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Making News: Podcast Now On-Line of U.S. China Strategy National Radio Interview

12 Tuesday Jan 2021

Posted by Alan Tonelson in Making News

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alliances, allies, America First, China, globalism, Joe Biden, Making News, Market Wrap with Moe Ansari, multilateralism, national security, Trade, trade war, Trump

I’m pleased to announce that the podcast is now available of my interview yesterday with Moe Ansari on his nationally syndicated “Market Wrap” radio program. This was a real corker of a segment, turning into an awfully intense (but always civil!) debate about the best way for the United States to deal with the Chinese economic and national security threat – by relying on its own devices (a la, more or less, President Trump) or by building international coalitions (the preferred approach of President-elect Biden). Click here to listen and go to the “Current Market Wrap: link. My segment begins at about the 27-minute mark.

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

Our So-Called Foreign Policy: Biden Choices Signal a “What, Me Worry?” China Policy

13 Sunday Dec 2020

Posted by Alan Tonelson in Our So-Called Foreign Policy, Those Stubborn Facts

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alliances, allies, Antony Blinken, BlackRock, Brian Deese, China, decoupling, Jake Sullivan, Janet Yellen, Joe Biden, Katherine Tai, Lloyd Austin, multilateralism, national security, Our So-Called Foreign Policy, Robert Lighthizer, sanctions, tariffs, tech war, Trade, trade war, transition, Trump, U.S. Trade Representative, USTR, Wall Street

Apparent President-elect Biden so far is sending a message about his China policy that’s unmistakably bad news for any American believing that the People’s Republic is a major threat to the nation’s security and prosperity – which should be every American. The message: “I’d rather not think about it much.”

In some limited senses, and for the very near future, the impact could be positive. Principally, although he blasted President Trump’s steep, sweeping tariffs on imports from China as disastrously counter-productive for the entire U.S. economy – consumers and producers alike – he’s stated that he won’t lift them right away. Presumably, he’ll also hesitate to remove the various Trump sanctions that have so gravely damaged the tech entities whose activities bolster China’s military strength and foreign espionage capabilities, along with new Trump administration restrictions on these Chinese entities’ ability to list on U.S. stock exchanges.

Looking further down the road, however, if personnel, as widely believed, is indeed policy, Biden’s choices for Cabinet officials and other senior aides to date strongly indicate that his views on the subject haven’t changed much from this past May, when he ridiculed the idea that China not only is going to “eat our lunch,” but represented any kind of serious competitor at all. In fact, in two ways, his choices suggest that his take on China remains the same as that which produced a long record of China coddling.

First, none of his top economic or foreign policy picks boasts any significant China-related experience – or even much interest in China. Like Biden himself, Secretary of State-designate Antony Blinken is an indiscriminate worshipper of U.S. security alliances who views China’s rise overwhelmingly as a development that has tragically and even dangerously given Mr. Trump and other America Firsters an excuse to weaken these arrangements by making allies’ China positions an acid test of their value. In addition, he’s pushed the red herring that the Trump policies amount to a foolhardy, unrealistic attempt at complete decoupling of the U.S. and Chinese economies.

As for the apparently incoming White House national security adviser, Jake J. Sullivan – who served as Biden’s chief foreign policy adviser during his Vice Presidential years – he shares the same alliances-uber-alles perspective on China as Biden and Blinken, and is on record as late as 2017 as criticizing the Trump administration for “failing to strike a middle course” on China – “one that encourages China’s rise in a manner consistent with an open, fair, rules-based, regional order.” I’m still waiting for someone to ask Sullivan why he believes that mission evidently remained unacccomplished after the Obama administration had eight years to try carrying it out.

On the defense policy front, Biden has chosen to head the Pentagon former General Lloyd Austin whose main top-level experience was in fighting Jihadist terrorists in the Middle East, not dealing with a near-superpower like China. That’s no doubt why Biden failed even to mention China when introducing Austin and listing the issues on which he’d need to focus – an omission worrisomely noted by the U.S. Asia allies the apparent President-elect is counting on to help America cope more effectively with whatever problems he thinks China does pose.

As for the Biden economic picks, Treasury Secretary and former Fed Chair Janet Yellen has expressed little interest in China or trade policy more broadly during her long career in public service. (See here for a description of some of her relatively few remarks on the subject.) His choice to head the National Economic Council, Brian Deese, has been working for the Wall Street investment giant, BlackRock, Inc. – which like most of its peers has long hoped to win Beijing’s permission to compete for a slice of the potentially huge China financial services market. But his focus seems to have been environmentally sustainable investments, and his own Obama administration experience centered on climate change.

One theoretical exception is Katherine Tai, evidently slated to become Biden’s U.S. Trade Representative (USTR). Both as a former lawyer at the trade agency  and in her current position as a senior staff member at the House Ways and Means Committee, she boasts vast China experience.

But history teaches clearly that the big American trade policy decisions, like handling China, are almost never made at the USTR level. Mr. Trump’s trade envoy, Robert Lighthizer, was a major exception, and his prominence stemmed from the President’s unfamiliarity as an outsider with the specific policy levers that have needed to be pulled to engineer the big China trade and broader economic policy turnaround sought by Mr. Trump. So expect Tai to be a foot soldier, nothing more.

The cumulative effect of this China vacuum at the top of the likely incoming administration creates the second way in which Biden’s seems to reflect a lack of urgency on the subject: It signals that there will be no China point person in his administration. It’s true that reports have appeared that the apparent President-elect will appoint an Asia policy czar. But more than a week after they’ve been posted, nothing further has been heard.

All of which suggests that, by default, China policy will be made by the alliance festishers Blinken and Sullivan. And if their stated multilateralist impulses do indeed dominate, the result will be basically a U.S. China policy outsourced to Brussels (headquarters of the European Union), and the capitals of Asia. As I’ve written previously, many of these allies have profited greatly from the pre-Trump U.S. and global China trade policy status quo, and their leaders are hoping for a return to this type of world as soon as possible. And it’s no coincidence that’s the kind of world Joe Biden was happy to help preside over during his last White House job.  

Following Up: Podcast On-Line of Last Night’s National Radio Interview on Biden China Policy

10 Tuesday Nov 2020

Posted by Alan Tonelson in Following Up

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China, Following Up, Gordon G. Chang, health security, healthcare goods, Joe Biden, manufacturing, national security, supply chains, tariffs, tech, The John Batchelor Show, Trade, trade war, Trump

I’m pleased to announce that the podcast is now on-line of last night’s interview on John Batchelor’s nationally radio show on the future of U.S.-China relations. Click here for a timely conversation among John, co-host Gordon G. Chang, and me on whether a possible Biden administration will continue or end President Trump’s trade and tech wars with China, and keep his promises to bring back home key manufacturing supply chains.

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

Following Up: Podcast Regrets

22 Thursday Oct 2020

Posted by Alan Tonelson in Following Up

≈ 2 Comments

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baseball, Following Up, Frank Morano, national security, New York Mets, Populism, semiconductors, Steve Cohen, Trump, WABC AM

I was hoping to post a podcast of my interview last night on Frank Morano’s WABC-AM New York City radio show, but “technical difficulties” unfortunately kept on interrupting the segment. What a shame, because when our connection was working, we not only got in some good exchanges about my recent articles on America’s lost lead in semiconductor manufacturing and on (offbase) charges that President Trump is a phony populist. We also provided blinding insights about the state of play of billionaire Steve Cohen’s purchase of the New York Mets!

So I’ll hope to return to Frank’s show soon. And in the meantime, keep checking in with RealityChek for news of upcoming media appearances and other developments.

Im-Politic: VP Debate Questions That Should be Asked

07 Wednesday Oct 2020

Posted by Alan Tonelson in Im-Politic

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1619 Project, African Americans, Barack Obama, Biden, budget deficits, CCP Virus, censorship, China, Confederate monuments, Constitution, coronavirus, COVID 19, education, election 2020, Electoral College, filibuster, Founding Fathers, free speech, healthcare, history, history wars, Im-Politic, inequality, investment, Kamala Harris, Mike Pence, national security, Obamacare, police killings, propaganda, protests, racism, riots, semiconductors, slavery, spending, Supreme Court, systemic racism, Taiwan, tariffs, tax cuts, taxes, Trade, trade war, Trump, Vice Presidential debate, Wuhan virus

Since I don’t want to set a record for longest RealityChek post ever, I’ll do my best to limit this list of questions I’d like to see asked at tonight’s Vice Presidential debate to some subjects that I believe deserve the very highest priority, and/or that have been thoroughly neglected so far during this campaign.

>For Vice President Mike Pence: If for whatever reason, President Trump couldn’t keep the CCP Virus under control within his own White House, why should Americans have any faith that any of his policies will bring it under control in the nation as a whole?

>For Democratic candidate Senator Kamala Harris: What exactly should be the near-term goal of U.S. virus policy? Eliminate it almost completely (as was done with polio)? Stop its spread? Slow its spread? Reduce deaths? Reduce hospitalizations? And for goals short of complete elimination, define “slow” and “reduce” in terms of numerical targets.

>For Pence: Given that the administration’s tax cuts and spending levels were greatly ballooning the federal budget deficit even before the virus struck, isn’t it ridiculous for Congressional Republicans to insist that total spending in the stimulus package remain below certain levels?

For Harris: Last month, the bipartisan Congressional Problem Solvers Caucus unveiled a compromise stimulus framework. President Trump has spoken favorably about it, while stopping short of a full endorsement. Does Vice President Biden endorse it? If so, has he asked House Speaker Nancy Pelosi to sign on? If he doesn’t endorse it, why not?

For Pence: The nation is in the middle of a major pandemic. Whatever faults the administration sees in Obamacare, is this really the time to be asking the Supreme Court to rule it un-Constitutional, and throw the entire national health care system into mass confusion?

For Harris: Would a Biden administration offer free taxpayer-financed healthcare to illegal aliens? Wouldn’t this move strongly encourage unmanageable numbers of migrants to swamp U.S. borders?

For Pence: President Trump has imposed tariffs on hundreds of billions of dollars’ worth of Chinese exports headed to U.S. markets. But U.S. investors – including government workers’ pension funds – still keep sending equally large sums into Chinese government coffers. When is the Trump administration finally going to plug this enormous hole?

For Harris: Will a Biden administration lift or reduce any of the Trump China or metals tariffs. Will it do so unconditionally? If not, what will it be seeking in return?

For both: Taiwan now manufactures the world’s most advanced semiconductors, and seems sure to maintain the lead for the foreseeable future. Does the United States now need to promise to protect Taiwan militarily in order to keep this vital defense and economic knowhow out of China’s hands?

For Pence: Since the administration has complained so loudly about activist judges over-ruling elected legislators and making laws themselves, will Mr. Trump support checking this power by proposing term limits or mandatory retirement ages for Supreme Court Justices? If not, why not?

For Harris: Don’t voters deserve to know the Biden Supreme Court-packing position before Election Day? Ditto for his position on abolishing the filibuster in the Senate.

>For Pence: The Electoral College seems to violate the maxim that each votes should count equally. Does the Trump administration favor reform? If not, why not?

>For Harris: Many Democrats argue that the Electoral College gives lightly populated, conservative and Republican-leaning states outsized political power. But why, then, was Barack Obama able to win the White House not once but twice?

>For Pence: Charges that America’s police are killing unarmed African Americans at the drop of a hat are clearly wild exaggerations. But don’t you agree that police stop African-American pedestrians and drivers much more often than whites without probable cause – a problem that has victimized even South Carolina Republican Senator Tim Scott?

For Harris: Will Biden insist that mayors and governors in cities and states like Oregon and Washington, which have been victimized by chronic antifa violence, investigate, arrest and prosecute its members and leaders immediately? And if they don’t, will he either withhold federal law enforcement aid, or launch such investigations at the federal level?

For Pence: Why should any public places in America honor Confederate figures – who were traitors to the United States? Can’t we easily avoid the “erasing history” danger by putting these monuments in museums with appropriate background material?

For Harris: Would a Biden administration support even peacefully removing from public places statues and monuments to historic figures like George Washington and Thomas Jefferson because their backgrounds included slave-holding?

For both: Shouldn’t voters know much more about the Durham Justice Department investigation of official surveillance of the Trump campaign in 2015 and 2016 before Election Day?

For both: Should the Big Tech companies be broken up on antitrust grounds?

For both: Should internet and social media platforms be permitted to censor any form of Constitutionally permitted speech?

For Pence: Doesn’t the current system of using property taxes to fund most primary and secondary public education guarantee that low-income school children will lack adequate resources?

For Harris: Aren’t such low-income students often held back educationally by non-economic factors like generations of broken families and counter-productive student behavior, as well as by inadequate school funding – as leading figures like Jesse Jackson (at least for one period) and former President Obama have claimed?

For Pence: What’s the difference between the kind of “patriotic education” the President says he supports and official propaganda?

For Harris: Would a Biden administration oppose local school districts using propagandistic material like The New York Times‘ U.S. history-focused 1619 Project for their curricula? Should federal aid to districts that keep using such materials be cut off or reduced?

Now it’s your turn, RealityChek readers! What questions would you add? And which of mine would you deep six?

Making News: Podcast Now On-Line of National Radio Interview on TikTok, China Strategy, Biden, & the Stimulus Negotiations

12 Wednesday Aug 2020

Posted by Alan Tonelson in Uncategorized

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China, Congress, decoupling, election 2020, Joe Biden, Making News, Mark Meadows, Market Wrap with Moe Ansari, national security, privacy, stimulus package, tech, TikTok, Trump

I’m pleased to announce that a podcast is now on-line of an interview I did yesterday on Moe Ansari’s nationally syndicated radio show.

Click here and then scroll down a bit to the segment with my name on it to listen to a timely, informative session on three major headline issues: what President Trump is trying to accomplish with his decision to ban from U.S. markets the popular Chinese social media app TikTok; how a President Joe Biden is likely to handle China issues; and what to expect from the current White House-Congress talks on the economic stimulus package. The segment comes on at about the 23:50 mark.

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

 

Our So-Called Foreign Policy: Why Microsoft Can’t Be Trusted to Run TikTok

10 Monday Aug 2020

Posted by Alan Tonelson in Our So-Called Foreign Policy

≈ 4 Comments

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censorship, China, Microsoft, national security, Our So-Called Foreign Policy, privacy, social media, tech, TikTok

When I read that President Trump’s recent decision to ban TikTok from the U.S. market gave the popular Chinese social media app’s services one chance to survive intact – a purchase of its U.S. business by an American-owned company (most likely, it seems, Microsoft) – my “Uh oh” antennae started buzzing. I knew that there’s no reason for confidence that a U.S.-owned tech multinational would adequately safeguard American national security and individual privacy interests versus the kinds of threats that have already been posed by TikTok’s obligations to an increasingly hostile Chinese government, much less uphold values in the freedom of expression family.

I knew this because research for a 2013 article I published on Bloomberg.com revealed that Microsoft was one of the many big U.S. tech companies whose drive for access to China’s potentially huge customer base involved extensive activities aimed at strengthening the technological prowess that has helped make the People’s Republic such a danger to America as well as the world at large.

As I wrote – based on the companies’ own financial reports – these efforts have included the establishment of state-of-the-art factories and laboratories, along with training programs that have taught literally hundreds of thousands of Chinese students state-of-the-art tech skills not only at facilities run by these businesses, but through partnerships with Chinese universities.

Worse, as made clear by a Financial Times report last week Microsoft, whose operations in China “have included collaborations with researchers at China’s military-controlled National University of Defense Technology,” has done nothing important since this piece came out to scale back such cooperation with China’s dictatorial regime.

For example, in 2015, Chinese leader Xi Jinping “visited Microsoft’s headquarters in Redmond, Washington, where he praised the company for “driving forward the development of China’s ICT [information and communications technology] industry”. Moreover, last month, “Microsoft was the sole US company invited to a televised entrepreneurs’ summit with Mr Xi.”

Perhaps most troubling, the Financial Times reported that “The company’s management of its research staff is very light.” According to a former executive at Microsoft China, limiting research collaborations is “a really tough question — research is a very liberal environment in itself. People might question [research collaborations] but from the point of view of our researchers, they want to work with the best partners they can find in their field.”

And what did Microsoft get for itself and its shareholders for all this assistance? Almost nothing. Even though its Windows operating system enjoys an estimated 90 percent market share, piracy of its products is so widespread that China accounts for less than two percent of its global revenues, according to its president. So I’m glad I don’t have to make the case that Microsoft can be relied on vigilantly to resist Beijing’s pressures to remain privy to important U.S. data – by hook or by crook.

Indeed, another recent Financial Times article claimed that Microsoft is mulling a takeover agreement that would give it “one year to separate TikTok from its Chinese parent and address US government concerns over the security of the data generated by the app.” Yet even if Microsoft’s U.S.-based executives do their darnest to shut the Chinese government out, that could leave plenty of time for TikTok’s Chinese employees to work with the regime to create new or keep open existing backdoors to Beijing.  Alternatively, once the deal is done, Microsoft might simply manage ongoing cybersecurity issues as “lightly” as the U.S. parent has managed its research team-ups with China’s regime.

Moreover, requiring Microsoft to conclude the separation much sooner would still leave the company – which would still be anxious for more China business – free to  wind up emulating TikTok’s practice of taking down content deemed offensive by China. Such subjects include praise for the Tiananmen Square protests of 1990, or the Tibetan independence movement. And Microsoft certainly wouldn’t be the first U.S. tech company to regulate speech with political aims in mind.

For all I know, effective safeguards against all these contingencies might be developed. But at very best, preventing China from continuing to exploit TikTok – and other tech products and services it’s currently offering to U.S. customers or could offer – will be a never-ending struggle. Best to remove as many uncertainties as possible, and make defense as easy as possible, by simply kicking TikTok and other Chinese products like it out, and keeping them out.   

Making News: On CNBC Today on the U.S.-China Tech War

07 Friday Aug 2020

Posted by Alan Tonelson in Uncategorized

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China, CNBC, Making News, national security, privacy, social media, technology, TikTok, Trump, WeChat

I’m pleased to announce that I’m scheduled to appear on CNBC this afternoon EST to talk about the intensifying technology conflict between the United States and China.  The segment, slated to start at 2 PM EST, will key off President Trump’s announcement last night that the Chinese social media apps TikTok and WeChat will be banned from the American market.

You can watch the segment live on the network, and if you can’t catch it, I’ll post a link to the video recording as soon as it’s available.

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

Our So-Called Foreign Policy: The U.S. and its Universities Remain Asleep at the Switch on the China Tech Threat

31 Friday Jul 2020

Posted by Alan Tonelson in Im-Politic

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Argonne National Laboratory, China, higher education, Hoover Institution, John Pomfret, Lawrence Berkeley National Laboratory, National Institutes of Health, National Science Foundation, national security, Our So-Called Foreign Policy, science, technology, technology transfer, universities

The word “blockbuster” has been so overused and misused by the national media during the Trump era that it’s impact has been watered down. Yet a new report by the California-based Hoover Institution definitely deserves that description – for it details the shocking and dangerous extent to which the U.S. government’s science and technology research arms, along with many of America’s top universities, have in recent years been merrily working, and no doubt sharing crucial defense-related technology, with individuals tightly connected with China’s military.

You can read an excellent summary of the report here by John Pomfret, a former longtime Washington Post China correspondent who’s turned into a full-time scholar of U.S. relations with the People’s Republic. But there are six points that I think deserve special attention.

First,even anyone who didn’t know that the Chinese institutions from which the Chinese researchers have come are called by China’s regime itself “Seven Sons of National Defense,” two of the names alone should be kind of a giveaway: Beiing University of Aeronautics and Astronautics, and Nanjing University of Aeronautics and Astronautics. Unless anyone at any of the American universities involved doesn’t know that any activity in China with an aerospace component isn’t largely military in nature?

Second, the research projects themselves being conducted by teams of scientists from these U.S. and Chinese institutions haven’t been given names with obvious military implications. But any American authorities with a tech background should be aware of this dimension. Take “Effect of gallium addition on the microstructure and micromechanical properties of constituents in Nb-Si based alloys.” Gallium is a metal used mainly in micro-electronics manufacturing. Among its properties: It can “produce laser light directly from electricity….” Nothing military to see there! Ditto for the role played by gallium arsenide its role in making semiconductors for pressure sensors for touch switches.

“Nb” is niobium, another metal, is useful for making “superalloys for heat resistant equipment” – and therefore is handy for producing items like jet engines. And of course “Si”, or silicon, is a core building block of semiconductors themselves.

Nor is that work the only research that should have raised eyebrows. In 2018, an entity called the China-US International Cooperation Project (about which a Google search turned up squadoosh) and the Harbin Institute of Technology jointly funded a Master’s thesis on the “Modeling and Analysis of Energy Characteristics and Equivalent Carbon Emissions of CNC Centerless Grinding Machine.”

These types of machine tools are critical for defense manufacturing – including in aerospace – because they can make sure that metal surfaces of parts and components of complex manufactured devices have smooth enough surfaces to operate friction-free – an especially important goal to achieve when producing weapons that need to be highly reliable even in the most challenging situations. Indeed, when these grinders get advanced enough, their overseas sale is regulated for national security reasons by the U.S. government. Why on earth would that same government be helping the Chinese find out anything new about them?

Possibly most obvious – and therefore possibly most maddening – of all: Why did a researcher at the University of Virginia co-author with three colleagues affiliated with Nanjing University of Aeronautics and Astronautics a 2018 article titled “Research Progress of Adaptive Control for Hyper-Sonic Vehicle in Near Space”? Did he and the University of Virginia think we’ve arrived already at the United Federation of Planets phase of human history?

Third, as indicated above, the list of American universities involved in these potentially dangerous activities is as long as the inividual schools are highly regarded. It includes Virginia, MIT, Stanford, Columbia, the University of Pennsylvania, the University of Michigan, the University of Texas, the University of North Carolina, Purdue University, Arizona State University, the University of Minnesota, George Washington University, the University of California-Irvine, and Georgia Tech.

Fourth, the list of U.S. government agencies involved is impressive, too. It includes the National Institutes of Health, the Lawrence Berkeley National Laboratory, Argonne National Laboratory, Oak Ridge National Laboratory, and the National Science Foundation.

Fifth, U.S. universities aren’t close to getting a handle on making sure that the research they sponsor in various ways doesn’t strengthen the Chinese military – and therefore undermine U.S. national security. As the Hoover authors point out:

“Only now is the US research community awakening to the intensity and scope of [the China challenge] and its military or dual-use dimensions. However, in the absence of external regulatory or policy mandates, US research institutions have been slow to adapt their due diligence and risk management frameworks. Weak institutional reporting mechanisms and compliance cultures have permitted some collaborations to go unknown, unreported, or underreported. Even among vetted collaborations, conflicts of commitment, unreported or misreported elements, or other activities that undermine the integrity of US scientific research and exceed the scope of collaboration agreements occur. In short, prevailing due diligence and risk management practices for screening and tracking potential collaborations with PRC entities fall far short of what circumstances require.”

Sixth, as must be obvious, the U.S. government isn’t doing much better. Specifically, according to the Hoover study, official U.S. responses (as with those of universities) focus too tightly on whether current laws and regulations aimed dealing with these threats are being violated, without considering whether these restrictions are still adequate. Moreover, Washington seems to view its processes of granting visas as the predominant way to fend off the Chinese threat. As noted by the Hoover authors, however, “collaborations with US partners may move online or to sites outside of the United States.”

So although the Trump administration is far more keenly aware of this problem than its predecessors, clearly is still has a very long way to go.

The Hoover authors are very careful to say that they’re not urging a complete ban on U.S. scientific and technological cooperation with China, and fully acknowledge that the nation has enjoyed major benefits from its academic and research-related openness. Indeed, they lay out a strategy for the research community to avoid handing China many of the keys to America’s scientific and technological kingdoms – in hopes that a heavier government hand can be avoided. Unfortunately, they make such a strong case that both the public and private research communities have been so far behind the eight ball in this respect, that it’s hard to see how anything short of sweeping official measures can deal adequately with the kind of systemic threat posed by China.

(What’s Left of) Our Economy: Without Supply Chain Transparency, There’s No Supply Chain Security

29 Wednesday Jul 2020

Posted by Alan Tonelson in (What's Left of) Our Economy

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Bureau of Economic Analusis, Defense Department, Defense Innovation Unit, defense manufacturing, election 2020, FDI, foreign direct investment, GAO, Government Accountability Office, health security, Joe Biden, medical equipment, national security, offshoring, Pentagon, supply chains, Trump, {What's Left of) Our Economy

Earlier this month, I criticized Joe Biden’s new plan to strengthen U.S. domestic manufacturing with a special eye toward boosting the security of key supply chains for holding out as a model the Pentagon’s work on defense-related manufacturing. Just this week, I found even more evidence to support the view that if the presumptive Democratic presidential nominee is really serious about achieving this goal (and given his longstanding record on trade and globalization issues, ample doubt is warranted) he’ll need a dramatically new model.

By the way, these findings show that the Trump administration also remains too far from getting its own supply chain act together.  And the main reason is a dangerous – and wholly unnecessary – lack of supply chain transparency.

The evidence comes from a September, 2019 report from the U.S. Government Accountability Office (an investigative arm of Congress) that summarizes the views of a panel of specialists convened to discuss foreign threats to the U.S. defense manufacturing base, and presents findings on the subject from various U.S. government agency, private sector, and university studies. The threats include the offshoring of the production of key defense-related goods; takeovers by foreign entities of U.S.-based facilities that supply these products, along with important services, or foreign acquisitions of significant stakes in these facilities; and the loss of U.S. competitiveness in these areas for market- and competition-related reasons and the resulting turns to foreign suppliers.

And crucially, the panelists consulted (listed on p. 40 of the report) include no notable supposed globalization alarmists or China hawks. In fact, one panelist was a senior executive of the U.S.-China Business Council, which has been a major pillar of what I call the nation’s Offshoring Lobby.

The report correctly noted that the use of foreign-origin goods and services can benefit U.S. national security interests. Specifically, it can “lower costs and provide better access to foreign workers and markets [which can help the companies in question gain the benefits of economies of scale by winning more customers].” Moreover, “When companies that offshore contract with DOD [the Departent of Defense], they can pass those benefits along. Foreign investment can help U.S. companies grow.”

So as in all areas of public policy, the key is finding the best balance, and reasonable people can always legitimately disagree on where it’s found. But here’s what’s really alarming about the message sent by the GAO report – and collectively by all the specialists and materials consulted: Neither the Defense Department nor any other branch of the U.S. government has the ability needed to achieve this goal partly because they lack the information needed to identify vulnerabilities, and partly because much helpful information is kept confidential at the request of private industry.

Here are the main relevant observations and conclusions presented in the report making emphatically clear that the nation lacks the supply chain transparency vital to improving supply chain security:

>”[T]he absence of a common definition of offshoring makes it difficult to analyze the extent to which offshoring is occurring in general as well as its effect on the defense supplier base. As such, the extent of offshoring and its effects are largely unknown.”

>”[P]ublicly available data do not provide granularity to analyze foreign direct investments in industry subsectors that comprise the defense supplier base.”

>”Pentagon “industrial policy officials told us that BEA’s [the Commerce Department’s Bureau of Economic Analysis] publicly available data are not complete enough to assess foreign investments in U.S. defense industrial subsectors. We also found that BEA does not disclose certain data for industry subsectors if the data would disclose the identity of individual companies, as these data are considered confidential. For example, BEA data on new foreign direct investment from China in the U.S. industry subsector “electrical equipment, appliances and component manufacturing” are not publicly available for 3 of the 5 years we reviewed.”

>”[A]ccording to BEA, new foreign direct investment data do not capture foreign investment transactions that involve less than 10 percent voting ownership in a U.S. enterprise. This may include data on venture capital investments in U.S. start-ups. According to a report by the Defense Innovation Unit (DIU) within DOD, there are an increasing number of investments in U.S. venture-backed startups from China-based investors that are not tracked by the U.S. government. This limits full visibility into foreign investors and the technologies they are investing in, as well as any increase or decrease in investment flows.”

>The DIU “echoed concerns about the limitations of U.S. government data and stated that the U.S. government does not comprehensively track all available data on investments, including those from private sources to assemble a complete picture of the level of foreign investment in U.S. companies.”

One big takeaway from the above is that the Defense Department is far from the only culprit here. Much more important, though, nothing could be clearer from this list of information gaps than that the Pentagon that Biden would rely on hasn’t made much of an effort to close them. And although the Trump administration has rhetorically prioritized reshoring manufacturing back to the United States in part for national security-related reasons, and can boast noteworthy progress in changing the U.S. trade policies that have encouraged so much defense-related offshoring, it’s clearly made little progress in making sure that it has the most fundamental information it needs to make sound decisions.

Also critical to recognize: It’s not that this information doesn’t exist. As I’ve previously noted, the companies that produce these goods and provide these services know exactly they, and most of their own contractors and subcontractors, are doing. Fully understanding and optimizing their own operations, after all, is one of the main ways they make money.

And the best way to extract what the government needs is to require legally what I’ve described as “Truth in Globalization” – and require it fast. Otherwise, no matter who wins the Presidency in November, the U.S. government will needlessly keep flying blind on supply chain security.

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  • Sober Look
  • Credit Writedowns
  • GubbmintCheese
  • VoxEU.org: Recent Articles
  • Michael Pettis' CHINA FINANCIAL MARKETS
  • New Economic Populist
  • George Magnus

(What’s Left Of) Our Economy

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Our So-Called Foreign Policy

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Im-Politic

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Signs of the Apocalypse

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

The Brighter Side

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Those Stubborn Facts

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

The Snide World of Sports

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

Guest Posts

  • (What's Left of) Our Economy
  • Following Up
  • Glad I Didn't Say That!
  • Golden Oldies
  • Guest Posts
  • Housekeeping
  • Housekeeping
  • Im-Politic
  • In the News
  • Making News
  • Our So-Called Foreign Policy
  • The Snide World of Sports
  • Those Stubborn Facts
  • Uncategorized

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Current Thoughts on Trade

Terence P. Stewart

Protecting U.S. Workers

Marc to Market

So Much Nonsense Out There, So Little Time....

Alastair Winter

Chief Economist at Daniel Stewart & Co - Trying to make sense of Global Markets, Macroeconomics & Politics

Smaulgld

Real Estate + Economics + Gold + Silver

Reclaim the American Dream

So Much Nonsense Out There, So Little Time....

Mickey Kaus

Kausfiles

David Stockman's Contra Corner

Washington Decoded

So Much Nonsense Out There, So Little Time....

Upon Closer inspection

Keep America At Work

Sober Look

So Much Nonsense Out There, So Little Time....

Credit Writedowns

Finance, Economics and Markets

GubbmintCheese

So Much Nonsense Out There, So Little Time....

VoxEU.org: Recent Articles

So Much Nonsense Out There, So Little Time....

Michael Pettis' CHINA FINANCIAL MARKETS

New Economic Populist

So Much Nonsense Out There, So Little Time....

George Magnus

So Much Nonsense Out There, So Little Time....

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