Our So-Called Foreign Policy: What Obama Gets Right and Wrong About America’s Allies

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alliances, allies, Asia, Bret Stephens, burden sharing, Cato Institute, David Cameron, David Ignatius, deterrence, Eli Lake, Europe, foreign policy establishment, France, free-riding, geography, Japan, Jeffrey Goldberg, Korea, LIbya, Middle East, Nikolas Sarkozy, Obama, Our So-Called Foreign Policy, Saudi Arabia, self-sufficiency, The Atlantic, United Kingdom, Wall Street Journal, Washington Post

As I said over the weekend, that Atlantic article on President Obama’s foreign policy based on a series of lengthy interviews is an unusually rich vein of material. So let’s keep mining! Since its most newsworthy aspects so far have been judged to be Mr. Obama’s views on America’s allies, let’s focus on them.

The quick and dirty: The bipartisan foreign policy establishment (including its journalistic wing) is just aghast that the president has derided many of the nation’s main treaty and less formal allies – including the United Kingdom – as “free riders.” And on this matter, Obama could not be more on target. At the same time, just as with his pessimism on the Middle East, he hasn’t even begun to follow up policy-wise in ways that are not only logical, but vital for avoiding major future troubles.

As the article by Jeffrey Goldberg reminds, the president has dressed down London for skimping on defense spending while the United States has borne an outsized share of the Western security burden. The British responded by – minimally – meeting a spending goal long endorsed by Washington, but Mr. Obama still complained bitterly about the history of many allies’ “holding our coats while we did all the fighting.’”

Indeed, he largely blamed his failed intervention in Libya on “Europe and a number of Gulf countries who despise Qaddafi, or are concerned on a humanitarian basis, who are calling for action. But what has been a habit over the last several decades in these circumstances is people pushing us to act but then showing an unwillingness to put any skin in the game.” And he fingered both current British Prime Minister David Cameron and his then French counterpart, Nikolas Sarkozy, by name.

Also harshly criticized by the president: Saudi Arabia and other arch-conservative Persian Gulf monarchies, which he has accused of “intensifying” (Goldberg’s language) the outburst of “Muslim fury” seen in recent years by “heavily” funding the spread of Islamic fundamentalism.

Wall Street Journal columnist Bret Stephens spoke for many in the nation’s professional foreign policy community when he wrote that Mr. Obama’s remarks to Goldberg “are so gratuitously damaging to long-standing U.S. alliances, international security and Mr. Obama’s reputation as a serious steward of the American interest that the words could not possibly have sprung from the lips of the president himself.”

But as shown by this essay by the Washington Post‘s David Ignatius, criticism has hardly been confined to neoconservatives. Indeed, Bloomberg View columnist Eli Lake delivered probably the ultimate slap at this facet of the “Obama Doctrine” – at least in the eyes of the nation’s chattering classes. He called it Trump-like.

The president certainly can be faulted for indiscretion while still serving in office. As Ignatius notes, candor can indeed be destabilizing. But such judgment questions aside what’s most important to know is that the president is unquestionably right on the merits. Unless you doubt that the Gulf Arab monarchies are funding the spread of one of Islam’s harshest, most medieval strains? Or believe that America’s allies in Europe and Japan have ever shouldered a remotely appropriate share of the load for what is after all their own defense?

As documented in this 2000 journal article of mine, since early in the Cold War, American administrations have struggled to convince or pressure leaders in London, Paris, Bonn (and then Berlin), and Tokyo alike to increase their military budgets both in absolute terms and as a percentage of overall alliance defense spending. All of these efforts have failed, even though Washington consistently used the most indulgent, and least sensible, criterion for success imaginable – raising allied spending to equal U.S. efforts.

If national security policy was a game, such an outcome would of course be “fair.” But when it comes to promoting and defending American interests, this approach has created a false equivalence in stakes, and led the United States to expend greater-than-necessary amounts on the military, and face greater-than-necessary risks. For however important America’s interests in securing Europe or Japan and the rest of East Asia from Soviet, Russian, and Chinese threats, the allies’ interests in defending themselves are infinitely more important – and indeed, vital.

But U.S. burden-sharing efforts also failed for the same reason that has frustrated President Obama’s own ambitions: a stubborn unwillingness to recognize the inescapable dynamics of free-riding. For just like his Cold War and post-Cold War predecessors, Mr. Obama has continually sabotaged his burden-sharing strategies by endlessly declaring not only that allies and their regions are vital American security interests, but that their security and America’s are indivisible. So naturally, allies for decades have concluded that they have no need for much military exertion given Washington’s conviction that their downfall would be completely unacceptable. Ditto for coalition warfare in third countries, like Libya. Whether for moral or strategic reasons, the Obama administration never indicated that it could take the situation or leave it. So countries like the United Kingdom and France understandably – and entirely predictably – chose to take the easy way out.

The bad news – not for the nation as a whole, but for the often grandiose ambitions of its leaders – is that without reliable allies, many of their foreign policy objectives do, as they fear, become impossible to achieve. So just to pick through President Obama’s remarks to Goldberg, say goodbye (at least often) to “establishing norms that benefit everyone, and even to “doing good at a bearable cost,” to “promoting values, like democracy and human rights,” to “making the world a better place,” to “bending the world toward justice,” and especially to “leading the world.”

The good news – not for America’s professional foreign policy community, nearly the whole of which believes deeply in the urgency of these goals, but for the nation as a whole – is that neither U.S. security nor prosperity requires achieving any of them. As I’ve explained repeatedly, America is geopolitically secure enough and economically self sufficient enough to achieve adequate levels of security and prosperity even in a badly failing world.

Better yet, both this security and prosperity can be further enhanced without more overseas engagement.  And even if strengthening the U.S. capacity for self-reliance in all dimensions wasn’t eminently feasible, assigning it a much higher priority would be essential precisely because America’s allies have proven themselves so utterly feckless for so many decades.

Moreover, there’s an even more compelling argument for disengaging from America’s current security commitments and pursuing a more independent course than recognizing their major limits as multipliers for American power. In this increasingly dangerous, unstable world, these ties are entirely too likely to embroil the United States in conflicts it’s better off avoiding. As analysts at the Cato Institute in particular have warned, when their deterrence power fails, they tend to become “transmission belts of war.”

And these belts remain in place throughout the world – albeit on scales smaller than during the Cold War. On the one hand, it’s true that international tensions in places like Europe and much of Asia are considerably lower than between 1945 and 1990 (with the Korean peninsula a notable exception). On the other hand, the threat to the United States from an ideologically hostile superpower with global ambitions is greatly reduced as well.

Fortunately for President Obama and the nation, the United States hasn’t yet been trapped into defending alliances and regions that, however important, don’t justify exposing the American homeland to the risk of major war. But because for all his frustrations with the allies, he hasn’t thought through the consequences of clinging to these outmoded arrangements, his successor is less likely to be so lucky.

 

(What’s Left of) Our Economy: 2015 was a Trade Disaster for America

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China, economic growth, exports, GDP, gross domestic product, imports, inflation-adjusted growth, Korea, KORUS, manufacturing, non-oil goods deficit, real GDP, recovery, services trade, Trade, trade deficit, {What's Left of) Our Economy

There were so many revisions to deal with in yesterday’s jobs report that it just wasn’t possible to post on the monthly trade figures that came out at exactly the same time. But don’t get the idea that they’re less important – if only because they add to the full-year, 2015 data that’s now available, and that give us an ever clearer picture of the ongoing economic recovery. The big takeaway from the trade numbers: They deserve much blame for keeping the current expansion historically weak, and American trade policy has been the worst offender.

Here’s what I mean. As I reminded in covering the first full-year 2015 economic growth figures we’ve gotten (which describe the gross domestic product, or GDP), when the nation’s trade balance improves, America’s export and import performance contribute to growth. When it worsens, it subtracts from growth. As a result, the growth of the trade deficit since the current recovery began in mid-2009 has slowed overall economic growth, adjusted for inflation, by 9.59 percent.

Another way to think about it: From the second quarter of 2009, when the recession officially ended, through the fourth quarter of 2015, the economy expanded in real terms by $2.0867 trillion. But had the after-inflation trade deficit simply stayed the same, the nation would have enjoyed just over $200 billion more growth.

Even better, practically all of this new output – and the jobs it would have created – would have come in the private sector. And its creation wouldn’t have required a single dollar of new tax cuts, or a single dollar of extra government spending – none of which is affordable (unless you agree with the idea that the federal government can and should spend whatever it takes to restore growth to acceptable levels).

As for trade policy, it can be identified as a special problem because, as I’ve repeatedly pointed out, the Census Bureau conveniently publishes figures for that (huge) portion of U.S. trade flows that are heavily influenced by trade deals and related decisions. These are exports and imports minus oil (which is always left of out trade agreements) and services (where liberalization has been modest so far).  And Census is even good enough to adjust these numbers for inflation, so they can be studied in the context of the growth figures that are watched most closely.

This real non-oil goods trade has been in deficit for as long as statistics have been collected (since 1994).  And its growth since mid-2009 has reduced total recovery-era growth by more than twice as much in real terms: $418.35 billion. This means that inflation-adjusted expansion would have been a shocking 20.05 percent stronger.

For now, these are the biggest remaining developments revealed by the new trade figures:

>America’s manufacturing sector racked up yet another record trade deficit in 2015, with the $831.40 billion figure shattering 2014’s previous mark of $734.44 billion by 13.20 percent. (These figures are expressed in pre-inflation dollars, not real terms.) It doesn’t take too active an imagination to see the manufacturing deficit move close to the $1 trillion neighborhood this year.

>As noted by most of the economics world, the strong U.S. dollar and weak global growth combined to depress American manufacturing exports. They fell by 6.73 percent in 2015. But even though America’s economy was growing pretty slowly, too, manufactures imports kept rising – by 0.87 percent.

>The manufacturing-heavy U.S. goods trade deficit with China hit a new record in 2015, too. At $365.70 billion, it eclipsed the old mark of $343.08 billion – also set in 2014 – by 6.59 percent. And U.S. merchandise exports to China fell in 2015 for the first time since recessionary 2009. The latest decline, moreover, was twenty times greater than the 2009 decline, even though the Chinese economy continues growing at an official (though probably overstated) near-seven percent annual rate.

>The nearly four-year-old trade agreement between the United States and South Korea (KORUS) has provided the blueprint for President Obama’s negotiators as they developed the Trans-Pacific Partnership (TPP) trade agreement. But the results of the Korea deal shows that the U.S. approach is failing badly. Since it went into effect, in March, 2012, America’s merchandise deficit with South Korea has more than tripled on a monthly basis – from $561.4 million to $1.996 billion.

>On that monthly basis, U.S. goods exports to Korea have plunged by 19.78 percent, while imports are up 12.50 percent.

>Between 2014 and 2015, the American merchandise trade shortfall with Korea increased by 13.09 percent, from $25.05 billion to $28.33 billion. U.S. goods exports to Korea fell by 2.18 percent, but imports rose by 3.32 percent.

>Overall, the combined global U.S. goods and services trade deficit was 4.56 percent higher in 2015 than 2014. The $531.50 billion total was the highest since 2012.

>Combined American exports dropped by 4.82 percent, from $2.343 trillion to $2.230 trillion – the lowest such total since 2012. Imports were off by 3.15 percent – from $2.852 trillion to $2.762 trillion. That still represented their second highest total ever.

>The United States ran an annual surplus in services trade – as it has since 1971. But that surplus declined year-on-year (by 2.45 percent, from $233.14 billion to $227.43 billion) for the first time since 2003.

Much more detailed data is available on the U.S. International Trade Commission website, and I’ll be posting on them in the days to come!

(What’s Left of) Our Economy: November U.S. Trade Deficit Dips but Longer-Term Trends Remain Worrisome

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Canada, China, exports, growth, high tech goods trade, imports, Jobs, Korea, KORUS, manufacturing, manufacturing trade deficit, Obama, petroleum, TPP, Trade, trade deficit, Trans-Pacific Partnership, {What's Left of) Our Economy

The U.S. goods and services trade deficit fell by 4.95 percent in November to the second lowest monthly total of the year but the drop’s magnitude was boosted by a significant upward revision for October’s total – the second big monthly upgrade in a row.

Overall exports, goods exports, and goods imports sunk to their worst monthly levels in nearly four and five years, respectively, and the huge chronic shortfalls in manufacturing and China merchandise trade retreated sequentially. Yet both are still on track for new annual records, and monthly high tech goods trade registered its third highest deficit ever. Goods imports from Canada are now at five-plus-year bottom. And even though petroleum imports and the oil trade shortfall increased on month, both remained near lows set in 2003 and 1999, respectively.

Here are selected highlights of the latest monthly (November) trade balance figures released this morning by the Census Bureau:

>The combined U.S. goods and services trade deficit decreased by 4.95 percent on month in November, to $42.37 billion – the second lowest total of the year after February’s weather- and ports-strike-affected $38.54 billion.

>But the improvement was magnified by a 1.57 percent upward revision in the October overall deficit – from $43.89 billion to $44.58 billion. This revision represented the second significant monthly upgrade in a row.

>U.S. combined exports and imports declined sequentially. The former fell from a downwardly revised $183.78 billion to $182.21 billion, and the latter from an upwardly revised $228.36 billion to $224.59 billion.

>In historic perspective, however, the export fall-off was more significant. Combined goods and services exports in November hit their lowest level since January, 2012, and goods exports have not been this weak since February, 2011.

>November’s overall import total was the lowest since that winter- and labor-affected February’s $224.43 billion. The merchandise import level of $183.48 billion, however, was the weakest since February, 2011’s $176.72 billion.

>America’s huge and longstanding shortfalls in manufacturing and China trade both were down sequentially in November, but both also still seem certain to hit new annual records.

>The manufacturing trade deficit fell to $71.13 billion from October’s all-time high $76.74 billion. Yet despite this 7.31 percent decrease, this trade gap is running 13.89 percent ahead of last year’s record pace.

>From October to November, manufactures exports sank by 7.43 percent, to $88.02 billion, while the much larger amount of imports dropped by 7.38 percent, to $159.15 billion.

>Through November, U.S. manufactures exports are down 6.39 percent year-on-year, while imports are up 1.30 percent.

>The manufacturing-dominated goods trade deficit with China declined 5.19 percent on month in November, from $32.97 billion to $31.26 billion. U.S. merchandise exports to the still strongly growing PRC economy were down 6.18 percent, from $11.38 billion to $10.68 billion. America’s merchandise imports from China on month were off 5.45 percent, from $44.36 billion to $41.94 billion.

>Nonetheless, the bilateral trade imbalance through November is running 7.23 percent ahead of last year’s all-time high. And America’s merchandise exports to China this year could fall on an annual basis for the first time since 2009.

>In another noteworthy development, the high tech goods trade deficit in November rebounded to 2015 high of $11.44 billion – up 9.79 percent from October’s $10.42 billion figure. This total also represented the third worst monthly high tech goods deficit ever, and could propel this imbalance to its second highest annual level on record.

>High tech goods exports decreased by 9.40 percent on month, to $28.10 billion, while imports fell by only 4.57 percent, to $39.53 billion.

>Another multi-year low revealed in the November trade figures came in U.S. goods imports from Canada. The $22.73 billion figure hasn’t been this weak since July, 2010.

>The new report also cast further doubt on President Obama’s trade strategy, as the goods deficit with Korea worsened by 4.84 percent. Washington and Seoul signed a free trade agreement in 2012, and this KORUS deal was the model for the much larger Trans-Pacific Partnership (TPP) completed last year.  But the trade gap with Korea this year is currently 14.50 percent greater than year’s January-November total and looks certain to set its third annual record since the bilateral pact was concluded.

>On a monthly basis, the U.S. merchandise trade deficit with Korea has more than quadrupled since the agreement went into effect in March, 2012.

>The improvement in the overall November U.S. trade balance contrasted with a 19.58 percent sequential increase in the petroleum trade gap – from $4.48 billion to $5.36 billion. Nonetheless, that figure still represents the second lowest monthly total since June, 1999.

>Similarly, although petroleum imports increased by 5.12 percent sequentially, to $12.62 billion, that total was the second lowest since December, 2003.

>Also, despite the monthly shrinkage, the U.S. combined goods and services trade deficit is 5.45 percent higher on a January-November basis than the 2014 figure.

(What’s Left of) Our Economy: Media Coverage of Trade and Jobs Issues Again Fails the Nation

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Alana Semuels, CNBC, currency manipulation, free trade agreements, GDP, Gerald F. Seib, gross domestic product, Korea, KORUS, Mainstream Media, manufacturing, manufacturing jobs, manufacturing trade deficit, Michael Froman, Obama, Phil LeBeau, The Atlantic, TPP, trade policy, Trans-Pacific Partnership, U.S. Trade Representative, wages, Wall Street Journal, {What's Left of) Our Economy

Silly me. Here we are in an election season practically defined by boiling working class economic anger at America’s political leaders. So I thought improved press coverage might be in store of the trade policy failings behind so much blue collar job loss and (at best) wage stagnation. Yet the last week alone has once again indicated that such hopes are in vain.

Example one was the October 20 Wall Street Journal post from Gerald F. Seib detailing the Obama administration’s efforts to sell Congress on the recently concluded Trans-Pacific Partnership (TPP) trade deal by touting its supposed benefits to individual states. Although that’s become a standard practice for such campaigns, Seib was right to report on the latest iteration.

But what Seib should have also reported on was all the evidence belying the sales pitch being made by U.S. Trade Representative Michael Froman. As usual, Froman’s case for the TPP relied exclusively on state-level exports. Apparently Seib forgot that trade flows also consist of imports, and thus their net effects can’t be determined without identifying trade balances and how they’ve changed.

Even worse, Seib was not only reminded of this potential half-truth, but actually given the data exposing the administration line as fraudulent. This came the following day, when I sent him an email pointing him to the government figures showing that in recent years, the great majority of states have seen their merchandise trade balances worsen, meaning that trade flows on balance have weakened their growth – and surely employment. The email also noted that the administration used its 2012 Korea trade agreement (KORUS) as the TPP’s model – and that since under this previous agreement, America’s bilateral trade shortfall has exploded, similarly dismal results seemed likeliest for TPP.

I’m still waiting for the courtesy of a reply.  More important, Seib has still failed to correct the record. So the odds have just improved that the Obama administration succeeds in hoodwinking the nation and its elected representatives.

Example two concerns the conventional wisdom that it’s completely naive to believe that American politicians can do anything to bring significant numbers of manufacturing jobs back to the United States, and that those that do return generally won’t pay like their predecessors. The Atlantic‘s Alana Semuels (in a post yesterday) and CNBC’s Phil LeBeau (in a tweet today), have been the latest to repeat this contention.

There’s no doubt that, largely because of the sector’s impressive (though apparently slowing) productivity gains, domestic manufacturing’s job-creation potential isn’t what it used to be, and that’s ultimately good for the economy, all else equal. But there’s also no doubt that for decades, a major manufacturing job (and wage) killer has been the mammoth trade deficit run by the sector – a gap that owes at least in part to the long string of offshoring-friendly trade deals signed and trade policy decisions (e.g., long-time acquiescence in China’s currency manipulation) made since the negotiation of the North American Free Trade Agreement.

Although it’s not explicitly reported in the U.S. government’s monthly trade reports, the dimensions of the shortfall have become truly jaw-dropping. Last year it hit $734 billion. This year, (as of August) it’s running nearly 16 percent ahead of that rate. Which means that a trillion dollar annual shortfall is within sight. According to the standard methodology for measuring the economy’s size and growth, the more than $850 billion trade deficit that could be registered this year translates directly into lost output. In fact, the 2014 manufacturing trade deficit represented 4.23 percent of gross domestic product in current dollar terms. Even simply narrowing the gap would boost production, and therefore employment and wages, dramatically.

Further, much of the current manufacturing trade deficit has nothing to do with the labor-intensive goods in which high income countries like the United States genuinely and naturally struggle to compete. Nearly $116 billion is in the automotive sector. Nearly $42.5 billion is in communications equipment. More than $33 billion is in pharmaceutical and medicines. More than $15 billion is in iron, steel, and similar metals. More than $5.9 billion is in machine tools and other metalworking machinery. More than $4.2 billion is in industrial heating and cooling equipment. Nearly $2.9 billion is in navigational, electro-medical, and other advanced instruments. Dig deeper into the numbers and you’ll see big deficits in construction equipment, relays and industrial controls, ball bearings, and the like. Can even most of these results be explained simply by market forces?

It’s understandable that many politicians would swallow easily debunked falsehoods or excessively defeatist memes about U.S. trade policy and its economic effects. That’s to be expected from a system that fosters corruption and rewards inertia and simple laziness. Why, however, has it become so common to see the same behavior from journalists?

(What’s Left of) Our Economy: July Trade Gap Falls but U.S. Deficits in Manufacturing & with EU Set New Monthly Records

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China, European Union, exports, free trade agreements, high tech goods, imports, Korea, KORUS, manufacturing, non-oil goods deficit, Obama, oil, TPP, Trade, trade deficit, Trans-Pacific Partnership, {What's Left of) Our Economy

The U.S. goods and services trade deficit narrowed on month in July in part because June’s total was revised sharply upward. America’s trade deficits in manufacturing and with the European Union both set their second straight monthly records, with the former headed for its third consecutive yearly all-time high. China’s mounting economic ills, meanwhile, are not preventing the PRC from staying on track to rack up yet another annual goods trade surplus of its own with the United States.

Here are selected highlights of the latest monthly (July) trade figures released this morning by the Census Bureau:

>The total U.S. trade deficit for July fell to its lowest monthly level in five months, though the improvement was partly offset by a unusually large upward revision in the June figure, and new monthly record deficits were set in the manufacturing sector and in goods with the European Union (EU).

>The July combined goods and services deficit of $41.86 billion was the nation’s lowest since February’s $38.54 billion, and came in 7.39 percent below June’s $45.21 billion. But the June reading was revised up an unusually large 3.12 percent, from the initially reported $43.84 billion. June exports were lower than first estimated, and June imports higher.

>The U.S. deficit in manufactures trade set its second straight monthly record in July, with the $73.58 billion shortfall exceeding the old June mark of $72.71 billion by 1.20 percent.

>U.S. manufacturing exports dropped 5.29 percent in July, from $97.52 billion to $92.36 billion. Manufactures imports fell by only 2.52 percent, from $170.23 billion to $165.94 billion.

>As a result, on a year-to-date basis, American manufacturing stayed on target for its third straight record annual trade deficit. Between last January and July, the manufacturing trade deficit totalled  $406.57 billion. This year’s comparable total of $466.62 billion is 14.66% greater  .

>Year to date manufacturing exports are down 4.93 percent, from $690.36 billion to $656.33 billion. Manufacturing imports are up 2.37 percent, from $1.09693 trillion to $1.12294 trillion.

>The July U.S. goods trade shortfall with the European Union rose to $15.18 billion in July – a mark that topped June’s previous record $14.45 billion by 5.03 percent. U.S. merchandise exports to this economically troubled group of countries sank by 5.33 percent, from $22.91 billion to $21.69 billion, while American merchandise imports dipped by 1.32 percent, from $37.36 billion to $36.87 billion.

>On a year-to-date basis, the goods trade gap with the EU has risen by 7.21 percent so far this year, from $80.95 billion to $86.79 billion.

>The July figures showed that total U.S. exports reversed two straight months of decreases, and advanced by 0.43 percent on month, from a downwardly revised $187.69 billion to $188.50 billion. U.S. imports declined by 1.09 percent from an upwardly revised $232.90 billion to $230.36 billion, their lowest level since February.

>Through the first seven months of this year, the combined U.S. trade deficit is running 3.59 percent ahead of last year’s January-July total.

>The U.S. oil trade deficit jumped for the second straight month in July, by 11.10 percent to $8.11 billion – the second highest figure for this year. But this shortfall is still less than half as large as last year’s on a year-to-date basis.

>The non-oil goods deficit dropped by 7.08 percent, to $51.13 billion, but is still running 21.81 percent ahead of 2014’s January-July figure.

>The U.S.-China merchandise trade deficit reached $31.58 billion in July – just 0.38 percent higher than the June figure but its highest total of this year, and the biggest since last October.

>American goods exports to China decreased by 1.93 percent on month, from $9.69 billion to $9.50 billion. U.S. merchandise imports from the PRC were off only fractionally, to $41.08 billion.

>On a year-to-date basis, the U.S. merchandise trade deficit with China is currently 8.55 percent higher than last year’s record level. U.S. goods exports to the slowing PRC economy are down 3.57 percent during this period, but U.S. goods imports are 5.32 percent greater.

>The U.S. goods trade gap with Korea – whose bilateral KORUS agreement with the United States is a model for President Obama’s prospective Trans-Pacific Partnership trade deal – rose by another 6.35 percent on month in July. U.S. exports were down and imports were up compared with June’s figures.

>Since the trade deal went into effect in March, 2012, the American merchandise trade deficit with Korea has surged by nearly 375 percent on a monthly basis.

>One bright spot in the July trade report came in high tech goods trade. The U.S. deficit fell on month by 15.93 percent, from $8.80 billion to $7.40 billion. Both exports and imports declined.

>On a year-to-date basis, however, the high tech goods deficit is running 5.68 percent ahead of last year’s pace.

(What’s Left of) Our Economy: Even a Great Energy Performance Can’t Keep Trade from Killing U.S. Growth

Tags

Canada, China, energy, Eurozone, growth, Japan, Korea, KORUS, manufacturing, Mexico, NAFTA, non-oil goods deficit, North American Free Trade Agreement, Obama, TPP, Trade, Trade Deficits, Trans-Pacific Partnership, {What's Left of) Our Economy

The monthly May trade figures show that even as the energy revolution keeps improving America’s overall performance, trade flows strongly influenced by trade deals and related policies keep producing historically high deficits and therefore remain drags on growth. Moreover, the still-worsening Korea goods deficit indicates that President Obama’s proposed Pacific Rim trade deal will bring more of the same, since it is modeled on the 2012 Korea agreement (KORUS).

Here are selected highlights of the latest monthly (May) trade balance figures released this morning by the Census Bureau:

>Despite the lowest monthly U.S. oil deficit since December, 2001, the combined goods and services trade deficit rose in May rose by 2.88 percent on month, from a downwardly revised $40.70 billion to $41.87 billion. These figures kept the shortfall running slightly (0.51 percent) ahead of last year’s pace on a January-May basis.

>The May oil trade gap, in current dollars, shrank by 15.27 percent on month, to $5.78 billion, just slightly higher than December, 2001’s $5.50 billion.

>Thanks to the interacting effects of lower global energy prices, a sluggish world economy, and America’s energy production revolution, for the first five months of the year, the U.S. oil trade deficit of $38.44 billion is only 43 percent as big as 2014’s comparable figure.

>America’s dramatically reduced oil trade performance helped produce an historic development in May – the first monthly merchandise trade surplus with Canada, its largest two-way trade partner, since monthly data have been published (1985). The $644.1 million goods figure contrasts with the $169.3 million deficit for April. The next best U.S. monthly goods trade figure with Canada was the $95.8 million deficit run in April, 1990.

>By contrast, the U.S. non-oil goods deficit rose month-to-month in May by 3.90 percent, from $52.60 billion to $54.65 billion – the second highest level ever for this portion of American trade flows, which unlike oil trade is heavily influenced by trade agreements and related policies. (March’s $61.76 billion is the all-time high monthly non-oil goods total.)

>May overall worldwide U.S. exports fell by 0.77 percent, to $188.60 billion, from their upwardly revised April level of $190.07 billion. The much larger amount of May combined imports ($230.47 billion) was only 0.13 percent lower than the downwardly revised $230.77 billion April figure.

>Year-to-date so far, overall exports have decreased by 2.73 percent, versus a 2.15 percent decline for the greater influx of combined imports.

>The U.S. China merchandise trade deficit rebounded strongly in May as well – by 15.01 percent, from $26.48 billion in April to $30.45 billion. The increase was led by a 5.99 percent monthly drop in U.S. Goods exports to China – from $9.32 billion to $8.76 billion.

>Year-to-date, U.S. goods exports to China are down 6.07 percent – more than the 5.12 percent fall-off in overall U.S. goods exports. Moreover, whereas U.S. global goods imports are down 3.50 percent on year, they’re up by 6.25 percent from China.

>Although the manufacturing-heavy U.S. China trade deficit worsened, the overall American manufacturing trade deficit actually improved slightly in May – from $66.70 billion to $66.55 billion. Manufactures exports dipped by 0.61 percent on month while the much greater amount of imports was lower by 0.45 percent.

>At the same time, at $320.33 billion, the manufacturing trade deficit this year is running 15.23 percent ahead of last year’s record pace. January-May American manufactures exports have sunk by 4.25 percent, while imports have increased by 2.51 percent.

>The U.S. goods trade deficit also worsened with new free trade partner Korea, whose 2012 deal with Washington is described by the Obama administration as the model for its proposed Trans-Pacific Partnership trade agreement.

>At $2.75 billion, the merchandise deficit with Korea was 9.76 percent higher than the April figure, and more than five times its level on a monthly basis than when the bilateral deal went into effect in March, 2012.

>Especially troubling – U.S. goods exports to Korea are down 12.51 percent since then on a monthly basis. Since March, 2012, U.S. global goods exports are only down by 3.12 percent according to the same measure.

> U.S. trade in high tech goods deteriorated in May as well. The longstanding deficit rose by 13.55 percent on month to its highest level of the year – $7.23 billion. Both U.S. high tech exports and imports fell.

>Year-to-date, this high tech deficit is 2.32 percent greater than the January-May, 2014 figure, but fully 9.41 percent below 2013’s comparable number.

>Although Canada’s monthly merchandise trade with the United States turned into an historic U.S. surplus, the nation’s other NAFTA partner, Mexico, saw its own goods surplus with America resume rising – by 3.64 percent on month, to $4.56 billion.

>The merchandise deficit with the struggling Eurozone rose slightly in May, but the goods trade shortfall with Japan plummeted by more than 23 percent, to $5.32 billion, mainly because U.S. goods imports dropped by 15.48 percent.

(What’s Left of) Our Economy: New Fakeonomics on U.S.-Asia Manufacturing Trade

Tags

Asia, Bloomberg, China, competitiveness, Federal Reserve, Financial Crisis, Institute for Supply Management, Japan, Korea, manufactures exports, manufacturing, Mexico, recession, Singapore, Trade, Vietnam, {What's Left of) Our Economy

That was some set of claims in a Bloomberg.com article yesterday:

>”If you wanted to figure out where Asian exports were headed, U.S. manufacturing data used to be a logical place to start. Not anymore.”

>”The U.S. is buying more goods from neighbors such as Mexico instead of Asia, and the shale-gas boom has kept demand within the country….”

>”The recovery in the world’s biggest economy is also more services-oriented this time….”

>”Asia’s definitely lagging behind the U.S. recovery, and so if you’re talking about an export-led recovery, I’m afraid that’s not happening in Asia. It’s the structural shift in terms of the U.S. recovery where demand is now more domestic oriented.”

But is any of this true? While reading the piece, I had my doubts. In particular, these assertions didn’t seem to track with the reality of several consecutive years of record U.S. manufacturing trade deficits despite historically weak economic growth rates. Also fishy: the Australian bank study that was the basis of this article used Institute for Supply Management’s manufacturing gauge as a proxy for American manufacturing growth. My own examination of how this series compares with the official manufacturing growth statistics kept by the Federal Reserve indicated that this private sector survey was anything but reliable. Finally, the Australian bank didn’t even look at Asian manufactures exports to the U.S. Specifically. It examined those exports to the entire world.

So I decided to compare the best, most relevant data: the Fed manufacturing production statistics with U.S. industrial purchases from East Asia and their recent growth. And it became clear as a bell, that the Asia lag thesis holds zero water.

The Australian bank study focused on manufactures exports from China, Japan, Korea, and Singapore as a proxy for the entire East Asia region, which isn’t completely unreasonable. But here’s what the correct data show: Before the financial crisis kneecapped world trade, the growth of manufactures exports to the United States from these four countries combined regularly exceeded the growth of American manufacturing itself by healthy ratios. But during the pre-crisis years selected by the Australians – 2005-2006 through 2007-2008 – this ratio steadily fell: from 1.92:1 to 1.40:1.

During the following two crisis years, these Asian manufactures exports to the U.S. collapsed much faster than American domestic manufacturing itself – because global trade took such an outsized hit. But once the recovery began, the ratio of this Asian manufacturing export growth to U.S. manufacturing output growth became higher than ever, reaching 2.82:1 between 2011 and 2012. (Between 2009 and 2010, the ratio soared to 7.78:1, but that reflected its rubber band-like snapback from its nosedive in recessionary 2008-2009.

Over the last two years, this trend has reversed. As suggested by the Australian bank report, the gap between the “Asian Four’s” manufacturing export growth and domestic U.S. manufacturing’s output growth has closed dramatically. As of last year, it was only 1.25:1. But here’s where you both need to know something and to start using your noggin. Because however important the four countries chosen are, they’re not the whole of export-happy Asia. More important, since much of the region is a highly, increasingly integrated, and dynamic manufacturing complex, all the links in these supply chains need to be analyzed.

One of the Australians’ most conspicuous omissions in this regard is Vietnam. Although still relatively small, it’s growing almost exponentially, largely because it’s an ever more popular destination for companies seeking a combination of very low-wages, a complete absence of worker rights, and highly trainable and productive employees. Therefore, no one well versed in Asian economics should be surprised that, as some of the higher priced, more developed Asian exporters (like Japan, Korea, Singapore, and even in some sectors, China) have become less competitive, Vietnam has filled many resulting gaps and manufacturing niches.

The most reliable numbers bear out this observation. Since the growth of the “Asian Four’s” manufactures exports to the United States has decreased relative to U.S. manufacturing production, Vietnam’s has surged. Already high at 4.37:1 between 2011 and 2012, it climbed to 5.59:1 in 2014.

One trend the Australian bankers and the Bloomberg piece got right – Mexico has been making growing inroads into American domestic manufacturing markets, too. But its push not mainly at the expense of Asia, but at the expense of its U.S.-based competition. That’s of course the principal reason for the U.S. manufacturing trade deficit’s flight into record territory – and for continuing to recognize claims of growing domestic American industrial competitiveness as an ongoing flow of hopium.

(What’s Left of) Our Economy: New Trade Figures Keep Weakening Case for Obama’s TPP and Fast Track Request

Tags

China, Congress, fast track, free trade agreements, growth, Japan, Korea, manufacturing, Obama, recovery, TPP, Trade, Trade Deficits, Trans-Pacific Partnership, {What's Left of) Our Economy

Government figures issues this morning showed that the monthly April trade deficit staged a major retreat following its greatest monthly surge in 18 years and the biggest monthly import rise on record. The trade gap heavily influenced by free trade agreements and related policies (in non-oil goods adjusted for inflation) narrowed significantly as well after a multi-decade monthly jump.  But it still remained at its second highest level of all time.

Thus as Congress continues to debate President Obama’s trade agenda, the trade policies pursued by him and predecessors have continued slowing growth during this current feeble recovery by nearly 20 percent.  Moreover, America’s trade performance remained miserable with Korea, whose agreement with the United States is the model for the president’s proposed Pacific Rim agreement.  In addition, though falling from its March all-time monthly high, the April manufacturing trade deficit remained historically lofty and the shortfall is running more than 17 percent ahead of last year’s record.

 

Here are selected highlights of the latest monthly (April) trade balance figures released this morning by the Census Bureau:

>The combined goods and services trade deficit plunged in April from a downwardly revised $50.57 billion to $40.88 billion. The 19.16 percent monthly drop was the biggest since February, 2009, the depths of the Great Recession, and followed a 35.75 percent (downwardly revised) rise that was the greatest since December, 1996.

>The April trade balance improvement was led by a 3.26 percent monthly drop in goods and services imports, to $230.78 billion from a downwardly revised $238.57 billion. That decline was the largest since January, and followed imports’ own monthly record jump of 6.50 percent in March.

>Exports also rose in April, but only by 1.01 percent, to $189.91 billion, from an upwardly revised $188 billion level in March.

>As Congress’ debate over President Obama’s trade agenda heads into the House following the administration’s Senate victories, the April trade report confirmed that the portion of the trade balance most heavily influenced by trade policy continues crippling the U.S. recovery.

>This policy-shaped balance – in real non-oil goods – sank by 13.18 percent on month in April, from an all-time high of $62.01 billion to $53.84 billion. That fall-off was the most since February, 2009 as well, and followed a 28.36 percent increase that was its greatest since August, 1997. Yet the April total is still the second greatest on record.

>Since rising trade balances subtract from economic growth, the increase in this real non-oil goods deficit has now cut cumulative U.S. economic growth after inflation by a stunning 19.49 percent since the recovery technically began in mid-2009.

>Further doubts about the administration’s trade strategy were fueled by the continuing poor U.S. performance with South Korea, whose 2012 trade agreement with Washington is viewed by the president as the model for his proposed Trans-Pacific Partnership (TPP) trade deal.

>Even as the U.S. goods deficit worldwide declined by 13.33 percent in March, it rose by 13.68 percent with Korea. On a monthly basis, this shortfall has now nearly quintupled (to $2.50 billion) since the agreement went into effect in March, 2012.

>During this period, U.S. merchandise exports to Korea have actually fallen on a monthly basis by 2.76 percent – from 4.23 billion to $4.11 billion.

>The April trade figures showed similar trends in the huge and chronic U.S. manufacturing trade deficit. The shortfall decreased from March’s all-time high of $71.96 billion to a $66.70 billion, but that figure is still historically lofty.

>Largely as a result, this year’s $253.78 billion manufacturing trade deficit to date is running 17.18 percent ahead of last year’s record pace.

>As operations in West Coast ports continued returning to normal in April, manufactures imports fell by 4.63 percent on month, to $163.24 billion. Manufacturing exports declined by 2.70 percent, to $96.54 billion.

> Thanks also in part to the gradual restoration of full service at West Coast ports, March manufacturing exports rose on month by 15.39 percent. But the much larger amount of imports soared by an even greater 23.80 percent.

>Year to date, manufacturing imports have increased by 3.65 percent, but exports have worsened by 3.95 percent.

>The U.S. goods trade deficit with proposed TPP partner Japan fell fractionally on month in April, from $7.13 billion to $7.12 billion. But this shortfall is up 6.76 percent year on year and the April total marks only the third time since the American recovery began that the monthly figure topped $7 billion.

>Japan has often undervalued its currency to achieve trade advantages, but the Obama administration and the Republican leadership in Congress oppose including strong measures in the TPP to fight this exchange-rate protectionism.

>Similarly, the immense U.S. merchandise trade deficit with China sank month to month in April by 15.23 percent, but is running 12.73 percent higher than last year’s record.

>The Korea, Japan, and China goods deficits are all up year-to-date much faster than the global U.S. goods deficit (0.40 percent).

(What’s Left of) Our Economy: The TPP’s Main Achilles Heel is Still Economic

Tags

Asia, China, free trade agreements, GDP, Korea, KORUS, non-oil goods deficit, non-tariff barriers, recovery, services, TPP, Trade, Trade Deficits, Trans-Pacific Partnership, {What's Left of) Our Economy

President Obama’s proposed Trans-Pacific Partnership (TPP) trade deal has attracted so much non-economic praise and criticism that it’s been understandably hard for many to remember that the strongest arguments against it concern its likely impact on both America’s growth and hiring, and on global recovery and financial stability.

It’s true that the TPP would affect realms of policy and life beyond the sale of goods and services across borders per se. In particular, it seeks better harmonization of regulations impacting health, safety, and other social priorities across the twelve member countries – and in ways that surely would curb national sovereignty. It will also inevitably bear on U.S. relations with East Asian countries at a time when China is displaying determination to replace America as kingpin in the Western Pacific. And let’s not forget the secrecy charges!

Nonetheless, economics deserves pride of place in the TPP and broader trade debate for two main reasons.  First, achieving most of America’s non-economic goals – including national security – ultimately depends on its ability to grow satisfactorily and in healthy ways. TPP and the endorsement of current trade strategies signaled by its passage would make that sustainable pie expansion all but impossible.  Second, the previous bubble decade should have taught Americans a bitter lesson about ill-considered trade expansion.  TPP’s passage would repeat the blunders that helped nearly blow up the entire world economy just over a half a decade ago.

The strongest evidence for TPP as an American recovery killer comes from examining what’s happened to that portion of U.S. trade flows most heavily influenced by trade agreements and related policies (like years of apathy re foreign currency manipulation). Adjusted for inflation, the rise in the non-oil goods deficit since the current expansion’s technical beginning in mid-2009 has slowed this sluggish recovery’s pace by nearly 20 percent in real terms, as of the first (still preliminary) first quarter 2015 figures. Nearly all this damage, moreover, has come in the private sector, which remains the economy’s only serious bet for genuine, long-term prosperity.

In other words, if the non-oil goods deficit, which was already $65.50 billion in the second quarter of 2009, had simply not gotten any worse through the first quarter of 2015, inflation-adjusted gross domestic product (GDP) would have grown by $95.40 billion more than its actual $487.30 billion increase. And although the relationship between economic growth and employment is ever more controversial, who can reasonably doubt that this faster expansion would have boosted hiring and therefore increased upward pressure on stagnant wages?

Many TPP supporters point to America’s already wide open markets and wonder why TPP would indeed worsen trade deficits. They need to look at America’s experience with the Korea-U.S. Free Trade Agreement (KORUS), which the Obama administration has touted as the high standards model for TPP. In one sense, it’s clear why the president portrayed KORUS as the TPP blueprint: Korea’s economy is defined by the same kinds of non-tariff trade barriers found in many of the TPP countries, and America’s trade negotiators targeted them in their talks with Seoul before training their sites on the TPP group as a whole.

But since KORUS went into effect in March, 2012, U.S. goods exports to Korea have actually fallen on a monthly basis by 21.44 percent. U.S. merchandise imports from Korea are up by 33.58 percent. The most valid global comparison is with the nation’s worldwide non-oil goods balance, and it’s devastating. During this period, U.S. goods exports in this category increased by 2.32 percent, while merchandise imports were up 17.20 percent – just over half as fast as they surged from Korea.

Apologists for this dismal performance concentrate on exports and point to America’s service trade performance. But these flows so far have only been lightly affected by trade liberalization. Moreover, according to the latest (2012) official U.S. data, two-way U.S. Korea services trade ($27 billion annually) was dwarfed by goods trade ($101.18 billion). And signs are appearing that the U.S. services surplus with Korea could well go the way of the goods balance, as the high tech Korean economy keeps making steady progress in narrowing its global intellectual property trade deficit in particular.

TPP supporters also blame Korea’s sluggish recent growth for disappointing U.S. export and therefore overall trade performance under KORUS. But since 2012, Korea’s economy has expanded considerably faster in real terms (by 2.29 percent, 2.97 percent, and 3.32 percent, respectively) than America’s (2.32 percent, 2.22 percent, and 2.39 percent). A much more plausible explanation for export lag is KORUS’ entirely predictable failure to reduce significantly those Korean non-tariff barriers – which is bound to be repeated with the TPP zone for reasons that have bedeviled U.S. trade diplomats (and American producers) for decades: These measures, put into effect and maintained by highly secretive bureaucracies, are excruciatingly difficult even to identify, much less document in trade courts.

Meanwhile, the post-KORUS U.S. import surge from Korea also has a policy-related explanation with ominous implications for a post-TPP America. Seoul – and all the companies it still tightly controls – correctly interpreted the deal as a green light to ramp up shipments to the United States, in full confidence that Washington would ignore the various forms of subsidization largely behind their price competitiveness. Since major TPP countries like Japan, Malaysia, Singapore, Vietnam, and Mexico are comparably export-dependent, expect TPP to have the same disastrous effect on their trade flows with America. And if TPP does indeed have a docking provision, which means that new members can be added to the deal without Congressional approval once it’s finalized, the deal could wind up giving the same signals to a host of other export-led Asian economies, including China’s.  

Finally, the results of soaring U.S. trade deficits would damage not only the American economy but the global economy. As I’ve written repeatedly, many leading economists now acknowledge that the unprecedented global economic imbalances that built up in the last decade, and that were centered around the rapid expansion of U.S. trade with China and other developing countries, were instrumental in inflating the interlocking American spending and housing bubbles that burst so disastrously in 2007-08.

In particular, the offshoring spurred by these policies transferred enough production power to the third world to undermine U.S. consumers’ livelihoods and incomes, but couldn’t transfer enough consumption power to these populations to turn them into world-class spenders. The problem was exacerbated by the decisions of many developing countries to grow by amassing trade surpluses, not by consuming, and to protect themselves against financial turmoil by amassing large amounts of dollar and other foreign currency reserves – which also requires exporting much more than importing. When Washington decided to compensate for consequent losses in earned income by propping up American consumption with enormous budget deficits and then-record low interest rates, catastrophe became inevitable, and economies around the world were victimized.

The steady rebound of America’s trade deficits even during an historically feeble recovery and the president’s determination to conclude trade deals practically structured to supercharge them has put the United Stated and the rest of the world right on course for Financial Crisis 2.0. The sooner the TPP critics start going back to these economic basics, the more optimistic I’ll feel about defeating the president and creating a trade policy that makes this disaster less, not more likely.

Our So-Called Foreign Policy: Former Military Bigwigs’ Militarily Dubious Case for New Trade Deals

Tags

alliances, China, Cold War, deterrence, energy, export-led growth, free trade agreements, geopolitics, Germany, Japan, Korea, Middle East, NATO, oil, Our So-Called Foreign Policy, Russia, Soviet Union, technology transfer, TPP, Trade, Trans-Atlantic Trade and Investment Partnership, Trans-Pacific Partnership, tripwires, TTIP, Vladimir Putin

Despite my great respect for America’s uniformed military and for the civilians who try to manage the nation’s huge defense establishment, many of them have just reminded us that they have long suffered from a big, fat blind spot when it comes to U.S. foreign policy and its relationship to trade and economic policy.

Seventeen former Secretaries of Defense and leading generals on Thursday released a letter expressing their “strongest possible support” for President Obama’s proposed Pacific Rim trade deal and its trans-Atlantic counterpart. According to the signers, who included Colin Powell (a former Secretary of State to boot), and former Pentagon chiefs Leon Panetta, Chuck Hagel, Robert Gates, and Donald Rumsfeld, as well as former U.S. Iraq commander and CIA chief David Petraeus, “There are tremendous strategic benefits to [the two deals] and there would be harmful strategic consequences if we fail to secure these agreements. In both Asia-Pacific and the Atlantic, our allies and partners would question our commitments, doubt our resolve, and inevitably look to other partners. America’s prestige, influence, and leadership are on the line.” Needless to say, the letter claims that the economic benefits of these pacts would be “substantial,” too.

But its predictions of strategic disaster flowing from rejecting the Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP) stem from fundamental misunderstandings of how and why America’s main alliances are structured and work. More specifically, these former leaders either don’t or refuse to recognize that U.S. allies need the United States much more than the reverse, and similarly, they have lined up with America because their own self-interest desperately requires it.

After all, whatever benefits Americans get from these arrangements, the United States is located thousands of miles away from any rivals that could seriously threaten it, and retains more-than-ample power to deter attacks on the homeland from any minimally rational adversary. (Alliances have no apparent potential to strengthen U.S. security against non-rational enemies armed with weapons of mass destruction.) The allies, however, are all located very close to countries that can cause them major grief, and Washington’s assistance is especially prized not only because it is abundant, but because it comes from a power too far away to dominate them in any meaningful sense.

It’s true that, during the Cold War, major fears were expressed about Western Europe “Finlandizing” itself and agreeing to some form of informal Soviet hegemony. And one concrete problem could have ensued – Moscow could have interfered with U.S. efforts to supply Middle East military ventures through European bases. But if no such scenario unfolded during those decades, why would it emerge given the much weaker state of contemporary Russia? Even weirder, given the enormous American potential recently revealed for substantial energy independence, and given Europe’s continued reliance on the Middle East, control of the continent would put the onus on Vladimir Putin to defend the free flow of oil from that dysfunctional region, and generally police it. More power to him.

For their part, America’s Asian allies have significant reasons to kowtow to China – mainly because so many of them are connected with the PRC economically through the vast multinational manufacturing production complex the region has become. At the same time, commerce (properly understood) also prevents East Asia from simply casting its lot with the Chinese and excluding the United States in any (further) meaningful way. For America is by far the single biggest national customer for the products turned out by their export-heavy economies. China is way too poor, way too protectionist, and way too export-led itself to serve as a substitute.

The former military leaders are on firmer ground in suggesting that America’s allies have reason to doubt U.S. defense commitments. But that has nothing to do with the fate of trade deals. Instead, it reflects chronic doubts about whether the United States would risk its own security on their behalf, especially against nuclear-armed adversaries. Washington’s traditional response has been stationing U.S. forces (and during the Cold War, their families) directly in harm’s way, to increase the odds that attacks on the allies would claim U.S. victims. Thus American leaders would be left with no real choice but to respond in kind, the allies would recognize this, and adversaries would be further deterred.

Since the Cold War’s end, these American “tripwires” have been thinned out, but they’re still deployed in Korea, Japan, and Germany. The big new commitment questions raised in Europe have concerned the conspicuously complete lack of permanently stationed tripwires in the newer NATO members that were once part of the Soviet bloc but that still may be in Putin’s sites. In the Far East, the credibility of the American deterrent, as I’ve written, is being undermined by the ongoing development of Chinese and North Korean nuclear forces capable of striking American territory and largely invulnerable to retaliation or preemption. Neither trade deal being pursued by the president has the slightest chance of easing these doubts.

There is one way that the TPP could bolster the American stake in East Asia’s security status quo – if the deal had any real promise of reducing the region’s main predatory trade practices and turning U.S. commerce with it from a net loser to a net winner, or something close. But since these Asian practices (and barriers) are generally informal, and carried out by bureaucracies that are expert at keeping secrets from foreigners, they’ve been difficult enough for Americans even to identify and document, much less combat effectively.

Finally, it’s vital to point out that, for all the alarms sounded by these former military leaders about using TPP specifically to offset China’s rise and economic influence over its neighbors, not one of them has ever registered a single complaint about the wealth and technology (including defense-related knowhow) that American policy has showered on China for literally decades. This apparent ignorance of the first maxim of strategy – don’t enrich and empower your enemy – shows that these former defense officials and senior generals and admirals may not deserve to be taken seriously even on many national security questions, let alone on trade issues.