GLOBAL CITIES & GLOBAL TRADE.

     The latest example of global cities bypassing central governments to conduct their own foreign policy and trade policy is the case of the City of London.

     London is sending its own delegation to Brussels to negotiate directly with the EU to establish a post-Brixit financial system to ensure the role of London in global finance. This is actually with the consent of Whitehall and EU officials in Brussels.

      To me this is the only the most recent example of global cities in the world and especially in the United States to engage in global commerce more forcefully. Especially since central governments seem to be incapable of developing meaningful policies for economic development and jobs that focus on trade, finance, investment and involving meaningful engagement with the global economic system.

      In the context of national sovereignty the older concern of sovereignty slipping and going to international organizations is receding in importance. It is now being raised as to the role of states and cities as they bypass central governments to formulate and negotiate their own foreign policies and trade policies directly with foreign governments. This is true as to countries that have a federal system of government as well as non-federal ones.

      National sub-divisions are finding it crucial to interact with the global systems directly, out of necessity since central governments have not been very good at this for a long time.

     Stay tuned …………..

 

London and Brussels.” Financial Times (July 3, 2017).

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Reaction to Trump’s Policies & Rise of the New Federalism.

[From my Op-Ed in this Sunday’s RICHMOND TIMES-DISPATCH (June (June 18, 2017) ……………………………..]

 

A new aggressive and proactive federalism seems to be evolving in the United States.

This newer federalism promotes global engagement and observation of international rules. This is remarkably different from the older version that supported states’ rights and segregation and was primarily based in the South.

Today, we see a rapidly evolving anti-Trump resistance in the widespread movement for “sanctuary cities” and the more recent “city-state climate coalition.” Virginia is one of the most recent members of that coalition.

These local actions by cities and states are in opposition to President Trump’s national policies relating to immigration enforcement, the rejection of the Paris Climate Accord, and a general contempt for a rules-based international order.

In particular, these policies relate to trade, climate change, immigration, multilateral alliances, and almost any international agreement that restricts the United States from taking unilateral actions. These historical changes have occurred under the claim by President Trump of protecting the United States and its national sovereignty.

 What else can be said?

This incipient development on city and state levels results from President Trump’s isolationist retreat from America’s engagement in the global system. This engagement has been a hallmark of U.S. foreign policy since before 1945. This incomprehensible retreat by the world’s most powerful nation has seemingly been done with little thought and even less collaboration with Trump’s key national security, military, and foreign policy advisers. Some advisers, however, have seemingly betrayed their own competence by recently declaring there is no longer a global community.

This atavistic retreat to isolationism is a rejection of the rules and institutions that have marked U.S. engagement in international relations since the end of World War II. That engagement had its earlier grounding in the United States’ participation in World War I and then in the 1930s under President Roosevelt’s Open Door Policy and his revamping of U.S. trade policies under Secretary of State Cordell Hull.

***

Those policies espoused open trade, adhering to the most-favored-nation principle as a life-saving antidote to the competitive tariff hikes globally, which had led to the Great Depression. That principle was later multilateralised in the post-war international economic system. This system persists today, but it is under attack by the Trump administration. Most recently, this is seen in its refusal to sign the historic OECD treaty on multinational tax avoidance and bilateral tax treaties signed by 70 other countries recently.

With only a slight knowledge of U.S. diplomatic history, one can draw a straight line from President Woodrow Wilson’s plea to Congress to stay involved in the global system after the Great War (only to see the League of Nations, the Permanent Court of International Justice, and the Versailles Treaty defeated in the U.S. Senate) to President Trump’s nihilistic foreign policies today. Of course, nothing good came from the failure of President Wilson’s efforts. Twenty years later, German troops marched across Europe.

The resurgence of the states’ and cities’ roles in foreign affairs is reminiscent of the role states had under the Articles of Confederation immediately after the Revolutionary War in the 1780s. This is seen even going back to the Middle Ages, when states and cities were the central players in international trade, as part of the Hanseatic League within the Holy Roman Empire.

Today, it is the global city and cities of all sorts that are powering international engagement, innovation, and economic development. Cities, counties, and states are taking the lead in interfacing with the global economic system to promote local economic development and jobs.

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What we see today are unprecedented actions by the United States on the global stage causing more disorder and insecurity. Just witness the recent flare-up in relations with Qatar and growing Saudi-Iranian hostilities instigated by President Trump’s visit to Saudi Arabia. To many, these actions and policies evidence failed national leadership and bizarre foreign policies.

We are now encountering unprecedented actions on the sub-national level, among city and state governments as a reaction to failed national governance and as blowback to skewed populism. These actions have been powered by extensive and broad-based individual and corporate support.

These activities are growing in intensity. For example, state attorneys general have been energized in bringing judicial challenges to Trump’s policies, most notably to immigration. Canada has begun negotiating directly with the states and cities that are members of the new climate coalition. Cities and states are expanding their sister-city and sister-state relations abroad. Most recently Virginia, completed a memorandum of understanding with the Mexican state of Baja California to promote trade.

Whether the Trump administration and its Justice Department will attempt to block these grassroots political actions by resorting to the federal courts is another question. Of course, these courts have not been very favorable to the administration’s actions and its reliance on national security and the president’s foreign policy powers, under either the principles of the separation of powers or federalism.

Thus, the growing opposition of cities and states to President Trump’s failed foreign policies are spawning a new proactive federalism focusing on locally generated foreign policies. This is setting up a legally and politically historic battle over the new federalism.

 

Stuart S. Malawer, J.D., Ph.D., is the Distinguished Service Professor of Law and International Trade at George Mason University’s Schar School of Policy and Government. He is a former member of the board of directors of the Virginia Economic Development Partnership. He can be contacted at StuartMalawer@msn.com. His website is www.GlobalTradeRelations.net

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JUSTICE GORSUCH & INTERNATIONAL LAW — Not Clear.

 

JUSTICE GORSUCH, INTERNATIONAL LAW AND U.S. LAW — Justice Gorsuch displayed a somewhat confused & restricted approach to international & foreign law during his Senate confirmation.

There is a critical distinction between international law and foreign law. International law (both conventional and customary) are incorporated into US law as the supreme law of the land under Article VI of the U.S. Constitution. Judges need to know this (judicial notice).

Foreign law, considered a fact issue in the U.S., belongs to the world of comparative and conflict of law. This often needs expert testimony.

The big issue today is will the Supreme Court look at legal solutions by foreign courts as a means of understanding today’s global problems. Not in interpreting the Constitution itself but helping the court to fully assess the dimensions of the problem under consideration.

Justice Breyer is a leading advocate of this approach. A detailed assessment of Justice Gorsuch’s prior decisions would probably lead to a better understanding of his views in this contentious area. http://us-global-law.net/images/Article.Gorsuch_and_IL_Blog._May_23,_2017_.pdf … …

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New US-China Trade Understanding — Not Much Substance. Better than Nothing?

 

     The new understanding between China and the US on trade is very welcomed. Even though it is very minor and a seeming betrayal of Trump’s campaign promises to the white working class.  Here are a few thoughts:

  • The linkage between security and trade is important. As long as this provides for growing trade ties and better political relations between the U.S. and China.
  • The actual provisions of this new understanding, dealing with US beef imports to China, electronic payment systems in China, and LNG exports to China,  have been in the works before the Trump administration. For example, the WTO already ruled on EPS.  China had previously committed to implement that decision. And these matters in general have only been minor annoyances or friction in US-China trade.
  • China has no obligation to purchase LNG. The lifting of restrictions on US beef imports relate to a very outdated response to health issues of US cattle last decade.
  • The provision allowing for cooked-chicken into the US from China is very problematical. Food safety and security in China is widely considered by the Chinese themselves as very poor throughout China. That’s why Chinese agricultural firms have been buying and investing in US agricultural and food companies, for among other reasons, to secure better technology.
  • The Trump administration’s threat to the WTO, by reliance of Section 232 ‘National Security Provision’ to impose additional tariffs on imported steel, can explode in the faces of the U.S., the WTO and the global trading system. There has never been a WTO decision on Article XXI of the GATT that governs the security exception.

     My conclusion — This understanding, not binding legal obligations, is not unexpected. They do not address the main issues. May just be window dressing. Hope not. We’ll see. Probably pretty shortly.

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Trump’s New Attack on the WTO ……….. Is Trump’s Trade Policy Becoming More Dysfunctional & Dangerous?

    

 

     On day 100 Trump signed an EO critical of the WTO. This follows 100 days of complaints. This is really unfortunate.

     Trump’s recent trade complaints target China, Canada, Mexico, South Korea, Japan, the EU and now to the entire rules-based system of treaties, institutions, and dispute resolution.

      The remarks accompanying this recent Executive Order by Wilbur Ross were totally unfounded. The Trump / Ross attack on the dispute resolution system is totally baffling.

    The US was the primary architect of the dispute resolution system and the primary user of it. The US has brought more cases and won more cases than any other country. Why condemn the dispute resolution system? It has succeeded better than anyone could have imagined. This is the way to resolve disputes. The US has been really successful.

What’s the point? Attacking the entire system? Yes. Trump’s trade policy gets dumber and more dangerous by the day, more inconsistent and more dysfunctional.

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100 Days & Trump’s Trade Policies — Disarray, Dysfunctional but Not Much Damage, Yet.

    

What can be said of Trump’s trade policies in the first 100 days? Here are some of my thoughts in outline form.

Recent trade actions ……………

  • Threatening withdrawal from both NAFTA and the WTO.
  • Subsidy duties on Canadian softwood lumber (to counter provincial subsidies).
  • Threatening Canadian dairy industry over import restrictions.
  • § 232(b) national-security investigation of steel (principally from China).
  • Withdrawing from TPP.

Recent failure to react ……………

  • Not declaring China a currency manipulator.
  • Not tearing up NAFTA (wanting some minor renegotiation).
  • Backing off the border adjustment tax.
  • Concluding only a 100-day study period for US-China trade relations.
  • No cases filed in the WTO.

Pending …………………………

  • Possible new domestic trade remedy actions concerning aluminum, semi-conductors and shipbuilding.
  • Supporting possible new bilateral negotiations.
  • Constant concerns over the WTO’s dispute resolution system and the issue of US sovereignty.

What to make of this? ……………..

  • Trump has not given into his extreme campaign rhetoric.
  • Trump relies upon older trade remedy laws to address older trade issues (steel, lumber …)
  • Neglected addressing the issues of the 21st century, for example cybertheft and digital commerce as well as newer issues of global taxation, global finance and growth of foreign antitrust regulations.
  • The disorder and disarray in his White House and administration is being mirrored in his disarray in international economic and trade policy 

Conclusions ……………………….

  • Good he has so far averted trade wars.
  • But by focusing on older issues he is looking backward.
  • Need to move beyond trade remedy laws that go back to the early 1900s as well as focusing on trade deficits in merchandise trade and focus on trade issues of the day.
  • Reliance on older trade remedy laws is not helpful. They focus on producers and not domestic consumers and real issues of competitiveness and innovation.

General Observations …………………

  • Not much has happened. There has been a disconnect in his actions and campaign rhetoric. But there is no coherent trade policy, whatsoever. Focusing on Trump’s failure to appreciate the strengths of the existing international trade and multilateral system is a grave error.
  • Focusing on  §232(b) national-security investigations is totally unfounded. We can import steel from a host of our friends during any sort of emergency. There’s a world glut.
  • He needs to transcend his earlier restrictive protectionist, transactional, and mercantilist views and more fully appreciate the global trends and the need for effective national and multilateral actions under thoughtful American leadership.
  • The US needs to once again reassert its traditional leadership in global trade relations. It’s in our national interest.
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President Trump returned to his attack on global trade — Is This a Good Trade Policy?

     After failing to declare China a currency manipulator this week President Trump returned to his attack on global trade.
     Relying upon rarely utilized “national security” arguments and questioning the well-known restrictions on domestic content requirements and the principle of non-discrimination for private and public contracts.
      The following two executive orders are highly questionable under global trade rules of the WTO and its Government Procurement Agreement — the new executive order requesting Section 232 review of steel imports on national security grounds and the new executive Order on “Buy American” as to steel for construction contracts.
     Most importantly these executive orders indicate the still unresolved civil war within the administration between the ‘nationalists’ and the ‘globalists.’
      What is required for a sane American trade policy is a return to a firm acceptance of the trading order that emerged during the last few decades. In which the United States was the primary architect. We’ll see how this plays out.
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