Tougher Trade Enforcement Means What, Exactly?

In Asia, especially, many people are also puzzled about how dumping is determined.  After all, costs in this region are much lower than costs in North America.  If you are just comparing costs of production, Asia could be found “guilty” all the time of dumping.  Ah—this gets to an interesting problem with trade remedies.  The methods used for determining “guilt” are, indeed, a major issue.  When the US argues that it will engage in tougher enforcement, part of what it means is that it will more aggressively pursue trade remedies.  Officials will crack down on firms assumed to be dumping stuff into the American market.  Expect to hear a lot more about AD and CVD in the coming weeks and months, including more new and novel ways to interpret trade remedies with potentially serious implications for firms.

“Moderating” on Trade in Washington? Don’t Bet on It Yet

There is a reason that such trade tools have not been used by the United States for decades.  Section 232 was first drafted in 1962 for use during the Cold War.  It joins a long line of dusty laws that allow an economic nationalist in the White House to do many deeply damaging things in trade.  Trump's Executive Order reviewing the "Buy American, Hire American" issued on April 17, 2017, fits within this overall mindset as well.  The sigh of relief over the relatively benign nature of the first 90 days in office from the Trump administration may be due to a lack of understanding of what is behind relatively anodyne sentences on the page.   The economic nationalists haven’t gone away.  They’ve maybe just gotten smarter at packaging.

RCEP: Facilitating Trade for E-Commerce?

One area of particular importance for smaller firms engaged in e-commerce is dealing with problems at customs.  Many e-commerce companies are not shipping 40 foot containers but a few boxes or even just one package straight to consumers or to other companies.  Yet the paperwork and processing requirements to send one small box can be exactly the same a huge container.  Firms often face complicated and cumbersome paperwork requirements at the border.  Some markets charge high fees or inspect every single parcel, which causes expensive delays.  Sometimes these issues are so significant that companies simply stop trying to send goods overseas at all.  These problems are not unique to e-commerce shippers, of course, but if one important goal of RCEP is to facilitate trade for e-commerce, then a final agreement that does not address the real impediments to trade in smaller size, smaller value shipments at the borders will be a missed opportunity.  The benefits of a robust e-commerce chapter that does not simultaneously tackle customs issues could be lost or watered down.

Digital Trade and E-Commerce Policies in Northeast Asia

Overall, the review of policy at the domestic level shows that governments have not yet figured out the best approach for creating supportive and enabling frameworks for digital trade and e-commerce.  To date, much of the official response has been fragmented between ministries and agencies, with little coordination. Digital trade is unlike many other sectors—it cuts across an increasingly wide swath of the economy and regulatory policies in one area often has knock-on or unintended consequences in other areas. It is also rapidly evolving, which is making it difficult for government officials to address.  If governments are too far out in front, too prescriptive or too forward leaning, they risk cutting off new sources of innovation and growth.  They may unintentionally box in specific technologies or platforms. Yet it can be very difficult to think about regulating for outcomes, since it requires bureaucrats to have a visionary sense of the future that few individuals are likely to have.  Creating digital economy policies at the domestic level, in any case, is probably not the best or most effective way to create sensible regulations.  The digital economy does not recognize national boundaries.  It does not logically stop at a customs border. Hence, the more efficient and effective way to manage digital policies is at the regional or international level. 

Special Edition: The WTO “Fall Back” Option for Brexit

None of these, however, can start until the WTO issues have been sorted.  Hence it is urgent to get the UK/EU internal discussions underway immediately on how to divide up WTO commitments and start the painstaking process of scheduling independent commitments for the UK. It may go smoothly and quickly.  But it may not.  And companies would be well advised to pay careful attention to what happens in Geneva—these apparently arcane discussions about schedules and commitments could become the rules that govern trade for UK businesses for a long time to come.