2016 election, China, currency manipulation, Democrats, Donald Trump, environmental standards, exports, forced technology transfer, Hillary Clinton, Im-Politic, imports, intellectual property theft, labor standards, Mainstream Media, Obama, offshoring, political classes, Republicans, special interests, subsidies, think tanks, TPP, Trade, Trans-Pacific Partnership, World Trade Organization, WTO, yuan
Boy, it’s hard to keep Donald Trump and his campaign for the GOP presidential nomination from dominating my posting. That’s because he remains the only presidential candidate recognizing the need to overhaul both the U.S. trade and immigration policies that have long been gutting the truly productive sectors of the American economy, and kneecapping wages and living standards for the nation’s working and middle classes.
Trump’s on-target priorities have once again been displayed in the new position paper he’s released on handling China – which is key to getting overall American trade policy right as well as getting much of U.S. national security policy right. Also evident from this paper – despite endless claims by the establishment-coddling Mainstream Media that Trump’s campaign is all sizzle and no steak, he’s once again outlined a series of impressively detailed policy positions.
And Trump’s China policies boast strong potential to put Hillary Clinton and other progressives who claim to champion American workers squarely on the spot. The Democratic presidential front-runner has said or posted nothing comparably specific on trade issues other than (for now?) opposing President Obama’s Trans-Pacific Partnership (TPP). Unless she ups this part of her game, independent voters are sure to take note.
Trump’s China plan starts off by correctly identifying the crux of America’s China problems right away. In the process, he’s sharpened his rhetoric and message. Rather than blame U.S. policy failures on simple “stupidity” on the part of American leaders, he points out that the nation’s economic approach to China has served the interests of “Wall Street insiders that want to move U.S. manufacturing and investment offshore,” not American workers. I’d have broadened that indictment to include most of the nation’s multinational manufacturing companies, but Trump valuably reminds voters that the biggest immediate obstacles to improving their economic prospects are Americans, not “foreigners.”
Trump also understands that many of China’s most harmful trade practices have nothing to do with the kinds of tariffs and quotas that for centuries dominated country’s efforts to keep domestic closed. Moreover, he focuses on the vast array of non-tariff barriers used by Beijing “to keep American companies out of China and to tilt the playing field in [its] favor.” These range from currency manipulation to rampant intellectual property theft to exports subsidies that clash with global trade law to forced technology transfer to “lax labor and environmental standards” that enable China’s “sweatshops [and] pollution havens [to steal] jobs from American workers.”
In addition, the Republican presidential hopeful gets the vital point that the damage done to the American economy by these Chinese practices can’t be ended without forcing China to face some consequences – namely, lost access to a U.S. market that China desperately needs in order to sustain growth and employment rates that can help keep its rulers in power. Trump does express some hope that such threats can lead China to “join the 21st century.” But he also indicates that, until and unless this goal is achieved, it makes no sense to permit China “to trade with America.”
Trump’s China plan will be slammed by the offshoring-happy, China-coddling Mainstream Media – and surely by nearly all of the policy hacks staffing America’s offshorer-funded think tanks. And let’s not forget many of his fellow Republican candidates, whose campaigns are largely financed by these special interests.
But it will be especially interesting to see the reactions of Trump’s Democratic opponents and the rest of the nation’s liberal and progressive establishment. For most of Trump’s positions mirror those of the party’s mainstream – and can be found in numerous bills their legislators have introduced into Congress and voted for. Will they continue dismissing Trump a charlatan – and worse?
In fact, if Trump’s positions deserve criticism on any score, it’s that they’re too mainstream – and accordingly timid. For example, since, as Trump sees, the United States does enjoy such decisive leverage over China by dint of serving as “the world’s most important economy and consumer of goods,” there’s relatively little need for Washington to negotiate more effectively with Beijing. His positions are better presented as take-it-or-leave-it propositions, with market access turned off, or at least curbed, until strong evidence of China’s compliance is available.
Similarly, Trump is far too deferential to the World Trade Organization (WTO), whose creation spearheaded by the mercantile U.S. trade competitors and American offshoring interests precisely in order to prevent the defense of U.S. economic interests in a timely, effective – i.e., unilateral – manner. At one point, his China paper (rightly) suggests that U.S. policy need not rely so heavily on the deliberations of “an international body.”
But he also (wrongly) suggests that Washington should continue to rely heavily on using the WTO to resolve its trade problems with China – an approach that is not only pitifully piecemeal, but that keeps an anti-American international kangaroo court in charge of most American international economic interests. If he’s serious about defending these interests – and restoring full American sovereignty – Trump needs to support establishing the United States as judge, jury, and court of appeals over all trade disputes, as well as over whatever enforcement issues arise from existing or future trade agreements.
Further, Trump appears to place excessive emphasis on China’s current currency manipulation. To be sure, there’s still strong evidence that the yuan remains substantially undervalued. It’s also not legitimately deniable that anti-currency manipulation tariffs would be an especially effective response to China’s trade predation. After all, China’s exchange-rate protectionism artificially cheapens the cost of everything produced in and traded by China. Therefore, these Chinese products (and services) receive price advantages over foreign competitors that have nothing to do with free trade or free markets.
But it’s also undeniable that China’s currency policies have gotten much more complicated in recent months, as Beijing has needed to move to support the yuan in order to stem unprecedented capital flight. So for both political and substantive reasons, Trump would have been much better advised to treat currency manipulation as threat that is all too likely to reemerge if China’s economy keeps slowing, not as today’s leading danger. (The same of course holds for the Asian countries who have just negotiated President Obama’s Pacific Rim trade agreement.)
Yet despite these flaws, Trump’s instincts on trade policy remain much sharper than those of the rest of the nation’s media/political establishment – not least of which entails his understanding that it won’t be possible to “make America great again” unless its trade policy becomes great again, too. And his new China trade blueprint shows that he grasps enough major policy details to make that goal reality.