Possible Solutions
Among issues to be discussed in negotiations, it is crucial to pay attention to the Chinese currency revaluation. In light of the events of 2019, when China devalued its currency, the US is concerned about Chinese currency policy, according to the New York Times. Among the consequences of such actions, the source notes the harm to American exporters and the drop of yields on United States Treasuries. Thus, the revaluation of Chinese currency can improve the current situation.
Another significant problem to be discussed in negotiations is the harmonization of intellectual property rights. In many cases, existing treaties can provide limited assistance regarding property rights and in different countries not offer equal protection for one author. International Law Association and WIPO were conducting forums and preparing guidelines “on which national, regional or international law-making organizations could model instruments concerning intellectual property and private international law”. These draft guidelines can provide the basis for the harmonization of intellectual property. Further discussions and ratifications of these guidelines by different nations may become a possible solution.
Preferred Outcomes of Negotiations
The reduction of existing across-board tariffs in developed countries may become a positive outcome of negotiations. Trump’s Administration tariff policy caused significant harm to the US economy, according to researchers. The raise of tariffs resulted in increased costs for domestic goods. In addition, researchers claim that it caused inflation, a decrease in demand, and productivity levels. Thus, the reduction of tariffs to the level existing before Trump’s reforms would have a beneficial effect on the US economy. As for the reduction of import tariffs by developing countries, it also may become a favorable outcome. According to WTO, reducing import tariffs by countries, including developing governments, contributes to global integration and world trade.
Maintaining subsidies for agriculture would be preferable since this industry is significant for the well-being of the people. However, subsidy reduction can be justified by several factors. US farms are located in a favorable region regarding weather conditions. They have “highly trained labor, computerized equipment, and cutting-edge chemical research in fertilizers and seeds”. In this regard, subsidizing agriculture cannot be considered mandatory. It also cannot be denied that US subsidies impede the development of world trade in this area. According to the source, “The Doha Round of trade talks and the Transatlantic Trade and Investment Partnership failed because of the US and European farm subsidies”. As WTO notes, the Doha negotiations are aimed at developing countries to have a share in world trade.
It is also an acceptable outcome for the US to open the Japanese market for rice, beef, and citrus. It can have a beneficial effect on the US agriculture industry. According to the source, the US Meat Export Federation considers that opening of Japanese beef market for the US may become a breakthrough for American agriculture. Thus, such an outcome of negotiations may open new opportunities for the United States.
The opening of the international financial services markets could have a beneficial effect on the US economy. According to WTO, liberalization of this area can help to increase the efficiency of the sector, “leading to lower costs, better quality, and more choice of financial services”. In addition, thanks to better allocation of resources between countries, opening the market will increase opportunities for financial intermediation and investment.
Opening trade in services also can be an acceptable outcome under certain conditions. According to WTO, the removal of market access restrictions should not mean that the government is required to allow the entry of an unlimited number of service providers. The government must reserve the right to limit the number of suppliers, service operations, persons to be employed, and “the types of legal entity permitted and the share of foreign capital”.
The creation of an open-seas policy for port-to-port transportations within the US can help to decrease transportation and consumer costs in this sector. In 2017, the United States provided humanitarian assistance to Puerto Rico after the hurricane. It was these actions, according to the source, that drew attention to the Jones Act. This act does not allow foreign-flagged vessels to ship within the United States, restricting competition. This is beneficial only to a small sector of producers but has negative factors for consumers. Thus, the open-seas policy would be beneficial to far more American people than the existing Jones Act.
Unacceptable Outcomes
Reducing US steel subsidies can be considered an unacceptable outcome. According to the source, Trump’s reforms led to a decrease in demand for products of American steelmakers. As the traffics increased, “U.S. Steel Corp. has lost 77% of its value, Alcoa Corp. is down about 57% and Nucor Corp., the biggest U.S. steelmaker, is down about 22%”. Thus, for the US, reduced subsidies may lead to further deterioration in the steel market.
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