US Trade Policy: America Resigns from its Leading Role as a Global Rule-setter

Summary

Donald Trump’s first year in office is approaching its end. While the most feared scenarios in the area of US trade policy have not materialized, some ongoing developments are a serious cause for concern. This is especially the case with regard to US scepticism towards the WTO. Trump is continuing his tactic of dismissing the bigger picture about the overall benefits of trade, and is focusing on the negative side effects of globalization. However, instead of addressing these side effects with appropriate regulatory responses, he is trying to please his electorate by blaming unfair trade agreements and immigration.

The Trans-Pacific Partnership (TPP) remains the only trade agreement that Trump has abandoned so far. The North American Free Trade Agreement (NAFTA) is currently being renegotiated. The antiquated agreement would benefit from updated disciplines, but Canada and Mexico are not likely to agree to Trump’s excessive and partly irrational demands. In the meantime, the TPP seems to be going ahead without the US. Regarding China, Trump has softened his stance. The two countries recently engaged in lucrative business agreements worth 250 billion dollars. However, the agreements do not address the structural market issues that American businesses have been most concerned about and seem aimed at disguising the lack of progress in real issues.

To access the Briefing Paper published by the Finnish Institute of International Affairs (FIIA) click here.

Professor Johanna Jacobsson is specialized in International Trade and European Union Law.