US International Trade Research Articles

US international trade policy: Scenarios of protectionism and trade wars

US international trade policy under both the Trump and Biden administrations has been increasingly protectionist. This paper considers two policy scenarios under active discussion: (1) an across-the-board increase in all US tariffs by 10 percentage points, and (2) a severe escalation of the US trade war with China. The scenarios are analyzed using a multi-country computable general equilibrium (CGE) simulation model of the global economy. Trade wars or policy regimes of widespread protection will increase tariffs in many sectors simultaneously and include both final goods and intermediate inputs. The impacts are complex, with a web of direct and indirect forces coming into play across domestic and international markets. The global CGE model captures these mechanisms, including both short and long-run effects, with and without retaliation by partner countries. In a world economy where the US accounts for only 10 % of global trade and potentially rival trade bloc have emerged in Europe and E&SE Asia, the US is no longer hegemonic in global markets. We find that across-the-board tariffs do not protect manufacturing jobs because the cost of imported intermediate goods increases, raising costs in manufacturing production. The US trade war with China leads to a dramatic fall in bilateral trade. Other countries expand their trade to China and the US with the exception of closely linked partners (e.g. Canada and Mexico and all countries in E&SE Asia). We find that the world economy can adjust to US trade wars, diverting trade around the US.

Business Roundup

BUSINESS Business Roundup ShareShare onFacebookTwitterWechatLinked InRedditEmail C&EN, 2022, 100 (1), p 17January 3, 2022Cite this:C&EN 100, 1, 17AbstractVertellus has acquired the food and personal care ingredients maker Jarchem Innovative Ingredients for an undisclosed sum. Jarchem specializes in biobased substitutes for silicones and synthetic esters. Reagens will buy the thioester antioxidant business of Evans Chemetics for an undisclosed sum. The ingredients in the deal are used to protect plastics from oxidation caused by heat and light. SK Innovation and Kolon Industries have launched a business in polybutylene adipate- co -terephthalate (PBAT), a biodegradable polymer. The companies opened a plant in Gumi, South Korea, with a capacity of 3,000 metric tons per year. JSR has joined the quantum computing companies PsiQuantum and QunaSys in a project to assess fault-tolerant quantum computing for industrial chemistry calculations. JSR says it hopes to solve previously impossible materials simulations. CMC Materials says the US International Trade Commission has issued an exclusion order against DuPont for violating CMC patents related to chemical mechanical planarizationView: PDF | Full Text HTML

Safeguard measures and fresh produce trade: The case of US blueberry imports

Abstract Safeguard measures are used to limit excessive import growth and protect domestic producers from unfair import competition. The global safeguard investigation for blueberries highlights these concerns and raises questions about the relationship between imports, prices, and the well-being of US producers. Although the US International Trade Commission (USITC) ruled that imports have not caused serious injury to US blueberry producers, it was important to further examine this issue. In this study, we employ an inverse demand model and dynamic vector autoregressive procedure linking source-specific fresh blueberry imports from countries like Mexico and Chile to US blueberry prices. Our results mostly support the USITC ruling. Results indicate that declines in US prices are small when compared to the level of import growth. Impulse response functions indicate that import price shocks are not long-lasting.

Trump and Trade – Policy and Law

I focus on the legal aspects of Trump’s protectionist policies, which hearken back to the 1930s but in many ways are much worse than those policies. Donald Trump clings to the delusion that bilateral pressure will rebalance trade in favor of American industry. Trump’s trade actions raise the issues of constitutional law and the interrelationship of public international law and U.S. constitutional law as matters of paramount concern today. Trump’s policies represent an aggressive attack on the post-World War II international order. Most notably, Trump’s attack on the judicial system of the WTO, as a derogation of U.S. sovereignty, is hugely baffling. The WTO’s dispute resolution system was an American initiative that reflected the core American belief in a rules-based global system and the American value of relying upon litigation to provide fair judicial determination of conflicts. Trump’s policies reflect his reliance on unilateral actions, raw power politics, the law of the jungle, bluster, and threats. This has only led to needless stress on the U.S. and global economies. Trump’s attacks on the exiting international system have significantly diminished the standing of the United States in diplomatic relations with our friends and allies and has only emboldened others to take unilateral actions. Consequently, over the last four years, the United States has failed to formulate viable foreign policies and strategies to tackle the multitude of global problems confronting its national interests and security. In the run up to the fall 2020 presidential election, I offer this work as a primer on Trump’s trade policies and his ferocious and unending attacks on both the U.S. legal system and the rules-based international system and its institutions. Click here or copy and paste the below link(s) to download (HeinOnline -- 'US International Trade Library.'): https:heinonline.org/HOL/P?h=hein.trade/ttrump10001&i=1 http://www.globaltraderelations.net/images/Hein.New_Book_Trump,_Trade_and_Law_2_2020_.pdf

The US and China International Trade Indices: A Comprehensive Empirical Survey, 2020 Edition

The performance of the Chinese economy has been remarkable since the country began reforming and liberalizing its economy in the late 1970s. The Chinese experience can provide critical social and economic development lessons to other developing countries that are still suffering from high rates of poverty. In 1980, the Chinese economy was ranked among the 15th top economies in the world; it advanced to 4th place in 2001 before advancing further to be the second-largest economy in the world after the United States in 2009. From 1980 to 2009, the Chinese economy has grown by an annual average rate equal to 10% compared to only 2.8% in the US. In the last decade (from 2010 to 2019), the Chinese GDP growth rates increased by an average annual rate equal to 7.7% compared to 2.3% annual rate in the US. As a result of this amazing growth record, the Chinese economy has grown by 34 folds in the last four decades, from 340 billion USD in 1980 to 11.5 trillion USD in 2019. In the same period, the US economy has increased by less than three folds, from 6.5 trillion USD in 1980 to 18.3 trillion USD in 2019. If both countries would continue to grow at the same rates of the last decade, the GDP of both economies will match each other (22.5 trillion USD) in 2028. China could not have achieved this remarkable economic performance without liberalizing its trading regime with the rest of the world, specifically the largest economy in the world, the United States. China's total trade with the rest of the world increased from 65 billion USD in the mid-1980s to more than 4.5 trillion USD in 2019. With the US, China total trade increased from 7 billion USD in the mid-1980s to around 542 billion USD in 2019. In 2019 and despite the trading war between China and the US, China was the largest trading partner to the US in 2019, the third-largest destination for its exports, and its largest source of imports. On the other hand, the US is the largest export market for China, its sixth major import source, and its largest merchandise trading partner. Despite the tense trade relationship, the two countries face critical political and economic issues including South China Sea, North Korea, climate change, and economic imbalances. On March 22, 2018, the two countries started a trade war with each other when the Trump administration imposed tariffs on China as a response to what the US claims are the Chinese theft of its intellectual property. The combined GDP of the two countries accounted for more than 35% of the world's total GDP in 2019. Therefore, the ongoing trade war will hurt not only both economies but also the rest of the world. Monitoring the trade relationship between the two countries is important for policymakers and researchers alike. The raw trade data contains critical trends that we could not observe. That is why we need to measure a number of trade indices that are grouped into five main categories as follows: 1. Trade and Economy and includes the following indicators: the trade openness, the export propensity, the import penetration index, the marginal propensity to import, and trade per capita. 2. The performances of the Chinese and the US international trades and includes the following indicators: growth rates of exports, growth rates of imports, growth rates of trades, normalized trade balance, and export/import coverage indices. 3. The directions of the Chinese and the US international trades and includes the following indicators: shares of the total world exports, shares of the total world imports, shares of the total world trade, major export partners, major import partners, trade intensity, and trade entropy indices. 4. The sectoral structures of the Chinese and the US international trades and includes the following indicators: competitiveness index, major export categories, major import categories, export diversification, revealed comparative advantage, trade complementarity, export similarity, and trade overlap indices. 5. Tariffs imposed on the China-US trade flows and include the following indicators: average applied/bound tariffs, weighted average tariffs, and dispersion of tariffs.

Protectionism in the Era of Globalisation: The misuse of anti-dumping instruments from an EU perspective

The purpose of the dissertation at hand is to contrast the AdA (Agreement on the Implementation of Article VI of the GATT'94) with anti-dumping investigations carried out by and against the EU. It has been usual to suppose that WTO Members apply the AdA's flexible rules in a protectionist manner. However, hardly any treatise on contingent protection is concerned with this facet of global trade law. The question, also, of the volume of dumped imports, in the sense of negligibility, the impact of geopolitical factors, the extent of protectionism and malpractices in the review phase, has scarcely been examined. Is it true that anti-dumping instruments are being misused in view of the flexible rules of the Anti-dumping Agreement? For, admittedly, malpractices have been forthcoming ever since the WTO came into being. Sharp distinctions are made through a critical examination of inspection documents on the one hand and sixty-six charts which scrutinise every section of the investigative process on the other. The study identifies contingent protectionism in sectors of geopolitical importance, tit-for-tat in the imposition of anti-dumping measures and partiality in the various rates of duties. Furthermore, it identifies malpractices in the determination of negligiblity, normal value, export prices, injury and margins of dumping. The findings shed new light on the functioning of the US International Trade Administration, the DG Trade EU and the PRC Trade Remedy Investigation Bureau. Finally, a solution is sought through the formulation of a new general theory on the detection of sales outside the natural course of world trade and a definition of sales within the ordinary course of trade.

Understanding the Stickiness of Commodity Supply Chains Is Key to Improving Their Sustainability

Summary Commodity trade is central to the global economy but is also associated with socio-environmental impacts, for example, deforestation, especially in producer countries. It is crucial to understand how geographic sourcing patterns of commodities and commercial relationships between places and actors influence land-use dynamics, socio-economic development, and environmental degradation. Here, we propose a concept and methodological approach to analyze the geographic stickiness of commodity supply chains, which is the maintenance of supply network configurations over time and across perturbations. We showcase policy-relevant metrics for all Brazilian soy exports between 2003 and 2017, using high-resolution supply chain data from www.trase.earth . We find that the Brazilian soy traders with the largest market share exhibit stickier geographic sourcing patterns, and that the supply network configurations between production places and traders become increasingly sticky in subsequent years. Understanding trade stickiness is crucial for supply chain accountability, because it directly affects the effectiveness of zero-deforestation commitments.

Arkema alleges refrigerant dumping by China

Arkema has filed an antidumping petition with the US International Trade Commission regarding imports of the fluorocarbon refrigerant R-32 (difluoromethane) from China. Arkema, which is the sole US producer of the refrigerant, at a plant in Calvert City, Kentucky, says US imports of R-32 shot up 900%, to about 15,000 metric tons per year, between 2016 and 2019. R-32 is used mostly in refrigerant blends. To circumvent US antidumping duties on blends from China, Arkema claims, foreign producers established US blending operations that allowed them to import unblended material into the US at below-market prices. The US Commerce Department appears to be closing the loophole. It has issued a preliminary ruling to impose antidumping duties on R-32 and R-125 (pentafluoroethane) from China. A final ruling is due in April.

Bumper to Bumper: Will the CUSMA Rules of Origin Make America’s Auto Industry Great Again?

In the negotiations for a new NAFTA, the Trump administration targeted the North American auto industry for major change. The Trump administration objected to the NAFTA rules of origin – with which a good must conform to be eligible for NAFTA duty-free treatment – as permitting too much non-NAFTA content in North American automobiles, and was fixated on the US’s significant balance-of-trade deficit with Mexico, most of which is accounted for by trade in automotive goods. For Canada’s auto industry, there is much at stake. In 2017, Canada exported automotive goods to the United States valued at close to $62 billion, and the US market is overwhelmingly the destination for vehicles produced in Canada. Therefore, it is important that the rules of origin with which the Canadian automotive industry must work be transparent and administratively workable. Under the new deal, the Canada-United States-Mexico- Agreement (CUSMA), the rules of origin that will apply to motor vehicles and their parts are considerably more stringent than their NAFTA counterparts. This Commentary analyzes the CUSMA rules of origin for automotive goods, identifies ambiguities and areas of uncertainty, and makes suggestions for clarifications through the adoption of the Uniform Regulations – for which CUSMA fortunately provides – that will provide greater certainty to both businesses and administrators in how to apply the rules. Adapting to the CUSMA rules will require major adjustments in supply chains. This is particularly the case with the substantially higher Regional Value Content (RVC) thresholds required for most automotive goods. While some relief is possible through limited alternative staging alternatives, the staging to the higher RVC thresholds under CUSMA is only three years for passenger vehicles and light trucks, as compared with eight years under NAFTA. Further, the CUSMA rules of origin are needlessly complex. There are multiple categories of parts for different categories of vehicles with varying RVC requirements that depend on the end use of the part. Complexity increases compliance costs, which are burdensome for all producers, but particularly for smaller producers that are less able to afford investment in expensive compliance systems. While the CUSMA rules mostly eliminate NAFTA tracing requirements, the CUSMA text inexplicably retains a form of tracing for several narrow categories of vehicles. The CUSMA rules of origin regime contains two requirements that are unprecedented in such regimes; namely a steel and aluminum purchase requirement and a labour value content requirement. These are performance requirements that are consistent with a managed trade regime (where rules are designed to achieve certain economic outcomes) and not with a free trade regime (which seeks to remove barriers to trade so that economic results are dictated by market forces). Two reports cast doubt on the benefits of the deal for the US. A US International Trade Commission report found, overall, the new rules should lead to a modest increase in employment in the US automotive sector, but the costs of vehicles produced in the United States will increase and production of vehicles there will decline. An International Monetary Fund working paper states quite bluntly that the tighter auto rules of origin will not achieve their desired outcomes by reason of higher costs, increased consumer prices and reduced demand.

United States – Anti-Dumping and Countervailing Measures on Certain Coated Paper from Indonesia (US–Coated Paper (Indonesia)), DS491

Indonesia challenged two measures of the United States' (US): first, the imposition of anti-dumping and countervailing duties (CVDs) on certain coated paper from Indonesia. In particular, Indonesia challenged certain aspects of the US States Department of Commerce (USDOC) final determination ‘as applied’ in its CVD investigation on certain coated paper from Indonesia, and the US International Trade Commission's (USCIT) final threat of injury determination regarding subsidized and dumped imports from Indonesia and China. Second, Indonesia challenged ‘as such’ Section 711(11)(B) of the US Tariff Act. In particular, Indonesia challenged the use of this provision in affirmative threat of injury determinations.

PRIVATE ANTITRUST AT THE U.S. INTERNATIONAL TRADE COMMISSION

This paper, drafted as an adjudicator's opinion in a recent case of nearly first impression, explores private antitrust adjudication in the Section 337 docket of the US International Trade Commission (ITC). There are several significant reasons why even a skeptic of the ITC's Anti-dumping, Countervailing Duty, and Safeguards docket (collectively, the “Title VII” docket)—as well as an antitrust skeptic—should be significantly less worried when cases normally expected to be brought in the Title VII portion of the ITC's docket as petitions are instead brought in the Section 337 portion of the ITC docket as complaints alleging ordinary violations of the antitrust laws. Private antitrust litigation fits with the plain meaning of the ITC's statute and with well-established antitrust case law. The ITC 337 docket also offers some practical benefits over courts and other agencies. The procedures do not rely heavily administrative deference; and do rely heavily on the full panoply of procedural devices ordinarily available in court for truth-testing of evidence including cross examination, all in a timeframe likely to be significantly shorter (around 18 months) than the many years typically required for antitrust litigation in federal court, and without the black box of a general jury verdict. What about the doctrine that federal courts developed called “antitrust injury?” The ITC relied on that doctrine to dismiss a case recently brought by the domestic U.S. steel industry against Chinese importers of steel. This paper explores some reasons why that doctrine does not fit the ITC 337 statute.

Entry modes of foreign direct investment and industry demand for trade protection

This paper investigates how two entry modes of foreign direct investment should affect industry lobbying for trade protection in different ways. The paper hypothesises that, in the case of green-field investment, as the number of firms increase in an investment-receiving sector, the firms will find it harder to coordinate industry-level protectionist demand and that (concordantly) as the size of protectionist rents to each firm decreases, firms will have less incentive to lobby. In contrast, in the case of mergers and acquisitions investment, where foreign firms acquire domestic firms, the domestic-owned producer concentration ratio should increase. This in turn may intensify political ‘weight’ on the industry or make coordinated collective actions easier in domestic firms. As a result, domestic firms in the investment-receiving sector should be able to secure more efforts to lobby for trade protection. An empirical test of industry petitions to the US International Trade Commission supports this hypothesis.

US Rural Poverty and International Trade

There appears to be limited research on the effects of recent international trade treaties on US poverty rates. Previous literature has discussed reasons why rural poverty and urban poverty have somewhat different sets of causes. Using 1985-2015 annual data, rural poverty and urban poverty rates are regressed on the unemployment rate and dummy variables reflecting the time periods for NAFTA and the Chinese entry into the WTO. In particular, the two dummies are statistically insignificant for both poverty rates.

Scholarly attention and the limited internationalization of US social science

What parts of the world does American social science consider worthy of scholarly attention? Analyzing the geographic focus of more than 2 million bibliographic records of journal articles, books, and dissertations, the study finds a weak trend toward internationalization of US social-scientific attention over the past half-century. Moreover, the share of scholarly attention devoted to particular regions has remained surprisingly stable over this period, with Western Europe remaining the primary focus of internationally-oriented work. Shifts in US national security priorities, international trade, student demand, and demographic characteristics account for only a small portion of the variation in the rate of social-scientific publications on world regions, lending credibility to the view that scholarly attention is shaped in large part by inertia that is built into academic institutions and cultures.

The Effect of Special 301 on US Trade Volume

The Special 301 Report, issued by the United States Department of State, is a list of countries of which private companies violate international intellectual property rights laws. The State Department would mediate with the listed countries on trade. This study concentrates on the relationship between the Special 301 listed countries and the international trade of the United States. Based on time series data of the absolute value of US net exports from 1973 to 2013, the findings indicate the Special 301 Report does have a positive impact on the volume of US international trade.

Learning from Past Mistakes The US Patent System and International Trade Agreements

To ensure that the TPP agreement works properly in practice with regard to patents and the governance of pharmaceuticals and semiconductors, strong mechanisms for enforcement and for rooting out system abuse are needed. To make this happen, regulators should learn from past mistakes of the U.S. patent system: the proliferation of non-practicing entities (NPEs), and strategic behavior that blocks or delays generic competition in the pharmaceutical industry. This Think Piece presents key findings of the author’s research on the complexity of the U.S. litigation and regulatory frameworks that have provided fertile ground for strategic behavior that can have negative effects on innovation, and may distort the expected gains from trade for innovation.

Cross-Border Intellectual Property Rights in Digital Data: The Legal Framework in Europe and the United States in the Light of ClearCorrect v. US International Trade Commission

The article will address the authority of the European Union (hereinafter, EU) to detain goods at its borders that infringe, or are suspected of infringing, intellectual property rights (hereinafter, IPRs), in part through a comparison of similar regulations in the United States (hereinafter, US), and especially with respect to the detainment of digital goods. On 10 November 2015, the US Court of Appeals for the Federal Circuit released its Opinion in ClearCorrect Operating, LLC v. United States International Trade Commission, a case that, in part, examines the definition of ‘article’ under section 337 of the US Tariff Act of 1930. In the EU, Regulation (EU) No. 608/2013 of the European Parliament and of the Council of 12 June 2013 concerning customs enforcement of intellectual property rights and repealing Council Regulation (EC) No. 1383/2003 entered into effect in 2014. This regulation expanded the scope of competent authorities in EU Member States to detain suspected infringing goods at the EU’s borders, including new powers to detain and destroy ‘small consignments’ of such goods absent a formal decision confirming an infringement of an intellectual property design right. EU courts have yet to address the issue of whether digital data transmitted electronically applies to such legislation. The article will provide a review of the recent Opinion of the US Court of Appeals for the Federal Circuit, as well as an analysis of the relevant EU framework.

Fueling up: the economic implications of America's oil and gas boom

New drilling techniques for oil and natural gas are propelling an energy production renaissance in the United States. As the US economy struggles to emerge from the Great Recession, many see the boom as a possible source of economic salvation that could reduce unemployment and revitalize American manufacturing. Until now, however, there has been little objective analysis of the energy boom's economic consequences. In this major study, Trevor Houser and Shashank Mohan fill that gap. They assess the impact of the recent and projected increase in domestic energy production on US GDP, employment growth, manufacturing competitiveness, household expenditures, and international trade balance. Alongside its economic impact, the American energy revolution is raising new environmental and trade policy questions. What are the consequences for the environment and global warming of increased domestic oil and gas production? Should companies be allowed to export the energy they produce or will doing so undermine American manufacturing competitiveness? Houser and Mohan provide independent research and analysis that will help policymakers navigate these issues.

Out of the Murky Lagoon and Into...Is There a Emerging Consistent US Government Policy on Standard Essential Patents (SEPs)?

In January 2013, the USDOJ and USPTO issued a Policy Statement on remedies for Standard Essential Patents (SEPs) which concluded, that while an Section 337 exclusion order issued by the US International Trade Commission (ITC) for infringement of encumbered SEPs may be appropriate in some circumstances, “depending on the facts of individual cases, the public interest may preclude the issuance of an exclusion order in cases where the infringer is acting within the scope of the patent holder’s F/RAND commitment and is able, and has not refused, to license on F/RAND terms.” Contemporaneously, the FTC entered into a settlement with Google which defined what constitutes an SEP and demarcates specific steps to determine what is, in fact, an unwilling licensee, proscribing unilateral action by the SEP holder seeking damages or injunctions. Together, these action bring some order to what has been a murky area in telecommunications standards. But, unlike the FTC in its settlement agreement, the USDOJ/PTO Policy Statement, went further, evidencing what appears to be an overreaching regarding U.S. Government (USG) policy on voluntary industry standards (and how patents relate to them), even though the factual situations arose in the peculiar industry of telecommunications. This paper explains how that sector differs from others, focusing especially on standards for software, Internet and Web fields, analyzes the risk (and inconsistency with other USG policies) for assuming that there is one approach for how patents are treated in standardization activities across all sectors, and outlines next step considerations for policy makers.

The Determinants of US Countervailing Duties

The current paper reveals the macroeconomic determinants of material injury decisions on countervailing duties, which have seldom been analyzed. The empirical evidence of the behavior of the US International Trade Commission for the period 1980 - 2010 shows that there is a long-run equilibrium relationship between affirmative injury decisions and macroeconomic variables such as the unemployment rate and the import penetration ratio. The error-correction models show that the unemployment rate causes affirmative decisions on countervailing duties. The dummy variable representing the effect of expiration in 1992 of the multilateral voluntary export restraint (VER) in the steel industry is revealed to be significant, while the operation of the WTO system is not shown to be significant.