On Friday, President Trump signed an executive order for an "Omnibus Report on Significant Trade Deficits." Here's how it starts:
OMNIBUS REPORT ON SIGNIFICANT TRADE DEFICITS
By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to ensure the informed exercise of the authority over international trade granted to me by law, it is hereby ordered as follows:
Section 1. Policy.
The United States must address the challenges to economic growth and employment that may arise from large and chronic trade deficits and the unfair and discriminatory trade practices of some of our trading partners.
I have two questions about this:
1. What exactly are the "the challenges to economic growth and employment that may arise from large and chronic trade deficits"? I have never seen a convincing argument that the U.S. trade deficit of the last 40 years has hurt economic growth and employment. In fact, higher trade deficits tend to be associated with a strong economy.
2. Don't we already do quite a lot to address the "unfair and discriminatory trade practices" of our trading partners?
Now we get to the report that will be issued:
Sec. 2. Report. Within 90 days of the date of this order, the Secretary of Commerce and the United States Trade Representative (USTR), in consultation with the Secretaries of State, the Treasury, Defense, Agriculture, and Homeland Security, and the heads of any other executive departments or agencies with relevant expertise, as determined by the Secretary of Commerce and the USTR, shall prepare and submit to the President an Omnibus Report on Significant Trade Deficits (Report). To aid in preparing the Report, the Secretary of Commerce and the USTR may hold public meetings and seek comments from relevant State, local, and nongovernmental stakeholders, including manufacturers, workers, consumers, service providers, farmers, and ranchers.
So they "may" hold public meetings and seek comments. I really hope they do. Without public input, I worry that this report will not take a balanced approach to the issue. [ADDED: I can imagine some people saying, even with public input, the report will not be balanced. Regardless, I think that public input could really help here.]
Now here's the key part in terms of the substance of the report:
The Report shall identify those foreign trading partners with which the United States had a significant trade deficit in goods in 2016. For each identified trading partner, the Report shall:
(a) assess the major causes of the trade deficit, including, as applicable, differential tariffs, non-tariff barriers, injurious dumping, injurious government subsidization, intellectual property theft, forced technology transfer, denial of worker rights and labor standards, and any other form of discrimination against the commerce of the United States or other factors contributing to the deficit;
(b) assess whether the trading partner is, directly or indirectly, imposing unequal burdens on, or unfairly discriminating in fact against, the commerce of the United States by law, regulation, or practice and thereby placing the commerce of the United States at an unfair disadvantage;
(c) assess the effects of the trade relationship on the production capacity and strength of the manufacturing and defense industrial bases of the United States;
(d) assess the effects of the trade relationship on employment and wage growth in the United States; and
(e) identify imports and trade practices that may be impairing the national security of the United States.
Here are some comments and questions on this part:
1. Their list of causes of the trade deficit is non-exhaustive. I hope they got lots of submissions explaining that the difference in savings rates between the U.S. and other countries is the main cause of trade deficits.
2. Doesn't USTR already gather information on unfair trade practices? Will this report just summarize the existing information?
3. They are only looking at the trade deficit for goods. I hope the public submissions emphasize the importance of services trade.
4. In addition to "assess[ing] the effects of the trade relationship on employment and wage growth in the United States," they should also assess the effects on consumers and the overall economy.
5. What will they do with the results of this report? I would think we already go after "discrimination against the commerce of the United States" to the maximum extent possible at the WTO, but perhaps there are new cases to be brought. With regard to "differential tariffs," the best way to address this is probably through a trade negotiation. Could the end result of this be more trade liberalization via trade negotiations? But of course, the concern is that the report will be used to justify unilateral restrictions.