Donald Trump does not like multi-party international trade deals. It doesn’t matter if that’s TPP, or NAFTA, or CAFTA, or T-TIP: Trump has been insistent that America’s past negotiators have been uniformly awful, and that he can deliver a better deal by putting his Amazing Dealmaker Skills to work one-on-one. Only the deals seem to be few and far between.
Back in May, the U.S. did sign a new trade agreement with China, but that agreement was limited to just a few areas and closely matched an agreement that had been in the works for years. What’s keeping Trump and his merry band of Goldman Sachs executives from knocking down those trade barriers? One big problem is that someone just can’t shut up.
President Trump wants to invoke a national security provision to stop the "dumping" of cheap steel into America, but trade lawyers believe Trump's public statements —and dubious legal reasoning — could expose the administration to significant legal problems.
Just as court cases against Trump’s Muslim ban have often turned on Trump’s inability to stop calling it a Muslim ban (despite the less illegal phrases his underlings try to present), Trump’s negotiations on trade are in peril because of the things he’s said himself.
Trump last week on Air Force One:"They're dumping steel and destroying our steel industry, they've been doing it for decades, and I'm stopping it."
If Trump was only talking, it might not be an issue. But Trump is taking unprecedented action that threatens to seriously disrupt American trade.
What’s wrong with what Trump is saying? There are already regulations that affect dumping. If Trump believes China or others are dumping steel, he can invoke the Anti-Dumping Agreement to levy appropriate penalties. There are also U.S. laws that Trump can invoke, laws that have been used for just this issue in the past.
Instead, Trump is taking a different approach.
Trump's team would likely try to justify its actions to the WTO by citing Article XXI of the General Agreement on Tariffs and Trade, which allows countries to make trade decisions based on "the protection" of "essential security interests." …
Trade experts view Article XXI — designed for emergencies or wartime — as a third rail in international trade law. If Trump invokes it he would threaten the WTO's legitimacy and potentially spark a global trade war.
Even the threat of invoking Article XXI is enough to send trade partners scurrying.
People are understandably reluctant to negotiate with someone who doesn’t abide by existing agreements, who threatens to walk away from previously negotiated deals, and whose notion of negotiation seems to start and end with the most extreme response. Trump’s actions with the Paris agreement were another sign to international partners that Trump—and by extension, America—just isn’t worth the trouble.