U.S. Trade Policy: Time to Embrace the Change

• Fair Trade

• Reshoring as a strategic necessity

• Nothing good happens when there is the perception of a weak America

• Change is inevitable so manage it; do not try and avoid it.

• You have to be comfortable with being uncomfortable

• Constructive destruction

     The aforementioned themes have never been more relevant than they are today! We are in a world which is changing at breakneck speed, and in my opinion will be seen over time as historically significant. I believe it is important to look at how we have arrived at this point to  better understand the relevance of what we are experiencing currently.

     After thirty-seven years as a member of the trade policy advisory process at the U.S. Department of Commerce, I tend to view global events through the prism of trade policy first and foremost. I have been involved in the process for long enough to have developed a perspective on the trends in global trade which, to me at least, are precursors of macro geopolitical changes. I believe that it is important to understand history if one is going to try and have an informed perspective on the current trade restructuring process. 

     In the latter part of the twentieth century, as the world’s economies tried to rebuild post WWII, trading patterns began to come under new sets of rules in the form of overarching agreements which were put in place to create some sort of discipline for managing global trade. After WWII the U.S. which was the arsenal of democracy became the engine of global commerce development. In the context of such efforts as the Marshall Plan, the goal of the U.S. was to facilitate the development of free market economies as a bulwark against the spread of Communism. We (America) were the top dogs with an overarching responsibility to rebuild the world into a better place, and as such we created unbalanced trading advantages to those allied countries which we wanted to assist in rebuilding. Over the years which followed, we fostered the rise of industries in allied countries that (be careful what you wish for) became competitors to us on the global stage. Under the cover of the GATT and the WTO, the global trading regime continued to develop rules and regulations which were created to build a more efficient world of commerce.

     There is no simple explanation to what is free trade or fair trade. The semantics of the trade world are in and of themselves confusing and ambiguous in many cases. One man’s local industrial development project is another man’s trade distorting subsidy! The border between intent and actuality is often very blurry, and no place more so than in global trade agreements.

In my opinion, it is almost impossible to game what the systemic outcomes of the current trade negotiations may be. The advice which I give to myself is to be open minded and embrace the need to change the system. It needs to be refreshed if it is going to be relevant to the future. In my opinion nothing good happens in the world when America is perceived to be weak, and one of the ways in which we can display strength is through a more creative and proactive global trade policy initiative. How and in what form that will finally take remains to be seen, but the old system is outdated and not working for our benefit. A perfect example of this is the Doha WTO negotiations which began in 2001 and have achieved nothing of substance! However; I believe  this process will be a messy and lengthy endeavor which will define global economics for some time to come. What that time frame is and how it is implemented will be a show that is worth watching! Despite the uncertainties, the fact that there is an initiative to shift the historical paradigm back into America’s favor, is the most important feature of this process. The status quo is not in America’s interest and therefore whatever comes out of the current negotiations will be beneficial!

     We are in the midst of an historic change in global economic relationships, and this change is long overdue, and necessitates significant actions. There has been only incremental change to the system since the Chinese accession to the World Trade Organization in 2001. Therefore; the time as well as need for a nontraditional approach to adjusting the system is well warranted and should be embraced as in America’s best interest moving forward!