Trump National Security Strategy interlocks with trade policy shift

President Trump’s just-announced National Security Strategy — summarized later below — interlocks with a subtle shift noticeable in his administration’s trade policy from bilateralism to plurilateralism. Although recent polls and special elections have been favorable to the anti-Trump Democrats, they have no positive program to run on in 2018 except “impeach Trump.” The investigation they hoped would prepare the way for that outcome — Special Counsel Mueller’s — is looking increasingly desperate in the face of massive conflict-of-interest revelations and the discrediting of FBI leadership.

TPP, other multilateral agreements to be rebranded as “plurilateral” to coordinate restraints on bad-actor China?

Up to now, Trump administration trade policy has been openly antagonistic to multilateral trade agreements such as NAFTA and the WTO, or the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP) negotiations inherited from the Obama administration. At the recent 11th Ministerial Conference of the World Trade Organization (WTO) held in Buenos Aires, US Trade Representative Robert Lighthizer continued to boycott primary WTO functions and declarations. But for the first time he indicated that the US was interested in pursuing plurilateral agreements within the WTO. This is potentially a very important shift from the Trump administration’s previous insistence that it would only do bilateral deals. Not only did the major free-world economies indicate zero interest in this earlier administration proposal; they even proceeded to (1) move ahead on reviving the TPP on their own without the US and also (2) concluded a Japan-European Union (EU) Free Trade Agreement (see “The bad news: world leaving US behind in trade deals” in the Dec. 11th Founders Broadsheet).

Plurilateral agreements have the virtue that they’re not subject to a veto by other WTO members. Instead, they’re based on “a coalition of the willing,” our trade correspondent L.C. advises. Their limitation is that they’re usually limited to one sector at a time, such as the Government Procurement Agreement or the Information Technology Agreement. But with a little bit of semantic shape-shifting, the Trump administration could revive its participation in the TPP and T-TIP under face-saving new names and as [cough cough], plurilateral rather than multilateral agreements.

On some other issues that had not been brought to fruition after months of effort, smaller groups of countries suddenly got together to announce they will work on solutions (that is, without countries that had been obstructionist). These covered rules for three matters not now within the WTO’s purview: e-commerce (a key US interest), investment facilitation, and encouragement of MSMEs (micro-, small-, and medium-sized enterprises).

The initiatives were welcomed by the US, with Lighthizer, as noted below, praising the turn toward plurilateralism in his final comments. He put out separately a statement on e-commerce: “The US is pleased to partner with 70 WTO Members to initiate exploratory work on negotiations on electronic commerce issues in the WTO…. The launch of this initiative marks a significant milestone…. Initiatives like this among like-minded countries offer a positive way forward for the WTO in the future.”

Lighthizer hailed the turn toward plurilateralism as a turning point for the WTO. In his brief closing statement, he said: “MC11 will be remembered as the moment when the impasse at the WTO was broken.  Many members recognized that the WTO must pursue a fresh start in key areas so that like-minded WTO Members… are not held back by the few Members that are not ready to act. In this regard, the US is pleased to work with willing Members on e-commerce, scientific standards for agricultural products, and the challenges of unfair trade practices that distort world markets. Further, the US intends to continue pushing meaningful disciplines on harmful fisheries subsidies based on guidance agreed to by Ministers at Buenos Aires. We are proud to defend the interests of US stakeholders at the WTO, including our farmers and ranchers, who need a result on agriculture that is based on the realities of today, rather than a 16-year-old, outdated and unworkable framework [e.g., the Doha Round mandate]. The US looks forward to working with those WTO Members who are seeking free and fair trade through the implementation of WTO agreements and decisions as negotiated by Members.  We welcome the opportunity in 2018 to continue to discuss how we can improve the functioning of the WTO.”

US-JAPAN-EU: Regarding “the challenges of unfair trade practices that distort world markets,” Lighthizer was referring to an important initiative involving just the US, Japan, and the EU – which was reportedly crafted by the latter two who intend it to be an alternative that might steer Washington away from unilateral action on China.  The US, EU, and Japan released a joint statement during MC11 reflecting their agreement “to strengthen our commitment to ensure a level playing field.” Aimed at China though not by name, the statement says: “We shared the view that severe excess capacity in key sectors exacerbated by government-financed and supported capacity expansion, unfair competitive conditions caused by large market-distorting subsidies and state owned enterprises, forced technology transfer, and local content requirements and preferences are serious concerns for the proper functioning of international trade, the creation of innovative technologies and the sustainable growth of the global economy.  We, to address this critical concern, agreed to enhance trilateral cooperation in the WTO and in other forums, as appropriate, to eliminate these and other unfair market distorting and protectionist practices by third countries.”  This initiative, especially if it leads to an effort with other countries within the WTO, could put more pressure on China than US actions would alone.

NSS focuses  on strong economy, fossil fuels, missile defense and nuclear weapon modernization

Michael R. Gordon, the respected defense analyst and author who until recently wrote for the NY Times but is now with the Wall Street Journal, summarizes the Trump administration’s just-released National Security Strategy as follows:

“President Donald Trump will put his domestic economic and trade policies at the heart of a new national-security strategy that depicts the world as one of heightened rivalries and potentially dangerous competition.

“The new strategy, with an emphasis on confronting unfair trade practices and precluding rivals from stealing American technology, holds potentially far-reaching implications for relations with China, which is described as a “revisionist power” that is seeking to undermine U.S. security and prosperity.

“Russia is portrayed as a dangerous rival that is trying to restore its status as a great power and establish spheres of influence by dividing the U.S. from its allies and is using state-funded media and cyber elements to undermine Western democracies….

“Much of the emphasis in the document is on economics, including domestic policy. The strategy casts the tax-overhaul plan and reductions in regulations as essential steps to strengthen the U.S. as an economic and military power….

“The strategy stresses that the size of the armed forces needs to be increased and rejects the notion that improvements in military technology can offset reductions in military-force structure. It calls for strengthening missile defense and fielding more-modern nuclear weapons.

“In contrast to the national-security strategy promulgated by former President Barack Obama, climate change isn’t presented as a national-security danger and there is no talk of seeking a world without nuclear weapons….”

Military historian Victor Davis Hanson adds:

“Another way of appreciating the radical departure from the foreign policy of 2009-16 is to appreciate what is not in the Trump Doctrine. The 2015 Obama document focused on climate change (e.g., ‘and the ground-breaking commitment we made with China to reduce greenhouse gas emissions’). In contrast, the Trump doctrine makes not a single mention of ‘climate change.’ Instead, the document pledges U.S. leadership to counter ‘an anti-growth energy agenda that is detrimental to U.S. economic and energy security interests.’

“It adds, ‘Given future global energy demand, much of the developing world will require fossil fuels, as well as other forms of energy, to power their economies and lift their people out of poverty. The United States will continue to advance an approach that balances energy security, economic development, and environmental protection. The United States will remain a global leader in reducing traditional pollution, as well as greenhouse gases, while expanding its economy.’

“Translated, that means fracking, the Keystone and Dakota pipelines, and new drilling on federal lands will enrich the U.S., weaken energy exporting rivals like Iran and Russia, and free up American strategic options from dependence on foreign energy sources. It assumes without comment that American energy producers are the most environmentally sensitive in the world.”

hat tip: Nicomachus, Eaglebeak

Click here for yesterday’s Founders Broadsheet (“Trump administration drops global warming as national security threat, will form Red Team to challenge climate alarmists”)