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Announcing the US-China Trade Policy Working Group

Summary:
Concerned about where the US-China trade relationship is going, we recently formed a “US-China Trade Policy Working Group.” Yang Yao, Jeff Lehman and I are co-conveners. Other members are Meredith Crowley, Robert Howse, Jiandong Ju, Feng Lu, Justin Yifu Lin, Eric Maskin, and Rob Staiger. We released our statement today. The statement is signed by 27 additional economists and legal scholars, including Philippe Aghion, Kaushik Basu, Robert Engle, Gang Fan, Robert Frank, Gene Grossman, Gordon Hanson, Ann Harrison, Kala Krishna, Ned Phelps, Alvaro Santos, Greg Shaffer, Anne-Marie Slaughter, Mike Spence, Joe Stiglitz, Michael Trebilcock, David Trubek. That is 5 Nobelists in all, in case you are counting! The basic idea is that we need a different narrative about how the two nations can

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Concerned about where the US-China trade relationship is going, we recently formed a “US-China Trade Policy Working Group.” Yang Yao, Jeff Lehman and I are co-conveners. Other members are Meredith Crowley, Robert Howse, Jiandong Ju, Feng Lu, Justin Yifu Lin, Eric Maskin, and Rob Staiger. We released our statement today.

The statement is signed by 27 additional economists and legal scholars, including Philippe Aghion, Kaushik Basu, Robert Engle, Gang Fan, Robert Frank, Gene Grossman, Gordon Hanson, Ann Harrison, Kala Krishna, Ned Phelps, Alvaro Santos, Greg Shaffer, Anne-Marie Slaughter, Mike Spence, Joe Stiglitz, Michael Trebilcock, David Trubek. That is 5 Nobelists in all, in case you are counting!

The basic idea is that we need a different narrative about how the two nations can resolve their differences. Neither convergence nor decoupling will work. We propose a middle path between these extremes that prohibits explicitly beggar-thy-neighbor policies but is otherwise permissive of policies that may create cross-border spillovers.

Under our guidelines, engaging in monopoly conduct, predatory pricing, or rent-shifting on world markets would be expressly prohibited while policies that protect domestic economic arrangements (e.g., industrial policies or social safeguards) would be allowed (unless they fall in the previous category).

We argue that nations are entitled to engage in trade policies that protect their economic models. But they are not allowed engage in policies designed to make other countries change their systems (trade wars) or that benefit them only through the adverse effects they have on others (BTNs).  

While we provide a new conceptual vocabulary for the two countries to address their differences, we do not prejudge the outcomes on any specific dispute. That is for the countries to figure out, using the approach we propose. See full statement here. A Bloomberg news piece about our effort is here.

Dani Rodrik
I am an economist, and a professor at the Harvard Kennedy School. My most recent book is Economics Rules: The Rights and Wrongs of the Dismal Science (Norton, 2015). I was born and grew up in Istanbul, Turkey. I still follow Turkish politics very closely, as you will find out if you spend any time with this blog.

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