Skip to Content

John Kabealo quoted by New York Times regarding Trump Administration’s economic policy

March 29, 2018 by in News

Several outlets are reporting that the Trump administration is considering declaring a national emergency to justify the invocation of the International Emergency Economic Powers Act of 1977 (IEEPA). This would provide the administration considerable authority to impose a broad range of economic measures to counteract China’s international trade policies, notably by restricting Chinese investment in next generation technologies developed in America. I spoke at length with Alan Rappeport of the New York Times on the issue, and have posted more of my own analysis below.

The concept of linking economic security issues with national security issues is one that has been around for quite some time. The U.S.-China Economic and Security Review Commission—historically considered very hawkish on matters involving China—has long espoused this view. This concept has also been central to the Trump administration’s rhetoric about national security, but to date has not been central to actual policymaking.

A declaration of a national emergency in response to general and longstanding trade policies of China would be an aggressive move by the administration. There may be legal problems in the lack of a clear “trigger” for the declaration of a national emergency. While any new economic move by China–perhaps breaking sanctions against North Korea–could serve as the hook for the declaration of a national emergency, in reality any policies implemented under IEEPA would be designed to counter Chinese trade policies that have gradually contributed to economic conditions and technology transfers that have not, to date, warranted the declaration of a national emergency. Separately, the Administration is on the record touting the strength of the U.S. economy. So the legal case for the declaration of a national emergency is not 100% clean, although judicial deference to the executive in national security matters is well established.

Invoking IEEPA is also probably not necessary. Section 301 of the Trade Act of 1974 already gives the President broad authority to take action against a country that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce. While lacking the drama of a declaration of national emergency, Trade Act authorities are likely sufficient to accomplish the administration’s goals of restricting Chinese investment in next generation American technologies. Moreover, there already exists a body, the Committee on Foreign Investment in the Untied States, whose exact mission is to review foreign investments in critical technologies (among other things) to ensure no transactions occur that could threaten to impair the U.S. national security.

So what is the point of invoking IEEPA? Here, the context matters. The administration is considering invoking the IEEPA in addition to its recently announced steel and aluminum tariffs. It appears that the administration is marshaling all possible leverage to renegotiate trade terms with China, and the invocation of IEEPA would be part of an overall package of sticks used to bring China to the negotiating table. In other words, perhaps the drama is exactly the point.

It is fair to say that the President has several sources of authority to take action against China. But is the linking of national security with economic security a good idea?

In some cases, yes. The military and strategic applications of a specific, narrow set of critical technologies are undeniably central to any country’s national security, and that is currently what the administration claims to be targeting. However, any expansions of this policy, such as the announced-then-abandoned plan to “nationalize” the 5G telecommunications network, should be undertaken with great care, as the more general use of a national security framework to address economic issues is fraught with risk.

While some analyses attempt to tie economic issues back to a more traditional, militaristic, understanding of national security, in that funding a strong military requires a strong economy, and protecting an economy requires a strong military (never mind the “guns or butter” debate), others have flatly declared the folly (their words) of viewing economic issues through a national security lens.

Any country with large numbers of unemployed young men (in particular a country that has undergone a period of rapid economic expansion) understands the existential danger of economic weakness and how threats to an economy necessarily threaten a country’s security. And yet, given the inherent risk aversion and interventionism by governments in all things “national security” in nature, the policy risks of equating economic and national security issues should be apparent. Proponents of limited government and free enterprise should be very cautious about morphing economic issues into national security issues. Questions of line drawing and slippery slopes–or mission creep if you prefer–abound. 

Free Consultation

This slideout can include a call-to-action or a quick scroll back to the top.

Scroll to Top