Smart Take: Miami in the Crosshairs of U.S. Trade Policy - by Professor Kathleen Claussen


Professor Kathleen Claussen

Professor Kathleen Claussen

Author and Professor Kathleen Claussen’s primary scholarly interests include trade and investment law, dispute settlement and procedure, international and cybersecurity issues, and transnational business law. Immediately prior to joining the Miami Law faculty in 2017, Claussen was associate general counsel at the Office of the U.S. Trade Representative in the Executive Office of the President. There, she represented the U.S. in international trade dispute proceedings and served as a legal advisor for the U.S. in international trade negotiations. She is the author of more than twenty articles, chapters, and essays, and co-editor of and contributor to four books. She holds leadership positions within a number of international law and arbitration professional associations. 

Nearly all areas of the United States are directly affected by what some have called the “trade war”: the tit-for-tat tariffs on goods imposed by the U. S. and its trading partners in the last year. Include Miami among them. At the crossroads of both north-south and east-west trade lanes and with the highest numbers of international freight traffic of any city in the U.S., Miami feels the impact of developments in the global marketplace. 

The trade war is made manifest in a variety of ways, though the most notable weapon deployed in the various battles underway is the tariff. U.S. trading partners and free-trade advocates are paying close attention to the Trump Administration’s widespread use of tariffs to achieve its economic goals. The Administration has applied at least three types of tariffs on billions of dollars’ worth of goods. First, there are national security-premised duties and quotas levied on steel and aluminum imports not just from major U.S. foes, but also from U.S. allies. More such tariffs may be on the way as the Commerce Department undertakes further investigations into the national security threat posed by the import of additional products. Second, the U.S. has imposed tariffs on a long and growing list of products from China for what the Office of the U.S. Trade Representative views as China’s bad behavior, particularly toward U.S. intellectual property, posing a threat to U.S. commerce. Third, the U.S. has imposed emergency or “safeguard” duties on certain types of imported solar cells and washing machines on the basis that they are unexpectedly flooding the market to the detriment of U.S. business. 

While these many offensive moves could help a number of U.S. industries maintain their competitive edge, the immediate consequence is that most countries affected by these tariffs have responded in kind, leading the U.S., China, the European Union, Canada, Russia, Mexico, Turkey, India, Norway, and Switzerland each to begin dispute settlement proceedings at the World Trade Organization. At stake in those cases is whether any of the tariff moves is lawful under international law. Another three dozen WTO members have questioned the validity of the moves in debates on the WTO floor in Geneva. As for these cases, time may be on everyone’s side. WTO cases do not often move quickly. Under the dispute settlement rules, governments must first attempt to settle their disputes through diplomatic consultations. If these fail, the case could be reviewed by a three-member panel and the losing side required to bring itself into compliance or face sanctions. 

A final outcome in any WTO case may be further complicated, however, by another battle taking place at the WTO. The U.S. has sought to block the appointment of new or returning members to the WTO’s appeals body. The U.S. argues that, in a number of past decisions, the appeals body has overstepped its authority in a way that endangers the right of each country to regulate its imports and exports. While some other countries share the U.S. view that the WTO appeals body has gone too far, reforming the system to the collective liking of all may be an insurmountable task. The confluence of a heavy caseload and insufficient numbers of decision-makers may paralyze the system designed for peaceful settlement of international trade disputes, driving countries to take measures further into their own hands.

In the meantime, what can be done about the tariffs in the U.S.? After many months of the Trump Administration taking these actions against U.S. trading partners, Congress is starting to get into the game. The regulation of foreign commerce is Congress’s constitutional prerogative. Yet when it comes to tariff authority, Congress has regularly empowered the executive to manage foreign commerce without the checks that it has accorded itself in other areas. Now, Congress appears to be re-thinking its “helpless bystander” stance—but finding that tariff authority is far more difficult to take back than it is to give. In trying to rein in the Trump administration’s actions, Congress has a few legislative options, but it remains unclear if any of them will be enacted. Even if Congress were to advance any reforms over the finish line, it may very likely then need to overcome a veto from the White House.

While these institutional issues occupy the better part of the international economic debate, the prospects for regional and bilateral free trade agreements also hang in the balance. As Canada’s top global economic partner, Florida was among the many states closely watching the renegotiation of the North American Free Trade Agreement, one of several negotiations undertaken by the Trump administration. Here again, Congress holds more power than may appear to be the case. In an article in the Yale Journal of International Law, I explained how the difficulty of Congress to accommodate change has led to path dependence in the rules and standards set out U.S. trade agreements for the last 20 years, particularly in certain issue areas such as labor and environment. Congress maintains the last word according to a legislative process it devised called the Trade Promotion Authority. Unlike treaties, trade agreements are congressional-executive agreements subject to approval in both houses of Congress on a strict timeline. 

These domestic, regional, and international battles are unlikely to disappear in the near term. At the very least, they will continue to keep the trade bar busy. What remains to be seen is whether any of the institutions fighting it out will successfully dictate a productive way forward for U.S. trade policy—a way forward in the interests of workers, ranchers, and businesses in chief U.S. transnational business centers like Miami and major agricultural states like Florida.