TRADE WARS: WHAT DO THEY MEAN? WHY ARE THEY HAPPENING...
Transcript of TRADE WARS: WHAT DO THEY MEAN? WHY ARE THEY HAPPENING...
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TRADE WARS: WHAT DO THEY MEAN? WHY ARE THEY HAPPENING NOW?
WHAT ARE THE COSTS?
Aaditya Mattoo (based on Mattoo and Staiger, 2019)
World Bank, ABCDE, June 2019
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The threat to globalization may be a historical inevitability1
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Shar
e of
Wor
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xpor
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USA UK China
UK: first concerns about German, US catch up
UK: departs from MFN
UK: confident, chooses openness and MFNPax-Britannica
US: confident, chooses openness and MFNPax-Americana
US: first concerns about Japan catch up
US: departs from MFN?
Pax-Sinica?
Shifts in trade shares and changes in policy stance
The UK and US Share of World Trade, 1800-2016
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US TRADE WARS
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What do trade wars mean? A popular view
GMR 2015/20163
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AN ALTERNATIVE INTERPRETATION
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STRUCTURE OF PRESENTATION
• The rules-based trading system• Why? US actions as bargaining
tariffs• Why now? Hegemonic transition• The costs of myopia
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THE RULES-BASED MULTILATERAL TRADING SYSTEM
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• MFN• Reciprocity
• Together constrain the exercise of power in bargaining
• Recent US actions as an attempt to escape these constraints
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WHY? US ACTIONS AS BARGAINING TARIFFS7
And bilateral trade deficits signify trading partners with whom US bargaining tariffs create strongest threat point
Trade negotiations: from win-win to zero sum; or later comers problem
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WHY NOW? HEGEMONIC TRANSITION
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WHY NOW? HEGEMONIC TRANSITION
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WHY NOW? HEGEMONIC TRANSITION
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WHY NOW? HEGEMONIC TRANSITION
Duration of phases is not exogenously determined and depends on policy choices
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THE COSTS OF MYOPIA
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THE COSTS OF MYOPIA
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THE COSTS OF MYOPIA
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THE COSTS OF MYOPIA
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Evading the Thucydides trap by facilitating rather than resisting the new hegemony?
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The domestic political economy of trade is also being turned on its head
• Classical view of national trade policy and trade negotiations: driven by concentrated producer interests
• But globalized production and ownership, weaken link between producer interests and national trade policy.
• The result: democratization of trade policy to favor diffuse and less-mobile labor and consumer interests.
• What does that mean for international trade cooperation?
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