Category Archives: foreign policy

A New US International Trade Regime

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As thought of by me.

The beauty of it, if I do write so myself, it that it’s wholly independent of tariffs, whether foreign policy or protectionist.

The idea, at a level of generality, is this. Congress, the President, and his Cabinet Secretaries develop a list of all goods and services critical to our national defense. The list must necessarily include dual use goods and services, those items that can serve both the private economy and our defense systems.

Then Congress and the President draw a hard line and require that 15% (to pull a number from the æther) of everything needed for production of those critical goods and services, from ore through intermediate components to the last components needed for final assembly or service provision, be produced entirely domestically. This would serve two purposes. One is that it would relieve our dependence on other nations, particularly enemy nations, for any of those goods or services, the denial of any one of which would stop our economy and our ability to defend ourselves beyond stocks already in place—a few weeks to a couple of months worth in an active shooting conflict.

The other purpose is that it would give us an extant production core from which we could surge production and expand production facilities much more quickly than if we had to attempt to start from scratch just to begin to surge.

The last step is to require a review of the list of goods and services every five years, de novo, adding to/removing from the list as necessary to keep it current. Every five years to relieve the review cycle, at least a little bit, from political cycles while keeping the update rapid enough to keep up with evolving technologies.

Of course, this will cost more than a classical Ricardian free trade, Smithian free market environment, but that’s the cost of national security. If we can’t protect a capacity for self defense, we’ll pay a far higher price.

There’s the Problem

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In an article centered on President Donald Trump (R) centralizing foreign policy in his office, Richard Haass, former president of the Council on Foreign Relations and staffer at State, NSA, and Pentagon, had this to say:

This is the most top-down administration in recent memory. This isn’t a staff-driven administration.

And there it is, in so many words. In the particular case, the President of the United States is, by Constitutional design, our nation’s foreign policy chief. The foreign policy-influencing centers in the Executive Branch—State, NSA, et al.—all work for him. And so do those centers’ staffers, albeit through their Department and agency Secretaries and Directors.

More broadly, this is a career government staffer (before joining the left-leaning think tank) decrying the reduction in control exercised by the deep state/bureaucratic state/staffers. He’s an echo of Fiona Hill’s angry objection that earlier-President Trump wasn’t listening to and obeying her ad hoc committee regarding Ukraine.

There should be No Question

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SecState Marco Rubio thinks Iran could have peaceful, energy-producing nuclear reactors so long as Iran uses only imported uranium already enriched for the purpose. Iran insists on doing its own enrichment.

There should be no discussion of this.

For Iran, not having its own enrichment capability is a deal breaker. For us, Iran having that capability should be a deal breaker. Iran has shown itself wholly untrustworthy with its enrichment program, rapidly enriching already to 60%, despite the fact that the 2015 accord expressly limited Iran to 3.7%-ish, and that accord remains in effect. Our withdrawal from it is irrelevant; all the other signatories, including Iran, remain nominally within its confines. Iran, despite its obligations under that accord, continues to deny inspectors access to facilities those inspectors want to see, and it demands untenable advance notice for those few facilities to which it has allowed access.

For all that, apparently unaddressed is what to do about the plutonium that lots of peaceful energy-producing uranium-fueled nuclear reactors produce. Plutonium can be recycled through peaceful energy-producing plutonium-fueled nuclear reactors, but critically, plutonium also can be used separately in nuclear bombs.

It’s rapidly approaching time for a kinetic solution to the Iranian nuclear problem.

A Useful Self-Identification

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The People’s Republic of China has decided not to apply its across-the-board 125% tariffs on certain goods that it imports from the US.

China’s government has exempted some US imports that the country would struggle to immediately source from elsewhere from its retaliatory tariffs, people familiar with the matter said.
Chinese authorities have told some importers of American goods that they would waive the most recent 125% increases in tariff rates for certain US imports. Those products include certain semiconductors and chipmaking equipment, medical products, and aviation parts, the people said.

These, then, are precisely the goods that we should cut off from exporting to the PRC.

On the other hand,

The Trump administration, similarly, announced exemptions on its “reciprocal tariffs” for China-made smartphones, laptops, and other electronics earlier this month, a recognition of the US’s reliance on China for such goods.

This is a mistake if the purpose is anything other than a negotiating tactic. There is a critical difference between the two sets of goods. The goods the PRC is exempting are critical components and component-making goods whose cutoff would severely impact that nation’s ability to make downstream products. The goods the Trump administration is exempting are finished products. Their supply chains can be adjusted to flow from non-PRC sources, including domestic, an adjustment that might be difficult, but an adjustment that both is eminently possible and is absolutely necessary: we should never have ourselves dependent on an enemy nation for such goods.

Americans’ Intellectual Property at Risk

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And that risk stems from President Donald Trump’s (R) alleged trade wars according to Daniel Gervais, a Vanderbilt professor and Director of Vanderbilt’s Intellectual Property Program, who should know better. In his letter to The Wall Street Journal‘s Tuesday Letters section, he wrote

The US is turning its back on the multilateral trading system it helped create after World War II, threatening Americans’ intellectual property…. Embodied by institutions such as the World Trade Organization (WTO), this system has provided stability through clear trade rules and dispute-settlement mechanisms….

And

The most important set of international rules protecting IP rights is the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights, or Trips. The agreement obligates member countries to provide IP rights, with limited exceptions, and enforce them at their borders and in national courts.

What Gervais ignored is that it is the PRC that’s been busily blowing up the global trading system ever since its accession to the WTO. Politically, the PRC ignores WTO rulings it doesn’t like, including one regarding its seizure and militarization of South Sea islands that belong to other nations and not the PRC. Specific to that ruling, the PRC is ignoring the Republic of Philippines’ ownership of—not mere responsibility for—the islands in its EEC.

Regarding intellectual property, Gervais also ignored the PRC’s assault on other nations’—particularly the US’—intellectual property and proprietary technologies. The PRC has long had (for all that the current regime recently has begun paying lip service to limiting) requirements that foreign companies partner with PRC-domiciled companies and agree to intellectual property and proprietary technology transfers that comport with PRC-mandated requirements at zero compensation beyond the privilege of doing business. These requirements go far beyond the WTO’s minimalist transfers with compensation for the transferring company.

Gervais also ignored the PRC’s long standing and extremely extensive intellectual property and technology thefts through corporate espionage.

It’s not the current administration that’s turning its back on the multilateral trading system and the WTO, it’s the PRC with its long-extant studied efforts to destroy them.