Allies find relations modestly tweaked, despite the president’s rhetoric, while relations with China are entering a deep freeze
When Donald Trump entered the White House on a platform of defiant nationalism nearly two years ago, many feared he would dismantle the global trading system the U.S. and its allies had built over the past 70 years.
He hasn’t. Instead, he is presiding over its realignment into two distinct systems.
- One, between the U.S. and its traditional, democratic trading partners, looks a lot like the system that has prevailed since the 1980s: free trade with a smattering of quotas and tariffs like those Ronald Reagan once deployed.
- The second reflects an emerging rivalry between the U.S. and China carrying echoes of the Cold War. On trade, investment and technology, the U.S. is moving to undo some of the integration that followed China’s accession to the World Trade Organization in 2001.
There are two big questions hanging over this realignment. The first is deciding how far the U.S. is prepared to decouple from China. The U.S. has given China until March 1 to avoid higher tariffs by addressing complaints it discriminates against foreign companies and steals their technology. Mr. Trump is counting on a deal that avoids a trade war. But many in his administration and Congress don’t trust China to make the necessary concessions and would likely advocate a sharper break.
The second question is whether the U.S. can persuade allies to join a united front to contain China. Other countries don’t relish the choice. Their economic ties to China are far greater than they ever were to the Soviet Union during the Cold War.
Nor are the ideological choices as clear cut. China isn’t waging an ideological struggle against the West as the Soviet Union did, and Mr. Trump, while enacting policies reminiscent of President Reagan, lacks Mr. Reagan’s commitment to alliances and free trade. Defense Secretary James Mattis’s decision to resign after Mr. Trump’s decision to withdraw troops from Syria underscores the president’s ambivalence toward international engagement.In his first week he withdrew from the unratified 12-nation Trans-Pacific Partnership. He prepared to pull out of the U.S.-Korea Free Trade Agreement (Korus) and the North American Free Trade Agreement. Earlier this year he imposed steep tariffs on imports of steel and aluminum, using a little-used national security law, and threatened the same for autos.
Today, Korus and Nafta have been replaced by updated agreements(one not yet ratified) that look much like the originals. South Korea accepted quotas on steel. Mexico and Canada agreed to higher wages, North American content requirements and quotas for autos.
These represent a step back from free trade toward managed trade, but they will have little practical effect: The limits on how many cars Mexico and Canada can ship duty-free to the U.S., for example, exceed current shipments. Mr. Trump hasn’t stopped threatening auto tariffs, but for now his officials have elected instead to seek broader tariff reductions with Japan and the European Union.
.. Meanwhile, the U.S. trade deficit that incenses Mr. Trump has grown during his presidency, especially with China and Mexico, as a strong American economy sucks in imports. His exhortations to manufacturers to bring jobs back to the U.S. have largely fallen on deaf ears.
Canada’s Impending Gun Ban: Three Lessons for the U.S.
It offers a baleful vision of the future if Americans ever tire of the battle to uphold the Second Amendment.
Canada’s Spy Chief Warns of Economic Espionage
David Vigneault says state-sponsored spying and cyber threats pose a greater challenge than terrorism, cites risk of election meddling.
The head of Canada’s spy agency said state-sponsored economic espionage and cyber threats now pose a potentially greater challenge to the country than terrorism, warning that foreign actors are already targeting the domestic technology and telecommunications sectors.
David Vigneault, director of the Canadian Security Intelligence Service, or CSIS, said foreign interference and espionage are “the greatest threat” to the country’s prosperity and national interest. He also warned of the possibility of foreign interference in the country’s national election next fall.
“Plainly said: there is state-sponsored espionage in Canada,” said Mr. Vigneault Tuesday, according to published remarks at a luncheon hosted by the Economic Club of Canada. “No matter how it’s done or who’s behind it, economic espionage represents a long-term threat to Canada’s economy and to our prosperity.”
.. sectors where CSIS has observed increased activity by state-sponsored actors include artificial intelligence, quantum technology, 5G mobile networks and biopharmaceuticals.
In Nafta Rewrite, Canada Took Cue From Mexico: Make a Big Concession
As Trump’s deadline for the negotiation neared, Canadian negotiators struggled to make the U.S. give ground
Mexican Economy Minister Ildefonso Guajardo offered advice: Make a key concession to the U.S. to break the logjam. Mexico had bent to U.S. pressure on policies aimed at shifting auto production from Mexico back north, opening the way for Mexico and the U.S. to strike a broader deal a month earlier.
.. For Canada, the equivalent of Mexican cars was dairy. Canadian negotiators had already been thinking along the same lines, and the next day, Canada sent the U.S. a document that included detailed plans for easing curbs on American milk and cheese products, a Canadian official said.
.. Two sectors drew outsize attention in the talks—auto and dairy—that came to be dubbed by some the “cars and cows” negotiations. The path to the deal had plenty of twists and gambits that backfired over the 13 months of meetings, as Mexico and Canada at times accused each other of betraying their early oath to present a united front.
The tone for the Nafta talks was set in October 2017, when Mr. Lighthizer made a number of controversial demands that would recast the pact, such as injecting a “sunset clause” making it easier for a country to terminate the pact and weakening the mechanisms allowing challenges to American trade penalties.
.. At the end of August, Messrs. Trump and Peña Nieto announced a deal that included the requirement that 40% to 45% of North American auto content be made by workers paid at least $16 an hour... Though the Nafta dairy market is worth a fraction of the auto industry—and the U.S. runs a dairy surplus with Canada—it became an important issue for Mr. Trump after he got an earful during an April 2017 visit to Wisconsin. The president made Canadian dairy a staple of stump speeches and tweets complaining about how Canada took advantage of the U.S... Mr. Kushner had come to play a behind-the-scenes role in the Nafta talks, and Canada’s negotiators wanted him to see right away a document that included Canada’s formal offer on dairy. The key concession had been made and the U.S. soon responded by giving in to some of Canada’s key demands.