Sep 22, 2020

Bhala: Managed trade now heavily used tool

Posted Sep 22, 2020 12:52 PM


Hutch Post

HUTCHINSON, Kan. — A trade law professor at the University of Kansas notes that managed trade agreements are now common practice regardless of who the partner is.

"The whole January 2020 Phase One agreement that the U.S. and China signed, that is a managed trade agreement," said Raj Bhala, Brenneisen Distinguished Professor of Law at KU and a Senior Advisor at Dentons. "There are very specific targets expressed in terms of dollar value of agricultural goods, industrial goods, energy goods and financial services that the Chinese are supposed to import over the two year period of 2020 and 2021."

The concern with using monetary value as a measure is that the economic downturn worldwide from the coronavirus has at least temporarily changed the level of demand overall for goods and services in that negotiated agreement. Nevertheless, the U.S. is also using the managed trade strategy in its conflict with Canada over aluminum.

"They have set specific monthly maximum tonnage amounts that range from, if I recall correctly, 75,000 to 85,000 tons of aluminum," Bhala said. "If any more come in from Canada, beyond those maximum thresholds then the USTR will reimpose the 10% tariffs."

Managed trade is not just a tool in the box any more, it's one of the most used.

"You could almost say it's become trade policy," Bhala said. "You look at so many trade agreements, even ones that are called free trade agreements and they really boil down, especially in sensitive sectors, to managing values or volumes of trade, setting actual quantitative limits."

Managed trade is part of the reason the United States does not do as much business through the World Trade Organization as it used to, as the 1994 GATT attempts to impose limits on such activities, specifically on quantitative restrictions.