Countries are increasingly linking climate and trade with measures like the US Inflation Reduction Act and EU Carbon Border Adjustment Mechanism (CBAM) although other countries have critiqued these measures including at COP27. However, the EU maintains that the CBAM will only minimally impact trade while simultaneously leveraging further climate action. As the design of CBAM is being negotiated, with the trial period beginning in early 2023, what should we know about CBAM?
What is it?
The EU Green Deal raises concerns that higher carbon prices and industry standards could make emissions-intensive and trade-exposed industries like cement, aluminium, iron and steel less competitive in international markets.… Seguir leyendo »
When Germany took over the G7 presidency in January, supply chain resilience was identified as a key priority, and now – ahead of the G7 leaders’ summit – the goal of ‘ creating open, fair, resilient and sustainable supply chains’ has gained even greater urgency.
Russia’s invasion of Ukraine has challenged global supply chains on top of ongoing disruptions stemming from the COVID-19 pandemic. But although these extraordinary shocks sent potentially long-term ripples through global production and transportation networks, strategic competition with China and climate change present gradual risks for supply chains over a much longer timescale. Against this backdrop, G7 leaders need to strike a careful balance of responding to short-term fragilities without losing sight of the long-term objectives.… Seguir leyendo »
Creating better global governance is possible
Dr Anne-Marie Slaughter
The Biden administration’s foreign policy achievements can be divided into great power achievements and global achievements. In the great power category, the administration has shored up the military balance of power against China by strengthening the Quad – Japan, India, Australia, and the US – and creating a new military configuration of the US, the UK, and Australia, even as it created a serious rift with France. The Biden team is also pushing back hard against Russia, certainly in the cybersphere, and has reopened negotiations to stop Iran from becoming a nuclear power.… Seguir leyendo »
Balancing trade and non-trade policy objectives
The supply chain disruptions stemming from the COVID-19 pandemic highlight trade cannot be taken for granted, and economic interdependencies have both benefits and costs. As international commerce rebounds and trade policy is increasingly seen through the prism of enhancing resilience, the moment is ripe to redefine and reimagine trade.
The goal of trade policy has never been to increase trade for trade’s sake, so a new narrative and framework for global trade requires striking a careful balance between pursuing trade and non-trade policy objectives.
Protecting the environment, strengthening labour standards, and upholding human rights have long been goals for which trade policy is used as a lever, and the interaction of trade and national security interests as well as the links between trade and competition policy are not new issues either.… Seguir leyendo »
Although the UK’s G7 presidency is featuring a dedicated trade track for the first time because there are key factors which make 2021 a particularly opportune moment to develop one, this new approach must not become a one-off. Establishing the G7 trade track as a meaningful format for coordinating positions on global trade among a small group of advanced industrial economies should be a key aim for the UK’s presidency.
Germany’s upcoming G7 presidency in 2022 and Japan’s in 2023 means two major advocates of global trade are in prime position to continue the separate trade track, but currently it is not self-evident that they will.… Seguir leyendo »
After four years of the Donald Trump administration’s piecemeal approach to trade with Asia-Pacific, the US now finds itself on the outside of the region’s most important trade agreements, and in a difficult position to re-engage with key players for global economic growth, security, and technological innovation.
As the US sat on the sidelines, other major players – especially the European Union (EU) and the UK – have marched forwards in negotiating free trade agreements with key partners in the region. Meanwhile, regional integration in Asia-Pacific has advanced.
The Regional Comprehensive Economic Partnership (RCEP) – a trade deal between 15 Asia-Pacific nations including China struck in late 2020 – and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – an agreement between 11 countries following the US withdrawal from the more ambitious Trans-Pacific Partnership (TPP) – are the two biggest elements of the new Asia-Pacific trade architecture, and the US is part of neither.… Seguir leyendo »
Democracy Must Work at Home First
Dr Leslie Vinjamuri
US democracy has been vividly on display and scrutinized by the world for the entirety of Trump’s presidency. In the years ahead, the global balance of democratic and authoritarian values will be shaped not only by US leadership abroad but especially by the ability of the Biden administration to fix America’s democracy.
Today, the US is wracked by internal division and the distribution of economic opportunities and benefits across society is radically unequal. Confidence in the leadership, the electoral system, and the capacity of the state to deliver has taken a serious hit.… Seguir leyendo »
1. Resistance to Biden is likely
The result of the election made it clear America has not rejected ‘Trumpism’ and remains deeply polarized. Donald Trump remains an important figure within the Republican Party, and perhaps even its leader.
Some senior figures in the party support his efforts to convey the impression the election was ‘stolen’ from them, and analysts such as Max Boot and Timothy Snyder are even comparing this to the Dolchstosslegende (myth of a stab in the back) in Germany after World War I.
Assuming Joe Biden does take over as president on 20 January, the question is what form any ‘resistance’ to his administration takes.… Seguir leyendo »
The authors of this collection consider the most pressing foreign policy challenges for the next US president, and examine how the outcome of the 2020 election will affect these.
The president will determine how the US’s diplomatic, economic and military resources are invested, and what value the administration will attach to existing alliances and multilateral institutions.
Whoever sits in the White House will shape the trajectory of the US–China relationship and the global economy after the COVID-19 pandemic, as well as international cooperation on climate action, international trade and technology policy, and health.
- The last four years have confirmed that the choices the US makes are highly consequential for international politics.
… Seguir leyendo »
The current pandemic is accelerating the geo-economic, technological, and environmental drivers behind supply chain reconfiguration. Even before coronavirus struck, global supply chains were under stress, and not just because of two years of rising tariffs and trade uncertainty in the wake of ongoing US-China tensions.
Technology developments such as automation and 3D printing which enable cheaper production closer to the final consumer, as well as an increasing preference for greener supply chains have already been spurring companies to reduce their exposure to cross-border supply chain disruptions and to shorten their supply chains.
This has understandably led to increased calls for ‘just in case’ or ‘just at home’ supply chains, but thinking that choosing between globalization and national self-sufficiency is the only way to develop greater resilience of supply chains is, in reality, a false dichotomy.… Seguir leyendo »
The global trading system – with the WTO at its heart – is facing a ‘make or break’ moment. All three of the WTO’s functions are under pressure and in need of reform: administering multilateral trade rules, serving as a forum for trade negotiations and providing a mechanism to settle trade disputes. But despite this gloomy outlook, there is reason to be cautiously optimistic.
The most immediate flashpoint is addressing the shortcomings of the dispute settlement system. Though President Donald Trump’s repeated threats to pull the US out of the organization are a cause for concern, this is unlikely to happen given the role of Congress and the economic costs involved.… Seguir leyendo »
The European Parliament has not endorsed two negotiating mandates that authorise the European Commission to start formal trade talks with the US – and instead ended up not taking a stance. Although any resolution by the parliament would have been non-binding, the unexpected vote adds a blow to forthcoming trade talks that already face a number of challenges.
The US tariffs on imports of steel and aluminium introduced by the Trump administration in the name of national security are a major source of friction. Although the removal of the metal tariffs will likely be a precondition for the conclusion of trade talks, the fact that the EU has been willing to start negotiations with the US while the tariffs are still in place has exposed the former’s U-turn on not negotiating ‘with a gun at its head’.… Seguir leyendo »
Republicans appear to have plenty of reasons to tout the strong US economy ahead of the midterm elections.
Real GDP increased at an annual rate of 4.2 per cent in the second quarter of 2018 (the highest since 2014), the unemployment rate dropped to 3.7 per cent in September (the lowest since 1969), and – despite the recent market turbulences – US stock indices have broken record highs since the election of Donald Trump. The president likes to take credit for the success of the US economy, and his approval rating for handling the economy – standing at – far exceeds his general approval rating.… Seguir leyendo »
Free-trade Republicans are up in arms about President Donald Trump’s recent actions, notably tariffs on steel and aluminium imports from key US allies like the EU, Canada and Mexico. The administration’s current investigation related to potential tariffs on cars and automobile parts imports in the name of national security have poured fuel onto the fire.
The major concern for the GOP is that President Trump’s latest trade moves could set off a trade war that would hamper the economy by undoing the boost from last year’s tax cuts. Republicans are hoping to tout a booming economy going into the midterm elections in November.… Seguir leyendo »
Donald Trump’s views on the trade deficit are not a passing fad. But his preoccupation with the deficit is widely regarded as misplaced – it focuses only on America’s merchandise trade deficit while disregarding the services surplus, and it ignores that the overall US trade deficit is largely due to macroeconomic forces. Despite this misguided fixation, Trump’s obsession with it has only seemed to grow.
Notably, the president’s recent decision to help the Chinese telecommunications giant ZTE ‘get back into business’ shows how his concern over the trade deficit takes priority in his thinking. His move came after the Commerce Department banned American companies from selling components to ZTE for seven years because it broke the terms of a sanctions violation settlement.… Seguir leyendo »
Now that Wilbur Ross has been confirmed as the US commerce secretary, he will likely emerge as the most important player on Donald Trump’s trade team.
Peter Navarro, director of the newly formed National Trade Council, had held the reins until now because he did not require Senate confirmation. But going forward, Navarro’s influence will likely be weaker, since the National Trade Council is still a novel entity and will not have the same resources available as the Commerce Department. Similarly, the Office of the US Trade Representative, which was regarded as the main trade architect and trade negotiator under Barack Obama, is likely to be overshadowed.… Seguir leyendo »
With Donald Trump in the White House, US trade policy will probably look very different from the past 70 years - seven decades across which successive Republican and Democratic administrations have participated in and led global trade liberalization initiatives. If the president-elect delivers on his major campaign promises on trade, the negative effects on the American economy would be severe and the United States would give up its role in shaping the global trading system.
But there is no need to panic. Trump will likely leave behind the rhetoric of the campaign trail once he sits in the Oval Office. Trump will probably moderate his proposals, because a faction of the Republican-dominated Congress continues to support free trade.… Seguir leyendo »
Though every presidential election comes with a degree of uncertainty, this one is unusual in the sense that the new president-elect actually values unpredictability. A Trump trial-and-error presidency has the potential to impede confidence and thus investment as well as unsettle global financial markets. Another layer of uncertainty is to what extent Trump will be able to implement his suggested proposals. Though the Republicans won the presidency and will continue to control the House of Representatives and Senate, Republicans might not back all of his plans – particularly his protectionist ideas or increased spending proposals.
The US is Europe’s most important trade and investment partner.… Seguir leyendo »
The US election is less than a month away. With so much focus on the large gap between the rich and the poor in this year’s race, a slightly altered version of James Carville’s 1992 mantra captures the election quite well: 'It's the inequality, stupid.'
Inequality divides the United States. In 2015, the top 5 per cent of Americans earned about 16 times more than the bottom 10 per cent. There has been some recent positive news on closing the income gap from the Census Bureau, indicating that the median household income rose by 5.2 per cent between 2014 and 2015. … Seguir leyendo »
Even though President Barack Obama cautioned that the UK would be at the ‘back of the queue’ for a trade agreement with the US if the country chose to leave the EU, in the post-Brexit world a deal might be struck more swiftly. Various ideas for bringing the UK and US into a formal trade arrangement have been floated – ranging from a bilateral UK-US trade deal, or the UK joining NAFTA (the North American Free Trade Agreement between the US, Canada and Mexico), to the UK becoming a part of the TPP (the Trans-Pacific Partnership that the US is pursuing with 11 other countries along the Pacific Rim).… Seguir leyendo »