Trade as Competition in the American Future (Adapt that Supply Chain ASAP)

May 10, 2022
By: David G. Forgue

In the wake of the Second World War the United States helped create a global trade structure focused on trade through a globally negotiated model. As part of these global structure the General Agreement on Tariffs and Trade (GATT) was formed. This would eventually become the World Trade Organization (WTO). The WTO was the forum in which countries were supposed to manage trade disagreements.

For United States policy purposes there had been concerns expressed about whether the WTO was a sufficient forum to manage the rise of the Chinese economy in the global trading system since before Chinese accession in 2001. However, the election of President Trump in 2016 was the point at which American trade policy explicitly deemphasized (or ignored) the WTO-centric system for dealing with trade partners. The issuance of special duties under Sections 201, 232, and 301 were all evidence of a new, confrontational approach.

With the election of President Biden in 2020 many in the trade community expected a reversion to the freer trade model utilized over the previous 65 years. The fact that the special duties under Sections 201, 232, and 301 were generally retained raised questions about whether the United States did intend to return to the WTO-centric model. However, steps taken to manage the steel trade with several allies under the Section 232 duties, as well as a more responsive exclusion process under Section 232 seemed like steps back toward the older, less confrontational system. After all, the post war era was not without trade disagreements, and the current era would be either.

On Thursday International Trade Today reported on a speech that makes clear that the United States is not return to the pre-Trump trade policy any time soon. The speech was made to the National Customs Broker & Forwarders Association of America annual conference by Brandon Lord, deputy executive director of the Office of Trade Policy and Programs. In that speech Director Lord indicated that Customs viewed the current era, and the foreseeable future, as an era “focusing on national economic security.” The brokerage community was specifically told that future demands from Customs would arise in area of “important macro level requirements around national economic security” including enforcement of trade remedies, special tariffs, AD/CVD, and forced labor.

It is clear from this speech that importers who were managing AD/CVD, 232, and 301 duties as short-term problems need to start thinking more long term. It is now apparent that there is a political consensus in the United States that views trade as more likely to be a competition to be won or lost instead of a mutually beneficial transaction. This is more similar to the confrontational approach started in 2016. While some commentators have referred to this as the “end of globalism” the reality for importers is that supply chains will need to adapt to an era that is more concerned with national economic security than cheap imports. And that’s not going away.

If you have questions about supply chain planning, or any other aspect of your imports or exports do not hesitate to contact any attorney at Barnes, Richardson & Colburn.