1

PODCAST ON THE ECONOMICS OF TRADE POLICY

Podcast on the Economics of Trade Policy

Name

University

Course Title

Instructor's Name

Due Date
 2
PODCAST ON THE ECONOMICS OF TRADE POLICY

Motivation

Listening to a Trade Talks episode, a podcast on the economics of trade policy. I am the

editor of Trade and Globalization for The Economist. In this episode, we will speak about the

views of Stephen Vaughn on the economics of trade policy. Stephen was the United States Trade

Representative's General Counsel or USTR. And so, basically, he was Robert Lighthizer's chief

lawyer. And to clarify the outcome, it is not really the point of this episode to win any of the claims

here. I don't think that kind of episode could have lasted for many days, and I'm not sure that any

minds would have changed. But what we are trying to do is provide listeners with a deeper

understanding of the reasoning behind some of the Trump administration's trade policies. If this is

the first Trade Talks episode you've seen, and you're not sure what all the points could be, please

go back and listen to our back catalog, please.

Context

Now we should say a few things before we start. The episode is a really long one. We're covering

the Trump administration's stance on China, the EU, the World Trade Organization. Basically, the

controversy relates to commerce between the United States and other nations. The essence and

scope of trade policy initiatives, as well as everything relevant to foreign trade. In global terms and

the general economy of the country, the consequences of such trade.

Questions

1. What is our trade strategy meant to be?

2. How are we going to support those people who were affected by the trade policy?

3. What is the Trump administration's approach to China?

4. Can the US government be versatile in terms of trade policies?

5. Are you concerned about any of the Trump administration's trade policies that might
 3
PODCAST ON THE ECONOMICS OF TRADE POLICY

backfire?

6. What idea of how a potential method of compliance works?

7. Will you summarize why the US is killing the Appellate Body of World Trade

Organizations?

8. Populism and the problems faced today by policymakers?

Preview of Results

According to Stephen Vaughn, the tremendous versatility is to deal with all the many

distinct and varying problems that occur in a nation with over 300 million citizens. People need to

think more about trade policy in the same way they think about tax policy. Some people will want

lower taxes, and some people will want higher taxes. But a great deal of this really goes into the

specifics and the basic nuances of the specific case. And so, there is a lot of versatility you need—

two, what you are doing for the individuals on the other side of the trade policy. I think you have to

have legislative solutions that would make it possible for people to believe that the system works

and is treated equally. And then three, it has to be done by US elected leaders in terms of who

makes the foreign policy, because they're the only ones who actually are accountable to the

electorate. It's really their responsibility to figure out what kind of country we want to be and how

trade policy fits into that.

It is important to realize that China still has a lot of confusion that people are concerned

about. If they want to do it, they have to decide. And we are waiting for that. And they have, as you

know, been sending mixed signals for a very long time, long before President Trump was elected.

So, basically, they'll know where they want to go. But in the meantime, if they want to keep going

with these measures, they won't have the same access to this market.

In a case involving the European Union regarding the subsidies they give to Airbus, the
 4
PODCAST ON THE ECONOMICS OF TRADE POLICY

United States has just earned a major victory. That's one significant industry, then. And that's been

the case at the World Trade Organization for 15 years now. Therefore, the notion that you will use

a similar mechanism to exclude individuals who have set targets to be reached by 2025 is not very

practical. On the other hand, to bring together an alliance of the willing against China. I have not

seen any indication that there is a large alliance of the willing, either in this administration or in the

last administration or the administration before that. The European Union was very cautious not to

take sides between China and the United States. And I think that the United States could do little to

get them to change their minds. The relative values of the two currencies are a problem for the

President. This is something he talked quite a bit about. He is worried about the relative rates of

interest in both markets. He was unambiguous that he feels that this partnership needs to be

rebalanced, that we need to generate more, and that they need to consume more. And I think in the

1970s, we had this dispute, which led to currency rebalancing.

In terms of compliance, there is not anything that the United States can do. There have been

a variety of unorthodox proposals. Blocking student visas, for example, doing more stuff in the

field of human rights, or going after individual businesses. And for the most part, as opposed to

dragging on non-trade variables, the President has pushed back on those kinds of actions and

sought to keep the emphasis on the economic side of the relationship.

When you look at what has happened in the last couple of years, Europeans have reached an

agreement with Korea, China, Mexico, Japan, India, and Canada. And the Europeans, for the most

part, have declined to have substantive talks with the government. US issues should be taken more

seriously by Europeans. And that could ultimately have repercussions for the relationship between

the EU and the United States. But at the same time, if we need to make trade policy changes, we

ought to make trade policy adjustments. I don't think it would make American politicians less
 5
PODCAST ON THE ECONOMICS OF TRADE POLICY

sensitive to these other issues to bring trade policy back on the ballot. It will make American

politicians more open to other issues, so they will be more likely to say okay as people have more

faith in trade policy, so now I have confidence in trade policy. Let's talk about some of these other

problems now.

Main Contributions

Yeah, I do agree that there would be flexibility in other nations. Actually, I believe the truth

of the situation is that there is flexibility in other nations, and they do act. And I believe we were

too limited in how we reacted to that. So we've been trying to get Europe to recognize our beef

hormones for a very long time, which they vowed to do when joining the World Trade

Organization. Other nations are developing their own trade policies, and I believe the Americans

ought to do the same thing.

So we've been trying to get Europe to recognize our beef hormones for a very long time,

which they vowed to do when joining the World Trade Organization. Other nations are developing

their own trade policies, and I believe the Americans ought to do the same. When you have talks,

and when you have to give and take, a lot of what you see in the process is just what it's like. This

is how trade talks look. If you look at the economy's response and the markets' reaction, the

unemployment rate is meager, the inflation rate is shallow, and the Dow is relatively high.

There has been a lot of effort between the United States and other nations to speak about

China in the first place. Ambassador Lighthizer and Commissioner Malmström, and the

Government of Japan released a series of trilateral statements to seek consensus on what market-

oriented powers will look like. It was apparent to the United States that they did not like the French

Digital Services Tax, and France went on with it anyway. I think it was evident to the United States

that they were worried about US agricultural access to the EU market. The Europeans were not
 6
PODCAST ON THE ECONOMICS OF TRADE POLICY

really able to negotiate that. It was evident to the United States that it was worried about the

subsidies being given to Airbus. The Europeans were relatively uncompromising about that. It was

evident to the United States that it was worried about some of the commission's latest inquiries into

US technology companies. And the US gave more authority to Commissioner Vestager recently. I

say, the EU gave more power to Commissioner Vestager recently. And the EU recently named a

man who said that he would teach President Trump the error of his ways" as its new Trade

Commissioner. So that's how the Europeans agreed that this partnership should be handled. And

there could be repercussions. With the United States, they run a huge trade surplus. We're one of

their largest markets for exports. For us, they're not nearly as great a market. They aren't almost as

open to us as we are to them.

Trade is a win-win for economists. And yes, tariffs can be levied by the government. But

the problem is the other nation can do the same thing that is worse off. But that's the worldview

that economists have, which might not be what everybody shares. Maybe we disagree with them as

to what the democratic systems are leading us towards. There is proof that the retaliatory tariffs,

speaking about the recent trade wars stuff. So far, the trade war phase has driven you to record low

unemployment; it has pushed you to meager inflation; it has pushed you to a very high stock

market.

Details

The United States sees the World Trade Organization agreements as a kind of arrangement

in the same way that the United States continues to interpret most of its diplomatic agreements.

They have made a certain set of promises. Still, elected officials are not in a position to bind other

elected officials or prospective elected officials or the United States government on policy issues

on which they have not decided. For the United States, it is a susceptible issue. The Americans said
 7
PODCAST ON THE ECONOMICS OF TRADE POLICY

very clearly that in the first place, there must be a vigorous dialogue about how we came to have

such a great misunderstanding. An honest dialogue about how the Appellate Body was going to

function and whether it was ever possible to create a kind of body that would respect the members'

retained rights and how the kind of judicial activism we have seen would be avoided.

In the years after World War II, US politicians were very active in promoting free trade,

encouraging free trade, and opening up the US economy. And as the United States opened up and

became more vulnerable to trade, the American policymakers made reforms. But there were all

these sorts of trade-offs that they made along the way, making sure the Americans moved on board.

From an economic point of view, trade helps, and where there are real issues with trade and US

trade policy, combine items that should not be of concern, such as bilateral trade deficits.
 8
PODCAST ON THE ECONOMICS OF TRADE POLICY

Reference

https://www.tradetalkspodcast.com/podcast/111-trade-policy-under-trump/