The Future of International Trade

Elliot J. FeldmanPartner, Baker & Hostetler LLP

The International Bar Association

Asia Pacific Regional Forum

Hong Kong SAR

September 19, 2008

The Pew Global Attitudes Project “World Publics Welcome Global Trade -- But Not Immigration” October 4, 2007

The Pew Global Attitudes Project “World Publics Welcome Global Trade -- But Not Immigration” October 4, 2007

Trade And World Peace

“Without commerce, without freedom of communication either by land or sea, cultivating no more of their territory than the exigencies of life required, destitute of capital, never planting their land (for they could not tell when an invader might not come and take it all away, and when he did come they had no walls to stop him), thinking that the necessities of daily sustenance could be supplied at one place as well as another, they cared little for shifting their habitation, and consequently neither built large cities nor attained to any other form of greatness.”

Thucydides, The Peloponnesian War, History Of Early Times

“It is commerce which is rapidly rendering war obsolete . . . international trade [is] the principal guarantee of the peace of the world.”

John Stuart Mill, Principles of Political Economy

“ . . .unhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition with war.”

Cordell Hull, United States Secretary of State

“Because each of us has something someone else lacks, and we each lack something someone else has, we gain by interaction. That is what makes trade the most compelling counterforce to war.”

Jonathan Sacks, The Dignity of Difference

World Trade Events And Partisanship

1922 Fordney-McCumber Tariff (Warren G. Harding -- Republican) RESTRICT (R)

1930 Smoot-Hawley Tariff (Herbert Hoover -- Republican) RESTRICT (R)

1934 Reciprocal Trade Agreements Act (FDR -- Democrat) EXPAND (D)

1945 – 1946 Congress Denies Trade Negotiation Authority (Republican) RESTRICT (R) Congress Opposes GATT RESTRICT (R)

1947 GATT Approval (Truman – Democrat) EXPAND (D) Reduce Tariff On Wool EXPAND (D)

1955 GATT Waiver For Agriculture (Eisenhower – Republican) RESTRICT (R)

1962 Beginning Of Kennedy Round (JFK – Democrat) EXPAND (D)

1967 Completion Of Kennedy Round (Johnson – Democrat) EXPAND (D)

1972 VRAs On Steel (Nixon – Republican) RESTRICT (R)

World Trade Events And Partisanship(cont.)

1974 Multifiber Agreement Restricting Textiles (Nixon – Republican) RESTRICT (R)

Enhancement Of Trade Remedies RESTRICT (R)

1983 VRAs On Steel And Automobiles (Reagan – Republican) RESTRICT (R)

1988 FTA With Canada (Reagan – Republican) EXPAND (R)

1994 NAFTA (Clinton – Democrat) EXPAND (D)

1995 Uruguay Round Agreements Act (Clinton – Democrat) EXPAND (D)

1996 Farm Bill (Clinton – Democrat) EXPAND (D)

2002 Farm Bill (Bush – Republican) RESTRICT (R)Steel Quotas RESTRICT (R)Softwood Lumber Cases RESTRICT (R)

2008: Farm Bill (Bush – Republican) RESTRICT (R)Doha Round Collapse (Bush – Republican) RESTRICT (R)

Blame China

“There is plenty of blame to go around . . . China’s role in the demise of the Doha Round is particularly

dismaying . . . U.S. supporters of Chinese inclusion in the WTO argued that drawing China into a system of multilateral give-and-take would mute its nationalistic tendencies. Evidently, the Chinese see the matter differently. They, and the world, will be poorer because of it.”

The Washington Post, July 30, 2008

[The] antidumping proceeding always has been and is increasingly a protectionist device, as various Congresses have amended the underlying statute to make the proceeding and remedy more effective. The darker face of the antidumping proceeding is so well known inside the Washington Beltway that it has become a trite joke among trade lawyers that antidumping is the protectionist’s weapon of choice.

Kenneth Dam, Former Deputy Secretary, U.S. Treasury

The Rules Of The Global Game

Interest-Group Liberalism

“[T] criteria drawn from interest-group liberalism: The most important difference between liberals and conservatives, Republicans and Democrats, is to be found in the interest groups they identify with. Congressmen are guided in their votes, presidents in their programs, and administrators in their discretion by whatever organized interests they have taken for themselves as the most legitimate; and that is the measure of the legitimacy of demands and the only necessary guidelines for the framing of the laws.”

Theodore J. Lowi, The End of Liberalism

U.S. Approach To Subsidy Allegations Against China

Chinese officials are not to be trusted, deceive and conceal information

State-owned enterprises subsidize because they are state-owned

State planning always implies subsidies

Anything the government owns and sells is sold at less than adequate remuneration

According To Commerce, The Chinese Government Is Not To Be Trusted

“a de facto problem with land supply in China which causes market distortions is that of local government corruption.”

“The GOC purposefully made a decision to conceal how the information on ownership structure was derived.”

“We continue to find that the GOC misrepresented how the information was obtained, and have drawn adverse inferences accordingly.”

“The GOC did not provide crucial information requested several times by the Department …”

“[T]he GOC’s legal counsel . . . misrepresented the source of the information.”

Views of China in the WestThe Pew Global Attitudes Project “How the World Feels About China & China Feels About Itself & the World”

Presented on July 29, 2008 at the Carnegie Endowment for International Peace in Washington, D.C.

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Senator McCain On Trade

In Michigan: “I’ve got to give you some straight talk. Some of the jobs that left the state of Michigan are not coming back. But I believe that we can develop a plan to take care of these workers who have lost their jobs my friends.”

Senator John McCain, January 2008

In Iowa: “My friends, we will disagree on a specific issue and that’s healthy. I believe in renewable fuels. I don’t believe in ethanol subsidies.”

Senator John McCain, August 2008

McCain v. Obama “If I am elected president, have no doubt that America will honor its international

commitments – and we will expect the same of others. We will strengthen and extend the open and rules-based international trading system”

Senator John McCain, in Ottawa, Canada, June 2008

“What I oppose—and what I have always opposed – are trade deals that put the interests of multinational corporations ahead of the interests of American workers--like NAFTA, and CAFTA, and permanent normal trade relations with China.”

Senator Barack Obama, Philadelphia, April 2008

“I also don’t oppose all trade deals. I voted for two of them because they have the worker and environmental agreements I believe in. Some of you disagreed with me on this but I did what I thought was right. That’s the truth.”

Senator Barack Obama, Pittsburgh, April 2008

“One million jobs have been lost because of NAFTA, including nearly 50,000 jobs here in Ohio. And yet, ten years after NAFTA passed, Senator Clinton said it was good for America. Well, I don’t think NAFTA has been good for America – and I never have.”

Senator Barack Obama, Ohio, February 2008

National Post, March 7, 2008 (Editorial Page)

On The Democratic Party Platform

“Trade has been a bigger part of the campaign so far this year, and I think it probably will continue to be. I think it does account for the rather more extensive attention paid to it in the platform compared to four years ago.”

Professor Daniel Tarullo, August 2008

Obama On China

“America and the world can benefit from trade with China.”

“Seeing the living standards of the Chinese people improve is a good thing – good because we want a stable China, and good because China can be a powerful market for American exports.”

Senator Barack Obama, April 2008