Trump Or Biden Will Need To Reset Trade Policy To Stop China

This article first appeared in The Washington Times

Whoever wins in November, American trade policy needs a reset but neither the Trump nor Biden camps offer encouraging visions.

The America First agenda has enjoyed mixed results. Tariffs brought China to the negotiating table, but the Phase One Trade Deal does little more than set numerical targets for Chinese purchases. Chiding Europe has increased NATO defense spending, but we still don’t have trade deal with the EU or UK.

Emboldened by its successful handling of COVID-19, an impressive economic recovery and prospects of surpassing the US in GDP by the end of the decade, President Xi has doubled down on his refurbished version of 1930s-style authoritarian capitalism—pre-war Germany and Japan had state orchestrated private economies that supported devastating military buildups.

Mr. Trump has accomplished too little of his primary objectives regarding Chinese protectionism—to transform the way China does business by stopping subsidies, market closing preferences for national champions like Huawei and Tencent (TCEHY) and technology theft.

According to a U.S.-China Business Council survey, 13 percent of U.S. businesses in China were asked to transfer technology this year, up from 5 percent last year.

Yet, the world is changing. The Europeans increasingly recognize China poses a primary threat to western democracies. Democratic nominee Joe Biden, who happily helped President Obama appease China for eight years, now acknowledges America needs to get tough with China.

But Trump administration actions—both warranted such as applying WTO approved tariffs on Airbus in response to European government subsidies and unwise like refusing to approve judges for the WTO Appellate Body—have driven the Europeans to collaborate with China on the latter.

Ambassador Lighthizer in a recent Wall Street Journal op-ed got it both right and wrong. For too long, the WTO has operated by multiple sets of rules—depending on who you are. Its agreements required the United States and other industrialized countries to slash import barriers while permitting developing countries, including China, to maintain terribly high tariffs and other discriminatory practices.

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Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. He is the five time winner of the MarketWatch best forecaster ...

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