David Xia: Pres. Trump Is Rebuilding the World Trade Platform

Ms. Gao: Recently, the U.S. signed, or plans to sign, bilateral or trilateral trade deals with the EU, Japan, Canada and Mexico. Do you agree that the U.S. plans to make the multilateral trade platform established by the WTO obsolete and build a new model of international trade? Why is he doing it? What are the potential outcomes?

Mr. Xia: On his campaign trail, Trump made it clear that the U.S. did not benefit from globalization. Free trade has helped several developing countries, especially China. However, the U.S. suffered significant loss because of it. According to his estimate, the U.S. trade deficit, plus the loss of intellectual property, is about $800 billion annually. That’s why he promised to fix the problem once elected. The trade platforms Mr. Trump inherited, whether unilateral or multilateral, and the WTO, appear to be politically correct, but are actually detrimental to the U.S. economy. What Mr. Trump is doing now is to rebuild the world trade platform, reshape U.S. foreign trade relationships and the U.S. economy strategically. His actions are very clear, and the steps he’s taken are reassuring. Let’s take NAFTA as an example. As the first step, he wanted out. Under the threat of U.S. withdrawal, Canada and Mexico made concessions and are willing to come to the table, which paved the way for a new trade agreement. Although the framework still involves the original three North American countries, the specific clauses would be quite different from the previous version. In the meantime, the U.S. is engaging with Japan and the EU to negotiate new trade agreements. There had been trade frictions between Japan and the U.S. in the 1980s and 1990s. It’s a significant step for Japan to renegotiate willingly with the Trump administration. Once the U.S., EU, and Japan — the biggest economic entities — can reach better agreements, the world trade platform will be remodeled. It’s just a matter of time when the old WTO framework will become practically meaningless.

 
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