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Money Matters

Tariffs and energetic protection of US trade is the American way

By Alan Beattie
Mon, 10, 17

So much for Britain's special relationship with Donald Trump, those sceptical of Brexit are saying. Theresa May goes over to Washington and literally holds the president's hand. In return, the US first endangers jobs in Northern Ireland by slapping punitive tariffs on the aircraft that factories in Belfast help make and then threatens British farmers by leading a vigilante posse of agricultural exporters eager to access UK markets in beef, sugar, lamb and more.

The reality is even worse than cynics would have it. Even were Hillary Clinton president, the US would be doing very similar.

Some of Mr Trump's antics, such as forcibly renegotiating deals like Nafta and threatening to impose import tariffs against offshoring companies, may be novel in their self-defeating protectionist eccentricity. But American trade policy in areas such as "trade defence", including the anti-subsidy duties it is threatening against Bombardier, and its obsessive pursuit of prising open foreign agricultural markets, is largely constant whoever is occupying the White House - and indeed Capitol Hill, where much of the power resides.

The US has a habit of imposing what by international standards are high punitive tariffs on imports deemed unfairly priced. But while the White House has discretion over some more esoteric trade tools, the workhorse anti-dumping and anti-subsidy duties are calculated and imposed largely through standard methodologies implemented by bipartisan independent agencies and career civil servants. It is long-established US trade law, not ideological whim, that throws up such barriers.

True, the US government decides to expend time and political capital fiercely defending those laws from criticism in the World Trade Organization, whose dispute settlement bodies have repeatedly ruled parts of them illegal. Robert Lighthizer, Mr Trump's trade representative, who spent much of his legal career in private practice acting on behalf of the steel industry, wants the WTO to back off. But one of the US's current tactics - the apparently extreme measure of starving the WTO dispute settlement process of resources by refusing to appoint new judges - is only an intensification of the trenchant criticism and indeed undermining of WTO dispute settlement from Barack Obama's administration.

Nor is energetically protecting Boeing from allegedly subsidised foreign competition exactly an innovation. The US's legal battle with the EU over subsidies to Boeing and to Airbus, its European rival, is now well into its second decade: this is the Jarndyce v Jarndyce of trade litigation.

As for American farmers, the lock that they have on Capitol Hill - particularly in the Senate, thanks to the over-representation of small agriculture-intensive states - is also a constant. Every trade deal the US does must have something to keep the farmers happy. The decade-long so-called "Doha round" of global trade talks had myriad problems, but what killed it was the US refusal to countenance a deal that did not give its rice, wheat, soy and other farmers more access to markets such as India and China.

The 12-nation Trans-Pacific Partnership boasted of covering 21st-century issues from data flows to drug patents, but what helped push it over the line to the signing stage were new import quotas for rice and wheat that Japan offered to the US.

As far as US trade policy is concerned, whomever you vote for, Boeing, the American steel industry, the farm interests and the trade defence lawyers always get in. No imagined special relationship with the UK will change the trade lobbying configuration in Washington. Any Brexiter comforting themselves with the thought that Mr Trump will not be president forever is likely to be disappointed.