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Trump’s ‘Spaghetti Bowl’ of Trade Rules Will Hurt U.S. Economy

Posted March 08, 2017

Under Economic Issues, International Trade Issues

(Pietra Rivoli via Miami Herald)

President Trump has made his distaste for multilateral trade agreements clear. He campaigned on a strong anti-NAFTA agenda and withdrew from the Trans-Pacific Partnership (TPP) process within days of taking office. (The TPP would have put in place common trade rules for the United States and 11 of its trading partners in South America and Asia.) According to the White House, Trump will soon bring his lifetime of negotiating experience to, instead of creating bilateral trade deals, negotiating with one country at a time. The image of the tough negotiator bringing these talents to bear on one-to-one negotiations has an instinctive appeal. Yet will this approach be effective in advancing the interests of this country?

Let’s stay in the realm of the real-estate developer: President Trump may have successfully negotiated many real-estate deals, but a major factor facilitating these transactions was a relatively standard set of rules in place in each country, state or district. What if a different set of government regulations had applied to each property? Or each city block or Zip code? The central problem with bilateral trade deals is the “spaghetti bowl” problem described by Columbia University economist Jagdish Bhagwati: different sets of trade rules linking pairs of countries create a mess. Click here to read more.