Bracing for a new trade framework
The author is the president of the Lee & Ko Global Commerce Institute and former minister of trade.
Comments from U.S. Trade Representative (USTR) Katherine Tai and Commerce Secretary Gina Raimondo during their recent visits to Asian countries suggest movements by Washington to design a new framework for trade. Washington is primarily engaged in getting the upper hand in the hegemonic struggle with China. Trade policy is oriented to achieve that goal.
The United States has been eager to take the initiative to arrange a new order in digital commerce. It aims to design a treaty encompassing tougher U.S. government regulatory authority for national and economic security interests and protect their workers and enterprises from discriminative actions in other countries. The U.S. plans to set guidelines for cross-border data migration, localization in data, privacy, government access to information, and worker rights. Washington took a step further to set ethical standards so that artificial intelligence does not threaten democracy while trying to block cross-border trade of products made by forced labor.
During her opening address during the recent general meeting of the American Iron and Steel Institute and the Steel Manufacturers Association, Trade Representative Tai noted the structural imbalances or excess capacity issues that would persist if left unaddressed. She singled out China for global overcapacity in its production of 1 billion metric tons of steel annually, or nearly 60 percent of global output. She blamed billions of dollars in state subsidies to the Chinese steel industry for the glut that was hurting the U.S. steel industry and workers. U.S. trade authorities target “unfair” industrial subsidies handed out to enterprises by state capitalism, because they not just spur excess production but also increase carbon emissions. She vowed to take all possible steps to curb the activities and come up with new measures when necessary.
The office of the USTR submitted a proposal to the World Trade Organization urging it to take stronger action on forced labor on fishing vessels and harmful subsidies in the ongoing negotiations on the issue. The U.S. Congress also has passed the Uyghur Forced Labor Prevention Act banning goods produced wholly or partly in the Xinjiang region of China on the presumption that behind them is “forced labor.” The move follows a temporary ban on imports of cotton and tomatoes from the area in January. During her Asian tour, Tai emphasized the “worker-centric” trade policy of the Biden administration and pledged trade restrictions on goods produced through forced labor.
The U.S. is drawing Asian nations to its new framework. It has been seeking cooperation with Singapore, the Association of Southeast Asian Nations, Korea, Japan and India through the Indo-Pacific Economic Framework, which in the works, to counter China.
The U.S. has withdrawn its 25-percent duty on steel and aluminum from the European Union under Section 232 of the Trade Expansion Act — imposed by the Trump administration — and agreed with the EU to change it into a quota tariff. The move suggests the U.S.’s rapport with EU for co-actions in the future by reviving the U.S.-EU-led international order pushed by the Obama administration to contain China’s rise. The U.S. and the EU are collaborating to address overcapacity and carbon emission issues.
The new U.S. trade policy encompasses networking with Indo-Pacific and EU members. It remains uncertain whether America will steer the Indo-Pacific Economic Framework as a regional pact or through bilateral agreements with individual states. The U.S. and the EU are poised to address various trade issues through the joint Trade and Technology Council (TTC) they recently launched.
The U.S. is expected to detail the Indo-Pacific Economic Framework next year. Korea must devise a strategy on joining the framework or related pacts. The government must set its position based on an accurate understanding of the digital trade agreement America is pursuing. The digital trade pact the U.S. has settled with Japan could be a benchmark. The government also must fix its stance on industrial subsidies. As oversupply in steel also hurts Korea, Seoul must demand removal of the annual quota on steel exports to the U.S.
Translation by the Korea JoongAng Daily staff.