A double-edged swordU.S. President Donald Trump has gotten tough on China on the trade front. He signed an executive order instructing his trade office to investigate China’s potential theft of American technologies, innovations and intellectual properties. If the investigation takes place, actions could trigger Section 301 of the Trade Act of 1974 that would enable merciless unilateral trade retaliations outside the World Trade Organization rules.
Trump wants to draw stronger actions from Beijing to rein in Pyongyang’s weapons program. China supplies a lifeline to Pyongyang even as the reclusive state has turned bolder in its military provocations with threats against the U.S. territory of Guam. Trump is testing Beijing on whether it dares to continue condoning Pyongyang’s provocations even with its economic interests at stake. We have nothing to lose if Beijing yields to Washington’s pressure to contain Pyongyang.
But there is an economic toll. Trump is resorting to domestic rules instead of obliging with WTO regulations to reduce the U.S. trade deficit with China that reaches $300 billion a year. This goes against the postwar-established global trade order. Nevertheless, the United States is out to ignore international rules to protect its own interests. Trump has pulled the United States out of the Trans-Pacific Partnership and entered renegotiation over the long-established North American Free Trade Agreement (Nafta). It is also bracing for a head-on clash with the world’s second-largest economy.
The export-reliant Korean economy would be hard hit if multilateral trade order is wrecked. Washington has proposed to start negotiation to revise terms in the bilateral free trade pact with Seoul. Officials must prepare a solid case to challenge new demands from Washington. Korea’s exports to China could be affected in the process of Beijing retaliating against U.S. moves. The worst — a trade war between the world’s two biggest economies — may not happen. But we must not let our guards down.
JoongAng Ilbo, Aug. 17, Page 30