the last decade of the twentieth century, production had become a complex global process. The logic of increasing efficiency by reducing trade barriers remained completely valid, but policy adaptation of that logic to a new era has faltered.

A laptop or a smart phone now is typically made in 15 to 20 countries. When old-style trade thinking is applied to this situation, confusion causes bad policy and gratuitous conflicts. A laptop made in 17 countries might be assembled in China for $2 worth of local wages then exported to the United States, but old two-country thinking leads members of Congress to react as if China had exported $1500 of value to the US. This bolsters protectionism, reduces support for multilateral trade liberalisation and contributes to the fragmentation of the global trade regime.

Because it is difficult to continue the process of trade liberalisation, countries feeling a need for deeper integration form their own regional blocs, inducing further fragmentation.

Regional and bilateral trade negotiations today are focused on ‘country of origin’, by definition a single country or preferential grouping, with the result that it is considered normal to have 500 pages of country of origin rules in a single trade agreement. Since each country has many trade agreements, companies may find the rules so complex that they simply pay high tariffs rather than trying to manage the complex paperwork to prove countries of origin. The complexity of the system discriminates against small, open economies like Singapore, and it discriminates against smaller companies without huge accounting departments. Because it cannot adapt to the globalisation of production, the system is beginning to defeat itself.

Moreover, the addition of over one billion new workers to the globalised workforce entailed very low wages in Eastern countries such as China, flat wages in the West and huge trade imbalances between East and West. This discouraged Western countries from vigorously pursuing the kinds of global agreements that would have eliminated those dozens of separate, conflicting 500-page rule books about countries of origin.

Feeling overwhelmed by Chinese manufactured exports, Western countries have also moved to exclude China from the most important efforts to modernise the global trading system. The proposed Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership agreements (TTIP) both seek to exclude the world’s second-largest economy from potential membership, an arrangement that is both economically untenable and a potential geopolitical disaster.

The geopolitical consequences were magnified by the inclusion of Japan in the TPP agreements, even though Japan’s economy is much less open than China’s and historically has been much less willing to reform in the face of domestic interest group pressure than China has. Given Sino-Japanese tensions, this has come across in Asia as part of a strategy to isolate China.

Magnifying Sino-American differences could make a more inclusive, truly multilateral future trade system much harder to negotiate.

While we still flounder over attempts to come to terms with globalised production, we are heading into globalised consumption. Instead of an era with one billion new globalised workers, we are heading into a world that will contain two billion or more new middle class consumers, mainly in Asia and heavily in China. Chinese wages are rising 13 to 20 per cent a year and total compensation is rising even more. This phenomenon should gradually resolve the most serious trade imbalances and begin to allow Western wages to rise.

But Western media, interest groups and politicians remain obsessed with the problems of yesterday. This could lead the West to squander one of the greatest economic opportunities in world history, namely the extraordinary consumer boom in China, India and other emerging markets. It could also disastrously delay responses to the jobs challenge of the new era: a technology-driven transformation of the workplace driven by robots, other automation, the internet of things and 3D printing that will eventually force billions of workers out of old jobs.

We must begin addressing the world as it is and will be, not the world of generations past. Ironically, in the process the WTO remains crucial to a vibrant world economy. Without the WTO’s dispute settlement mechanism, trade wars will ignite everywhere. By allowing the WTO system to decay, and by blaming globalised trade for problems that are unique to the past generation, we risk going back to pre-World War II trade wars. We need a modern, multilateral structure that updates the WTO, not a degeneration of the global trade and investment system based on a failure to recognise the shape of the new world we are entering.

We are now at one of those great historical turning points. Disillusionment, often misplaced, with existing institutions and obsession with obsolescent problems have allowed the process of trade negotiations to decay so far that TPP and TTIP negotiations could fail or, if they succeed, the exclusion of China could make them Pyrrhic victories. Continued Western failure to address the real issues of our emerging world of globalised production and consumption, and the reality of China’s central role, could lead to trade regimes with the most dynamic markets governed by structures like the Regional Comprehensive Economic Partnership promoted by Asian emerging economies.

The views expressed here are personal and not endorsed byDr. Overholt's employers.

China's responsibilities

German China Trade Ship ca. 1870

GLOBAL ECONOMIC OUTLOOK: CHINA, THE EURO CRISIS, AND THE UNITED STATES. 12/21, 9:45-11:45am, Breakfast, Washington, DC. Sponsor: Carnegie (CEIP). Speaker: Pieter Bottelier, Nonresident Scholar, CEIP; Uri Dadush, Senior Associate and Director, CEIP; Yukon Huang, Senior Associate, CEIP; Hans Timmer, Director, Development Prospects Group, World Bank.

2011 REPORT TO CONGRESS ON CHINA’S WTO COMPLIANCE, USTR, 12/12/11.
Despite this progress, the overall picture currently presented by China’s WTO membership remains complex, given a troubling trend in China toward intensified state intervention in the Chinese economy over the last five years. Increasingly, trade frictions with China can be traced to China’s pursuit of industrial policies that rely on trade-distorting government actions to promote or protect China’s state-owned enterprises and domestic industries. In fact, in recent years, China seems to be embracing state capitalism more strongly, rather than continuing to move toward the economic reform goals that originally drove its pursuit of WTO membership.
Summary

Testimony Before The Congressional-Executive Commission on China, Assistant United States Trade Representative for China Affairs Claire Reade, December 13, 2011.

Ten Years in the WTO: Has China Kept Its Promises Hearing of the Congressional-Executive Commission on China, December 13, 2011.