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Can the WTO remain relevant without reform?
Published 14 December 2022
Are economies and companies recoupling or decoupling? How can we avoid a new cold war over critical minerals for green tech? We cover the latest developments in trade in our reading list.
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Defining the national security exception | Re–coupling | Are critical minerals the new oil? | Trade policy | Sanctions | More research from Hinrich Foundation
Defining the national security exception to trade
Late last week, the World Trade Organization (WTO) dispute settlement body circulated a panel report deciding that the US’ steel and aluminum tariffs justified on the basis of “national security” violated WTO rules. The report partially defined the limits of the national security exception, per Politico. The Biden Administration blasted the decision, vowing to keep the tariffs in place. The WTO could be saved with more flexible rules, argues Robert Z. Lawrence, though a new book by Henry Gao and Weihuan Zhou argues that, existing rules should be enough to address China’s challenges. The WTO remains a key repository of vital information, including the latest world trade statistical review.
Mentioned publications
- WTO says Trump's steel tariffs violated global trade rules – Doug Palmer, Politico, 9 December 2022
A WTO panel says the US broke rules in arguing that national security justified steel and aluminum tariffs. - WTO circulates dispute panel reports regarding US measures on steel and aluminium products – World Trade Organization, 9 November 2022
The WTO’s landmark ruling decides what constitutes a “national security interest”. - Statement from USTR Spokesperson Adam Hodge – Office of the US Trade Representative, 9 December 2022
Section 232 tariffs will remain in place despite the WTO’s decision. - How to Save the WTO with More Flexible Trading Rules – Robert Z. Lawrence, Peterson Institute for International Economics, December 2022
The WTO should become more flexible in order to remain relevant and effective. - Between Market Economy and State Capitalism – Henry Gao and Weihuan Zhou, Cambridge University Press, November 2022
Existing rules on subsidies combined with rules from China’s accession package should be enough. - World Trade Statistical Review 2022 – World Trade Organization, 30 November 2022
The WTO’s analysis of the year’s trade trends.
Re–coupling, not de–coupling
The world remains deeply interconnected but data, services, and students are now driving integration, finds McKinsey in a new report. Geopolitics is changing the contours of trade claims Bloomberg, with seven examples. The rise of Asia and next generation trade will shape the economy to come, claims the Asia Society Policy Institute’s new report.
Mentioned publications
- Global flows: The ties that bind in an interconnected world – McKinsey and Company, 15 November 2022
McKinsey finds that deglobalization is easier said than done. - Geopolitical Rivalries Are Transforming the Contours of Trade – Bryce Bashuk, Bloomberg, 4 December 2022
What does recoupling look like? Here are seven examples. - The Evolution of the Global Trading System: How the Rise of Asia and Next Generation Trade Will Shape the Future Economy – Shay Wester and Wendy Cutler, Asia Society Policy Institute, 28 November 2022
A helpful framework for understanding the current multilateral trading regime and its challenges.
Are critical minerals the new oil?
Here’s how to avoid a new cold war over critical minerals for green tech, explains Cullen Hendrix in Foreign Policy. Expanding the supply of critical minerals may mean overcoming domestic opposition to refining them at home, notes Elisabeth Braw in Foreign Policy. Concerns over control of critical mineral resources prompts Canada to revise its investment law, reports the Financial Post.
Mentioned publications
- How to Avoid a New Cold War Over Critical Minerals – Cullen Hendrix, Foreign Policy, 22 November 2022
Will the 21st century bear witness to a new great game over critical minerals for green tech? - NIMBYism Is a Strategic Threat – Elisabeth Braw, Foreign Policy, 6 December 2022
Rare earths are not rare, but willingness to take on the costs of mining and refining them, is. - Security concerns compel Ottawa to make 'most significant update' to Investment Canada Act in a decade – Naimul Karim, Financial Post, 8 December 2022
Canada updates its laws to allow greater scrutiny of foreign investment.
Trade policy for the people
How do trade and trade policies disparately affect workers based on race, ethnicity, economic status, and other factors in the United States? Concerns over manufacturing job losses seem to drive politics surrounding US trade policy. Yet, US manufacturing employment has risen in the last decade. Has trade with China really cost US jobs? Economists remain divided, per Scott Kennedy and Ilaria Mazzocco.
Mentioned publications
- Distributional Effects of Trade and Trade Policy on U.S. Workers – United States International Trade Commission, October 2022
The USITC attempts to understand the impact of trade policy on different worker communities. - PPI’S Trade Fact of the Week: U.S. Manufacturing Employment has Risen in 11 of the Last 12 Years – Ed Gresser, Progressive Policy Institute, 7 December 2022
Should scholars rethink causes underlying job loss and job creation cycles in US manufacturing? - Has Trade with China Really Cost the U.S. Jobs? – Scott Kennedy and Ilaria Mazzocco, Harvard Business Review, 10 November 2022
Although the “China Shock” study indicated severe job loss, the debate among economists is far from over.
Sanctions, sanctions, sanctions
Russia’s war in Ukraine has prompted a large number of retaliatory sanctions in 2022. Will 2023 look the same? The Atlantic Council forecasts the coming year. Sanctions on Russia are working, writes Agathe Demarais in Foreign Policy. Russian oil output will fall next year as an EU ban comes into effect, per Reuters.
Mentioned publications
- Global Sanctions Dashboard: What’s coming in 2023? – Charles Lichfield, Maia Nikoladze, and Castellum.AI, The Atlantic Council, 17 November 2022
Will sanctions continue and grow as they have in 2022? - Sanctions on Russia Are Working. Here’s Why – Agathe Demarais, Foreign Policy, 1 December 2022
Sanctions on Russia are having an impact and the worst is yet to come. - Russian oil output to fall 1.4 mln bpd next year as EU ban takes effect – IEA – Noah Browning, Reuters, 15 November 2022
More disruption to oil and gas markets is coming as the EU bans come into effect.
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