In One Sentence

• Associating Davos with a “specific,” traditional kind of globalization that needs “evolving,” U.S. Trade Representative Katherine Tai argued for a “new economic world order” that is “worker-centric” and focuses on “who we want to benefit from our vision and from the economic opportunity.”
• Meanwhile, China’s Vice Premier Liu He discussed China’s economic development plans and affirmed China’s commitment to “socialist market economy” and “all-round opening-up.”
• In response to China’s challenge at the World Trade Organization (WTO), the United States argued that its semiconductor export controls protect U.S. national security and, accordingly, concern non-reviewable “political matters.” 
• German lawmakers are reportedly calling on the European Union to decrease tariffs between the United States and the EU through the U.S.-EU Trade and Technology Council. 
• The U.S. Department of State has established a new office for Critical and Emerging Technology as part of a “wider modernization agenda” in light of “intensifying” “competition to develop and deploy foundational technologies.”

Mark the Essentials

• At the annual State of American Business event, CEO of the U.S. Chamber of Commerce Suzanne Clark said that the U.S. is on a “downward trend on trade” and called on the Biden administration to resume negotiations on trade agreements, pursue “crucial” market access provisions in IPEF negotiations, and “go back to the negotiating table” with China on trade policy.
• Vice Premier Liu He also argued that the international community should “abandon the cold war mentality” and “uphold the right principles” to preserve an “equitable” and “effective” international economic order while calling for coordination of international macro policy and a global response to climate change.
• Japan is hoping to establish a permanent body on digital governance among “like-minded countries” to coordinate data governance practices, counter China’s influence in the Global South, and allow African and Asian companies to more easily enter American, European and Japanese markets, according to Japan’s minister for digital transformation Kono Taro.
• In support of the United States’ Section 301 tariffs on Chinese goods, some U.S. manufacturers commented that the tariffs “level the playing field,” “resuscitate America’s industrial base,” “counteract unfair competitive advantages” from China, and increase overall employment in the United States. 
• When asked about Taiwan’s decision to join Beijing’s case challenging U.S. semiconductor export controls at the WTO as an interested third party, a senior U.S. trade official said they believe Taiwan supports the United States’ position on the matter.

Keeping an Eye On…

• Kudos to USTR Katherine Tai for her “worker-centric” vision of a new economic world order. Someday we might even get a glimpse of it in practice, and hopefully it will be an improvement on the ‘vision’ of Marx and Engels. On the other hand, if the labor chapter of the U.S.-Mexico-Canada agreement (USMCA) is what USTR Tai has in mind, then this does not amount to much of a vision at all. That chapter, with its rapid response enforcement mechanism and rules prohibiting the imports of goods made by forced labor, among others, is an improvement on labor chapters in previous trade agreements. But Mexico’s industrial relations and its overall macroeconomy post-USMCA have hardly become more “worker-centric,” and neither will that be the case of IPEF member states economies if USTR is indeed successful in importing the USMCA labor provisions in IPEF. On the other hand, in his keynote address in Davos, the departing Chinese Vice Premier Liu He laid out a forceful vision of China’s structural reform framework. Five years earlier, Vice Premier Liu had pithily framed China’s policy objectives around a Key Necessity (transitioning to high-quality development), a Main Task (excess capacity reductions), and Three Critical Battles (against financial risk, pollution, and poverty) during an earlier Davos address. To varying degrees, these objectives—save the Key Necessity—have been successfully addressed. Going forward, the focus of China’s modernization efforts is to center around a three-pronged approach: high-level opening-up; economic re-balancing based on consumption-led growth pursued in an open economy context; and a new social development goal of achieving common prosperity. The last two will not be easy to come by. The East Asian growth model has been singularly ineffective in re-balancing economies towards a more consumption-led model. For China, a key determinant in this regard further will be the extent to which entrepreneurship is allowed to prevail as a factor for wealth creation in society. In this era of President Xi Jinping’s domestic preeminence, this latter attribute can no longer be taken for granted—the effort by Liu He to dispel suspicions to the contrary in Davos, notwithstanding.

Expanded Reading

• The Case for Trade, event by the World Economic Forum, January 18, 2023 
• Davos 2023: Special Address by Liu He, Vice-Premier of the People’s Republic of China, World Economic Forum, January 17, 2023
• United States – Measures on Certain Semiconductor and Other Products, and Related Services and Technologies – Communication from the United States, World Trade Organization, January 12, 2023
• Suzanne Clark’s 2023 State of American Business Remarks, U.S. Chamber of Commerce, January 12, 2023
• Germany’s Scholz Backs Joint EU Funding to Counter US Aid, Bloomberg, January 11, 2023 [Paywall]
• Leading Japan’s Digital Transformation: A Discussion with Kono Taro, event by Center for Strategic & International Studies, January 11, 2023
• Readout of Deputy Secretary Graves’ Meeting with Japan’s Minister for Digital Transformation Taro Kono, U.S. Department of Commerce, January 11, 2023
• Establishing the Office of the Special Envoy for Critical and Emerging Technology, U.S. Department of State, January 3, 2023
• Public Docket – Request for Comments in Four-Year Review of Actions Taken in the Section 301 Investigation: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, Executive Office of the President of the U.S., USTR Public Docket