Playing the Blame Game on Trump and Trade

Stimson Spotlight

Playing the Blame Game on Trump and Trade

By William Reinsch
 
Just when everyone is frothing at the mouth over what the Trump administration is doing on trade, along come some things that are not Trump’s fault (at least not yet). For example, just a few days ago the Commerce Department preliminarily announced countervailing duties of more than 200% (yes, you read that right — two hundred percent) on Bombardier aircraft to offset subsidies allegedly provided by the Canadian government. Shortly before that the International Trade Commission (ITC) unanimously found injury in a safeguards case involving solar panels. And both of those occurred while the government continues to negotiate an agreement on Canadian lumber, which also began as a subsidy case.
The result is even more panic on the trade front, with some assuming that these are final actions that have already occurred, and others assuming that these are all part of the president’s protectionist trade policy. Both of these assumptions are wrong.

None of these actions is final yet. In the Bombardier case, Commerce must do more analysis before coming up with a final subsidy number, and even then, the ITC will have to determine if injury has occurred. In the solar panel case, the Commission must now recommend a remedy, and after that it is up to the president to decide what, if any action to take. In the interminable lumber case, negotiations will hopefully preempt the imposition of countervailing duties later this fall. (I should make clear that I am not, in this column, taking a position on the merits of any of these particular cases, but I have long supported the laws that permit them to be filed and adjudicated).

Second, these cases were not instigated by the government. All of them originated in the private sector with companies using U.S. trade laws that allow them to bring their grievances to the government for redress. Trump had nothing to do with any of them. Moreover, in the Bombardier and lumber cases, the statute in question does not provide for presidential discretion. The Commerce Department is charged with determining whether dumping or subsidies exist and, if so, their amount, and the ITC is charged with determining whether the statutory threshold of injury is met. If both determinations are affirmative, duties are automatically imposed in the amount necessary to offset the subsidy or dumping. They are not something the president gets to weigh in on (although sometimes both parties try to strike a deal to avoid the duties, which does at point necessitate an administration role). 

Nor is this something new. The U.S. countervailing duty law dates from the 1890s, the Antidumping Act from 1921. Their contemporary versions took shape in trade legislation following the Tokyo Round in 1979 and in the major trade legislation in 1986-87 during the Reagan administration. 

The trade laws in question are also permitted by WTO rules. There is frequent litigation in the WTO about how the laws are applied — both ours and similar laws in other countries — but their basic consistency with WTO rules was established a long time ago. It is more than a bit hypocritical for other countries to complain about our laws or our government’s policy when they are doing exactly the same thing. In fact, while the U.S. is a frequent party to dispute settlement in the WTO over the application of our laws and those of other countries both as a plaintiff and a defendant, on the whole its track record of winning is quite good. 

That does not mean there is nothing for pro-trade people to worry about. Far from it, as I’ve pointed out virtually every week I’ve been writing this column. But U.S. citizens using the rules by seeking to address what they believe to be either unfair activity or serious injury from imports by using U.S. law that is consistent with our multilateral obligations should not be a cause of concern or over-interpretation by the media.

So, the sky is not falling — yet. Or at least it is not falling because of these extraneous events. They are not part of some grand Trumpian protectionist plot, and in only one of them — solar panels — will we eventually find out what the president thinks. Instead of frothing at the mouth over what has long been a normal part of the administration of trade policy globally, we should spend our time worrying about what the administration is actually up to in areas where its leadership matters, like NAFTA, KORUS, TTIP, and China.
____
William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative.