Biden — Law, National Security and Global Trade.

My new article — Malawer. “Biden — National Security, Law and Global Trade. China and WTO Review (Draft) (January 20, 2021). Some excerpts are below.

………………………………………

It is now up to President Biden to recalibrate the American approach to trade relations, particularly with China, and the relation between trade and national security – at least in the context of applying unilateral trade measures including tariffs and trade sanctions. The widening use of tariff exclusions over the last few years and the minimal impact of Trump’s trade war on the US manufacturing growth only served to increase the dysfunction of his protectionist trade measures. Those seemingly only led to managed trade, which led to domestic cronyism.

My general prediction is that the Biden administration will most likely draw more heavily on national security to guide the US trade and tariff policies than did administrations prior to the Trump administration, but using a much more restricted and circumspect approach than that of the Trump administration. Biden will do so in a broader and more rationally realistic way than has been seen in the last four years, and the process will observe domestic and international law more rigorously. Trade policies will be neither erratic nor punitive.

However, the Biden administration will not implement trade actions immediately. It will review Sections 232 and 301 tariffs methodically. The same can be said concerning the US-China trade relations and longstanding US-EU trade relations. This review will now include the recently concluded the EU-China investment treaty as well as bilateral trade relations with the UK as a result of Brexit.

Given the much more pressing domestic, legal and policy issues currently confronting the United States (COVID-19, alliance relations, the global climate and Iran, among others), the Biden administration will need to address those issues first. In addition, the traditional lack of consensus and conflict over trade issues within the Democratic Party will hamper a broader trade review as well as a more specific review of trade-based national security actions.

                                                  …………………………………

The following is my partial list of trade problems confronting Biden:

  • Trump’s tariff and trade wars, especially with China, raising the basic issues of confrontation or cooperative competition.
  • Rebuilding alliances and a multilateral global strategy which in particular addresses trade and political disputes relating to U.S.-China relations.
  • More specific China trade issues, such as China’s implementation of a Phase One agreement to purchase more U.S. products and commodities, the lifting of various 232 and §301 tariffs on Chinese exports to the United States and of various transactional sanctions, particularly on investments in Chinese firms, and issues of human rights—specifically the use of Uighurs as prison labor.
  • Legislative efforts to restrict and transfer some delegated tariff authorities back to the President and perhaps to the Treasury Department.
  • Trade relations with the EU and the UK after the recent Brexit deal, including the competing retaliatory tariffs resulting from the Boeing and Airbus cases, the digital taxation proposals emanating from the EU concerning global internet firms and issues concerning the newly announced EU-China investment treaty.
  • The global tax avoidance of global tech firms, global e-commerce and the threatened EU digital taxation.
  • WTO issues, especially the decimation of the Appellate Body by the Trump administration and the selection of a new WTO director-general.
  • Other WTO issues, including the growing reliance on litigation within the WTO and the continuing failure to negotiate new trade rules.
  • The Paris Climate Accord.
  • Sanctions related to the Iranian nuclear deal from which Trump withdrew.
  • Reconstitution of an Asian alliance and joining of the newly revised Comprehensive and Progressive TPP (CPTPP) to offset the Chinese-inspired Regional Comprehensive Economic Partnership (RCEP).
  • Renewal and expansion of the Trade Promotion Authority (TPA; formerly known as “fast track authority”).
  • Changes by the Trump administration to the duty-free tariff treatment of various nations under the Generalized System of Preferences (GSP).
  • Reconsideration of recent trade sanctions (for example, designating Cuba a State-Sponsor of Terrorism) in the last days of the Trump administration.

                                             ……………………………………………….

The appointment of a new trade, foreign policy and national security team by Biden seems very promising. To me, the team seem seasoned, experienced, professional and pragmatic, with a mature understanding of the US and global issues and interests. However, the greatest problems now confronting the new Biden administration are domestic.

In my view, one of the first issues that the Biden administration ought to confront is the longtime delegation (since the 1930s) of trade authority from Congress to the President, particularly in the area of national security, found in various legislative enactments, especially Section 232 of the Trade Expansion Act and Section 1701 International Emergency Economic Powers Act. While it may seem counterintuitive for Biden to restrict his own authority, it is necessary to ensure that the abuse and corruption of national security cannot happen again. Recently proposed legislation by Virginia senator Tim Kaine, The Reclaiming Congressional Trade Authority Act of 2019, did not gain much traction, unfortunately. But its time has now come again.

Such restriction would be something akin to post-Watergate legislation -passed in the aftermath of President Nixon’s abuses and criminal and unethical activities – that restricted presidential powers and reasserted Congressional authority, which worked to some extent. One needs to keep in mind that Congress, not President, has the exclusive authority to regulate trade. However, since the 1780s, trade policy has increasingly been understood to have foreign policy implications. Of course, the President has extensive powers related to foreign affairs, including the ability to negotiate and withdraw from international agreements.

            This balance of power between the branches needs to be recalibrated now. The direction in which the WTO has moved in cases concerning national security is not a good omen for the US. Recalibrating domestic law would most likely preclude future quite questionable US actions being contested (and ruled against) by the WTO and the global trading system. That is good for everyone. But most importantly, first and foremost, President Biden needs to revitalize American democracy in the post-Trump world.

Leave a comment

President Biden and a New Era for National Security and Trade.

 

While issues concerning national security and trade can be quite technical, they are exceedingly significant, and it is unfortunate that there has been little comment on a dual-track line of cases—those that involve national security in U.S. domestic courts and trade cases that raise the national security exception in the WTO’s dispute resolution system.

 

These dual-track cases seem to have been overshadowed by President Trump’s constant and broad claims of grievances, his bullying, and his protectionist policies from the very outset to the desperate, dying days of his administration.

 

For example, his trade actions  over the last days of his administration include a §301 action on Vietnam for alleged currency manipulation, which of course is not proscribed by GATT rules; duties and retaliatory duties on French wine included as part of the continuing Boeing-Airbus dispute over sanctions; extension of §201 safeguard tariffs on washer imports from China and efforts to delist Chinese telecom firms from US public markets, prohibiting U.S. private and state investment in Chinese companies, expanding the number of Chinese companies on the export blacklist—also known as the Entity List—and banning U.S. transactions with eight Chinese software apps. In a further flurry of last-minute restrictions, the Trump administration has issued new rules restricting import of Chinese technology. These actions have already resulted in a new Chinese blocking statute aimed at U.S. sanctions. The Trump administration initiated a total of 306 antidumping and countervailing duty investigations, 283% more than the Obama administration initiated.

 

It is now up to President Biden to recalibrate the American approach to trade relations, particularly with China, and the relation between trade and national security—at least in the context of applying unilateral trade measures including tariffs and trade sanctions. The widening use of tariff exclusions over the last few years and the minimal impact of Trump’s trade war on U.S. manufacturing growth only served to increase the dysfunction of his protectionist trade measures. Those seemingly only led to managed trade, which led to domestic cronyism.

 

My general prediction is that the Biden administration will most likely draw more heavily on national security to guide U.S. trade and tariff policies than did administrations prior to the Trump administration, but using a much more restricted and circumspect approach than that of the Trump administration. Biden will do so in a broader and more rationally realistic way than has been seen in the last four years, and the process will observe domestic and international law more rigorously. Trade policies will be neither erratic nor punitive.

 

However, the Biden administration will not implement trade actions immediately. It will review §232 and §301 tariffs methodically. The same can be said concerning US-China trade relations and longstanding US-EU trade relations. This  review will now include the recently concluded EU-China investment treaty as well as bilateral trade relations with the UK as a result of Brexit.

 

Given the much more pressing domestic, legal and policy issues currently confronting the United States (COVID-19, alliance relations, the global climate and Iran, among others), the Biden administration will need to address those issues first. In addition, the traditional lack of consensus and conflict over trade issues within the Democratic Party will hamper a broader trade review as well as a more specific review of trade-based national security actions.

 

Leave a comment

TRUMP & BIDEN — From Cronyism to Engagement, Hopefully.

[Recent  postings on Twitter since the Presidential Election as of January 1, 2021 ………… Stuart S. Malawer (@smalawer) / Twitter]

Good editorial on Tariffs and Tariff Exclusions. Downside of tariffs is more market distortion. Terrible Trump tariff and trade policy. Nationalistic protectionism doesn’t help anyone. Tariff cronyism is terrible. Biden needs to reject this asap. 12.29.20

 

Good Financial Times editorial. Need to fully engage with the global trading system. Trade & retraining are critical for economic development in rural areas. Negotiating & adjudicating rules by the WTO are important. Biden needs to reject Trump trade policies asap. 12.29.20.

 

More trade chaos from Trump’s dying days in office. We need cooperation and competition. Not confrontation. US-China relations are too important for foreign policy by personal grievance and nation-baiting. Use of the national security authority (under Commerce’s ‘Entity List’) to bar computer chip exports to China is really questionable. Part of Trump’s misguided & harmful trade policies. This is a continued distortion of national security authority delegated by the Congress.  12.19.20

Terribly NYT editorial. WTO crisis mainly caused by Trump’s nihilistic actions. Need engagement , not pathological destructiveness. Was US creation, building & adjudicating trade rules. Destroying domestic & int’l rules & institutions need to stop, now. 12.18.20
                                                                 Image
Biden’s global trade agenda is huge. Critically important to move away from unilateralism & isolationism toward a rules-based system & multilateral organizations. Global problems need global resolutions and cooperation. Universities can help. 11.26.20

 

Yellen’s appointment as Secretary of Treasury is really important for international tax & trade sanction issues. Treasury Department’s authority in these areas is often overlooked, but growing rapidly. It is critical to US trade policy, foreign policy and national security. 11.25.20

Image

Just outrageous. Trump, on his way out imposed new investment restrictions on US investors in Chinese firms Under IEEPA and national security. He needs to step back & stop meddling. Now. 11.13.20
Good piece on trade issues Biden will face including the TPP & China. However, many more are in need of attention — existing tariffs, trade sanctions, WTO. A host of international institutions need close attention (the WHO, OECD, EU, NATO .. 11.6.20

Image

Trump’s Trade War’s a Failure. No increase in manufacturing or exports (merchandise or agricultural).No decrease in trade deficit. A lot of grievances, but no win. Worse trade relations with China & our allies. ‘America First Strategy” didn’t work. Period. 11.2.20
……………………………………………………………………………………………………………………………………………………………………………..
Leave a comment

Global Challenges — Broadening National Security & Less Sanctions & Tariffs — by Bill Gates

 

Two good statements in the New York Times today from Bill Gates Concerning Biden’s Global Challenges — National Security and Economic Sanctions  …………..

 

  • “The multidimensional competition with China and transnational challenges require the formal involvement of agencies previously not considered part of the national security apparatus ….”

 

  • “In recent years, our international economic tools have centered mainly on punitive measures, such as sanctions and tariffs. We need to be more creative in finding positive economic inducements to persuade other countries ….”

Yes. Great advice for the new Biden foreign policy, trade and national security teams.

Leave a comment

More Trade Chaos — Blocking Exports of Computer Chips to China Under National Security.

More trade chaos from Trump’s dying days in office. We need cooperation and competition. Not confrontation. US-China relations are too important for foreign policy by personal grievance and nation-baiting. Use of the national security authority (under Commerce’s ‘Entity List’) to bar computer chip exports to China is really questionable. Part of Trump’s misguided & harmful trade policies. This is a continued distortion of national security authority delegated by the Congress. Which has exclusive Constitutional authority to regulate trade. Such broad delegated authority needs to be reconsidered by the Congress. The broad authority was intended to expand trade, not restrict it for nationalistic and projectionist reasons. That only promotes dysfunctional and divisive unilateralism. 12.19.20

Leave a comment

TRUMP & BIDEN & TRADE — Twitter Comments Since the Election (as of January 1, 2021).

[Recent  postings on Twitter since the Presidential Election ………… Stuart S. Malawer (@smalawer) / Twitter]

Good editorial on Tariffs and Tariff Exclusions. Downside of tariffs is more market distortion. Terrible Trump tariff and trade policy. Nationalistic protectionism doesn’t help anyone. Tariff cronyism is terrible. Biden needs to reject this asap. 12.29.20

Good Financial Times editorial. Need to fully engage with the global trading system. Trade & retraining are critical for economic development in rural areas. Negotiating & adjudicating rules by the WTO are important. Biden needs to reject Trump trade policies asap. 12.29.20.

More trade chaos from Trump’s dying days in office. We need cooperation and competition. Not confrontation. US-China relations are too important for foreign policy by personal grievance and nation-baiting. Use of the national security authority (under Commerce’s ‘Entity List’) to bar computer chip exports to China is really questionable. Part of Trump’s misguided & harmful trade policies. This is a continued distortion of national security authority delegated by the Congress.  12.19.20

Terribly NYT editorial. WTO crisis mainly caused by Trump’s nihilistic actions. Need engagement , not pathological destructiveness. Was US creation, building & adjudicating trade rules. Destroying domestic & int’l rules & institutions need to stop, now. 12.18.20
                                                                 Image
Biden’s global trade agenda is huge. Critically important to move away from unilateralism & isolationism toward a rules-based system & multilateral organizations. Global problems need global resolutions and cooperation. Universities can help. 11.26.20

 

Yellen’s appointment as Secretary of Treasury is really important for international tax & trade sanction issues. Treasury Department’s authority in these areas is often overlooked, but growing rapidly. It is critical to US trade policy, foreign policy and national security. 11.25.20

Image

Just outrageous. Trump, on his way out imposed new investment restrictions on US investors in Chinese firms Under IEEPA and national security. He needs to step back & stop meddling. Now. 11.13.20
Good piece on trade issues Biden will face including the TPP & China. However, many more are in need of attention — existing tariffs, trade sanctions, WTO. A host of international institutions need close attention (the WHO, OECD, EU, NATO .. 11.6.20

Image

Trump’s Trade War’s a Failure. No increase in manufacturing or exports (merchandise or agricultural).No decrease in trade deficit. A lot of grievances, but no win. Worse trade relations with China & our allies. ‘America First Strategy” didn’t work. Period. 11.2.20
………………………………………………………………………………………………………………………………………………………………………………….
Leave a comment

BIDEN AND TRADE REHABILITATION.

Trump’s trade policies need serious rehabilitation.

Biden faces numerous trade issues. Including the TPP & China. However, many more are also in need of critical attention — tariffs, trade sanctions, export controls, investment restrictions, taxation of multinationals and technology firms, offshore tax evasion and tax havens, protection of intellectual property rights, and better promotion of state and federal policies for engaging the global economy in local economic development.

And of course reconsideration of U.S. policies concerning the WTO and of a host of bilateral and regional trade agreements (including the revised NAFTA). A number of international economic and political institutions also need close attention (the WHO, OECD, EU, NATO).

A return to multilateral diplomacy is critical. Must have a rejection of bilateral bullying and the politics of unrelenting threats. The further rejection of the ‘America First strategy’ and foreign policy of unilateralism and grievances is essential.

But even more importantly —- upholding the rule of law (domestic and international law) and institutions (domestic and international) are most essential. And ceasing unrelenting revenge litigation. We need a return to the real American values. Those that have made the U.S. a global inspiration and have structured the global system for decades.

This includes reengaging with the WTO’s dispute system and stopping discrediting it. We should use it. This was an American initiative. The rule of law is immensely better than daily chaos.

In conclusion, there needs to be a return to respecting and promoting  professionalism, public service, the legal system and institutions, and civic mindedness in our public officials and society.  Better public education from K through universities need to do a much better job of this. This is essential to promoting and sustaining American democracy.

 

 

Leave a comment

 ‘Trade, Technology, Telecommunications & Transaction’ (T4) — Trump’s New Foreign Policy.

To me, TikTox and WeChat highlight the growing ‘national securitization’ of trade and business transactions in U.S. foreign policy. ‘Trade, Technology, Telecommunications and Transaction’ (T4) has become the newest foreign policy focus of the Trump administration.

This focus on business and government intervention is in the context of a rapidly changing global and digital environment with increasingly unilateral and mercantilistic state actions, often challenging the international legal and multilateral institutional systems, as well as the notion of free markets. Foreign policy is not what it used to be; it is not your father’s foreign policy.

This has been a growing development and now includes reregulating the Internet. This reverses decades of US policy toward an open and unregulated Internet. 

To some degree, we are now emulating the Chinese control of the web. Of course, the European Union, Russia, India and other countries are also regulating Internet access, localization of data storage, user information, encryption and cybersecurity by private and state actors. There has been an incremental and growing Balkanization of the global web. We really need to look at this carefully. Better national, international and diplomatic actions are clearly needed.

The battle over the use of national security as a rationale or as a cover for global trade actions by the U.S. administration is under increasing federal court scrutiny. Who would have thought that user data, source codes, algorithms and technology transfers of all sorts would become matters of national security and judicial review?

For example, a federal district court in California recently reviewed (Sept. 19, 2020) WeChat’s claim for a temporary nationwide injunction (which it granted) because the Trump administration’s actions violated the president’s delegated authority under the International Economic Emergency Powers Act (IEEPA).

While the court concluded that the plaintiff would probably not be successful on its IEEPA claim, it did grant WeChat’s request for an injunction on other constitutional grounds (First Amendment). Nevertheless, the court caustically stated, “Certainly the government’s overarching national security interest is significant. But on this record … it has put in scant little evidence that its effective ban of WeChat for all U.S. users addresses those concerns.” Of course, the court can review this question at trial.

TikTok has also sued the Trump administration, raising issues of national security over proceedings of the Committee on Foreign Investment in the United States (CFIUS) concerning restriction of its transactions. TikTok’s subsequent deal involving Oracle and Walmart has caused TikTok to file even a more recent legal action. This is a highly unusual attempt by the Trump administration to force transfer of business ownership. This case just resulted in the issuance of a temporary injunction against the Trump administration’s download ban. The federal district court in Washington, D.C., concluded that the “Plaintiffs have demonstrated that they are likely to succeed on their IEEPA (national security) claims.” 

Recently, 3,400 companies asked the U.S. Court of International Trade to declare $300 billion of Trump’s tariffs on imports from China illegal. The Trump administration has asked this case to be delayed. The Commerce Department has continued to restrict exports and reexports to Chinese firms by including them on the “Entity List” that prohibits sales to foreign firms for reasons of national security. 

The Trump administration has continued now to impose even newer restrictions on Chinese firms. For example, it has recently imposed export restrictions on China’s largest semiconductor manufacturer, SMIC, relying upon national security as its rationale.  The Trump administration has also recently declared reliance on imports of critical minerals is a national security issue. Chinese firms continue to react against the growing intrusiveness of the Trump administration into its global business and trade transactions. For example, Chinese firms are listing more today in Hong Kong and Shanghai and moving away from New York. Chinese direct investment in the United States has plunged dramatically.

In conclusion, data transfer, privacy, data storage, telecommunications and national security are complex and intertwined legal issues that involve technology, public policy, business, trade and legal issues. Moreover, these critical issues are growing internationally. The expanding use of the national security rationale to address these issues by the United States is a critical newer development becoming ever more ominous every day.

 

Leave a comment

TikTox and WeChat — Growing National Security Focus Over Trade, Technology and Transactions (T3).

TikTox and WeChat highlight to me the growing ‘national securitization’ of trade and business transaction in U.S. foreign policy. ‘Trade, Technology and Transactions’ (T3) and even better ‘Trade, Technology, Telecommunications and Transaction’ (T4) have become the new foreign policy focus of the Trump administration.

This focus on business and government intervention is in the context of a rapidly changing global environment with increasingly unilateral state actions. Often challenging the international legal and multilateral institutional systems as well as the notion of free markets. Foreign policy isn’t what it use to be. It’s not your father’s American foreign policy.

This has been a growing development, now including reregulating the Internet. This reverses decades of US policy towards an open and unregulated Internet. 

To some degree we are now emulating the Chinese national control of the web. Of course, the EU, Russia, India and other countries are also concerned about Internet access, localization of data storage, user information, encryption and cybersecurity by private and state actors. There has been an incremental and growing Balkanization of the global web. Really need to look at this  carefully. Better national, international and diplomatic actions are clearly needed.

One additional point. The battle over the use of national security as a rationale or as a cover for global trade actions by the U.S. administration is under constant federal court scrutiny. Who would have thought that user data, source codes and algorithms  and technology transfers of all sorts would become matters of national security?

For example, a federal district court in California recently reviewed (Sept. 19, 2020) WeChat’s claim for a  temporary nationwide injunction (which it granted) that the Trumps administration’s actions violated its delegated authority under the International Economic Emergency Powers Act (IEEPA).

While the court concluded that the plaintiff would probably not be successful on its IEEPA claim, it did grant its request for an injunction on other constitutional grounds (First Amendment). But it interestingly stated, “”Certainly the government’s overarching national security interest is significant. But on this record … it has put in scant little evidence that its effective ban of WeChat for all U.S. users addresses those concerns.” Of course, the court can review this question at trial.

It should also be noted that TikTok also sued the administration previously raising issues of national security in light of CFIUS proceedings concerning restricting its transactions. However, the deal reached subsequently involving Oracle and Walmart has at least temporally stayed this action and might very well cause TikTok to file newer actions.

In conclusion, data transfer, privacy, data storage, telecommunications, and national security are complex technological, policy and legal issues. And they are growing internationally. The growing use of the national security rationale to address these issues by the United States and other countries is a critical development becoming ever more ominous this decade. 

 

 

Leave a comment

Restricting Foreign Governments Standing to Sue in US Courts & Trump’s Foreign Policy — Two Annoying WSJ Op-Ed’s.

Two really annoying op-ed pieces in the Wall Street Journal discussing separately the Foreign Sovereign Immunities Act (restricting the right of foreign states access to U.S. Courts). And why President Trump’s foreign policy should be a basis for reelecting him. Don’t agree with either.

…………………………………………………………………………

This Stanford law professor gets it entirely wrong. The Foreign Sovereign Immunities Act allows broad litigation against foreign governments. Any abusive litigation can be dismissed by federal courts. He addresses a problem that doesn’t exist.

“Stopping Foreign Governments from Using US Courts.” Wall Street Journal (Sept. 2, 2020).

…………………………………………………………………………

Sorry to ready this by former colleague at George Mason law. Trump’s foreign policy has been a chaotic failure. Krauss is grasping for very, very short straws. Trump is wrecking the int’l rules-based system. As well as our legal & court system.

“Why I’m Now Voting for Trump.” Wall Street Journal (Sept. 2, 2020).

 

Leave a comment