China recently announced that it will beef up its intellectual property rights enforcement:
China said on Sunday it would seek to improve protections for intellectual property rights, including raising the upper limits for compensation for rights infringements. . . .
The document said that by 2022, China should be making progress in issues that have affected intellectual property rights enforcement, such as low compensation, high costs, and the difficulty of proof. By 2025, there should be a better system of protection in place.
This will justifiably be regarded as a success in President Trump’s trade war with China. There are, however, a few caveats to consider:
1. President Trump will no longer be in office in 2025.
2. The people who will trumpet this as a big success are the same people who tell us that China can never be trusted to live up to its agreements. (That’s not necessarily my view, but it is the view of many trade hawks.)
3. This a big win for Bill Gates, who will now become even richer. Meanwhile Trump’s economic policies (especially the fiscal policy train wreck) are making the trade deficit even bigger, which hurts Ohio workers making auto parts:
And America’s manufacturing growth is slowing sharply:
I do believe that this is a modest success in the trade war. But looking at the bigger picture, it’s far from clear that we are achieving anything of major significance.
READER COMMENTS
Duncan E
Nov 25 2019 at 11:53pm
Although Trump wont be in office in 2025 I expect whoever is to follow the same trade policy path. The Democrats don’t really seem to criticize Trumps trade policy directly.
Scott Sumner
Nov 28 2019 at 1:00pm
Duncan, You said:
“The Democrats don’t really seem to criticize Trumps trade policy directly.”
That doesn’t tell us much. Over the past 30 years, the party out of power has always promised to get tough on China, and has always failed to do so. (Until Trump.) Why expect a President Biden to be any different from Obama, who also promised to get tough with China?
Mark Z
Nov 29 2019 at 10:37pm
I agree that Biden would be unlikely to get ‘tough on China’ if he’d followed Obama, but if he inherits a government already ‘tough on China’ he may just acquiesce to the status quo. Lacking the will to do something doesn’t necessarily imply the will to undo it, especially since many swing state voters blame China for their woes while fairly few voters are eagerly pro-China. And if it’s president Warren, I definitely wouldn’t expect a retreat on China.
nobody.really
Nov 26 2019 at 1:08am
Trump’s “America First” trade policy led him to abandon the Trans-Pacific Partnership (TPP), by which the US and other developed nations would band together to establish high trading standards, and to exclude China unless it acquiesced in these standards. Did withdrawing from this treaty actually promote US interests?
Perhaps. That is, perhaps China would be unwilling to make certain concessions to EVERY developed nation, but would be willing to make these concessions to one or two nations. By joining the TPP negotiation, the US was forgoing the opportunity to exploit its leverage to secure uniquely favorable trade terms just for itself. It’s kind of a freedom vs. equality thing.
(Compare to the Telecommunications Act of 1996: Prior to this act, Bell Operating Companies and competitors could negotiate any terms for exchanging telephone traffic that they wished. Generally the smaller carriers lacked much bargaining power, but a few carriers might negotiate some unique advantages here or there. But after passage of the 1996 Act, any carrier had the option to opt into the same interconnection agreement as any other carrier. Suddenly, Bell Operating Companies balked at extending old interconnection agreements–not because the Bell companies objected to providing those terms to the few, small carriers who had negotiated them, but because they objected to providing those same terms to EVERY carrier. In short, the non-discrimination requirement generally favored competitors–but may have harmed SOME competitors who had been especially good negotiators prior to the Act’s passage.
In other words, I may be willing to carry my girlfriend’s books to school. But if that means that I must also be willing to carry EVERYONE’s books to school, I’ll decline to make the offer.)
Mark Z
Nov 26 2019 at 2:43am
Scott, did you listen to Susan Houseman on Econtalk a few weeks ago (or are you familiar with her work)? She argues that growth in American manufacturing productivity (and therefore output in large part) in the past few decades was almost entirely attributable to high tech industries categorized as manufacturing (computers and other electronics), but that traditional manufacturing has in fact been stagnant for decades (she has a bunch of arguments for why official numbers overestimate manufacturing output). If this is true, I wonder if the graph of manufacturing output is reflecting a plateauing of US high tech industries specifically, if they’re what’s been driving increasing output. Or traditional manufacturing could just be contracting. I’m curious what industries within manufacturing are waning.
Scott Sumner
Nov 28 2019 at 1:04pm
For long term trends I agree. When there are short term fluctuations, it’s likely also impacting older industries.
Andre
Nov 26 2019 at 9:18am
“And America’s manufacturing growth is slowing sharply:”
Is that what the chart is supposed to show?
Scott Sumner
Nov 28 2019 at 1:03pm
Yes, growth has slowed sharply over the past 9 months. Most people believe this is due to the trade war.
Luis Pedro Coelho
Nov 26 2019 at 9:25am
Obviously, this is because Chinese companies themselves have started moving up the value chain and start demanding IP protections.
What I think many don’t realize is that this extends not just to “hard IP” (e.g., patents on 5G), but increasingly also to “soft IP” like design/trademarks… I know fashion itself is not IP-able, but there are luxury Chinese designers now and they will want to protect their trademark from fakes.
I think these products/stores are still rarely seen outside of China, but I expect that will change soon. I think Luckin Coffee is already expanding outside of China, but there are others that could do so in the very near future.
Scott Sumner
Nov 28 2019 at 1:03pm
I agree.
Comments are closed.