Page 782

reduction in the US. bilateral trade deficit with India. Similarly, if Taiwan were to reduce its tariffs to U.S. levels, the size of the U.S. bilateral trade deficit with Taiwan would fall by 6 percent. If the U.S. imposed a mirror tariff, its bilateral trade deficit with Taiwan would fall by 59 percent.

These results again underscore the high degree of unfair, unbalanced, and nonreciprocal trade that currently exists between the U.S. and much of the rest of the world, which penalizes American farmers, ranchers, manufacturers, and workers because of the WTO-MFN conundrum. These simulations also demonstrate that implementation of the USRTA most likely would substantially reduce the US. trade deficit while creating hundreds of thousands of new jobs. These benefits notwithstanding, however, the U.S. would still face a substantial overall trade deficit and substantial bilateral trade deficits with many of its major trading partners.

Why might this be so? Because under WTO rules, America still faces numerous nonreciprocal nontariff barriers around the world. For example, one of America’s largest trading partners, Japan, runs a significant bilateral trade surplus in goods with the U.S.—more than $70 billion a year. While Japan has relatively low tariffs, it ranks high on the nontariff barrier scale. In such cases, which are numerous, passage of the USRTA would likely also be very helpful in reducing nontariff barriers.

This is because under the powers provided by the USRTA, if a foreign country imposes significantly higher nontariff barriers, then the President has the authority to “negotiate and seek to enter into an agreement” that “commits the country to... eliminate [its] nontariff barriers.”!° If the country refuses to come to the negotiating table and lower its nontariff barriers, the President has the authority to levy reciprocal duties to offset or mirror those barriers.

In summary, passage of the USRTA would go a long way toward leveling the playing field for American farmers, ranchers, manufacturers, and workers who are now forced to compete in an intrinsically unfair, unbalanced, and nonreciprocal WTO-MEN system.

Nor is the USRTA necessarily the only possible legislative way to address this issue. In 2017, then-House Speaker Paul Ryan (R-WI) and then-House Ways and Means Committee Chairman Kevin Brady (R-TX) proposed a “border adjustment tax.” The proposed border adjustment would have eliminated the ability of corporations to deduct the cost of imports while eliminating the tax on income attributable to exports. This border adjustment tax would have shifted the U.S. corporate income tax from an origin-based tax applying to the production of goods and services in the United States to a destination-based tax applying to the consumption of goods and services in the US.

This tax—strongly opposed by American multinational corporations and bigbox retailers—not only would have leveled the playing field with respect to WTO rules, but also would have provided an innovative alternative to the application of