Sat. Nov 27th, 2021


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Hello from Washington, which ends later this week for the Thanksgiving holiday. It has been brought to my attention that American people like to eat marshmallows on sweet potatoes for this holiday, which sounds a bit much.

In other news, our note today looks a little ahead to next week’s World Trade Organization ministerial meeting, wondering if the US really cares about what’s happening in Geneva.

We would love to hear from you. Send any thoughts to trade.secrets@ft.com or email me at aime.williams@ft.com

Tai remains very quiet about everything that concerns WTO

Former President Donald Trump’s chief trade officer, Bob Lighthizer, has repeatedly called the WTO a “failed organization”. Talk to the Financial Times in January this year he suggested the body was full of “professional bureaucrats” emphasizing the “bureaucratic stuff they do”. And on top of that, he said, the WTO had just as many members and they all blocked and blocked.

Fast forward to November. Lighthizer has been replaced by Katherine Tai, and we are now approaching WTO Ministerial 2021. The question is: does Tai think differently?

Of course, she has a different way of talking. In a roundtable discussion with reporters a few weeks ago, she seemed to have expressed upliftment and quite enthusiasm about reforming the beleagured and multi-faceted multilateral body. Her “vision”, she said, was that “WTO members come to Geneva or wherever it is to meet them and bring their honest selves”. Members must be “willing to fight for the vision of the WHO you want”.

“Just restoring the WTO to where it was four years ago, five years ago,” she added, “is not really going to bring back the energy we, honestly, need for a world economy that is changing very fast and moving further and further away from the point and the reality of where the WTO started. “

But has the US itself actually proposed anything practical that could spur such change? The answer seems to be no.

One of the major problems with the WTO’s relationship with the US pre-Biden has had to do with the appeals body, which is intended to resolve disputes between members. The US effectively hampered this by blocking new appointments for it, because they did not like what they considered to be judicial handover. A week before the critical ministerial meeting, we still have no idea what Tai thinks a reformed appeals body might look like.

Here’s the thing. If the WHO is sitting here in Washington, it does not seem like a big agenda item. While continuing its decades-old argument about fishing subsidies, Washington is confused by the idea that China is subsidizing its steel and dumping it on Europe and the US, that it is winning the race to produce the world’s most advanced chips, and that it already far ahead with the confinement of the minerals and scarce earths needed for the energy transition. Now, while trying to recover from the pandemic by injecting large amounts of cash into the domestic economy, economic policymakers are also trying to figure out how to catch up with China and make sure the US always has access to medicine, chips, minerals to make batteries, and so on.

It also does things like upset allies (namely Mexico and Canada) by threatening to undermine the terms of recent transactions by offering tax credits to people for EVs.

Geneva’s outdated consensus-based negotiation procedures seem a world away from current US concerns.

The pandemic taught us, if we did not already know, that everything can change in an instant. Adam Tooze quoted in a New York Times piece adapted from his most recent book, Shutdown, that the world’s decision makers have given us a demonstration of their inability to govern the deeply globalized world they have created. Part of that problem, he argues, is that global institutions were toothless, even in a situation where likely geopolitical tensions could be thrown aside in the face of a common enemy.

So, what are we hoping for? Well, hopefully an agreement on fishing subsidies. If WHO members can not do that, says Jake Colvin, president of the National Foreign Trade Council, a business lobby group, it is possible that “everyone goes elsewhere to look after important trade issues”. There are a lot of people out there who say similar things. It feels like scratch time.

In addition, Alan Wolff, former Deputy Director-General of the WTO, said in a speech that the body’s members should agree on two more “essential” items, and provide a statement on how countries should deal with the pandemic, and ‘ a proper explanation of how to deal with climate change in the commercial sphere. The U.S. and China both joined talks earlier this month on environmental trade, including fossil fuel subsidies.

There is one good sign, and that is Tai’s visit to India. India is part of what the Brussels element of Trade Secrets likes to call “the awkward team”. That is, they block most things. Inu Manak, of the Cato Institute, a brainstormer, points out that Tai’s visit was important as many delegates expressed “frustration” over India and called for more American leadership and diplomacy.

Ultimately, however, we wonder if Biden’s trade policy is a matter of working out how to appear to like multilateralism, while politely sidestepping existing trade rules to make domestic investments, such as EVs and semiconductors. How the WTO meeting is going may give us more clues.

Mapped waters

The New York Times has an interesting piece ($) on how rich nations fight among themselves to attract immigrants to stop labor shortages. The graph explains why this is so.

Since the pandemic hit, the US has experienced what has been baptized The Great Resignation, with millions of workers leaving the workforce.

Although this trend is much more pronounced in the US than elsewhere, it has also affected parts of Europe and Asia. Claire Jones

Bar graph of labor force participation rate (%) showing that the US labor market has not recovered from the impact of Covid

A fun story about the slides crisis. A boom in forgery semiconductors entering the Japanese market have emerged a cottage industry of chip detectives (Nikkei, $).

Ed White and Sara Germano have a excellent piece about how the case of tennis star Peng Shuai it makes companies reconsider how they work in China.

China will have “no exceptions, no cuts, no transitions, no special treatments” as applicable to join CPTPP, a Senior Mexican Commercial Officer told Nikkei ($).

It looks like living fees are have the desired impact to get companies to load their cargo from the dock yards of the American West Coast. Aime Williams and Francesca Regalado

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