PCB007 Magazine

PCB-May2017

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100 The PCB Magazine • May 2017 tice. Factories do not simply produce at home and export final goods to a foreign country; rather, firms participate in global value chains, where stages of production are divided across multiple countries." Harmonized standards across a group of countries are far more efficient, thus speeding fulfillment and lowering supply chain costs. U.S.−China Negotiations Which brings me to my final point: The Trump administration has hinted that it would consider retaliatory actions against China. Far from embracing that nation as a favored—essen - tial—trading partner, retaliatory actions such as new tariffs on Chinese imports could backfire on the United States. If new U.S. tariffs and barriers to Chinese goods are too severe, they could spur China to retaliate by raising its own tariffs on imports, or developing non-U.S. alternatives to its needs. We've already seen this with microchips. Rather than negotiate with the United States on micro - chip imports, China instead chose to develop its own chips with its own IP, which has lowered the country's dependence on imports and decreased the market share of foreign chipmakers there. At the end of the day, U.S. trade with Chi- na is integral to the success of both economies. And to ignore multilateral trade agreements is to ignore a fundamental truth: In 2017, global- ization is continuing—either with the United States, or without it. Remaining engaged as a global leader on trade is the path that will make America greater. PCB References 1. Former US Trade Official: China will fill Asia Pacific trade void. 2. Trump's Bilateralism and US Trade Partners by Geoffrey Gertz, Global Trade Magazine. John Mitchell is president and CEO of IPC—Association Connecting Electronics Industries. To read past columns or to contact Mitchell, click here. ed some tariffs, such as the 74% tax on the com- pany's motorcycles sold in Vietnam. Former U.S. Trade Representative Michael Froman recently put it this way [1] : "If the U.S. remains near the sidelines, then our businesses—from agriculture and manufactur- ing to services industries—will likely find them- selves excluded from important markets, or com- peting under a set of rules that don't necessarily play to our interests and values. That's why it's ul- timately important for a TPP-type regime to be put in place in whatever fashion it can be." And there are other TPP-type regimes out there, ready to move forward with—or without— U.S. involvement. The RCEP For instance, the collapse of TPP makes im - minent the completion of the China-led Region- al Comprehensive Economic Partnership (RCEP) more likely. Encompassing 16 countries so far, the RCEP is potentially an even larger multilater- al trade agreement than TPP by population. RCEP potentially includes more than three billion peo- ple (about 46% of the world's population), repre- senting a combined GDP of about $21.3 trillion, and accounting for about 30% of world trade. Whereas before, the United States was an ac- tive party to multilateral negotiations in a U.S.- led deal that excluded China, now those roles have reversed. Now China has the greatest power to influence the terms of the RCEP, to which the United States is not a party. Multilateral vs. Bilateral Finally, the Trump administration has sig- naled its distrust of multilateral agreements, on the theory that it could negotiate better deals for the United States in a series of bilateral talks. While this may be true in some cases, it ig- nores the reality that globalization and multilat- eral free trade agreements have been the grow- ing trend worldwide for more than 60 years. And for good reason. As Brookings Institution fellow Geoffrey Gertz notes [2] : "In today's economy, bilateral relationships do not capture how international trade works in prac - CHINA—A CRITICAL PARTNER FOR TRADE

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