'America First' should yield to realism
President Donald Trump has instructed trade officials to look into whether to launch a probe into China's infringement of intellectual property rights and the like, on the basis of Section 301 of the U.S. Trade Act.
Under that law, should unfair loss incurred by U.S. companies be recognized, punitive measures, such as tariff hikes, can be taken against China.
The Chinese government is countering the U.S. move by declaring that it will take its own measures if Washington invokes sanctions against it.
If U.S.-China trade cools down, it will inevitably have an adverse impact not only on the two countries but also on the entire global economy.
It is apparent that the U.S. side aims at urging China to apply further pressure on North Korea, a country that is moving ahead with its nuclear and missile development, and over which Beijing has some influence.
Yet there is the danger that using trade policies as a "bargaining chip" for the sake of national security, while the two things have no direct link with each other, would lead to a political settlement in disregard of the rules. Both sides are required to deal with the issue levelheadedly.
U.S. firms' computer systems have been hacked by China, and trade secrets have been stolen. And U.S. companies that have entered the Chinese market have been forced to excessively hand over their technology to China. The U.S. government is criticizing Beijing, blaming China itself for these unfair practices.
On the occasion of its joining the World Trade Organization (WTO) in 2001, China promised to reinforce the protection of intellectual property in the country. But that promise has not been kept, when the real state of affairs is taken into account: Even today counterfeit goods and pirated software are rife in China. It is important to improve the situation steadily.
But Section 301 may also pose a problem.
When Japan-U.S. trade frictions became serious in the 1990s, Japan's automobile parts and photographic film market were targeted by the U.S.
The European Union back then filed a complaint against the U.S. with the WTO, claiming that Section 301 runs counter to WTO rules. The United States, by promising self-restraint in the use of Section 301, managed to avoid having the WTO determine that such a conflict exists. Should the United States deviate from WTO procedures, however, it will be considered to have violated WTO rules.
While past U.S. administrations in the 2000s and later restrained themselves from applying Section 301, the Trump administration has declared that it will change its stance to utilize it aggressively.
Trump considers a reduction of the U.S. trade deficit a top priority in his economic policy, but there are structural problems involved, such as strong domestic consumption. Even if the U.S. pressures its trading partners to make concessions by hinting at punitive measures, it would be a long way from solving a fundamental problem.
The renegotiation of the North American Free Trade Agreement started on Wednesday, and substantive negotiations of the Japan-U.S. economic dialogue are expected to kick off this autumn.
The Trump administration, which has taken a self-assured negotiating stance with its "America first" trade policy, probably should switch quickly to take a realistic line that would foster reciprocal trade.
FROM AN EDITORIAL IN THE JAPAN NEWS/YOMIURI SHIMBUN