By Justin Kirschner

After negotiations that have spanned two Canadian governments, Canada and the European Union this week announced they overcame a major hurdle and moved one step closer to inking what Canadian Trade Minister Chrystia Freeland called a "gold-platted" trade deal. Formally known as the Comprehensive Economic and Trade Agreement (CETA), the deal’s latest draft resolved the thorny issue of how and when companies can directly sue governments. To assuage EU worries that ad-hoc arbitration panels would settle disputes, well, arbitrarily, and thus give multinationals a legal backdoor around government regulations, CETA will create a permanent investor-state tribunal that comes with a built-in appeal process and consists of members appointed by both sides. Hovering in the background of this part of the EU-Canada deal is the skeptical eye of the United States. The EU and the US are in the middle of negotiating their own bilateral trade deal, TTIP, and a major sticking point of those talks is investor-state dispute resolution. The U.S. has steadfastly opposed a permanent tribunal like the one Canada and the EU have agreed to create, while the EU hopes that CETA will serve as a template TTIP will ultimately duplicate.

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March 27, 2016

By Justin Kirschner

Think about the captivating prose of the last great novel you read. It pulled you so far into the story that the real world faded in favor of the scene created by the mind’s eye. Only master novelists can do that, right? No ordinary person working as, say, an international trade lawyer could pull that off. Well in the case of The Revenant, you would be wrong—though forgiven—for thinking that. The novel on which the Oscar winning movie was based was written by the man who is now a deputy U.S. Trade Representative and U.S. ambassador to the WTO: Michael Punke. Because of the duties of his day job and federal ethics rules, Punke has missed out on most of the fun surrounding the success of the film adaptation of his book. He could not attend the A-list Hollywood premier and walk the red carpet with Leo because he was negotiating a trillion-dollar trade deal in Nairobi, and he cannot sign copies of his book or make other “self-enriching” appearances. He did get to attend the Golden Globes and the Oscars, however. And there’s the plus that Punke’s Geneva colleagues now seek him out not only to discuss global trade issues, but also to do what has become the 21^st Century version of getting an autograph, that is, they seek him out to take a selfie. Michael Punke: A-list trade lawyer by day, novelist and selfie target by night.

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March 25, 2016

By Justin Kirschner

The “mother of all trade issues” will come to a head by the end of this year: is China a market economy under the WTO and who gets to make that decision? The answers to those questions have far-reaching economic and political ramifications.

Though the purpose of the WTO is to facilitate a reduction of trade barriers between its members, the WTO explicitly permits its members to levy anti-dumping duties. An anti-dumping duty is a temporary duty on imported goods imposed on a foreign firm when the foreign firm “dumps” products on the importing member’s market. A product is dumped when it is “introduced into the commerce of another country at less than its normal value” so as to cause or threaten to cause material injury to the domestic industry in the importing country. The consequent anti-dumping duty an importer may impose can be as high as the dumping margin, which is the difference between the actual price of the imported good and the normal value of the good. Generally, a product’s normal value is equal to the value of the product in the ordinary course of trade in the home market of the exporting country. 

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March 24, 2016

By Justin Kirschner

The US trade deficit widened in December as exports hit a four-year low, according to numbers released on February 5. The trade gap rose 2.7% in December to $43.4 billion, up from the newly-revised November deficit of $42.2 billion. December exports were $181.5 billion, the lowest monthly total since January 2012. Why the recent tumble? It's likely because of a generally weak global economy coupled with a strong dollar that made American goods and services comparatively more expensive on the global market. With the Federal Reserve likely to gradually increase interest rates, and the Fed’s foreign counterparts likely to push their domestic currencies in the opposite direction, the stronger US dollar will likely make US goods and services more expensive overseas throughout this year.

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February 16, 2016

By Justin Kirschner

With the Trans-Pacific Partnership signed on February 4, and the ratification battle lines cutting deep through the halls of Congress and the town halls of New Hampshire, comparatively less attention has been paid to what economists make of the deal. Though more genteel in their presentation than the average senator or presidential candidate or senator-turned-presidential candidate, maybe these are the experts to whom we should be listening? Last week, a group of economists from Tufts University, supported by former Biden economic advisor Jared Berstein, released their report. It concluded that the TPP will likely lead to losses in employment and increases in inequality. On the other side are multiple studies, including most recently from the Peterson Institute for International Economics. Their analysis concludes that incomes will rise in the US but employment rates will be flat as a result of the TPP’s full implementation. The Peterson Institute economists conceded that some workers would be displaced, but called helping them “a compelling ethical and political objective.” Unfortunately knee-jerk reactions and political pandering have largely displaced rational analysis on the campaign trail. The noise has spilled over into Washington, spoiling what otherwise could have been a deeply analytical Congressional debate about what is best for the country.

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February 15, 2016

By Justin Kirschner

It’s hard to imagine the United States and China “joining hands” on much.  The two countries are often at loggerheads over China’s currency value, China’s power projection into the South China Sea, and alleged Chinese hacking of US government personnel records.

But “joining hands” is just how China described the US-Sino relationship in fighting cross-border corruption after the US repatriated wanted economic fugitive Yang Jinjun ahead of President Xi’s first state visit to the US.  Just days later, China heralded the return of another fugitive, Kuang Wan Fang, who was serving a prison term in the US for financial crimes, but was wanted in China for corruption and bribery linked to those same crimes that got her thrown behind bars in the US.

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November 23, 2015

By Justin Kirschner

The U.S. Court of Appeals for the Federal Circuit has ruled that the International Trade Commission does not have the power to prevent the import of patent-infringing digital files like it may patent-infringing physical goods. Though argued over imported digital models for invisible orthodontic braces, the Federal Circuit’s ruling will reverberate across the intellectual property landscape and be felt acutely in Hollywood and Silicon Valley, two mega-industries battling over digital piracy that were closely watching this case. On one side are the content creators—the movie studios, record labels and the like—who argue that the import of blatantly pirated copyrighted works is killing their industries, and that the ITC should be empowered to stop it at the border. On the other side are the digitally native content transmitters, like Google, and open-internet advocates who hailed the decision as a bulwark against the over-regulation of digital commerce. It remains to be seen if the ruling will be appealed to a full Federal Circuit panel, or even to the Supreme Court.

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November 18, 2015

By Justin Kirschner

The Organization for Economic Cooperation and Development released its semiannual Economic Outlook, and the numbers are not pretty. It predicts that global trade in 2015 will grow at just 2%, a level that in the past has consistently coincided with a world economic slowdown. The OECD says the paltry trade numbers are due at least in part to shifts in emerging market economies, particularly China’s move away from manufacturing and infrastructure investment towards consumption and services. Indeed, China’s most recent trade numbers bear this out: exports fell 6.9% and imports fell 18.8% just in October. That, in turn, has sent commodity prices plummeting, hurting exporters such as Australia, Brazil, Canada and Russia. In presenting these new numbers, OECD Secretary General Angel Gurría put the onus squarely on the G-20, calling on it to address global trade and growth at its upcoming meeting in Antayla, Turkey.  Among other specific actions, Gurria urged governments to roll-back protectionism and adjust public spending towards investment in an effort to support short-term demand.

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November 17, 2015

By Justin Kirschner

Between 150,000 and 250,000 turned out in Berlin to protest TTIP, the trade deal being negotiated between the U.S. and the EU.  The deal’s opponents also presented the European Commission with what they claim are 3 million signatures from people who oppose the deal. TTIP’s opponents worry that the deal will force the EU to lower its food and environmental standards in order to “harmonize” with U.S. regulations.  They say that the deal—negotiations for which are so shrouded in secrecy that Wikileaks has even offered a 100,000 euro reward for portions of the deal’s text—worsens the democratic deficit many Europeans feel is inherent in the EU’s structure. For their part, the deal’s European proponents argue that TTIP will stimulate economies on both sides of the Atlantic and set trade rules of the road based on U.S./EU values that others will adopt. European opposition to TTIP sounds a lot like the opposition many Americans are voicing against the recently completed Trans-Pacific Partnership - opposition that may yet doom that deal in Congress. So far, TTIP negotiators are plowing ahead even in the face of public resistance.

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October 19, 2015

By Justin Kirschner

On Monday, October 5, the United States and eleven other nations representing forty percent of the global economy and a third of global trade agreed to the Trans-Pacific Partnership, the largest regional free trade agreement in history.  The TPP lowers trade barriers for the twelve members in the agriculture, pharmaceutical, automobile and textile industries, just to name a few.  It also imposes strict environmental, labor, intellectual property and cross-border data flow standards.  China, notably, is not part of the deal.  Though some see the TPP as a geopolitical effort to balance China’s rise, that view has softened to a point where Pacific-rim leaders, including those in the U.S., leave the door open to China’s accession.

Now that the deal has been inked, each country must approve the TPP through its own domestic political mechanism.  In the U.S., pursuant to the Trade Promotion Authority Congress granted the president, Congress and the public will have 90 days to consider and debate the deal, at which point Senators and Representatives will vote up or down without the ability to amend.  With the presidential campaign in full swing, and support for, or opposition to, the deal already making strange political bedfellows, the TPP is likely to be put through the political wringer before a vote happens in early 2016.  For now, the deal stands as a seminal achievement in President Obama’s much-heralded pivot to Asia.

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October 14, 2015

By Justin Kirschner

Australia’s Trade Minister, Andrew Robb, is warning that China will walk away from the China-Australia Free Trade Agreement if the deal’s passage through Australia’s parliament is delayed.  In Australia, Labor MPs, worried about the deal’s effect on the Australian job market, want to pass a domestic provision forcing Australian companies to advertise job openings domestically before looking overseas for workers.  In an interview, Mr. Robb admitted that such a law would be easy to pass, but wouldn’t be desirable because China would view it as “an almighty snub,” ruining any good will the deal generated.  In parliament this week, the trade deal dominated question time.  Some Labor MPs made serious inquiries into the rationale behind particular provisions of the deal, but politics soon took over: the deal’s proponents resorted to rebranding the agreement an “export” deal and lobbed accusations of “xenophobic, racist activities” at the deal’s opponents.  Of course both sides appreciate increased trade’s benefits—indeed the deal was negotiated over the last ten years mostly under Labor governments—but that has not stopped trade’s natural nemesis, domestic politics, from delaying the deal’s approval.

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September 17, 2015

By Justin Kirschner

After protests in Brussels that included hundreds of tractors, burning hay and cowbells, EU farmers are set to get a €500 million relief package aimed at backstopping the agriculture industry against falling prices.  Prices plummeted, Bloomberg News reports, in part because of a Russian ban on many European food exports, including pigmeat.  Within the swine sector, there’s a whiff of cautious optimism that the WTO dispute between Russia and the EU over Russia’s pigmeat ban will soon be settled.  Britain’s National Pig Association, a trade group of commercial pig producers, reports that a “mutually agreed outcome” may come before the end of the year.

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September 17, 2015

By Justin Kirschner

China must tread carefully in managing their recent currency devaluation or else they could start a trade war says Bruce McCain, Chief Investment Strategist for Key Private Bank. The chance of China setting off a chain reaction of retaliation is not great, McCain predicts, because China is moving towards a more market-based, less arbitrarily pegged currency value.  That will seem fairer to its trading partners, he argues, who also let their currency values float. But retaliation may nonetheless be in the cards.  With many countries holding excess export capacity with China, home to a market of eager potential consumers, other countries may deploy economic antidotes to China’s devaluation in order to realize their own export potential.

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September 15, 2015