Not quite the end of the global economic order
Rather it is kludgy free trade we are getting these days, as I argue in my latest Bloomberg column. Here are a few scattered excerpts:
When it comes to China, the WTO structures were already being jerry-rigged. If anything, you could say that the point of the new trade regime is to make the jerry-rigging more transparent.
In fact, it is hard to see how trade relations with China could be anything but jerry-rigged. The Chinese economy is simply too different, and far more statist, than those of the economically developed Western nations or Japan. And yet China is now the world’s No. 2 economy and largest exporter.
And:
The more important technology becomes to the U.S. and global economies, the more issues such as data storage and access will move to the forefront. Can the Chinese government demand that a technology company hand over user data? On whose servers do the data need to be stored? Can national storage be treated as a prerequisite for market entry? Again, the right answers cannot help but be complicated.
Most generally:
It is well-known in economics that exporting services is much more difficult than exporting resources or manufactured goods. It then follows that trade law for services will be messier and kludgier as well. Trade arrangements for services may feel ugly and excessively bureaucratic, but the underlying reality is that the principles of free trade are being extended, not repudiated.
And:
At a larger scale, what to think of the first phase of the U.S.-China trade agreement? It is still difficult to divine the entire agreement, or how much of it will be announced publicly. The real core of the deal may be an impossible demand on the Chinese to buy many additional billions of dollars of goods from the U.S., with the very impossibility of that demand serving as a cudgel for enforcing Chinese compliance with the less tangible, harder-to-measure aspects of trade relations.
To close:
In short, this new era of international trade certainly looks messier. But maybe that’s because the resources of simplicity have been all but exhausted. Free trade isn’t yet dead. It’s just not quite as free as it used to be.
Recommended.