Im-Politic: It Was Trump – and Nationalism – That Killed TPP for Good

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Campaign for America's Future, Congress, Democrats, fast track, free trade agreements, Im-Politic, Jobs, Lori Wallach, manufacturing, nationalism, progressives, protectionism, Public Citizen, Republicans, Tobita Chow, TPP, Trade, Trans-Pacific Partnership, Trump

However understandably it’s been overshadowed by the earthquake election of 2016, the demise of President Obama’s Trans-Pacific Partnership trade deal (TPP) is a very big, indeed historic, deal. Think of it this way: Do you know how many times since 1950 that a trade agreement concluded by an American administration has been turned back by public opposition? Try “none.”

As a result, it’s vital that trade policy critics correctly understand the ingredients of this victory – if only because they’ll decisively influence the nature of alternative approaches able to pass public and legislative muster. And in this vein, it’s becoming apparent that left-of-center trade activists – who deserve most of the credit for organizing impressive campaigns of opposition to U.S. trade policy since the NAFTA fight of the early 1990s – have especially important lessons to learn. The biggest ones: first, that Donald Trump’s election as president delivered the coup de grace against TPP; and second, and that his fundamentally nationalist arguments made the trade critics’ movement genuinely, and victoriously, bipartisan.

Just to review the history briefly, in 1950, President Truman decided that his plans to create a global trade body with strong enforcement powers were going nowhere, and so the White House announced in December that legislation to approve the globally endorse International Trade Organization would not be put before Congress.

Over the following six and a half decades, Congress did formally or informally rebuff three presidential requests to renew the executive’s trade negotiating authority in conjunction with expedited “fast track” voting procedures. But when actual trade deals came before the House and Senate, all of them passed. Not even the financial crisis and Great Recession were able to generate winning coalitions against new trade agreements, as lawmakers approved deals with Colombia, Korea, and Panama in October, 2011, when the current (historically weak) recovery was still in a relatively early and not especially strong stage.

During all of these trade battles, left-of-center forces such as labor unions and environmental groups provided most of the opposition’s political and financial muscle, its lobbying strength on Capitol Hill, and its grass roots organizing. And considering how tremendously outspent these groups were by Big Business (including Wall Street), and how vigorously the national media tried to marginalize them, these groups performed heroically.

Both President-elect Trump and his Democratic rival, Hillary Clinton ran deeply divisive campaigns. And Mr. Trump’s displayed a clear penchant for assailing numerous liberal social and cultural sacred cows. So it wasn’t entirely surprising that trade critics on the left consistently tried to minimize the overlap between their positions on globalization and those of the GOP candidate. Much more surprising, and less defensible, is how this practice has continued and even intensified since the Trump victory.

The most egregious example seems to have come from Tobita Chow, who heads a Chicago-based political organization called The People’s Lobby and, more important, just wrote on the president-elect and trade for the nationally influential Campaign for America’s Future. According to Chow, although Mr. Trump opposed TPP, he “plans to pursue bilateral trade deals with a number of Asian countries, including with Vietnam, which is also part of the TPP. Expect Trump’s trade deals to be even more damaging for people in the US and abroad than the TPP would be.”

Working a different but related angle, Public Citizen’s Lori Wallach claims that although President Obama’s continuing push for the TPP “helped to elect Donald Trump…Trump himself did not derail the TPP – people power united across borders accomplished that first by delaying the TPP’s completion beyond its 2012 deadline and then by ensuring that a majority in Congress could never be built to implement the deal since it was signed 10 months ago.

“By declaring he will formally bury the zombie TPP, the president-elect is merely acknowledging the obvious: The deal died under the weight of its own terms and could not achieve sufficient support in Congress.“

If Chow is indeed speaking for much of the progressive community, then he’s vividly demonstrated that this faction has become just as oblivious to the concerns of working class Americans as the corporate-funded Clinton wing of the Democratic Party. Here’s why he has such a beef with the President-elect on trade. As he explains it, Mr. Trump’s fundamental mistake is basing his approach to trade

“on his nationalistic politics. Trump has promised to step in and stop competition across borders, and to defend ‘real Americans’ against the immigrants and foreigners whom are too often perceived as threats to their livelihood and their way of life. And in trade policy, Trump is a protectionist. The very name, ‘protectionism’, implies that jobs and investment in other countries are threats, and that we can and should ‘protect’ the American economy against these threats. A protectionist like Trump would have us believe that if we throw up trade barriers and stop investment in foreign countries and force goods to be made in the US, then we can ‘bring back’ jobs and factories from China and Mexico and return to the middle-class economy that flourished between WWII and the 1970s. This is what is captured in Trump’s slogan, ‘Make America Great Again.’”

Chow goes on to sound like a charter member of the nation’s offshoring lobby, or a Mainstream Media columnist, by insisting that

“[T]he slogan is a lie. You can’t ‘bring back’ jobs that don’t exist anymore. Manufacturing jobs are on the decline around the world–including in China. Economist Joseph Stiglitz sums it up: ‘Global employment in manufacturing is going down because productivity increases are exceeding increases in demand for manufactured products by a significant amount.’”

As I’ve written previously, countries much less important economically than the United States has long used their market power to influence multinational companies’ investment decisions and the contours of their supply chains to lure investment – and jobs – to their economies. Why does Chow believe that similar U.S. efforts are bound to fail?

I have other substantive issues with his arguments, but more important is Chow’s conclusion that what Americans should back instead is

“what is sometimes called progressive nationalism: an agenda to pursue a progressive agenda across borders to create a more just and sustainable global society. And since, as progressives, we understand that the labor movement is central to all our struggles, this means that a core goal of progressive internationalism must be to increase the power and status of workers internationally.”

Does he really believe that this will be a winning message in American politics for the foreseeable future? Is there any evidence that the working class that rallied behind Mr. Trump (including many union households) would respond favorably? And if so, what does Chow believe has changed over the last quarter century? After all, progressives have made these points at every opportunity during that period’s trade battles. They never galvanized enough voters to win.

Which brings us to the main weakness of Wallach’s case. She’s right about “people power united across borders” delaying TPP’s conclusion and ratification – and about the importance of buying such time. But ultimately the deal was signed by all the countries involved, and most prospective TPP members with reasonably democratic systems made clear that the U.S. Congress’ ratification was crucial to bringing the treaty across their own various finish lines. The reason was obvious: America’s market would have represented nearly two-thirds of the final free trade zone.

Now ask yourself about TPP’s fate had Clinton won her expected victory this year. Can anyone seriously doubt that she would have pushed for a few cosmetic changes and then worked with pro-TPP Republican Congressional leaders to win a final passage sometime early in her first term that mirrored President Obama’s fast track triumph last year? In fact, as Wallach repeatedly warned before Election Day, when Mr. Trump seemed dead and buried and Clinton seemed sure to win the White House, a TPP vote during a lame duck session of Congress was entirely possible.

Mr. Trump’s election was the event that finished off the treaty for good – both because of his own opposition and because of the shock effect of his upset victory, which revealed that a substantially transformed Republican party electorate wasn’t about to take its cues on trade anymore from the likes of offshoring lobby hired guns like House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell.

In other words, President-elect Trump’s successful conversion of a critical mass of Republicans into energized trade policy critics who actually voted their convictions was what turned the opposition led for so long by the progressives into a truly bipartisan – and therefore winning – movement.

As a result, progressives face a major choice. They can ensure a more lasting defeat for job- and growth-killing trade deals – and lay the foundations for realistic plans to promote greater prosperity outside the United States, too – by acknowledging the political and substantive merits of more nationalistic American trade policies. Or they can keep inveighing against the President-elect and his approach, or provide at best niggardly support, and boost the odds that a genuine revolution in the politics of trade in the United States fizzles out.

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(What’s Left of) Our Economy: Big Business Still Favors A TPP Fast Track – for Everyone Else

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Business Roundtable, Congress, fast track, Michael Froman, National Foreign Trade Council, Obama, offshoring lobby, Orrin Hatch, Paul Ryan, Ted Cruz, TPA, TPP. Trans-Pacific Partnership, Trade, Trade Promotion Authority, {What's Left of) Our Economy

A funny thing has happened to the Offshoring Lobby groups that pushed so hard (and successfully) for Congress to give President Obama fast track trade negotiating authority. Now that they’ve seen the text of the Trans-Pacific Partnership (TPP) trade deal whose passage they’ve also urged, several have decided they don’t like the core provision of fast track trade negotiating authority.

Central to the case for fast track – now officially known as Trade Promotion Authority (TPA) – is that preventing Congress from monkeying around with the final text of trade agreements negotiated by presidents and their aides is vital to persuading America’s interlocutors to negotiate seriously. If American lawmakers could amend the deal at will, why would foreign leaders put forward their best offers, especially if they might anger powerful domestic constituencies?

That’s what U.S. Trade Representative Michael Froman has made unmistakably clear. In a late-2014 article in Foreign Affairs, Mr. Obama’s chief trade diplomat wrote, “By ensuring that Congress will consider trade agreements as they have been negotiated by the executive branch, TPA gives U.S. trading partners the necessary confidence to put their best and final offers on the table.”

The Republican leaders who have supported the president’s trade agenda agreed as well. According to Senate Finance Committee Chair Orrin Hatch of Utah, TPA “allows for trade deals to be submitted to Congress for an up-or-down vote, an incentive for negotiating nations to put their best offer forward for any deal.” And before he was elected Speaker and chaired the House Ways and Means Committee, Wisconsin’s Paul Ryan contended (in an article co-authored with Texas Republican Senator and current presidential candidate Ted Cruz, “By establishing TPA, Congress will send a signal to the world. America’s trading partners will know that the U.S. is trustworthy and then put their best offers on the table. America’s rivals will know that the U.S. is serious and won’t abandon the field.”

When Congress was considering fast track, moreover, leading business groups strongly echoed this line. As specified in a statement from the Trade Benefits America coalition that spearheaded the pro-fast track lobbying campaign, fast track historically ”has provided our trade negotiating partners with a degree of comfort that the United States is committed to the international trade negotiating process and the trade agreements we negotiate.”

One of the coalition’s major members, the National Foreign Trade Council (NFTC), was even more explicit: “Without U.S. trade negotiating authority, other countries will be unwilling to negotiate with the United States for fear that U.S. commitments and concessions would not hold weight.  In particular, they would be unwilling to put important politically sensitive concessions on the table.”

Last week, however, some of these organizations were changing their tune. In a statement calling for Congress to pass the TPP, the Business Roundtable declared that it also wanted to administration “to quickly address the remaining issues that impact certain business sectors in order to ensure the broadest possible benefits to all sectors of U.S. business, which will enable the broadest support possible for the TPP.” Huh? It’s true that Congress can attempt to clear up purported ambiguities in the text when it writes implementing legislation, but as for changing the text itself? Sorry, but that’s a no-no under TPA. Unless the Roundtable wants to reopen the entire negotiation?

Similarly, the NFTC reported that it is “encouraged by discussions that are underway between Congress and the Administration to address provisions in the agreement in order to further improve trade and investment liberalization, and strengthen the system of international trade and investment disciplines and procedures, including dispute settlement, for all of American business. Early resolution of areas for improvement identified by the business community will speed approval by Congress in 2016.”

With due respect, what on earth are they talking about other than the aforementioned clarifications and interpretations that unfortunately are entirely unilateral, and have no standing under the new TPP regime?

It seems that when the Offshoring Lobby touted the importance of banning Congressional amendments to TPP, it meant all amendments except its own. You can’t blame its organizations for seeking such blatant favoritism; it’s their job. Now we’ll see if Congress believes that enforcing the principle of equality under the law is its job.

Im-Politic: Biden’s Trade Views are Big Nomination Obstacles

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2016 elections, Bernie Sanders, China, Congress, Democrats, fast track, Hillary Clinton, House of Representatives, Im-Politic, Joe Biden, MFN, Most Favored Nation, NAFTA, Obama, Permanent Normal Trade Relations, PNTR, polls, Senate, TPP, Trade, Trans-Pacific Partnership, Uruguay Round, World Trade Organization, WTO

When, as now expected, Vice President Joe Biden finally enters the presidential race, one of his top challenges will be winning the lion’s share of endorsements from organized labor over main Democratic nomination rivals – former Secretary of State Hillary Clinton and Vermont Senator Bernie Sanders. And if, as expected, trade policy records are a big part of most unions’ litmus tests, he’ll have a hard time convincing labor that he’s dedicated to making trade agreements and related decisions more worker-friendly.

The unions’ role in Democratic politics is hardly limited to campaign contributions, though money of course matters. But labor also is the dominant player in the party’s ground game, being the only constituency that can mobilize armies of campaign workers to knock on doors and get out the vote. Don’t, moreover, forget the enthusiasm factor. If union members and their families are excited about Democratic candidates, they’ll help the party win the turnout war. If they’re discouraged about the nominee and too many stay home in November, the Democrats’ chances of victory plummet. Moreover, union apathy and its costs can trickle down to state and local-level elections as well – where the Democrat’s recent performance has been abysmal.

The Vice President’s real views on trade policy are hard to discern for several reasons. First, he’s been anything but a model of consistency, supporting some deals and opposing others seemingly with no rhyme of reason. Moreover, there’s often much less to trade votes in the Senate – where he served in Congress – than meets the eye. For decades, after all, large bipartisan Senate majorities have strongly supported the main thrust of American trade policy; the only real opportunities for mandating course changes have been in the House. As a result, Senators who favor politically unpopular trade deals but who fear antagonizing wealthy donors can often have their cake and eat it, too. They can cast No votes and assure their offshoring lobby backers that their favored policies will be approved anyway.

Nonetheless, two clear patterns emerge from reviewing Biden’s trade record since Delaware voters first elected him to the Senate in 1972. (My source is the Cato Institute’s indispensable Congress trade votes database.) He’s been much likelier to oppose the trade policy status quo when Republicans have occupied the White House than under Democratic presidents. And second, not only has he never been a leader in this area. He’s expressed almost no interest in it whatever. That tells me that nothing has been easier for him than to accept the bipartisan inside-the-Beltway consensus that the longer America stays the current, offshoring-friendly trade policy course, the better.

Biden did oppose some high profile trade agreements as a Senator – notably the Central America-Dominican Republic deal of 2005. He also joined most of his colleagues that year in backing unilateral sanctions on China to fight its currency manipulation. In 2007, he supported continuing to ban trucks from Mexico from driving on American highways. And in 2003, over the objections of key American trade partners, he voted to strengthen U.S. requirements that labels on certain food products reveal the country in which they were grown and raised.

But all of those votes took place when George W. Bush was president. And many fell into that aforementioned category of “free votes.” Under his Democratic predecessor, Bill Clinton, Biden’s positions seemed very different. He twice voted to approved extension of Most Favored Nation trade status for China, and in 2000 favored making normal trade treatment for China permanent – which paved the way for Beijing to join the World Trade Organization and triggered a flood of job-, wage-, and growth-destroying Chinese exports (many illegally subsidized) into the U.S. market. Biden also backed the North American Free Trade Agreement (NAFTA) in 1993, the Uruguay Round multilateral trade agreement of 1994 that created the World Trade Organization, and fast track negotiating authority for Clinton in 1998.

Biden and his camp could argue that the Vice President has learned and evolved. But the trade policy decisions he endorsed in the 1990s were much more important than those he opposed in the following decade. Moreover, this past spring, he helped the president he serves secure Congressional passage of fast track negotiating authority. That’s bound to boost the odds of TPP’s approval on Capitol Hill.  And he remains a strong supporter of the actual deal even though it suffers most of the main weaknesses of its predecessors. 

Interestingly, Biden’s trade positions might not be a total loser in Democratic primaries, or in the general election if he makes it that far. Several recent polls indicate that Democratic voters have become stronger supporters of current trade policies than the Republican electorate. But Clinton and Sanders aren’t working overtime for union support – and in the former’s case, flip-flopping on the TPP – for nothing. If Biden’s loyalty to President Obama and his own beliefs lead him to champion TPP on the hustings, his best chance for the nomination could boil down to Clinton’s vulnerability to any legal charges stemming from her questionable handling of sensitive national security material on her private email system.

 

 

 

Im-Politic: Why Trump’s Debate Victory over CNBC Really Matters

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2016 elections, Ben Carson, CNBC, diplomacy, Donald Trump, fast track, Im-Politic, multinational corporations, offshoring, presidential debates, Rand Paul, Republicans, Ted Cruz, Trade

No, this isn’t an endorsement, but the way Donald Trump handled the dispute over its planned presidential debate format between CNBC on the one hand, and several Republican candidates including him on the other, shows precisely why he could well transform U.S. trade policy – and possibly American foreign policy – dramatically for the better if elected.

Along with Ben Carson, Ted Cruz, and Rand Paul, Trump protested CNBC’s original plans for two hours of actual debating time, plus up to 16 minutes of commercials, with no opening or closing statements by the contenders. The four protesting candidates wanted the event’s total time capped at two hours, and insisted that opening and closing statements be included in that total.

As these disagreements indicate, the gulf between CNBC and the four Republican hopefuls wasn’t terribly wide. But what’s important about this story is how and why these candidates – and especially Trump – prevailed even though the rest of the much more numerous Republican field apparently was fine with CNBC’s intentions.

Essentially, the four dissenters recognized that they had decisive leverage. (Their absence – especially Trump’s – could cost the cable network valuable ratings.) They threw around their weight. And they won. And when it comes to trade policy (and many other international challenges and opportunities facing the United States) that’s exactly what U.S. leaders from both parties have consistently failed to do for decades, even though the United States typically holds all the main cards.

This is especially true in trade policy, because the United States has long served as the market-of-last resort for a world full of major and minor trade powers alike that desperately depend on ever higher exports for adequate growth. But Washington’s failure to wield its relative power and leverage effectively arguably has undercut important American objectives in the national security sphere, too – for example, in persuading free-riding allies to bear a greater share of the West’s common defense burden.

I single Trump out because none of his three comrades in arms in this tussle has made trade policy a centerpiece of their campaigns. In fact, Texas Senator Ted Cruz and his Kentucky counterpart Rand Paul have been strong supporters of the substance of America’s current trade strategy, though both opposed (for procedural and political reasons) the recent (successful) attempt in Congress to award fast track negotiating authority to President Obama. Moreover, unlike Trump, neither Carson nor Cruz nor Paul has touted deal-making and bargaining as among their strongest suits. 

At the same time, Trump’s victory over CNBC underscores how incomplete his attacks on American trade diplomacy have been. For Washington has signed deficit-fueling and deals and reached similarly counterproductive trade policy decisions (like long coddling China’s currency manipulation) not mainly because U.S. officials can’t size up a situation accurately – a charge consistent with Trump’s claim that they’re incompetent and lack elementary street smarts.

Instead, they repeatedly fail at trade bargaining tables to advance and defend the interests of the American economy as a whole primarily because they haven’t considered that their job. They view themselves as agents of offshoring-happy multinational corporations, whose campaign contributions have ensured that their trade priorities prevail even when success comes at the expense of America’s productive sectors.

That’s why, as I keep arguing, Trump’s trade policy rhetoric should mainly demonize these U.S. corporate special interests, not foreign governments. (And why it’s encouraging that he’s shown signs of making this pivot.) At the same time, since the United States no longer dominates the world stage as in the early post-World War II decades, accurately assessing power balances and recognizing when compromises are needed has also become an important ingredient for diplomatic, and presidential, success.

So Trump should promise that he’s independent enough to be working for Main Street (because he doesn’t need that special interest money), that he’s tough enough to press clear advantages hard, and that he’s smart enough to “know when to fold ’em.” What other candidates can credibly make this combination of claims?

Im-Politic: Will Trump Spark a GOP Revolt on Trade Policy, Too?

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2016 elections, Donald Trump, fast track, free trade agreements, illegal immigration, Im-Politic, immigrants, Immigration, Jeff Sessions, Jim Tankersley, legal immigration, offshoring, Republicans, Scott Walker, Ted Crjz, The New York Times, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership, wages, Washington Post

Honestly – I’m still trying to make sure that posts about Donald Trump don’t completely dominate RealityChek. But with the Republican presidential front-runner still shaking up American politics and policy on an almost daily basis, especially on the vitally important issues of trade and immigration, what am I supposed to do?

The latest bombshells Trump has dropped into the 2016 election mix have now received extensive coverage from The New York Times and the Washington Post – entailing his talk of tax hikes on key segments of the Republican political donor base, like offshoring multinational companies and hedge fund managers.

But the Post article also indicated that an equally important development has been gathering momentum: Some major Republican candidates are starting to criticize Open Borders and amnesty-friendly immigration policies not only on national security, sovereignty, and law-and-order grounds; out of multi-culturalism-related concerns; or based on their role in excessively fueling Big Government and the Welfare State. Instead, these figures are starting to criticize the establishment’s current and favored immigration policies on wage-related grounds. It’s a shift that – finally – opens the way, at least in theory, for these candidates and others to start criticizing the trade policy status quo for similar reasons,and weaken its hold on political Washington.

For years, I’ve been struck by how immigration policy critics have faced the same kinds of powerful opponents as trade policy critics – especially Big Business and the Mainstream Media – yet have achieved much more impressive results. And for just as many years, I’ve been frustrated that even during economically troubled times, these immigration critics haven’t focused their formidable energies and talents on trade measures and decisions that have devastated the jobs and wages of the middle- and working-class Americans so prominent in their ranks. Still more bewildering, many Republican politicians in Washington who staunchly opposed amnesty-friendly immigration reform proposals just as staunchly backed job- and wage-killing trade measures.

Trump has long been one of a handful of national figures who has been as exorcised about Washington’s thoroughly bipartisan trade policy blunders as about its immigration policy failures, and both indictments have been at the center of his campaign. Now it looks like his success to date, and his focus on the pocketbook impact of the establishment’s trade and immigration agenda, has spawned some influential imitators.

Thus, reports Post correspondent Jim Tankersley, Texas Senator Ted Cruz has recently lamented “the enormous downward pressure on wages and employment that unrestrained illegal immigration is providing.” Wisconsin Governor Scott Walker has become even more emphatic on the subject, and strongly suggested that legal immigration as a major contributor to wage stagnation as well:

“In terms of legal immigration, how we need to approach that going forward is saying—the next president and the next congress need to make decisions about a legal immigration system that’s based on, first and foremost, on protecting American workers and American wages, because the more I’ve talked to folks, I’ve talked to {Republican Senator Jeff Sessions of Alabama] and others out there—but it is a fundamentally lost issue by many in elected positions today—is what is this doing for American workers looking for jobs, what is this doing to wages, and we need to have that be at the forefront of our discussion going forward.”

Cruz actually voted against granting fast track trade negotiating authority to President Obama earlier this year, but animus toward the president rather than economics seemed his main motivation. Indeed, after fast track’s passage, a Cruz spokesman somewhat confusingly declared that “Sen. Cruz remains a strong supporter of free trade and fast-track.” In his only other major trade vote, in 2013, he opposed expanding Buy American requirements for certain federal infrastructure projects.

It’s time for Cruz’ supporters, and those whose support he seeks, to ask him why he thinks admitting large numbers of immigrants from low-income countries like Mexico depresses U.S. wages, but passing trade deals that send U.S. production to such countries – and their low wage workers – has no such impact. Ditto for Walker, who hasn’t voted for any trade agreements, but has strongly endorsed Mr. Obama’s proposed Trans-Pacific Partnership (TPP) trade deal (albeit with some wiggle room).

Indeed, if these candidates aren’t ready to rethink their illogical endorsement of these economically destructive trade policies, I’d advise them to start thinking of some convincing answers soon. Because if the voters don’t yet get the connection, it’s clear that the outspoken Mr. Trump does.

(What’s Left of) Our Economy: The Real Economics of Currency Manipulation

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central banks, currency manipulation, currency wars, devaluation, exchange rates, fast track, Federal Reserve, Financial Times, Great Depression, John Plender, Obama, protectionism, QE, Robert Aliber, TPA, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership, University of Chicago, {What's Left of) Our Economy

Since Congress is finished with its fight over fast track negotiating authority for President Obama, and the next big trade deal in the offing – the Trans-Pacific Partnership (TPP) – is still being negotiated, issues like foreign currency manipulation have virtually disappeared from the media.

That’s more than a shame, since the effects of China’s longstanding exchange-rate protectionism – which gives Chinese-made goods artificial price advantages in all global markets – still weigh on American manufacturing production and employment.  And let’s not forget that Mr. Obama and Congress’ Republican leadership successfully beat back efforts to include strong disciplines on manipulation in the TPP – even though prospective TPP member Japan looks like another huge manipulator.

Here’s hoping, though, that when these subjects return to the spotlight, decision-makers will read John Plender’s excellent post in yesterday’s Financial Times explaining why this predatory practice needs to be abolished – and not just for America’s sake.

Plender makes two main contributions to the heated currency manipulation debate. First, he explains that the main argument against curbing manipulation is a straw man. It doesn’t much matter whether national currencies weaken because the governments in question are explicitly seeking trade advantages or not. It’s true, as manipulation soft-liners note ad nauseam, that the recent spate of central bank monetary easing policies pursued all around the world generally has been bound to weaken their countries’ currencies. It’s also true that America’s own Federal Reserve has eased massively itself – though the dollar has remained strong over the long run partly because of its unique status as the world’s predominant currency, and partly because the U.S. economy has outperformed that of most other major powers lately.

But as Plender notes, the distortions to trade flows take place all the same. He could have added, as opposed to only suggesting, a point I keep making: Monetary easing by a trade- and export-led economy (like China’s or Japan’s) is much likelier to stem from trade-related concerns than easing by a consumption-led economy like the United States. (Other considerations let America off the hook, too.)

His second contribution: observing that the universally condemned currency devaluations that helped deepen the Great Depression were by no means all made to beggar trade partners. Yet as trade policy critics are constantly reminded, trade flows suffered anyway. In fact, Plender cites this stunning claim from University of Chicago economist Robert Aliber: measured in terms of the worldwide trade imbalances that have resulted, “today’s currency wars are more severe than those of the 1930s.”

Indeed, this is a great opportunity to revive another point I’ve made in the context of of the fast track/TPP currency manipulation debate: The devaluations of the 1930s and the economic and military calamities they brought closer taught the American and other architects of the post-World War II global economic order a seminal lesson: that such currency movements needed to be controlled in order to create and maintain a viable international trade system. Unless Mr. Obama and his fellow globalization cheerleaders now believe that this conviction was wrong, they need to make sure that U.S. policy helps end or severely punish manipulation, and finally treat genuinely free trade like a priority, not a talking point.

(What’s Left of) Our Economy: After the Fact, a Big TPP Rationale is Shredded

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Asia-Pacific, Australia, China, CNN, Congress, credibility, fast track, global leadership, Obama, Pew Research Center, TPA, TPP, Trade, Trade Deficits, Trade Promotion Authority, Trans-Pacific Partnership, {What's Left of) Our Economy

Now that Washington’s big fight over the fast track bill is over, the national media will surely return to its norm of almost completely ignoring trade policy until a new trade deal like a Trans-Pacific Partnership (TPP) comes before Congress. The only likely exceptions will be the extent that trade comes up in the intensifying presidential campaign.

This neglect is even more of a shame than usual, and not just because America’s relentlessly growing trade deficits keep slowing its already slow-enough semblance of a recovery. It’s a shame because the main justifications for the TPP keeping falling apart – most recently with the release of a new survey of international opinion from the Pew Research Center.

As will be recalled by those whose memories exceed the short term, a major set of arguments for concluding the TPP pretty much as it stands sprung from geopolitics. One especially prominent claim was that the agreement was vital for maintaining and strengthening America’s preeminence in the fast-growing Asia-Pacific region.

No one should be surprised that President Obama himself insists that the fast track legislation that will ease TPP’s journey through Congress “will reinforce America’s leadership role in the world -– in Asia, and in Europe, and beyond.” (The wisdom of a national leader suggesting that his country’s position needs strengthening is another subject entirely.) Somewhat more surprising is how completely the national chattering class accepted this view. Thus even someone as remote from trade (and foreign policy) issues as senior CNN politics reporter Stephen Collinson felt comfortable presenting as a fact, “Had the fast-track provision crashed,” the TPP “would have died, likely taking U.S. credibility in Asia and Obama’s pivot to the region with it.”

As I have repeatedly pointed out, such assertions are (take your pick) moronic or deceptive on their face. Examining America’s role as the leading final consumption market for export-dependent Asia, and its role as the only conceivable source of protection against a rising China, makes its centrality beyond legitimate dispute. But since doubters will always remain – and especially self-interested ones – it’s great that Pew has just made clear that the populations of the Asia-Pacific region itself clearly understand America’s importance economically.

Pew asked publics in several first-round TPP countries (and many other countries) to “name the world’s leading economic power” and gave them the choice of the United States, China, the European Union, Japan, or “Other/None/Don’t Know.” Although there was some country-by-country variation, the Asia-Pacific region was the one that most often awarded the United States the top spot – with solid majorities.

Specifically, respondents in Japan, Malaysia, and Vietnam considered the United States to be Number One by majorities of 59 percent, 53 percent, and 50 percent, respectively. The share of their populations that believed China had gained the lead? Twenty-three, 33, and 14 percent, respectively. Only one TPP first-round country placed China atop the world economy – Australia, by a whopping 57 percent to 31 percent over the United States. These results indicate that Australians know that their economy has relied heavily on exporting raw materials to China – but also that Australians need to learn about where much of China’s own growth comes from.

Indeed, the Chinese are apparently well-positioned to instruct the Aussies. They named the United States as the world’s leading economy over their country by 44 percent to 34 percent.

In fairness, another Pew survey reveals some evidence of America’s perceived top dog status slipping between 2014 and 2015. At the same time, this decline could have resulted from several months of Mr. Obama and other American leaders warning about China’s rise and thereby implicitly poor-mouthing their own country.

In fact, the only main TPP-related question surrounding the Pew results concerns timing: Why did the Center wait to release them four days after fast track’s final passage by the House?

Making News: Talking Fast Track on Chattanooga, Tenn. Radio at 2 PM EST Today

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Chattanooga, Congress, fast track, Making News, Tennessee, TPA, Trade, Trade Promotion Authority, WGOW-FM

I’m pleased to announce that I will be interviewed this afternoon on Congress’ passage of the fast track trade bill, and where it leaves American politics and the economy, on “The Brian Joyce Show” on Chattanooga, Tennessee’s WGOW-FM radio station.  The segment is scheduled to air live at 2 PM EST, and you can listen live at this link.

As always, I’ll post any podcast that becomes available as soon as I can.

(What’s Left of) Our Economy: With Fast Track Done, Where We Stand

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2016 elections, AFL-CIO, Asia, China, Congress, Democrats, fast track, Hillary Clinton, House of Representatives, Lincoln Chafee, national security, Obama, Senate, technology transfer, TPA, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership, unions, {What's Left of) Our Economy

President Obama hasn’t signed the bill yet, but the Senate’s passage of fast track legislation yesterday ensures that the nation is entering a new phase in trade policymaking. So here are some first thoughts about where we stand economically and politically right now.

>It’s crucial to remember that Congressional approval of fast track doesn’t automatically mean approval of the Trans-Pacific Partnership (TPP) when (and if?) negotiations on this trade deal are completed. The odds of passage have certainly soared, since Congress has never rejected a trade deal that it’s considered under fast track procedures.

But thanks to the almost entirely unbinding, loophole-filled presidential negotiating instructions Congress has included in the legislation, the final TPP is nearly a lock to lack meaningful disciplines on currency manipulation and the discriminatory activities of state-owned enterprises. It will also extend trade benefits to a country that’s a major violator of global human trafficking norms (Malaysia) and one that’s recently instituted Islam’s often brutal Sharia as the law of the land (Brunei). Moreover, it looks likely that even the most obtuse American lawmaker will see that TPP contains a “docking” provision that will permit its ranks to be expanded beyond the current initial group of members – for example, to China.

>As I’ve written previously, organized labor still needs to take the political scalps of lots of the Senate and especially House Democrats who defied its heatedly expressed wishes and supported the fast track bill. I distinguish between the Senate and House because members of the former inevitably have broader political bases in their (almost always) larger jurisdictions, and therefore are much harder for any particular interest group to unseat. But an age-old rule of politics still holds: If you’re going to strike at your enemies, make sure (figuratively!) to kill them.

Making good on its threats will be particularly important for labor, since Democratic politicians have been feeling free for decades to ignore its wishes on a raft of other priority issues, like the so-called “card check” legislation that would have changed the laws governing unionization elections.

>The not-trivial levels of Congressional Democratic support for fast track will create an especially interesting situation for the party’s presidential politics during the rest of this national election cycle. All but one of its main presidential hopefuls – including Hillary Clinton – declared their opposition to the bill. (Former Rhode Island Governor and U.S. Senator Lincoln Chafee has been the exception.) So assuming that Chafee or another fast track supporter is not its nominee, the party’s 2016 standard-bearer will find him or herself running alongside (and thus endorsing) a number of House and Senate candidates who have backed a measure detested by many of the party’s major constituencies (not just unions, but environmental organizations as well).

>Finally, for now, I’ll be waiting breathlessly for signs that impending American approval of fast track will shore up the nation’s position in East Asia versus China’s encroachment – in line with TPP supporters’ repeated claims that the agreement is vitally needed to contain or counterbalance China. So I’ll continue to keep a close eye on China’s activities in the region – as well as the actions of U.S. allies, who have shown every sign of hedging their bets regarding Asia’s future kingpin and will undoubtedly maintain such postures whether TPP is created or not.

For as I’ve explained, unchangeable geopolitical realities, a rapidly evolving military balance, and the longtime massive, reckless, ongoing U.S. corporate transfers of defense-related technologies to Beijing (not to mention trillions of dollars’ worth of trade profits) all mean that although the United States is anything but destined to remain a “Pacific power,” an ever stronger China unmistakably is.

Our So-Called Foreign Policy: TPP Backers Ignore Business Deals that Strengthen Bogeyman China

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China, Congress, fast track, FinFET, Huawei, national security, Obama, Our So-Called Foreign Policy, semiconductors, SMIC, technology transfer, TPA, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership

Congress has just reminded us that, if timing is indeed the secret of great comedy, it’s even more crucial for political tragicomedy. What better way to describe the Senate’s final vote for fast tracking a prospective Pacific Rim trade agreement touted as a bulwark against rising Chinese regional influence two days after a U.S. corporate tech giant dramatically increased its investments in China’s (inevitably) defense-related technology sector?

The Senate was passing the fast track bill even as I wrote this, which means that the president could sign it before close-of-business. As I’ve repeatedly noted, it’s become an article of faith in the main stream of the nation’s foreign policy establishment that the Trans-Pacific Partnership (TPP) trade deal whose Congressional endorsement fast track will ease (though not guarantee) will help prevent China from increasingly dominating East Asia’s commerce and security relationships. And as I’ve also repeatedly noted, these same security whizzes, from President Obama on down, have consistently turned a blind eye to U.S. corporate transfers of advanced technology that can only strengthen China militarily at America’s expense.

The latest instance came earlier this week. On Tuesday, China’s state-linked flagship semiconductor manufacturer, SMIC, announced that American computer chip firm Qualcomm will help it develop new generations of the integrated circuits that control communications devices in particular. But the knowhow supplied by Qualcomm and by a world-class microelectronic research center in Belgium can be applied across the full range of semiconductors – including the types used in all modern military systems. Indeed, a major focus of the new joint venture will be enabling China to master so-called FinFET technology, which is a key to manufacturing chips that can leapfrog current limits on semiconductor power consumption and speed.

I’d say that “To put the icing on the cake, the third partner in the JV is Huawei, the Chinese telecommunications equipment maker that has been all but explicitly banned from selling in the United States because of national security concerns.” But the ironies scarcely end there. Qualcomm has lobbied actively for the TPP. It also paid Democratic presidential front-runner – and former Secretary of State for President Obama – Hillary Clinton $335,000 to give a speech last October.

It’s inconceivable that this new Qualcomm deal isn’t known to the Obama administration. It’s just as inconceivable that it’s not known to the Pacific Rim countries whose security from China the TPP will supposedly bolster. What’s certain is that Qualcomm’s efforts to strengthen China’s high tech industries, and similar recent corporate moves, are known to very few American voters – and that Members of Congress who supported fast track should be very grateful that they haven’t been front page news.