How to foster growth by advancing Anti-Competitive Market Distortion-focused trade policy reform in the United States
The Growth Commission today sets out how the developing Trump Trade Doctrine can be pursued to boost economic growth both in the United States and across the globe.
The measures are included in the new paper, How to foster growth by advancing Anti-Competitive Market Distortion-focused trade policy reform in the United States, written by Shanker Singham, Chairman of The Growth Commission, which comprises twelve leading international economists.
As the Trump administration has noted, key to the proposals is tackling government actions that create artificial advantages for overseas firms which have been allowed to proliferate. These actions are classified as ‘Anti-Competitive Market Distortions’ (ACMDs) and include:
- excessively high or discriminatory tariffs
- regulations that reduce cost for domestic producers or act as regulatory barriers that exclude foreign competitors
- weak protection of property rights and intellectual property
- systematic industrial favouritism through state-owned enterprises or implicit subsidies
Such actions distort comparative advantage, lower global GDP per capita and rob U.S. firms of fair market access.
Now that President Trump has started a long overdue debate about how to tackle behaviour by foreign governments that harms American interests, we recommend that these ACMDs be evaluated using the methodology The Growth Commission has developed. The paper provides estimates for G20 nations as an example, but this could be extended to all countries of the world.
We further recommend that the new ‘Trump Trade Doctrine’ could benefit from a legal and economic framework covering:
- An economically robust calibration of U.S. tariffs to ACMDs in other countries.
- A reduction in U.S. ACMDs – which can be achieved through action emanating from the recent Executive Order on reducing anti-competitive regulatory barriers. This highlights that the Trump administration recognises that ACMDs in the U.S. damage U.S. GDP per capita, and that he is prepared to do in the U.S. what he is asking other countries to do.
- For the flow of future ACMDs, a chapter in a trade agreement that disciplines them.
- For the flow of future ACMDs, a mechanism or enhanced trade remedy for affected producers to use.
Shanker Singham, Chairman of The Growth Commission and previously a cleared advisor to the U.S. Trade Representative and to the UK Trade Secretary, said:
“President Trump is correct to focus on what we have long called Anti-Competitive Market Distortions that artificially suppress US exports and artificially inflate imports into the US. These ACMDs are economic weapons of mass destruction that have been allowed to proliferate and destroy wealth from both the US economy and also from the economy that chooses to deploy them.
“Our models suggest the losses from behind the border measures are far more impactful than traditional border measures. This metastasising cancer in the international trade and domestic regulatory system must be eradicated now.
“For far too long nothing has been done to curb this problem as proven by the virtually unchanged entries in the annual National Trade Estimate report year after year. Continuing to do nothing is no longer an option.
“President Trump is trying to do something new and he is to be commended for his approach. It is up to other countries now to reduce their distortions so that we move ever closer to a world of no tariffs and no distortions.”
