Politics Intruding on Sourcing Decisions, Think Tank Scholars Say
People are realizing they can no longer count on global supply chains operating relatively free of political interference, according to a think tank official who studies the global economy. “That said, it’s not so easy to change global supply chains,” said Homi Kharas, deputy director for the Global Economy and Development program at the centrist Brookings Institution. Kharas, who was speaking on a Brookings webinar Oct. 19, “Global China: Assessing Beijing’s growing influence in the international system,” said there's still an enormous amount of trade between the U.S. and China.
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Robert Williams, executive director of Yale Law School’s Paul Tsai China Center, said that the U.S. should not give up on international institutions like the World Trade Organization, deciding they aren't capable of dealing with China's role in international trade. “China has generally complied with the outcomes of WTO suits that come out against it,” he said, and noted that when it appeared that the European Union was about to win on a case in which the EU had said it could treat China differently because it's not a market economy, China backed down.
China wants legitimacy in international trade, Williams said, and said that international trade law “creates certain incentives structures China can’t easily ignore.”
House Intelligence Committee Chairman Rep. Adam Schiff, D-Calif., who spoke at the beginning of the webinar, and Kharas said the U.S. needs to be clearer on what issues are economic competition and what issues really endanger national security.
Schiff said, “We have to be very careful not to blur trade issues with security issues,” and said the Trump administration's about-face on exports to ZTE made it seem that trade and security were being traded off for each other.
Kharas said that the way “national security” is tossed around as a justification for trade actions is unhelpful. “One needs to be much more hard-headed where national security issues really prevail,” he said.