Reflections on the angels on the head of Jamieson Greer's pin

Amid the flurry of trade activity and just one day ahead of President Trump's 1 August tariff deadline, U.S. Trade Representative Jamieson Greer issued a statement titled “President Trump’s Vision for a New System of International Trade”. In it, and in a New York Times op-ed a week later, the USTR lays out a defense of U.S. trade policy as accomplishments that expand market access for U.S. exporters, defend critical American industries, create jobs and manufacturing investments, and reassert American leadership. 

Maybe I am being optimistic in finding comfort that someone in the administration is at least trying to put some sort of organizing thought, a structure, to what is happening to define what a “system of international trade” should be. The USTR concedes that the “system” is still inchoate: “In the coming weeks, this new system will begin to take shape, as the Trump Administration works with trading partners on a common path to shared prosperity.”

I am a former deputy USTR and am not in this administration. I have very little visibility into what is happening in the ongoing negotiations. With no public texts and only occasional one-sided summaries, it is hard to glean what is actually being negotiated. 

I can only imagine the negotiations must be quite fraught. I see Greer expressing a desire to “work with trading partners on a common path to shared prosperity”. But, so far, the one-sided U.S.-centered statements don’t exude “shared prosperity”. I take Greer's statement on its face that there is a desire to work together and I hope that trading partners take Amb. Greer up on that opening. I hope there is still some trust left in the interactions between our negotiators to allow for honest conversations to occur.

But it is also critically important to be honest and to work with facts. In that vein, I have to take issue with the set-up in the statement by Greer: “For decades, American international economic policy has been subordinated to the industrial and trade policies of other countries.”

Curiously, in his next sentence, Amb. Greer takes aim at an “America [that] pursued a principle of economic efficiency at all costs – even where it meant the American industrial base was off-shored and our workers had to compete against unfair trade.” Now, I would argue that, over time, U.S. trade agreements did take into account interests other than pure economic efficiency, by bringing in issues like labor and environment into our bilateral agreements, for example. But that has not been the case with respect to the multilateral system. And, as we all know, many of the arguments against the Trump tariffs point to their economic “inefficiency”.

Still, here is fertile ground for a conversation. Indeed, many of the debates at the WTO about whether the rules are inherently good or bad for development can be boiled down to this knotty issue of whether economic efficiency “at all costs” is good or bad. It is ironic that, in a way, the United States is now making the arguments that many developing countries have been making – you need space to achieve certain goals that are not just about economic efficiency. We should be looking at these issues from where we are today, in the context of how the world has changed.

The USTR's statement then says: “Global trade is now being organized around the principles of fair and balanced trade – all pursued in support of countries’ economic and national security.” On the plus side, I am glad he expressed desire to support “countries”, not just one country. However, "principles of fair and balanced trade … in support of countries’ economic and national security” is a pretty fluffy standard. What is fair is clearly in the eye of the beholder, and what is balanced depends on many factors. And “fair and balanced” cannot be one-sided. With an economy of our size, we cannot expect to have “balanced” trade with the majority of world economies, as not many can match our purchasing power. In this regard, I was glad to see that countries like Lesotho got a much lower tariff than originally proposed, though still quite high compared to the past.

And what would a conversation about how we find a new system for international trade with a view to shared prosperity look like? For one, it should not start with complaints about how the United States is destroying the system it helped build. I understand the frustration with what is happening. But that will fall on deaf ears in Washington and be a non-starter.

In my view, if there is one rule that needs revisiting, it is MFN, which commits WTO members to extend the same trade terms to all other WTO members. Everyone waxes poetic about it. It is indeed a beautiful concept. But perhaps it is a victim of its own success. If one were to think about it, MFN truly only made sense when the number of nations to which it applied was fairly small (even if economically powerful). “Most-favoured” makes sense only if there are less-favored nations. If almost everyone is in the club, you lose the ability to differentiate (not necessarily “discriminate”) among members and you get more free-riding. We honestly need to think whether that makes sense today – not debate whether it made sense before, which it perhaps did. (Let’s also not forget that MFN was about getting the preferences that the former colonial powers had vis-à-vis their territories. So, not so poetic after all.)

I know there is some chatter about whether the “agreements” various WTO members have, and certainly will, enter into with the United States will be offered on an MFN basis to others. It is unrealistic to demand that trading partners provide MFN with respect to their latest deals with the United States. If they do it out of the kindness of their heart, that's great, but it would serve no purpose to demand it or to take members to dispute settlement over it.

I take note of an article by former executive director of the International Monetary Fund Hector Torres, who in a 16 May article for the Official Monetary and Financial Institutions Forum, addressed some of this. He proposed a temporary MFN "peace clause" through the next WTO Ministerial Conference, scheduled for March 2026. This clause would allow countries to negotiate deals with the United States without being challenged at the WTO, while giving the WTO time to coordinate broader negotiations, ideally under Article XXVIII of the General Agreement on Tariffs and Trade, the WTO's predecessor. The Article, an alternative dispute settlement method, permits modification of tariff commitments alongside compensation talks. Failing agreement, affected exporters could withdraw equivalent concessions” under the provision of Art. XXVIII.

I would argue for a long "peace clause" to allow members adequate time to negotiate. Why no one has called for Article XXVIII renegotiations at the WTO is frankly a bit of a mystery to me. We have the tools and yet we don’t use them.

To those who are reading this and rolling their eyes, maybe frothing at the mouth, give me your thoughts. Who knows, maybe over time, we end up in a place not too far from where we started? But first we need to start a conversation about what we need today. I hope Amb. Greer’s statement is an opening for those who want to engage.

A final note: Greer's statement asserts that the new trading system will lower the U.S. trade deficit and lead to better outcomes for U.S. workers, families, and communities. I always hope for the latter, and there is a lot more the administration and Congress could do in this regard that has nothing to do with trade. 

As for the trade deficit, only time will tell if the new trading system will lower it. I am sure we will all be tuned in.

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[1] https://unctad.org/system/files/official-document/osgdp20045_en.pdf 

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