In this episode, the Trade Guys talk about how the midterm election results will affect trade policy. They also welcome the Honorable Tim Groser, New Zealand’s Ambassador to the United States. Amb. Groser is one of the world’s leading experts on international trade and was New Zealand’s chief negotiator in the GATT Uruguay Round. Amb. Groser and the Guys discuss the CPTPP, the state of the WTO, China, and…the Donkey Theory of Management. 

What We’re Reading

“The biggest 2018 midterm loser: Trade liberalization”

Washington Post

 “The midterm elections produced one of my desired results: the GOP lost control of the House of Representatives. This means that President Trump faces a branch of government not controlled by his party. That will be a new experience for him, and I am sure he will handle it with the maturity we expect of him.”

“While fans of the rule of law should welcome that change, the trade policy wonk in me is saddened by the way in which the midterms played out. Based on what happened, it is highly likely that trade protectionism will be on the rise over the next two years.”

“And now we arrive at my pessimism about the next two years. While pre-election punditry was hopeful about Democratic gains in Florida, Georgia, and the Sun Belt, the Democrats made their greatest gains in the region where Trump surprised the most in 2016: the Rust Belt. And after two straight elections in which Florida has pulled the football from the Democrats just as they ran up to kick it, they will focus far more on recapturing the Rust Belt states in the 2020 election.”

“Rust Belt Democrats and Republicans will have one thing in common, and that is comfort with higher levels of trade protectionism. Consider Sen. Sherrod Brown (D-Ohio), who romped to reelection despite the state trending Republican in the past few cycles. As the Hill’s Alexander Bolton notes, this will raise Brown’s profile for the next few years: ‘Brown’s strength in Ohio and his appeal to Rust Belt voters could make him a tempting vice presidential pick in 2020. He has been an outspoken critic of steel dumping in the United States and has pushed hard to protect pension plans for retired coal miners.’”

Why it matters: Democrats took control of the House last night, but the broader outcome of the election signals that they may not be the bulwark against President Trump’s protectionist tendencies that some hope for. Democrats – already traditional proponents of trade protections for workers - made gains in the rust belt, and members representing that territory tend to be more comfortable with protectionist policies than the average congressperson.

Key questions: Will Democrats break from their mold and resist the president’s trade agenda? How can Democrats forge an alternative trade policy agenda distinct from the presidents?


“In big win for Japan, CPTPP to start at year’s end after Australia ratifies Pacific trade pact”

Japan Times

“A trade deal among 11 Pacific nations, once envisioned as a check on China’s clout but abandoned by U.S. President Donald Trump, will kick in on Dec. 30, Economy Minister Toshimitsu Motegi said Wednesday.”

“Australia became the sixth country to ratify the Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — the number required to trigger the 60-day countdown to its activation — New Zealand said earlier in the day.”

“’I expect other signatories will come on board after the CPTPP enters into force, as many are working hard to progress their applicable domestic procedures,’ New Zealand Trade Minister David Parker, whose nation is the depositary of the pact, said in a statement. ‘As a result, we could well see other signatories in a position to ratify over the coming weeks and months.’”

“Japanese government officials hope that the CPTPP will help inject momentum into Tokyo’s push for multilateral free trade ahead of the expected start of bilateral negotiations for a Japan-U.S. trade agreement in January.”

Why it matters: Now that six members of CPTPP have ratified the agreement, it will come into force for them on Dec. 30. New Zealand’s trade minister expects other members to ratify the agreement as a result of this development.

Key question: What diplomatic and economic impact will CPTPP’s entry into force have on the region?

“Beijing is ready for talks with the US to resolve trade issues: China’s vice president”


“China is ready to have discussions with the United States and work to resolve trade issues because the world’s two largest economies stand to lose from confrontation, Vice President Wang Qishan said on Tuesday.”

“U.S. President Donald Trump has threatened to impose further tariffs on $267 billion of Chinese imports into the United States if the two countries cannot reach an agreement on trade, ahead of his expected meeting with Chinese President Xi Jinping later this month.”

“’Both China and the U.S. would love to see greater trade and economic cooperation,’ Wang told the Bloomberg New Economy Forum in Singapore.”

“’The Chinese side is ready to have discussions with the U.S. on issues of mutual concern and work for a solution on trade acceptable to both sides,’ he said.”

 “Xi Jinping promises to open Chinese markets in trade war joust with Trump”

The Guardian

“Xi Jinping has promised to lower import tariffs and improve access to the Chinese market in remarks meant to portray his country as a champion of globalisation as it remains locked in a trade war with the US.”

“’Protectionism and unilateralism is rising. Multilateralism and the free trade system are under threat … China will not close its door to the world and will only become more and more open’, the Chinese president said on Monday at the beginning of a trade fair in Shanghai.”

“The speech, ahead of a meeting between Xi and US president Donald Trump at the end of the month on the sidelines of the G20 meeting in Argentina, signalled little improvement in trade ties before that meeting.”

“Xi claimed China had entered a ‘new round of high-level opening up’ but did not make any concrete concessions likely to satisfy the White House. The Chinese leader reiterated a pledge to enforce intellectual property rights, as well as open up the country’s educational, cultural and telecommunications sectors, something officials have been promising for years, with little action taken.”

“Trump Asks Cabinet to Draft Possible Trade Deal With China”


“President Donald Trump wants to reach an agreement on trade with Chinese President Xi Jinping at the Group of 20 nations summit in Argentina later this month and has asked key U.S. officials to begin drafting potential terms, according to four people familiar with the matter.”

“The push for a possible deal with China followed a telephone call the president set up with Xi on Thursday, the people said, requesting anonymity to discuss internal deliberations.”

“Trump asked key Cabinet secretaries to have their staff draw up a potential deal to stop the escalating trade conflict with Beijing, the people said, adding that multiple agencies are involved in drafting the plan. It was unclear if Trump was easing up on U.S. demands that China has resisted, and reaching any accord still faces significant hurdles.”

Why it matters: Between statements from Chinese leadership and reports that President Trump has tasked his cabinet with drafting a trade deal with China, the stage could be getting set for a breakthrough on trade when President Trump and Chinese President Xi Jinping meet at the G20 at the end of November. On the other hand, President Trump and President Xi may be trying to calm markets out of a downward trend, and President Xi in a recent speech did not offer any new trade concessions to the United States that would signal a breakthrough is imminent.

Key questions: Is a breakthrough between President Trump and President Xi at the G20 likely? Why or why not? What are the motivations for each side in reaching an agreement or continuing to impose trade penalties?