Time for a global mercantilist index: the United States must move quickly.

Author:Wein, Michelle

For even the casual observer of globalization, not to mention trade experts, it is clear that we are a long way from the "Washington Consensus" ideal of free and open trade practiced by the majority of nations. But just how far away are we? And which nations are farthest away? To date, there is no way to know, other than to rely on anecdotal evidence that points to some likely suspects like China. Global trade and development organizations, such as the World Bank and the World Trade Organization, do little to shine light on this question, other than to put together broad lists that count the number of technical barriers to trade (according to the WTO these reached a record high of 1,560 in 2012).

Within the U.S. government, the United States Trade Representative publishes two reports on aspects of the problem--the Special 301 Report, which ranks nations on the adequacy of IP protection, and the National Trade Estimates Report on Foreign Trade Barriers, which details all foreign trade barriers the United States faces by country. However, neither report provides a full picture of the mercantilist practices of nations, nor ranks nations by which are the worst mercantilist offenders. To remedy this, it's time for USTR to create a "Mercantilist 301 Report"; that is, a ranking of nations on a broad range of mercantilist practices beyond just intellectual property protection.

Toward that end, the Information Technology and Innovation Foundation developed the Global Mercantilist Index, which ranks fifty-five countries on sixteen different mercantilist factors in order to understand their impact on U.S. businesses and workers. These indicators are grouped into eight categories: forced localization, intellectual property protection, market access, benefits for domestically owned enterprises, currency manipulation, preferences for domestic production, tariffs and import discrimination, and a rating based on NTE factors.

While a simple ranking of these variables is useful, it's perhaps more useful to assess these nations on the extent that their practices negatively impact the U.S. economy in particular. As a result, the ITIF developed an economy-weighted score based on a country's relative trade and investment importance to the United States. In addition, because "potato chips" are not as important as computer chips--in other words, advanced technology industries play a more important role in the U.S. economy than commodity-based, lower-value-added...

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