In a message aimed squarely at China, U.S. Trade Representative Katherine Tai emphasized the importance of deepening economic ties between the United States and the European Union, stressing the need to work together to adjust to the shifting geopolitical landscape shaped by China’s growing global influence.
“Basing that community on a community of democracies is really important,” she stated. Reflecting on China’s past role as a cooperative partner, Ms. Tai remarked, “The China that we’re dealing with now, the PRC [People’s Republic of China], is not a democracy; it’s not a capitalist, market-based economy.” Given China’s substantial global presence, the United States and its allies must reconsider how to “coexist” with China and “adapt” to the current global economy, she added.
“We need to evolve the way we do trade,” warned Ms. Tai. “You can’t do that by yourself.”
The trade representative addressed international trade representatives at an event hosted by the Atlantic Council on June 3, commemorating the 80th anniversary of the Bretton Woods system. This monetary management arrangement, established after the 1944 Bretton Woods Conference involving 44 countries, set the rules for commercial relations among the United States, Canada, Western European countries, Australia, and others.
The Bretton Woods Agreement marked the first fully negotiated monetary order aimed at governing monetary relations among independent states. It promoted greater cooperation to prevent competitive devaluations. The creation of the International Monetary Fund (IMF) was a key outcome, which is tasked with monitoring exchange rates and providing reserve currencies to nations facing balance of payments deficits.
China Factor
Ms. Tai emphasized the need for the United States to strengthen transatlantic commerce and resist China’s non-market economic actions.
“As history unfolds, everything is connected,” she said. “That economics is connected to politics, which is connected to national security, which is connected to the relationships between countries and to the relationships with the people, citizens and their people, and to their governments.”
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In that “world order,” there is a sense of anxiety and insecurity in every economy, according to her.
Take for example the global supply chain, about which Ms. Tai noted: “How incredibly fragile we now realize they are; how much concentration is reflected on certain supply chains in terms of single source, single country, and single region supply.”
Consequently, she added, the dominance of certain regions and countries over entire sectors or specific parts of the supply chain is fueling geopolitical tensions.
According to her, while globalization has brought significant efficiencies, it has also incurred costs, with the greatest drawback being the insecurity in the global supply chain.
Another cost, she noted, is the intense geopolitical competition that results from “pitting our workers against each other, creating a zero-sum struggle for economic and industrial growth opportunities.”
To mitigate these costs, Ms. Tai emphasized that leaders in the United States and the European Union must adopt a “holistic” approach to trade. This approach should integrate domestic and international needs alongside economic and security priorities. Such a comprehensive strategy, she explained, is essential for establishing “another new world order.”
US-Europe: A Unifying Force
According to the U.S. Trade Representative, there is a growing acknowledgment that the international financial and trading system must adapt to the modern global economy. The way it adapts and maintains its principles will be critical. Historically, strong U.S.-Europe trade relations have fostered prosperity and security, serving as a stabilizing force.
However, today, both sides of the Atlantic face new geopolitical and geoeconomic challenges reminiscent of the postwar era, prompting debates about the future of this order.
These strategic challenges have ignited new actions focused on economic security, such as export controls, investment screening, and, recently, Washington’s increased tariffs on Chinese electric vehicles, semiconductors, critical minerals, batteries, and more.
Transatlantic coordination on these issues will be essential to building resilience against responses from Beijing and other challengers, as well as revitalizing and restoring the global economic system.
Technological Change
Ms. Tai also noted that the rapid pace of technological advancements, particularly in data-related fields, is transforming trade, and she recommended taking a moment to reassess and foster collaboration across government departments to effectively address these changes.
“When we’re talking about data, it’s not just about the bits and bytes that help facilitate a traditional goods transaction anymore,” she said. “Data is the game itself.”
She added that this shift in data dynamics might necessitate a reconsideration of conventional trade approaches. “Isn’t it time for us to hit pause on this, come back … and try to get our arms around what is actually happening here and what is in the public interest?” she asked.
In this process, the Office of the U.S. Trade Representative (USTR) would need to reconnect with decision-makers across various government departments, Ms. Tai highlighted. “A USTR-led answer to how we should be regulating tech and data … is not going to be the right answer,” she cautioned.
“We have got to figure out what works for the United States … what works for our democracy,” she concluded. “It’s a domestic policy issue first before we bring it to the international realm.”
Original News Source Link – Epoch Times
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