US president-elect Donald Trump has today (27 November) announced his new selection for US trade representative (USTR), Washington lawyer Jamieson Greer.
Greer served as the chief of staff to Trump’s previous USTR Robert Lighthizer, during the president-elect’s first term in office. This time around, Trump has said he wants Lighthizer to serve as his ‘trade czar’, according to a report earlier this month in the Wall Street Journal.
The announcement of Greer comes following yesterday’s news from Trump that he would seek to impose 25% tariffs on Canadian and Mexican imports, as well as an additional 10% on Chinese imports, in response to what he argued was their role in the export of illegal drugs to the US.
‘Short-term pain’
As reported by Bloomberg, Greer’s plans include further moves to limit trade with China, from which he wants to “pursue strategic decoupling”, according to his testimony to the US-China Economic and Security Review Commission in May.
Greer is said to share Lighthizer’s sceptical approach to trade with the Asian nation, and though he conceded during that testimony that “there is no silver bullet”, he asserted that the “short-term pain” associated with winding down trade with China was necessary:
“The cost of doing nothing or underestimating the threat posed by China is far greater.”
In his testimony, he said there were “very serious dependencies and imbalances in US-China trade relations”, and that “an increasingly ambitious and confrontational” China required the US Congress to take measures that would “strengthen the US economy, protect American workers, reinvigorate the country’s industrial base, and protect national security”.
Case for the prosecution
Among the measures suggested by Greer is a move to revoke China’s most-favoured nation (MFN) status with the US. He argued during his testimony in May that, from 2000–2016, when the US trade deficit with China grew from US$83.6bn to $346.8bn, China had repeatedly “failed to abide by its World Trade Organization (WTO) commitments”.
A host of “non-market economic practices”, including “providing subsidies and pursuing programmes to develop national champions to displace US and other Western companies”, broke WTO rules and created an unlevel playing field on trade, Greer suggested.
“China took full advantage of [US trade] openness by leveraging state-directed capital investments and subsidies, industrial overcapacity, abysmal labour and environmental standards, forced technology transfer, and countless protectionist measures.”
At the same time as this, openness helped China to accelerate its GDP growth, “regions [of the US] sensitive to increased import competition suffered from job losses”, which in turn exacerbated the “extremely large and persistent” trade deficit of the US with China.
Import plans
To continue efforts started under the first Trump administration to redress this process, Greer says, the US should limit preferential treatment for Chinese goods that enter through other countries.
He suggested:
“Congress should pass legislation prohibiting preferential duty treatment under free trade agreements with third countries or other preference programs where (1) Chinese content in relevant imports exceeds a de minimis level and (2) the goods were produced by a Chinese company or its subsidiary or branch in the third country.”
This would allow higher tariffs on Chinese-made goods even if they are exported through Mexico. As noted by Bloomberg, some Chinese firms have relocated to or opened divisions in Mexico to avoid the effects of tariffs, particularly on cars – a sector where the current Biden administration has also seen fit to hike tariffs.
Greer has argued that the government should access expanding the incentives provided by the Biden administration’s CHIPS and Science Act and Inflation Reduction Act to manufacture domestically in the US. He suggested these should be considered for sectors as varied as pharmaceuticals and telecoms.
Export controls and investment
It’s not just what’s coming in that interests Greer. The export controls regime should be enhanced to include “a broader range of critical industries”. Among these is the aerospace industry, transportation equipment and “legacy semiconductor manufacturing equipment”.
There should also, he said, be a “China-specific sanctions programme” that would account for “practices related to international security, human rights and other issues”.
He also suggested in May that the US should exert “outbound investment controls” on US companies looking to invest in China, giving government the power to “prevent or otherwise mitigate such investment where it would harm the economic or national security” of the US.
