The Hinrich Foundation Trade Podcast – Details, episodes & analysis

In this special edition of Current Accounts, the Hinrich Foundation’s podcast on global trade, the US Association of Foreign Press Correspondents interviews Deborah Elms on the WTO’s landmark e-commerce agreement.

In July, The Joint Statement Initiative (JSI) on Electronic Commerce achieved a historic milestone in global trade, as 82 World Trade Organization (WTO) members released a “stabilized text”, potentially setting the first digital trade rules. This is a significant development, addressing the WTO's previous lack of a digital trade framework and aiming to create unified, consistent regulations for e-commerce. This agreement, remarkably, was reached without the participation of United State, with major players like China and the European Union joining forces with smaller nations such as Benin and Laos.

The JSI's impact is particularly significant for developing countries, which face significant challenges due to regulatory fragmentation. By addressing these challenges, the JSI aims to foster a more equitable digital trade landscape worldwide. The initiative’s inclusive approach includes commitments for cooperation and development, helping them integrate into the global digital economy. The agreement also aims to facilitate trade for smaller firms by allowing electronic paperwork and signatures, simplifying cross-border transactions.

Despite the progress, achieving consensus at the WTO remains a challenge. Although 82 WTO members have endorsed the JSI’s text, some remain dissatisfied, complicating the integration of these rules into the broader WTO framework. Any dissenting member, including the US, can block progress, leaving the signatories to navigate these disagreements and determine the path forward.

Tune in to this special episode as Deborah Elms, Head of Trade Policy at the Hinrich Foundation, dissects the WTO's historic e-commerce agreement and its potential impact on the future of digital trade.   

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In this special edition of Current Accounts, the Hinrich Foundation’s podcast on global trade, Patrícia Vasconcellos from the US Association of Foreign Press Correspondents and Robert York, Director of Regional Affairs at the think tank Pacific Forum, delve into how shifting oil trade dynamics are fueling global fragmentation.

Following Russia’s invasion of Ukraine in February 2022, the West imposed stringent sanctions on Russia to cripple its oil exports and economy. Despite these efforts, Russian oil shipments have remained resilient, mainly due to new buyers entering the market.

Russia has surpassed Saudi Arabia as the primary oil supplier to China. This shift in the global oil markets, driven by falling oil prices and Western sanctions, has significantly influenced global trade dynamics. While the European Union’s reduced dependence on Russian oil is seen as a positive outcome, the increase in oil imports by India pose a challenge, as the US is concerned about strengthening trade ties between India and Russia.

In response to Western economic pressures, Russia has strategically increased its oil exports to Africa and Asia. This move highlights the need for the US to bolster its diplomatic efforts in the Global South to counterbalance the influence of Russia and China. Furthermore, the environmental risks associated with oil transportation, particularly through poorly maintained "shadow tankers," pose substantial threats of oil spills and ecological damage.

These insights were highlighted in the Association of Foreign Press Correspondents’ interview with Robert York, Director of Regional Affairs at Hawaii-based think tank Pacific Forum.

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In this special edition of Current Accounts, the Hinrich Foundation’s global trade podcast, guest host former US Representative Charles Boustany leads a discussion on the Asia-Pacific Economic Cooperation (APEC) forum 2023 with former US Deputy Trade Representative Robert Holleyman and Shihoko Goto of the Wilson Center. The episode was first featured in Asia Insight, the podcast of the National Bureau of Asian Research. 

The United States will host the APEC forum in 2023. Under APEC’s 2023 theme, “Creating a Resilient and Sustainable Future for All”, the United States is set to spearhead efforts on key issues such as supply chain resilience, digital trade, connectivity, opportunities for small and medium-sized enterprises, climate change, and environmental instability. 

Things have changed rapidly since the last time the US hosted such a forum in 2011. This year, the US has chosen to cast a wide net in setting priorities and faces the challenge of bringing a disparate group of countries together on key issues. 

While there are a lot of expectations of US leadership, skepticism abounds in equal measure. Another US-led regional initiative, the Indo-Pacific Economic Framework for Prosperity, has received a lukewarm response from many in the business and policy communities. APEC provides an opportunity for the US to prove its global economic leadership capabilities. 

What are the opportunities for the US to make tangible progress in its host year? What are the challenges it faces?

As APEC members prepare for the November summit, this podcast unpacks the economic and geopolitical factors that may impact its agenda.

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In this fourth edition of Current Accounts, the Hinrich Foundation's podcast on global trade, Research Fellow Stewart Paterson speaks with Naoise McDonagh, Senior Lecturer in the School of Business and Law at Australia’s Edith Cowan University, on the national security calculus driving decoupling and the crucial role of legal contestability of such measures undertaken by the US and China against each other.

China’s heft in the global trading system fueled its rise to a stature that is challenging US hegemony throughout the world. The rivalry now has become enmeshed in national security interests and its impact is shaking the multilateral trading system. In many ways, the tensions resemble those of the Cold War between the US and Soviet Russia – but for one key difference, says McDonagh. 

During the Cold War, there was almost complete separation between the rival giants. But since China joined the World Trade Organization in 2001, the contesting superpowers are among the most closely integrated economies in history.

Geopolitical confrontation and economic disentanglement between Beijing and Washington have been far more consequential in a painful, near-anarchic reshaping of global networks. The drastic change in relative power between superpowers led to sharply spiraling risks. And there’s no global policeman any longer, McDonagh says, as the US turns against the multilateral governance frameworks it created. 

As both economies invoke national interests, the legal interpretation of the term in the world’s rules-based organizations has become a key measure of its ability to come to terms with the geopolitical changes – not least at the WTO. 

States “are not going to allow an impingement of their national security, and so it is just not going to work for them to bow down to a legal interpretation, because national security issues are too important,” McDonagh says. “So that is why the WTO did not want to rule on this. People will not adhere to it, and that undermines the credibility of the system.”

As nations struggle to figure out the new fissures created by decoupling, Paterson and McDonagh contemplate the abyss in this Current Accounts podcast.

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In this third edition of Current Accounts, the Hinrich Foundation's podcast on global trade, our Research Fellow Stewart Paterson speaks with Emily de la Bruyère, co-founder of Horizon Advisory and a Senior Fellow at the Foundation for the Defence of Democracy, on China’s growing global export prowess, its leverage on world markets, and trade dependency in the technology sector.

When China joined the World Trade Organization in 2001, it accounted for about 4% of global exports. That figure had risen to 15% in 2022. China’s growing export prowess reflects its dominance in global markets. Today, China maintains oligopolistic power in technology-oriented sectors and manufacturing exports, de la Bruyère said. 

The view that China remains the factory of the world for low-end consumer products is outdated. The nation has moved up from the lower rungs of critical value chains, and now enjoys comparative advantages in the higher value-added end of the chain. However, rather than being a market-driven outcome, this dominance, especially in technology, derives from a larger state-driven strategy for China to gain leverage and project its power internationally, she said.

Scale matters. China’s success is in large part due to its huge and centralized state system. Its ability to decide which sector to prioritize, identify champions within those sectors, provide generous capital and funding, and leverage on strong network effects to scale cannot be overstated. In Bruyére’s view, the role of the Chinese government in amplifying market advantages through subsidies and lower regulatory standards to encourage vertical and horizontal integration is critical for Chinese companies to build as much scale as possible. 

While China expands its reach across global markets, regulatory bodies such as the WTO is key to ensuring fair play amid increasing competition and trade tensions. However, the effectiveness of such international institutions has deteriorated in recent years amid rising global geopolitical tension. Trade policies have become so intertwined with national security that geopolitics now often dictates or muddles trade relations. Paterson and de la Bruyère discuss these complexities in this Current Accounts podcast.

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In this second edition of Current Accounts, the Hinrich Foundation's podcast on global trade, our Research Fellow Stewart Paterson speaks with Jeff Ferry, chief economist at the Coalition for a Prosperous America, on how globalization has evolved from a worldwide success for multinational corporations to a dilemma for the American economy, blamed for job losses, low wages, and slow growth.

In key parts of the world, and not least in the planet’s largest economy, trade has become something of a dirty word. In democracies, politicians that advocate for greater levels of global trade are finding themselves ever more unelectable.

Many voters in the US, in particular, have in large swaths turned against the idea that trade is a boon for economic growth. In Washington, leaders and lobbyists no longer dare speak in favor of free trade agreements or offering market access to foreign economies for fear of getting run out of office.

In large part, the belief is that trade – and its byproduct, globalization – has benefited a select slate of large corporations and elites, but left many industrial belts jobless and stagnating. Meantime, China and other Asian economies that bid to manufacture the products that the US chose to offshore have sustained stratospheric growth rates and persistent current account surpluses against the US that has aggravated, in Ferry’s view, de-industrialization, social inequalities, and, increasingly, national security threats.

In trade policy circles, such views are by no means theocracy. Many believe that globalization remains inevitable, though its restructuring – or a “reglobalization” led by geopolitics – is equally inescapable in the rising Great Power rivalry between the United States and China. Supply chains have grown so complex that attempting to reshore all of them is a fool’s errand, some argue. These arguments too will be showcased as the Current Accounts series progresses.

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Here’s an excerpt of Ferry’s conversation with Current Accounts:

Stewart Paterson: The clear barrier seems to have been over the last 20 years, or much of the last 20 years, a reluctance on China's part or the current account surplus countries generally, to stimulate domestic demand to a level that brings their current account back to balance. And therefore, a disproportionate amount of the responsibility for ensuring there is sufficient demand in the world has fallen upon the United States, it has become this kind of consumer of last resort.

But implementing a more balanced global economy or encouraging a more balanced global economy is going to require a lot of cooperation, isn't it? And the level of cooperation that existed in the World Trade Organization in the early part of this century seems to have been sort of inadequate for the job at hand. And that was before the organization and the multilateral trading system generally started to fray at the edges. So, do we not enter into a period here of sort of trade anarchy?

Jeff Ferry: Yes, you could call it trade anarchy, or you could call it, the revolt of the 'dumping-ground countries'. As you say, the United States has been the dumping ground for dozens of countries, really, that want to expand production. 

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In this first edition of Current Accounts, the Hinrich Foundation's newly launched trade podcast, our Research Fellow Stewart Paterson speaks with Jan David Bakker, of Bocconi University, on the rise of non-tariff barriers to trade, their impact on economic welfare, and the nature of data analysis on traded goods from horses to salt.

As the United Kingdom takes the first tentative steps into Brexit, after voting to leave the European Union in mid-2016, it triggered a prolonged negotiation between the two parties that led eventually to the Trade and Cooperation Agreement (TCA) between the two sides coming into effect in January 2021. TCA allows tariff-free and quota-free trade between the two parties, however, since the UK is no longer in the European single market, and no longer in the Customs Union, some previously non-existent non-tariff barriers to trade have come into operation. This has given rise to an opportunity for trade economists to examine the impact of trade legislation and particularly non-tariff barriers on economic welfare.

The recently published paper by the Centre for Economic Performance titled- "Non-tariff barriers, and consumer prices: the evidence from Brexit" co-authored by Nikhil Datta, Richard Davies, Josh De Lyon, and Jan David Bakker, takes a data-driven approach to unpacking the impact of non-tariff barriers on consumer prices. Jan David Bakker, co-author of the paper and Assistant Professor of Economics at Bocconi University in Milan talks to Stewart Paterson, Senior Research Fellow at the Hinrich Foundation about the findings of the paper and the impact of Brexit on British consumers.

Among other issues including how geopolitics and globalization have driven food prices, and how specific classes of products drive non-tariff barriers, the discussion also focuses on the nature of trade data analysis.

In the discussion, Bakker and Paterson talk about the granularity of UK data versus the readily available international trade data provided by the United Nations Comtrade system, commonly used by economists. The challenge in aligning the datasets drill down to singling out commodities from salt to domesticated horses, and how that has a bearing on economic observations.

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In this special edition of Current Accounts, the Hinrich Foundation’s podcast on global trade, Patrícia Vasconcellos from the US Association of Foreign Press Correspondents interviews Hinrich Foundation Research Grant recipient Rodrigo Fagundes Cezar about the impact of unilateral green rules and voluntary standards on Brazil’s green transition.

Amid efforts to promote sustainability through trade, import policies have taken centerstage. The European Union (EU), for example, has unilaterally launched the Renewable Energy Directive (RED) and the EU Deforestation Regulation (EUDR) to help the single market achieve its ambitious climate goals by 2030. As a result, several countries have established or plan to adopt private standards and certifications, such as Brazil's sugar agency Bonsucro, to ensure compliance with these new regulations.

In Brazil, however, the results of adopting these voluntary standards have been mixed. While the country’s exports of sugar and ethanol to Europe have generally increased, these gains are often limited to municipalities with established trade ties with the EU. On the other hand, areas with fewer prior trade ties have seen declining exports. Furthermore, compliance with these standards may inadvertently lead to land concentration, favoring larger agricultural units and potentially exacerbating land inequality within Brazil.

This special episode delves into the findings of a report titled ‘Unilateral green rules and voluntary standards: A balancing act for Brazil’, commissioned under the Hinrich Foundation Research Grant, which supports up-and-coming academics. Rodrigo Cezar and his team analyze the impact of these voluntary standards on Brazil’s sugar and ethanol exports and land concentration. They also discuss the heterogeneous effect and history of trade across Brazilian municipalities. The research highlights the role of policymakers in developed nations can mitigate adverse spillover effects to achieve their sustainability goals.

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In this special edition of Current Accounts, the Hinrich Foundation’s podcast on global trade, Patrícia Vasconcellos from the US Association of Foreign Press Correspondents talks to Inu Manak, fellow for Trade Policy at the Council for Foreign Relations, discussing the role of US trade policy in current presidential election year.

Trade exerts a profound impact on our daily lives as it plays a pivotal role in shaping consumer choices, production processes, and overall economic resilience. The historical trajectory of US trade policy reveals a gradual shift towards protectionism, driven by factors such as the economic disruptions and the lack of effective worker adjustment programs. While the move towards protectionism predates the Trump administration, it is important to note that Trump’s intensification of protectionist sentiment is viewed more as a symptom than the cause.

Looking ahead to future trends, the anticipation looms over the continuation of the trade restrictions in US trade policy, regardless of the election outcome. The dynamic interplay between security concerns and trade decisions highlights the need for a balanced approach.

Moreover, a discernible gap exists between public perceptions, which generally acknowledges the positive aspects of trade, and political narratives that often carry a negative connotation. Bridging this gap necessitates engagement with everyday Americans to capture their perspectives on the global economy.

This episode dissects the evolving landscape of US trade policy during the ongoing presidential election year with guest Inu Manak, PhD in government and an expert in international political economy. Manak's insights offer a nuanced understanding of the intricacies shaping US trade policy, shedding light on the challenges and potential future trends.

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In this special edition of Current Accounts, the Hinrich Foundation’s podcast on global trade, Patrícia Vasconcellos from the US Association of Foreign Press Correspondents and Keith Rockwell, former WTO director and senior research fellow at the Hinrich Foundation delve into the evolving global trade patterns. 

There is a notable shift in global trade patterns, particularly in case of the US. This is a result of deliberate decoupling initiatives spanning two successive US administrations, marked by tariffs on Chinese imports. The US-Mexico-Canada Agreement, sometimes characterized as NAFTA 2.0, emerges as a pivotal factor, fostering enhanced trade relations among the US, Mexico, and Canada. Proximity and integrated economies, as well as the challenges in global shipping routes, contribute to Mexico's increasing competitiveness in supply chains, especially in areas like electric vehicle (EV) production.

The Biden administration's trade policy alignment with its predecessor reflects a prevailing skeptisim towards trade. Prioritizing industrial and environmental policies, the administration has achieved significant legislative milestones, including the infrastructure bill, semiconductor bill, and the Inflation Reduction Act. That said, the convergence of trade and environmental policies, particularly in the context of EV production and domestic manufacturing requirements, poses a challenge in realizing the government's multifaceted policy objectives.

Moreover, the ongoing conflicts, such as those in Ukraine and the Middle East, continue to have physical and economic repercussions to global trade. The uncertainty surrounding the upcoming WTO ministerial meeting's ability to forge comprehensive agreements is heightened by challenges ranging from agricultural disputes to disagreements on e-commerce and tariff issues. 

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