Asia’s Response to US Trashing of the Rules-Based International Trading System

The end of 2023 left no doubt that the Biden administration in Washington had joined its predecessor on the mission to trash the rules-based international trading system, of which the United States had been the architect-in-chief in the aftermath of the Second World War. In December, US Trade Representative Katherine Tai thumbed her nose at the WTO rulings against the Trump administration’s steel and aluminum tariffs, which she too had gone into bat for.

And Biden’s team introduced the CHIPS and Science Act that sought to limit Chinese participation in the complex international semiconductor chip trade and production networks. Gone is any pretense of not forcing countries to choose — if US allies remain in the semiconductor business with China, they’ll be hit by sanctions. This is sold as security policy, but with some US companies given a temporary license to continue to do business in China it looks very much like crude protectionist industrial policy.

In case there was any doubt, the Biden administration then introduced the misnamed Inflation Reduction Act which gave a massive boost to the subsidisation of electric vehicle manufacturing in the United States with large scale buy-in to industrial policy — exactly the issue it has been accusing the Chinese of — and retreat from open trade.