Much wonkery is going on as academics pore over the Republican platform for November’s elections, adopted by the convention on Tuesday.
Given Mitt Romney’s sharpish turn towards China-bashing on the campaign trail, the section on trade is worth a detailed look. Scott Lincicome does a thorough number on it here - but I’m also thinking, cynically, about how much of the frothy combative stuff a Romney presidency (and a Republican Congress) could execute in the least trade-warmongering fashion possible – i.e. keep to the letter but not the spirit of the platform.
Taking the actual pledges one by one:
- The US should “stand ready to impose countervailing duties if China fails to amend its currency policies”. At minimum, this could mean provisions such as those in the currency bill that passed the Senate but has not made headway in the House: requiring the US Commerce Department to incorporate estimates of currency undervaluation when calculating “countervailing duties” (those against unfairly state-subsidised imports). But in practice, it is unclear about how big a deal this would actually be. Estimates of currency undervaluation for China have recently been heavily reduced; the commerce department would most likely have to use a conservative undervaluation formulation to protect itself against legal challenges at the World Trade Organisation. Companies still have to prove they have been injured by imports to get countervailing duties in the first place. Indeed, one of the arguments I have heard against the Senate currency bill is that, having progressively been narrowed to try to make it compatible with WTO rules, it risks provoking a major diplomatic row with Beijing in order to achieve not very much.
Of course, the question of whether China has amended its currency policies is a judgment call for the administration/Congress to make, and they could avoid the whole issue by claiming that some underlying amendment has been made.
- “Commercial discrimination will be met in kind. Counterfeit goods will be aggressively kept out of the country.” Too vague to mean much. Met in kind how? Kept out how?
- “Victimised private firms will be encouraged to raise claims in both US courts and at the World Trade Organisation.” This statement combines the mundane with the literally impossible. Businesses already raise plenty of claims in US courts, when they can build a case, and companies can’t bring cases to the WTO – only governments can.
- “Punitive measures will be imposed on foreign firms that misappropriate American technology and intellectual property.” Too vague to be binding.
- “Until China abides by the WTO’s Government Procurement Agreement, the United States government will end procurement of Chinese goods and services.” This is actually pretty substantive, if they can stick to it – though it might also mean having to exclude other WTO member states that haven’t signed up to the GPA, which is most of them. Note though that lots of procurement is done by the states, not all of which are signatories to the government procurement agreement and which will not be bound by this pledge.
All in all, then, implementing the minimum compatible with the letter of the platform is not meaningless, but it isn’t a declaration of all-out trade war.