(What’s Left of) Our Economy: Is The Wall Street Journal Now Getting Woke on China Trade?

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allies, China, decoupling, dual-use technologies, health security, high tech goods, Huawei, investment, manufacturing, national security, technology, The Wall Street Journal, Trade, {What's Left of) Our Economy

Hell has frozen over! Death and taxes are no longer certain! Water is flowing uphill!

Those are just some of my calmer reactions upon learning that The Wall Street Journal editorial board has just endorsed the idea of a “partial decoupling” of America’s economy from China‘s.

Given today’s national mood, and the marked turn it’s taken against various domestic and international outrages committed by China, this may not sound surprising – especially if you (unlike me) haven’t immersed yourself in the trade policy wars Americans have waged against each in recent decades. But in a Mainstream Media long world filled with staunch supporters of the kinds of approaches to foreign trade and international commerce generally pursued by pre-Trump U.S. Presidents, the Journal‘s editorial writers have been far and away the staunchest. Indeed, their arguments usually read like they’ve been taken straight out of standard economic textbooks, without even paying lip service to real world complications.

Not that the Journal ever championed unfettered trade and commerce in war-time. (This exception was formally identified by the so-called Father of Capitalism, Adam Smith .) And not that it ever supported selling, say, weapons to the Soviet Union during the Cold War, or encouraging investment in North Vietnam during the 1960s and early 1970s.

But the editorial doesn’t describe today’s world in those terms. Instead, it notes that  “partial decoupling may be necessary to prevent China from accumulating more leverage to bully the free world.” and that “U.S. and allied dependence on Chinese technology in a crisis….could allow the Chinese Communist Party to disrupt or shut down parts of foreign economies—or use the threat as political leverage.”

And the Journal‘s editorial board is right. Those threats are more than serious enough to justify departures from conventional free trade and broader global economic policies – which understandably prize economic efficiency and low prices and individual economic freedoms during peacetime, but which have struggled to deal with those all too commonplace gray periods between tranquility and all-out conflict.

Yet however satisfying this apparent U-turn will be to the Journal‘s longtime trade antagonists (and take it from me – it’s really satisfying), for the sake of intellectual honesty, and of U.S. national interests, its editorial board will need to go much further. And so will other influential voices who are acting newly woke about the China threat, but who may mainly be looking for safe harbors during what they hope is merely a passing storm. Several reasons stand out, and all stem from the critical reality that no industry exists in isolation from other areas of the domestic economy – let alone other industries.

So to all the ostensible pragmatists who, for example have recognized – at least rhetorically – that national security needs to come before free trade and commerce, it’s high time to recognize the implications of a development you’ve long claimed to understand: that many products crucial for national defense also have major and even predominantly civilian functions, and that for such such dual-use goods and technologies (and not only semiconductors, but high-value manufactures of all kinds) strong domestic manufacturing bases are essential.

Moreover, maintaining strong domestic manufacturing bases requires maintaining robust production complexes for all the key parts and components of the final products.

These imperatives also apply to critical healthcare goods. For example, it doesn’t do much good to set as a goal making massive numbers of the most effective facemasks in America without also ensuring adequate domestic supplies of the raw materials and the machinery needed to make them. And currently, the global production centers are in China. Similarly, what’s the point of resolving to restore national self-sufficiency in ventilators when the nation remains woefully short of the circuit boards, sensors, computer chips, tubes, and numerous other parts they’re made of?

In addition, as pointed out repeatedly on RealityChek, the secure supply problem goes way beyond China. During the CCP Virus period, literally dozens of countries, including long-term treaty allies, have embargoed or curbed exports of healthcare equipment of all types. That is, as with war, there are few free traders during a pandemic.

The lessons of dealing with both China and the CCP Virus should be screamingly obvious: In their own ways, they both represent systemic problems, and therefore require systemic, not entity-by-entity or country-by-country, responses. Acknowledging these lessons will be the test of whether the Journal‘s editorial writers and others of their ilk actually are ready to play useful roles in developing realistic U.S. trade policies, or whether they’re simply posturing.

Our So-Called Foreign Policy: Closer U.S. Taiwan Ties Must Become a Two-Way Street

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alliances, allies, CCP Virus, China, coronavirus, COVID 19, decoupling, East Asia-Pacific, foreign investment, Hong Kong, Huawei, national security, Our So-Called Foreign Policy, South Korea, Taiwan, tech, Trade, Trump, TSMC, Wuhan virus

As if its CCP Virus coverup and planned crackdown on what’s left of Hong Kong’s freedoms weren’t bad enough, China has been escalating its aggressive words and deeds throughout its East Asia/Pacific neighborhood, and one major sign has been new pressure exerted on Taiwan – which Beijing views as a breakaway province that needs to end its rebellion immediately and join the Communist People’s Republic.

This more worrisome Chinese posture understandably has sparked calls for the United States to retaliate by demonstrating stronger support for Taiwan in various ways. This impulse also seems reasonable to me. But if the Trump administration speeds up its march down this road, it handles a closer relationship with Taiwan a lot better than its predecessors for decades had handled security alliance relationships with Japan and South Korea. Specifically, it’s crucial that Taiwan share much more of the burden of resisting China’s ambitions than has long been the case.

The latest alarm bells about China’s Taiwan policies have been set off by China’s words – or, more accurately, a missing word. Although the PRC (People’s Republic of China) has never renounced using force to achieve its longstanding aim “reunifying” China (as it defines the issue), its rhetorical positions toward the island have long fluctuated between the conciliatory and the blustery. But for 40 years, when Beijing mentioned of reunification, the word “peaceful” has always preceded it.

Last Friday, though, China’s second most important leader dropped the “peaceful” – and did it at a major forum: the annual meeting of the country’s rubberstamp parliament.

So it seems clear that the China cloud over Taiwan has darkened. But U.S. steps to bolster Taiwan’s security will greatly underperform – and may actually increase the dangers posed to America by China itself – unless Washington starts demanding in return that Taiwan stop its longstanding practice of investing massively in manufacturing in China, including in high tech sectors.

Indeed, as of 2018, according to this report, the total value of Taiwanese investment in China hit $180 billion – ten times the value of Taiwan’s investment in the United States. The annual amounts have been going down, but mainly because of the Trump administration’s tariffs on China, which have made it much more difficult for any factories in China – Chinese or foreign-owned – to earn fat profits by exporting major shares of their output to the United States. Even so, such investment had reached massive proportions. Indeed, in 2017. China still attracted nearly 45 percent of all Taiwan’s outbound foreign direct investment. Moreover, so much of this investment has come in technology sectors that fears have emerged of the island hollowing out its own innovation sector – which has been so vital to Taiwan’s spectacular economic development. And of course, Taiwanese companies like contract semiconductor manufacturing giant TSMC have been major suppliers of microchips and other high tech products to Chinese tech companies like Huawei, the global leader in advanced telecommunications.

It’s important to recognize that Taiwan is hardly the only U.S. ally that’s promoted China’s economic – and therefore technological and military – development. It’s not even the biggest. (That dubious honor goes to Hong Kong, but most of this Chinese “Special Administrative Region’s” direct investment flows to China seem to be concentrated in lower-tech, labor-intensive sectors without significant national security implications.) Moreover, the United States remains complicit itself.

But even though his administration doesn’t use the word, decoupling from China does appear to be a major goal of President Trump’s. There’s certainly been a lot of it. I’m not big at all on the United States embarking on a full-fledged campaign to mobilize East Asia/Pacific countries to out-compete China for influence in the  region. Indeed, I’ve argued that disentangling the United States from China economically is vital to ensure American security and prosperity on its own merits. But if President Trump does want to go the full-court anti-China press route, what’s the point if supposed American allies aren’t all-in on decoupling asd  as well?

Our So-Called Foreign Policy: A Cheer and a Half for Trump’s New China Strategy Document

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alliances, allies, America First, CCP Virus, China, coronavirus, COVID 19, decoupling, globalism, Josh Rogin, liberal global order, Our So-Called Foreign Policy, Phase One, stock markets, technology, The National Interest, Trade, transactionalism, Trump, Washington Post, Wuhan virus

When over breakfast this morning I read Josh Rogin’s Washington Post column on the Trump administration’s new China strategy statement, I was pretty pleased. It’s been a long time since I viewed the intra-administration disagreements on the subject that its release has supposedly resolved as major problems in the China strategy overhaul that President Trump has sought, The tough and, more important, smart Phase One trade deal signed in mid-January was a convincing sign that the “doves” had been marginalized, but only one sign. The new statement itself describes many others. At the same time, the more basic agreement within Mr. Trump’s team, the better.

When I finally read the actual statement a little later, I was less pleased. It’s true that the President is both fully woke to the China threat, and that he’s reversed or overturned many of the disastrous mistakes made by his predecessors on a variety of fronts – including not only trade but technology, foreign investment, and exchange programs in particular. Moreover, the evidence is multiplying that the disaster created by the CCP Virus will lead to still tougher and, more important, still smarter measures. (A further crackdown on U.S. stock exchanges listings of Chinese entities is just one example.)

But the statement also made clear that Mr. Trump hasn’t made the clean break with previous globalist approaches to China and related aspects of American foreign policy that I’ve been advocating and that, as I’ve written, could lead to serious and needless dangers down the road. And as with much of the rest of the Trump framework, the big problem has to do with the role assigned to U.S. allies and alliances. Specifically, it’s still way too big, and not different enough from the globalist approach he’s rightly slammed verbally.

Not that “United States Strategic Approach to The People’s Republic of China” was devoid of America First-y ideas. It was great, for example, to see the administration reaffirm “Our approach is not premised on determining a particular end state for China. Rather, our goal is to protect United States vital national interests” (even though the United States keeps demanding, at least rhetorically, major structural reforms in China’s trade, technology, and other economic policies – demands I’ve explained are fruitless because of impossible monitoring and enforcement challenges).

Similarly encouraging, the top two vital interests identified: “(1) protect the American people, homeland, and way of life; (2) promote American prosperity….”

I also really liked “[T]he United States responds to the PRC’s [People’s Republic of China] actions rather than its stated commitments. Moreover, we do not cater to Beijing’s demands to create a proper ‘atmosphere’ or ‘conditions’ for dialogue. Likewise, the United States sees no value in engaging with Beijing for symbolism and pageantry; we instead demand tangible results and constructive outcomes.”

Indeed, the document adds, “We acknowledge and respond in kind to Beijing’s transactional approach with timely incentives and costs, or credible threats thereof.” This kind of transactionalism – expecting proposed foreign policy measures above all to create specific, measurable short-term benefits for the United States, rather than focusing on more ambitious steps that might turn out even better farther down the road, but whose success is far less certain – is a key tenet of America First foreign policies (as I’ve argued in the above linked National Interest article). Therefore, this explicit mention and endorsement of the term is most welcome (though it needs to be enshrined as a pillar of U.S. diplomacy elsewhere, too).

The statement’s treatment of transactionalism is closely related to its clear skepticism about another dubious globalist concept – though in this instance it’s more important for what it doesn’t say than for what it does: “[C]ompetition necessarily includes engagement with the PRC, but our engagements are selective and results-oriented, with each advancing our national interests….” I read this passage as an implicit announcement that the United States will no longer be seeking any particular kind of “relationship” with China, a gauzy goal that I’ve explained (on Twitter) creates powerful pressures to sacrifice concrete objectives in the here and now in the usually mistaken belief that the other party will feel obliged to make comparable sacrifices going forward – at some point.

And all this excellent material helps make clear why I’m so disappointed in the document’s numerous bow to globalism’s shibboleths. Two stand out in particular, and they’re so intimately intertwined as to be practically two sides of the same coin: the idea that it’s crucial for the United States to uphold something globalists (and the authors of this document) call a “rules-based international order,” and the maxim that critical building blocks of this order are America’s security alliances. The big problem from an America First standpoint with these notions? Once you buy into them, you’re back in Relationships-Uber-Alles-Land.

So I was distinctly unhappy to read passages like:

“[T]he United States does not and will not accommodate Beijing’s actions that weaken a free, open, and rules-based international order. We will continue to refute the CCP’s narrative that the United States is in strategic retreat or will shirk our international security commitments. The United States will work with our robust network of allies and likeminded partners to resist attacks on our shared norms and values, within our own governance institutions, around the world, and in international organizations.”

Indeed, the lionization of America’s international security commitments completely ignores problems that President Trump has rightly spotlighted – like flagrant defense free-riding, diplomatic fence-sitting, and trade policies that have ripped off America nearly as much as China’s. Just as thoroughly ignores problems that have largely escaped Mr. Trump’s notice – like the recent, rapidly growing nuclear war risks the United States has been running in places like the Korean peninsula and Eastern Europe precisely because its allies do so little to defend themselves. Does the Trump administration really believe it can count on these countries to help fight China if shooting starts?

Meanwhile, the similar shout-out to international organizations overlooks the administration’s warning in this very same document about the naivete of assuming that “engagement with rivals and their inclusion in international institutions and global commerce would turn them into benign actors and trustworthy partners.”

Another way to put this critique: The document pays no attention to the fundamental problem with rules-based order worship. In the last analysis, it’s never been based on adherence to rules – i.e., a consensus on what is and is not acceptable international behavior. It’s been based on a willingness of the so-called free world to allow the United States to bear most of the costs and risks of providing them with security and prosperity. Those costs and risks, however, have become unaffordable and unacceptable for the United States, and its allies have displayed no serious signs of helping carry the load.

Let’s end on a happier note: The new China document promises that the United States will judge China by its deeds and not by its words. And since despite the references to alliances and international orders, these considerations so far haven’t much inhibited the administration from hitting China ever harder, especially on the trade and technology fronts, focusing on its deeds seems like the best way to evaluate its China policy, too. 

In fact, here’s possibly the strongest proof of that pudding.  The document doesn’t once mention the aim or even the concept of “decoupling” – the notion that the United States should disengage economically from China as fast and as thoroughly as practicable.  But decoupling – indeed, big time decoupling – is exactly what’s been taking place during the age of Trump.

Our So-Called Foreign Policy: Another Wuhan Virus Lesson Globalists Need to Learn

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alliances, allies, China, core deterrence, coronavirus, COVID 19, Eastern Europe, extended deterrence, globalism, Japan, NATO, North Atlantic treaty Organization, North Korea, nuclear deterrence, nuclear war, Our So-Called Foreign Policy, Russia, South Korea, Soviet Union, tripwire, Western Europe, Wuhan virus

Here’s a seemingly off-the-wall question: What does the Wuhan Virus have to do with U.S. policy toward its global security alliances?

And here’s why it’s not only not a perfectly sensible and even vital question, but why the best answer is “Plenty”: Because these decades-old globalist arrangements now pose to America risks that look like the coronavirus-in-not-so-miniature. Even worse: The benefits to the United States these days are much more modest than  during the Cold War era when they were created.

The purely national security arguments should by now be familiar to RealityChek regulars. (See here and here for fuller descriptions of the points I’m about to summarize.) The North Atlantic Treaty Organization (NATO – which has linked the United States, Europe, and Canada), and the bilateral security relationships between the United States and Japan and South Korea, originally aimed to prevent the Soviet Union from dominating global centers of economic and technological strength and potential, and therefore of military strength and potential.

In fact, these countries and regions were considered so important that American policy made clear that Washington was ready to wage nuclear war – with all the dangers such conflicts would create for the U.S. homeland. Moreover, because the allies (or protectorates, as many call them) understandably doubted that American leaders really would, when the chips were down, “sacrifice New York to save London,” Washington felt compelled to station the U.S. military directly in harm’s way.

The idea was never to stop Soviet or North Korean or Chinese aggression with conventional forces alone. Quite the contrary. These units were intended as trip-wires. The very likelihood that they’d be annihilated was supposed to put irresistable pressure on a U.S. President to respond to attacks with nuclear weapons. In turn, this prospect was supposed to deter U.S. adversaries from attacking in the first place.

Such an approach (called “extended deterrence” by the cognoscenti – as opposed to “core deterrence,” which sought to protect the United States itself) made obvious sense when the United States enjoyed a monopoly on nuclear weapons. It even made arguable (though less obvious) sense when the Soviets reached nuclear parity, and the Chinese developed their own rudimentary nukes.

Since the end of the Cold War, however, it’s made much less sense, and more recent developments have turned this nuclear umbrella border-line – and crazily – suicidal. For the Soviet Union is gone. It’s been partly replaced with a newly aggressive Russia, but the countries most threatened by Moscow are not the economic and technological giants of Western Europe, but the newer NATO members of Eastern Europe – whose security was never remotely vital to the United States, as evinced by the long decades they spent as Soviet satellites or actual parts of the former USSR.

In East Asia, nuclear forces both in China and in North Korea can now not only hit the United States (or in the case of Pyongyang, are rapidly approaching that capability). When it comes to China, these weapons’ launch platforms have become much more difficult for the United States even to find, much less take out before they can be used. In other words, for all the continuing and even growing economic and technological importance of Japan and South Korea – which is considerable – the nuclear threats to America from their leading potential adversaries have grown faster both quantitatively and qualitatively.

And in all these alliance cases, despite President Trump’s clear interest in a fundamentally new America First-type foreign policy, and even though the allies are amply capable of fielding the forces needed to defend themselves, they choose not to. Therefore, U.S. forces still serve as tripwires in both Europe and Asia.

It’s likely that the economic damage done to the United States from a North Korean nuclear nuclear bomb landing in a big American city or two wouldn’t compare to the coronavirus economic damage we’re seeing now and are likely to see. But who can doubt that this damage will be substantial in economic terms, and catastrophic from a humanitarian standpoint? And in the areas hit, the harm to businesses and their workers could well last much longer. Further, the impacts of the kind of much larger retaliatory strikes that could come from China (if it invades Taiwan) or Russia, would be that much greater.

And these prices paid for maintaining current alliance policies would be all the more unacceptable because they are now completely unnecessary – because of the allies’ capabilities, and because so many of the European countries now under this U.S. “nuclear umbrella” are so thoroughly marginal to America’s safety and prosperity.

The globalist supporters of these alliances insist that these risks are indeed acceptable largely because deterrence has made them so remote. That sounds ominously like the optimism expressed by so many Americans (myself included) the day(s) before the Wuhan Virus threat’s scale became all too real. Now it’s increasingly clear that the globalists’ favored policies of indiscriminate free trade and offshoring-happy globalization policies have gravely endangered the nation’s health security as well as its prosperity, at least in the near-term. Let’s not be needlessly blindsided by a calamity triggered by the globalists’ hidebound alliance policies.

Our So-Called Foreign Policy: A Big Hint that America Finally Needs to Leave NATO

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alliances, allies, Article V, Cato Institute, defense spending, Europe, free-riding, globalism, NATO, North Atlantic treaty Organization, nuclear war, Our So-Called Foreign Policy, Pew Research Center, tripwire, Trump

Whenever I’ve written about America’s security alliances lately, I’ve emphasized the unacceptable dangers they pose to the nation’s safety because they commit the United States to risk nuclear attack to defend countries that clearly now don’t belong on the list of U.S. vital interests – that is, countries so important to America that their independence literally is worth the complete destruction of major individual cities and even genuine armageddon.

Earlier this week, however, a reminder has appeared about another crucial reason to ditch the granddaddy of these alliances – the North Atlantic Treaty Organization (NATO). Revealingly, it also strongly bears out President Trump’s charges that U.S. allies in the region where they’re concentrated (Europe) have been shamelessly free-riding on the United States. Indeed, the new information also underscores how the allied defense deadbeats are not only ripping America off economically (which seems to be Mr. Trump’s main concern), but how their cheapskate defense budgets are fueling the nuclear risk faced by the United States.

The evidence comes in the form of a new survey of the populations of NATO member countries (including the United States) released by the Pew Research Center, and if you stopped with the headline (“NATO Seen Favorably Across Member States”) you’d understandably think that everything is just dandy in alliance-land. But check out the chart below, which for some reason doesn’t appear until the middle of the Pew report. Its central message should outrage the entire nation.

 

For it shows that although NATO populations are confident that the United States “would defend them from Russian attack,” they’re decidedly unenthusiastic about their own countries participating in the defense of another NATO member. Specifically, a median of 60 percent of residents of NATO Europe (along with Canada) countries express such confidence in America’s military (including nuclear) guarantee (versus 29 percent who are not so convinced). But by a 50-38 percent margin, they oppose their own country joining in.

Of the fourteen NATO members surveyed, populations in only four (the United Kingdom, Canada, Lithuania, and the Netherlands) favored using military force to defend a fellow NATO ally. Yet in only four (Turkey, Poland, Hungary, Czech Republic) did majorities not expect the United States would use force to defend them.

The gap was widest in Italy (where only 25 percent favored helping defend another ally versus 75 percent believing that the United States would ride to its own rescue) and narrowest in the Netherlands (where the numbers were 64 percent and 68 percent respectively). The Italians also were the most confident in the United States in absolute terms, and tied with the Greeks for the least willing to help out. The only NATO members in which majorities supported both propositions were the Netherlands, the United Kingdom, Canada, and Lithuania.

Americans should be infuriated by these results for several intertwined reasons. First, the obligation to come to the defense of a fellow NATO member is at the heart of the alliance (and indeed of any alliance) and is spelled out in Article V of the NATO treaty. Although it’s true that members can always ignore legal obligations when push comes to shove, that’s long been much more difficult for the United States – because of its policy of stationing its own forces in many NATO countries (as well as in South Korea) to serve as “tripwires.” The idea has been that once they’re bloodied by attackers, and indeed about to be overwhelmed (because of their relatively small size) American Presidents will have no real choice but to respond with the U.S.’ equalizer – nuclear weapons.

This prospect was supposed to deter attack in the first place, and the (very) good news is that this strategy worked to keep the peace in Europe throughout the Cold War, and is still working. The bad news is that during the Cold War, the main European beneficiaries were countries whose independence was arguably vital to America – like the United Kingdom, (West) Germany, and France. Nowadays, the main beneficiaries are countries whose independence was never even during the Cold War viewed as vital to the United States – principally, the former Soviet bloc countries.

Yet although the stakes have shrunken dramatically, Washington continues to brandish the nuclear sword. And this risky American strategy remains in place – as it always has – because the European allies’ military forces have remained far too small and weak to repel a Soviet/Russian attack on their own, or with the help of modest U.S. non-nuclear forces. Worse, the Pew results also strongly suggest that if war did break out, American leaders could not for long even count on the help of allied forces even if it was provided initially. That’s an unparalleled recipe for disaster on the actual battlefield.

The Pew findings make the reason for this alarming situation glaringly obvious – the allies have skimped on their military spending out of confidence that the Americans would always answer their call. So why shouldn’t they save the big bucks that would be needed for genuine self-defense and use them for other purposes – like generous welfare states? Even better, the Americans would be left holding the nuclear risk bag, since once any conflict on the conflict escalated to that level, the nuclear conflict would be fought over their heads.

In addition, the Pew survey reinforces the results of a poll released last fall and alertly reported by my good friend Ted Galen Carpenter of the Cato Institute (who’s also just come out with an important new book on the subject).

Let’s be totally clear: This European approach has always made perfect sense from a European standpoint. But it not only makes no sense for the United States – it’s a strategy that creates the danger of national suicide because of decisions that still yoke the country’s fate to manifestly unreliable foreign publics.

Weirder yet: Avowedly America First champion President Trump has been steadily increasing the U.S. military presence in NATO’s most vulnerable – eastern European – members without having secured military spending increases from the other NATO countries that are remotely game changing.

It’s tough, therefore, to avoid the conclusion that America’s NATO allies are now giving Washington the broadest possible hint that it’s time for the United States to leave – because they’ve become utterly unreliable on top of their defense free-riding.  Why is the President acting as reluctant as any globalist to take it?

Our So-Called Foreign Policy: A China Fork-in-the-Road Coming for America First-ers?

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allies, America First, Barack Obama, China, deterrence, East Asia, globalism, industrial policy, Marco Rubio, national security, North Korea, nuclear deterrence, Our So-Called Foreign Policy, South Korea, Trade, tripwire, Trump

Something’s been bothering me for some time about the way that the national debate over dealing with China has been evolving.

Don’t get me wrong – it’s been great to see the major shift in the conventional wisdom since President Trump took office toward genuine recognition that the People’s Republic poses major economic and national security threats to the United States, that many of these threats are closely related, and that they have to be dealt with both on the economic and national security policy fronts.

That’s tremendous progress from the pre-Trump – and globalist – consensus that greater U.S. economic engagement with China was promoting more economic and political freedom in China, and more peaceful international behavior (or definitely would in some indefinite future), and that any dangers emanating from Beijing in the national security sphere are best coped with by increasing America’s military presence in East Asia (e.g., former President Barack Obama’s “pivot to Asia,” largely rhetorical though it was), cooperating more closely with the country’s allies in the region, or some combination of the two.

You don’t have to be an avid follower of world affairs to realize that the sharp distinction drawn by this globalist consensus between China economic and China national security policy was already producing a mind blowingly idiotic result: Washington was still resolving to resist any expansionist ambitions of Beijing’s in East Asia while continuing to help send China’s way floods of money and defense-relevant technology bound to turn into formidable military equipment that U.S. and other allied forces would face if conflict broke out.

Further, as I began pointing out years ago, because of the impressive progress made by both China and North Korea in developing intercontinental-range nuclear weapons, the globalist approach was exposing the American homeland to an ever increasing threat of nuclear attack – and mainly because even the U.S.’s wealthiest regional allies refused to field the (admittedly) expensive conventional military forces that could repel aggression from Beijing or Pyongyang without American help.

So everyone should be encouraged by the growing, bipartisan support for limiting the flow of U.S. resources and technology to China – even though many allegedly converted globalists continue hoping in vain that this goal can be achieved without setting limits (like tariffs) on trade and investment between the two economies.

My problem? Many of the new China hawks (and the leading example here is Florida Republican Senator Marco Rubio, who deserves considerable credit for his out-front role waking up other conservatives to the need for changing course on China) apparently believe that new U.S. trade, investment, and technology transfer curbs are mainly needed to shore up America’s decades-long position as the national security kingpin of East Asia. In other words, they’re hoping that America First-type China economic and technology policies can buttress globalist East Asia policies.

Maybe they’re right.  And if they succeed, it will at least become less likely that American troops will be killed in battle by Chinese weapons developed with dollars and knowhow from the United States.

Unfortunately, too much of the nuclear danger to the United States will remain in place – because the free-riding instincts of America’s East Asian allies inevitably will be reinforced. That is, the more confident they stay in America’s determination to protect them, the less military effort they’ll feel the need to make, and the longer U.S. military forces in places like South Korea will be needed to play tripwire roles – deterring aggression due to their vulnerability to attack and the chances that their imminent destruction will pressure a U.S. President to save them with nuclear weapons use that could trigger a similar retaliatory strike on the United States.

As I’ve written repeatedly, because taking every step possible to prevent a nuclear weapon from landing on American soil should be a much higher priority for Washington than protecting free-riding allies, it’s best for the United States to pull its troops back from the front-lines in East Asia and force its allies to defend themselves. And if this means okaying their own decisions to build nuclear forces, fine with me. I’d also sell them any conventional weapons they’re seeking – which would achieve the added benefit of improving American economic growth and employment.

Does this mean that an America First China policy would or should lack any national security dimension? Not at all. For as I first explained in this recent interview, staying ahead of China technologically will stay imperative for the United States to protect itself from the kinds of cyber-attacks Beijing is already capable of waging and has probably been sponsoring. And the threat is hardly limited to the hacking of U.S. government agencies or private businesses that originates from China. The more Americans (including individual Americans possessing valuable knowledge) use Chinese technology products because these goods have become the world’s best or cheapest, the more their privacy will be vulnerable to Chinese surveillance and ultimately blackmail. The advanced telecommunications equipment produced by Huawei is of course the most important example so far.

There’s another technology-based national security issue that purist America First-ers of my ilk need to deal with as well, and one that I haven’t sufficiently thought through. Nothing’s changed my mind about the United States being a big net loser from trade with East Asia, or about how it can retain the clout if needs in the solely from its role as a final consumption market these export-dependent economies will desperately need.

But thanks largely to failed globalist trade policies, most of the world’s semiconductor manufacturing capacity and capability is now located in East Asia – particularly in Japan, Taiwan, and South Korea. It may be tempting to believe that these countries will become more resistant to China’s power if the United States withdraws militarily from the region. But prudence counsels against simply assuming the best.

So as America First leaders start and keep offering these countries all the military hardware they need to rebuff Chinese advances, they will also need greatly to step up efforts to restore U.S. self-sufficiency in these key building blocks not only of high tech industry, but increasingly of all high value manufacturing and services. (To their credit, Rubio and some other new China realists also understand the need for redoubled American industrial policy efforts to achieve these goals.)

Attempts to reorient U.S. foreign and trade policies in America First directions are still at such an early stage that concern about these differing emphases might look premature. But events have a way of forcing major decisions much earlier than expected – either because crises erupt sooner, or because lead-times to implement new strategies can be longer, than is convenient. So all America First-ers should agree at least agree that the earlier this potential division in America First ranks is addressed, the better.

Our So-Called Foreign Policy: Time to Test U.S. “Allies” on China

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allies, America First, Asia-Pacific, Barack Obama, China, Emmanuel Macron, EU, European Union, France, globalism, Our So-Called Foreign Policy, RCEP, Regional Comprehensive Economic Partnership, TPP, Trade, Trans-Pacific Parternship, Trump

President Trump’s globalist critics in the foreign policy Blob (the Washington, D.C.-centered complex of former diplomats and military officers, genuine academics, think tank hacks, and their Mainstream Media mouthpieces) think they’ve uncovered major new proof that the administration’s America First-type foreign policies and trade policies are failing catastrophically. Actually, the developments they’ve seized upon make clearer than ever the dangerous folly of their own outdated strategies, and the urgent need for a Trump-ian course change.

What’s gotten the globalists excited: Reports that America’s allies the world over are turning their backs on Washington and either moving into China’s orbit or cultivating better relations with the People’s Republic.

In the Asia-Pacific region, fifteen countries, including American treaty allies Australia, Japan, and South Korea, have decided to join the Regional Comprehensive Economic Partnership (RCEP) – a Chinese spearheaded trade agreement that doesn’t include the United States. Although Washington is apparently free to join, RCEP’s progress is seen as a big defeat for the United States, and for Mr. Trump in particular, because for years Beijing has been pushing it as an alternative to the Asia-Pacific-focused Trans-Pacific Partnership (TPP) deal signed by former President Barack Obama but nixed by President Trump on his first full weekday in office.

TPP was touted as a counter to RCEP that was vastly preferable for the United States because its protections of the environment and labor rights, and its curbs on state-owned enterprises, created standards that China could not hope to meet any time soon. Therefore, the agreement allegedly represented both a means of containing Chinese power and a powerful inducement to the kinds of Chinese reform long sought by Washington (and at least nominally sought by the President).

In other words, it supposedly was a globalist masterstroke that was foolishly trashed by Mr. Trump. And he’s now getting his richly deserve comeuppance via the Chinese-developed RCEP, which, it’s said, doesn’t address the above issues nearly as effectively as TPP, but which has nonetheless attracted many other signatories also spurned by the Trump rejection.

As known by RealityChek regulars, the anti-China case for TPP was bogus from the start, along with its claims to promoting the kinds of reforms throughout the Asia-Pacific region that would benefits American exporters. For the agreement contained a wide open backdoor for numerous products with high levels of Chinese content, which would have enabled Beijing to realize many of TPP’s benefits without incurring any of its obligations. Nearly as bad, for all their lofty ambitions, those obligations would have been impossible for Washington to monitor and enforce adequately, as most signatory governments’ bureaucracies, along with their national industrial bases, were too large (and in the case of the governments, secretive) to track.

Moreover, these glaring TPP weaknesses raise questions that hardly strengthen confidence in globalist views both of the agreement and, just as important of U.S. Allies. Specifically, TPP’s China back door and verification shortcomings weren’t exactly secrets. And they surely reveal that the Australias, Japans, and South Koreas of the world were never very interested in containing China or pressuring it to reform in the first place. The decision of these countries to go along with an RCEP that doesn’t even try seriously to achieve these goals casts even deeper doubt on their reliability for any future American efforts to work multilaterally to cope with China.

And as for the inevitable counter-argument that the Trump TPP pullout gave these Asia-Pacific countries little choice but to accept a second-best deal more advantageous to Beijing, it doesn’t withstand scrutiny. After all, all these countries had years to work with the George W. Bush and Obama administrations to develop regional trade arrangements that could realistically hope to achieve their intertwined China and reform objectives. They all (along with those globalist Presidents) completely blew the opportunity.

On the other side of the world, the Associated Press has just reported on a similar shift by the European Union, that huge economic bloc that also contains many countries allied with the United States through the North Atlantic Treaty Organization. In an article titled “Europeans look to China as global partner, shun Trump’s US,” correspondent Sylvie Corbet wrote that “When France’s president wants to carry European concerns to the world stage to find solutions for climate change, trade tensions or Iran’s nuclear ambitions, he no longer calls Washington. He flies to Beijing.”

She added that on his recent visit to Beijing, Emmanuel Macron “portrayed himself as an envoy for the whole European Union, conveying the message that the bloc has largely given up on Trump, who doesn’t hide his disdain for multilateralism.”

In the process, though, the author made a powerful, if completely unwitting, case for American unilateralism. For according to Corbet, Macron and Chinese dictator Xi Jinping “issued a ‘Beijing call’…for increased global cooperation in fighting climate change and better protecting biodiversity. Both countries have deplored the U.S. withdrawal” from the Paris climate change accord.

Macron apparently stood by as Xi “said the two leaders were sending ‘a strong signal to the world about steadfastly upholding multilateralism and free trade, as well as working together to build open economies.’”

And for good measure, the French president touted China’s record of helping to reduce tensions in the Persian Gulf, and potential contributions to using diplomacy to persuade Iran to return to full compliance with the nuclear proliferation deal rejected by Mr. Trump. In addition, he touted China’s ability to help “develop stable and cooperative trade rules at the international level.”

To which the only serious reply from the American standpoint is, “If Macron and anyone else in Europe really believe this nonsense, and assume that they’re better off aligning with China than with the United States, then America is better off without them.” And this holds not only for trade but for security issues like Iran.

It’s been unconvincing enough for globalists to insist that the United States has no choice but to maintain alliances with countries famous for being defense deadbeats and free-riders, and fence-sitters in the campaign to create a truly open world economy (as opposed to one that winks at all instances of protectionism except America’s). But it’s positively goofy for globalists to claim that these countries would be strong and active supporters of security or economic goals compatible with U.S. and traditional free world interests if only President Trump showed more patience with them.

Of course, it’s possible – and perhaps likely – that these Asian and European moves are ultimately bluffs aimed at curbing Mr. Trump’s perceived worst excesses. But it’s at least as possible that these countries hope to create pressure on the President to accept their longstanding, “Heads we win, tail you lose,” strategy vis-a-vis the United States.

All of which reminds me of episodes when I was little, and blurted out remarks like, “I’m going to run away.” My parents often replied, “Is that a promise or a threat?” That sounds to me like a necessary and indeed long overdue U.S. response to its worrisomely feckless allies.

(What’s Left of) Our Economy: Now What in the U.S.-China Trade War?

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agriculture, allies, China, decoupling, Democrats, election 2020, forced technology transfer, Hong Kong, Huawei, impeachment, intellectual property theft, National Basketball Association, Phase One, Steven Mnuchin, subsidies, supply chains, Taiwan, tariffs, Trade, trade talks, Uighurs, verification, {What's Left of) Our Economy

This is the second working day since the United States and China reached what the Trump administration is calling a “Phase One” trade deal with Beijing last Friday, and the questions surrounding the agreement still far outweigh what’s known. That alone should tell you that towering obstacles continue blocking any confident assessment of where the President’s so-called trade war stands, much less where the conflict is likely to go. Even so, here are some observations I hope are useful.  (Teaser:  One major point concerns tonight’s Democratic presidential candidates debate.)

First, the absence of any written statements or documents from the U.S. side describing or even summarizing what’s actually in the agreement justifies big doubts that anything deserving the term “deal” has been reached at all. Further reinforcing legitimate skepticism is China’s long record of broken promises on trade.

Second, especially strong skepticism is warranted about U.S. claims that any meaningful progress has been made on the so-called structural issues focused on from the very beginning by the Trump administration. For it as I’ve long argued, China’s government is so vast and secretive, and leaves such scanty written records of key decisions, that it will simply be impossible for the United States to monitor and enforce even the most promising Chinese commitments on intellectual property theft, technology extortion, discriminatory Chinese government procurement, and Beijing subsidies that shaft U.S.-owned and other foreign businesses vis-a-vis their Chinese rivals.

Third, even if China currently means to keep its alleged promises to binge buy American agricultural products, any number of external events could upset the apple cart. They include the Hong Kong picture becoming uglier (its becoming prettier can’t be totally ruled out, but seems highly unlikely); new Chinese crackdowns on other protests that may emerge (especially among the Uighur Muslim population) or revelations of new Chinese atrocities against the Uighurs or other minorities or other protesters; more attempted Chinese bullying of high-profile U.S. businesses like the National Basketball Association; a major flare-up of tensions over Taiwan or China’s aggressive moves in the South China Sea; a step forward in the Huawei case that increases the chances that the CFO daughter of the founder of this Chinese telecommunications giant will be extradited to the United States from Canada for sanctions-busting; and Chinese moves that persuade Washington that Beijing has no intention of keeping its perceived agriculture or other promises.

Moreover, the longer China takes to ramp up its buys from American farmers, the greater the potential for these kinds of shocks to bring this “Phase One” agreement crashing down.

Fourth, the less impressive the “mini-deal” keeps looking, the more convincing my view that its apparent modesty reflects President Trump’s belief that his domestic political position has weakened significantly – both because of the new impeachment threat and signs of an economic slowdown.

It’s true that Treasury Secretary Steven Mnuchin has suggested that if the deal hasn’t been finalized by December 15, the Trump administration will go ahead with a previously vowed 15 percent increase on $156 billion worth of levies on Chinese imports. But that’s anything but a concrete threat. In addition, it’s important to note this report suggesting (the specifics are really sloppily described) that China wants the sequencing to work in the opposite way:  First, tariffs get rolled back (or frozen in place?), then the agriculture buys begin. 

Moreover, no one in the administration has said anything about reversing its Phase One-related decision to suspend a big tariff increase (to up to a formidable 30 percent on some products) previously announced to begin on October 15. So even though U.S. duties on some $360 billion worth of Chinese goods would still remain in place if China blows Mr. Trump off, there’s a real chance that Beijing won’t incur any further punishment – doubtless because the President believes that tariffs above and beyond current levels and coverage could panic investors again and further soften economic growth.

Some kind of blow-up in Hong Kong or elsewhere could yet change Mr. Trump’s calculations. But the more important point so far is that events, not the President, are now in charge of the trade talks track of his China policy.

Fifth, at the same time, none of the above means that the United States is devoid of leverage versus China and in particular the kind of clout that can keep advancing its economic as well as closely related technology and national security interests, and this is where a second, arguably more important, track of the Trump China policies needs to be remembered. As I’ve written, the President has sought not only to end the threat of China’s economic predation by forcing Chinese policy changes through tariff pressure. Although he rarely speaks of it, he’s also been trying to repel Chinese threats to U.S. security and prosperity through a series of unilateral measures aimed at decoupling the United States from China economically.

By crimping trade, investment, and technology flows, these decoupling steps are reducing America’s vulnerability to China by significantly reducing the access to the U.S. market so crucial to the success of China’s advanced industries; by shrinking the footprint of China’s state-controlled economy in America’s largely free market system; and by cutting off a Chinese tech sector that could be become highly dangerous from critical supplies of U.S. components.

Decoupling has also been advanced by those tariffs so far imposed on $360 billion worth of Chinese products (amounting to nearly 86 percent of all goods imports from China last year). They haven’t done much to achieve their stated aim of improving China’s behavior, but they have decreased China’s importance to the U.S. economy by prompting an exodus of global manufacturing supply chains out of the People’s Republic.

Further, the Trump decoupling campaign has also helped awaken many foreign governments to the China tech and broader economic threat – though because so many other countries (including major American treaty allies), were profiting so handsomely from the pre-Trump globalization status quo, progress on this front has been uneven and disappointing. (See here for why Germany, for example is so conflicted.) 

Sixth and finally, one major set of actors in this drama, though, hasn’t been very woke on China issues:  most of the Democratic presidential candidates. Sure, many have supported a policy of “doing something” on China (though rarely involving tariffs – or any other concrete measures). But so far, none seems to view China’s multi-dimensional challenge to America as a major concern – and all the top-tier contenders and most others now support impeaching the President. 

Consequently, they could greatly strengthen not only Mr. Trump’s position, but the American position, with firm declarations in tonight’s debate that China will stay squarely in Washington’s cross-hairs if they win the White House, and that therefore there’s no point in stonewalling in hopes of easier post-2020 U.S. policies. Not that any confidence looks well founded that any of them will.        

Our So-Called Foreign Policy: Why Mattis Isn’t the Last Word on “America First”

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alliances, allies, America First, China, Defense Department, globalism, Japan, Jim Mattis, Marines, Mattis, NATO, North Atlantic treaty Organization, North Korean, Our So-Called Foreign Policy, South Korea, The National Interest, Trump

By all accounts, General George S. Patton was one of America’s greatest battlefield leaders during World War II. And by nearly all of those same accounts, he had no qualifications to advise Presidents on the grand strategies that would serve the country best in world affairs.

I couldn’t help but think of Patton while reading about the contents of former Trump Defense Secretary Jim Mattis’ upcoming book about leadership lessons he’s learned during his own career in a Marine Corps uniform. For one of the main points made in Call Sign Chaos – that President Trump’s foreign policies are dangerously ignoring the vital importance of allies to U.S. security and prosperity – is not only far from obvious. This critique of America First-ism could itself be dangerously wrong.

Here’s the gist of Mattis’ case:

“Nations with allies thrive, and those without them wither. Alone, America cannot protect our people and our economy.

“At this time, we can see storm clouds gathering. A polemicist’s role is not sufficient for a leader. A leader must display strategic acumen that incorporates respect for those nations that have stood with us when trouble loomed.”

“…An oft-spoken admonition in the Marines is this: When you’re going to a gunfight, bring all your friends with guns,” he wrote. “Having fought many times in coalitions, I believe that we need every ally we can bring to the fight.”

And there can be no question that these beliefs form the core of Mattis’ policy worldview. His letter to Mr. Trump declaring his resignation as Pentagon chief shows that this decision was driven largely by his prioritizing of alliances. His stated position is worth quoting at length:

“One core belief I have always held is that our strength as a nation is inextricably linked to the strength of our unique and comprehensive system of alliances and partnerships. While the US remains the indispensable nation in the free world, we cannot protect our interests or serve that role effectively without maintaining strong alliances and showing respect to those allies.

“Like you, I have said from the beginning that the armed forces of the United States should not be the policeman of the world. Instead, we must use all tools of American power to provide for the common defense, including providing effective leadership to our alliances. NATO’s 29 democracies demonstrated that strength in their commitment to fighting alongside us following the 9-11 attack on America. The Defeat-ISIS coalition of 74 nations is further proof.

“Similarly, I believe we must be resolute and unambiguous in our approach to those countries whose strategic interests are increasingly in tension with ours. It is clear that China and Russia, for example, want to shape a world consistent with their authoritarian model — gaining veto authority over other nations’ economic, diplomatic, and security decisions — to promote their own interests at the expense of their neighbors, America and our allies. That is why we must use all the tools of American power to provide for the common defense.”

“My views on treating allies with respect and also being clear-eyed about both malign actors and strategic competitors are strongly held and informed by over four decades of immersion in these issues. We must do everything possible to advance an international order that is most conducive to our security, prosperity and values, and we are strengthened in this effort by the solidarity of our alliances.

“Because you have the right to have a Secretary of Defense whose views are better aligned with yours on these and other subjects, I believe it is right for me to step down from my position.”

In fact, the letter’s reference to advancing an international order most conducive to U.S. interests also makes clear that Mattis is a card-carrying globalist. For the defining feature of this school of thought is that because the United States lacks the ability to defend and promote its essential goals on its own, it has no choice but to nurture and support global systems that will do these jobs for it – even if such policies degrade some of its own power and wealth.

I’m not saying that because he’s a globalist, Mattis is wrong and good riddance to him from a policy-making position. Instead, I’m saying that, typically for adherents to this school of thought, Mattis evidently doesn’t know, or refuses to acknowledge, the possibility of an alternative approach, one that relies above all on America’s own considerable strengths and advantages, to security, prosperity, and freedom. I made the case for such an approach last year in this article for The National Interest (which also pointed out that the President’s actions – lamentably – haven’t been nearly as America First-y as his rhetoric).

Equally disturbing, the months since his resignation last December, Mattis seems to have overlooked the continuing emergence of evidence undermining continuing faith in globalism. Just three of the most obvious:

(a) the determination of the major allied economies of Europe and Asia to keep fence-sitting in America’s economic and strategic conflict with China – in large part because so many of them make so much money supplying the PRC’s export-focused factories;

(b) the ongoing failure of most of these allies to pay any reasonable share of the common defense;

(c) the bitter economic conflict that’s broken out between Japan and South Korea, which mocks the idea that the American military can rely on any effective help from them against aggression from North Korea or China; and

(d) the major progress made by North Korea and China in developing the kinds of nuclear forces that have created an unprecedented and needless risk of nuclear attack on the American homeland – needless because the wealthy countries anchoring the U.S. alliance system in East Asia refuse to build adequate defenses for themselves. In other words, tightly linking America’s fate to such deadbeats could wind up incinerating a major American city…or two…or three. 

So welcome to the foreign policy/grand strategy debate, General Mattis. Now how about addressing its most difficult questions seriously rather than simply repeating decades-old globalist mantras?

Making News: Podcast Now On-Line of New G7 Summit/Asia Trade Interview with Joe Piscopo…& More!

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allies, G7 Summit, Joe Piscopo, Making News, Market Wrap with Moe Ansari, New York Yankees, The Joe Piscopo Show, Trade, Trump

I’m pleased to announce that the podcast of my interview this morning on Joe Piscopo’s drive-time New York City radio show is now on-line.  Click here for a timely discussion of the big global economic summit that’s wrapping up today in France, the latest developments on the turbulent world trade front, and what the meeting’s revealing about America’s relations under the Trump administration with its allies in Europe and Asia.  My segment starts a little after the 22-minute mark.

Special bonus:  To close out the segment, Joe and I talk Yankee baseball!

In addition, at 3 PM EST, I’ll be discussion the same subjects on the nationally syndicated radio show Market Wrap with Moe Ansari.  I’m not sure whether this interview will be broadcast live or sometime later today, but if it’s the former, head to this page and scroll down to “Listen Live” link.  If the latter, I’ll let you know ahead of time if possible, and will of course post a link to the podcast as soon as it’s available.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.