NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — Raj Bhala, Brenneisen Distinguished Professor at KU Law, noted that the recent passing of former President Jimmy Carter gave the world an opportunity to appreciate his contributions in many areas. One of those was trade policy.
"A trade imbalance, protecting the strength of the dollar, working with allies and friends for freer trade, the dialectic between free trade and fair trade, and the question of unfair foreign trade practices that hurt our workers, even illegal ones. These are all topics that all of the presidents since President Carter, and now President Trump in the second administration, will have to deal with," Bhala said. "Many of these words could easily, if we didn't date them, be spoken by contemporary politicians. It's also worth pointing out that President Carter both started and ended the last great successful round of multilateral trade negotiations. That was called the Tokyo Round. It was the last great successful round before the Uruguay Round, which gave birth to the WTO. The Tokyo Round was in 1976 to 1979. It was under the old General Agreement on Tariffs and Trade. It laid a lot of key documents, treaties for the Uruguay Round that would come from 1986 to 1994 and give birth to the WTO. President Carter had to deal with a lot of themes and issues that we see today. In some sense, he was avant-garde. His record on multilateralism with the Tokyo Round, it was exceptionally strong."
As for the second bite at the apple for incoming President Donald Trump, it remains to be seen if his hard-nosed approach to negotiation will ultimately prove successful.
"If we were in the old world, the old paradigm of a liberal international trading order, I don't mean politically liberal, I mean liberal in the sense of open trade, open investment, low tariffs. If we were in that kind of world, the kind of world that President Carter was negotiating, then tariff threats would not be used for non-tariff purposes like immigration or narcotics," Bhala said. "We are in a different paradigm in which trade is very clearly linked to national security by President Trump. He's not the only one. Other presidents have done it before him. I think we've been clearly moving in that direction. President Biden certainly has linked trade to national security. And so President Trump will indeed, as he has been, continue to pull trade levers like tariffs and non-tariff barriers, export controls, trade sanctions, investment bans for any non-trade purpose that he feels is important to U.S. national security. It's an expanded use or scope of application of the tariff weapon."
The U.S., especially in the Trump I and Biden administrations, has been willing to go it alone quite often in trade policy. Bhala doesn't expect that to change.
"It's going to be much more of a unilateral thing, not only from the US side, but unilateralism begets unilateralism," Bhala said. "You're already seeing that from the European Union side, for example, where there's a huge clash between Trump I and Trump II, on the one hand, and most European countries, on the other hand, on climate change issues and the use of tariffs to encourage the production and exportation of low carbon emission goods. Well, the European Union has already put on its carbon border adjustment mechanism and it's continuing to phase it in. That's going to mean potentially higher tariffs on some US goods that are dirty goods. That carbon border adjustment mechanism or CBAM, as it's called, probably violates a number of WTO rules. But the European Union is not going to be bound down by a failure of the multilateral trading system, the WTO, to agree on how trade should address climate change, just like Trump one and Trump two are not going to be bound down by WTO inaction on how to deal with China, such as, for example, overcapacity in the Chinese steel industry. The failure of the WTO to address Chinese Communist Party policies on trade that are orthogonal, are perpendicular, are averse to US national security interests is not going to stop the Trump administration from continuing to act and prosecute this trade war."
Bhala said that the height of the effectiveness of the WTO was about 20 years ago, and unless many changes happen that are not currently on the horizon, its influence will likely continue to wane in the coming years.
The full conversation between Nick Gosnell and Raj Bhala is below.