(What’s Left of) Our Economy: You Call This a China Trade Deal?

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agriculture, China, dispute resolution, enforcement, NAFTA, offshoring lobby, Phase One, tariffs, Trade, trade deal, Trump, U.S. Trade Representative, USMCA, USTR, WTO, {What's Left of) Our Economy

OK, let’s assume that something deserving the name “U.S.-China trade deal” has been reached – even one dubbed “Phase One” or “preliminary.” Deep doubts would remain justified about whether it can possibly serve American interests.

For example, where’s even an English-language version? There’s nothing new about such agreements coming out in both English and Chinese, raising thorny questions about ensuring that key terms in both languages are commonly understood – on top of all the towering issues raised by China’s long record of flouting official commitments it’s made. But if something worth announcing officially on both sides has actually been produced, why is the most detailed description so far this statement from the U.S. Trade Representative’s (USTR) office?

Why does this statement contain plenty of specifics about U.S. tariff reductions (except for the actual dates by which American levies on imports from China will be cut) but no specifics about China’s own pledges? In that vein, no useful accounts have been released of what China will actually buy from the United States (though it’s interesting that President Trump has included manufactures on the list – not simply agricultural products and other commodities), and by when the Chinese will buy these goods. Special bonus – shortly after noon, the President said he “thinks” China will hit $50 billion in U.S. agriculture imports. Over what time period? Heaven only knows.

Don’t forget – such import increases will be the most easily described and verifiable aspects of any agreement. So maybe since these terms are still being left so vague, it shouldn’t be surprising that there’s absolutely nothing from the administration so far about “structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.”

Even the Trump administration has viewed these issues – which lie at the heart of the intertwined U.S.-China technology and national security rivalries, as well as of the purely economic rivalry – as so challenging to address diplomatically that rapid progress can’t be made. Why else would Mr. Trump have settled for now for seeking a shorter term, interim agreement?

If genuine breakthroughs have been made that will strengthen and safeguard and enrich Americans, terrific. But if so, what’s the point of couching them in generalities? And if not, what’s the point in claiming major progress?

Also completely, and crucially, omitted are any indications of what’s actually meant by “a strong dispute resolution system that ensures prompt implementation and enforcement.” In particular, if the United States doesn’t insist on the last word in judging Chinese compliance and meting out punishment when agreement terms are broken, then this deal will work no better on behalf of U.S.-based producers (employers and employees alike) than previous arrangements under the World Trade Organization (WTO) and the old North American Free Trade Agreement (NAFTA) that pleased only the corporate Offshoring Lobby, its hired guns in Washington, D.C., and the Mainstream Media journalists who have long parroted its talking points.

So if the United States is not recognized as sole judge, jury, and court of appeals when dealing with Chinese compliance, history teaches that will be the case that the agreement literally will be worthless.

The politics of this U.S. announcement are puzzling in the extreme as well. China’s economy obviously has taken a much greater trade war hit than America’s – of course mainly because it’s so much more trade-dependent. Beijing’s dictators are struggling to contain unrest in Hong Kong. The new U.S.-Mexico-Canada Agreement (USMCA), which will replace NAFTA, will offset some of the China-related losses suffered by the agriculture-heavy states so critical to Mr. Trump’s reelection hopes. The polls show unmistakably that the President is winning the impeachment battle in the court of public opinion. And even before the Congressional Democrats’ efforts to remove him from office began bogging down, their party’s slate of presidential candidates had started looking so weak to so many in Democratic ranks that a gaggle of newcomers jumped into the primary campaign on stunningly short notice. 

In short, this is no time for Mr. Trump to reach any deal with China – whatever Phase it’s called. In fact, it’s the time for the President to keep the pressure on (because whatever weakens the Chinese economy ipso facto benefits the United States these days). And since a deal that promotes real U.S. interests remains impossible to reach because of verification obstacles, it’s also time for Mr. Trump to start signaling to American business that major tariffs on China are here to stay for the time being, and may even increase down the road. That’s one way to eliminate any uncertainty employers are feeling about doing business with China that will increase the odds of building a new, improved bilateral relationship – not restore its epically failed predecessor.

The only reasons for optimism on the U.S.-China trade front right now? Just two that I can identify, but they’re hardly trivial. First, for all the reasons cited above, the supposed Phase One deal is clearly still so tentative and, frankly, so flimsy, that it’s likely to fall apart sooner rather than later. Second, U.S.-China decoupling will continue – precisely because the closely related technology and national security gulf dividing the two countries can’t be bridged diplomatically, and because even previously gullible U.S.-owned companies in numerous industries will now be thinking twice about exposing themselves, or exposing themselves further, to the whims of China’s utterly lawless and unreliable government. 

(What’s Left of) Our Economy: Why Pre-Trump Trade Policies Really Were America-Last Policies

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diplomacy, Finbar Bermingham, globalists, negotiations, South China Morning Post, Trade, Trump, U.S. Trade Representative, USTR, {What's Left of) Our Economy

I’ve often struggled to decide whether America’s dreadful trade policies over recent decades have stemmed more from incompetence (as President Trump sometimes charges) or corruption in the form of politicians and diplomats shilling for offshoring business interests or the often economically clueless national security community (as Mr. Trump also sometimes charges).

A report from Hong Kong’s South China Morning Post (which still publishes mostly reliable material even though the city is now part of China) didn’t settle the matter for me. But it once more valuably reminded that their country’s national interests have rarely topped U.S. trade negotiators’ priority lists. Why else would these officials have allowed themselves to be duped by the series of transparently cynical ruses and deceptions from their foreign interlocutors that they themselves describe in the article?

Correspondent Finbar Bermingham makes clear that his aim was to show how major “complications that can arise from issues of language, interpretation and translation during negotiations” and that as a result, “trying to iron out arguments over words, phrases or even grammar can be ‘worse than pulling teeth.’” Instead, what he (and the “experienced negotiators” he interviewed) demonstrated was how easily they could be snookered – and how thoroughly they either forgot or ignored America’s decisive leverage in all these dealings.

Take Elena Bryan. According to this 17-year veteran of trade negotiations with the Office of the U.S. Trade Representative (USTR), “it’s very hard to enforce anything under the Chinese because their system is both complicated and relatively opaque, and there aren’t that many Mandarin speakers around that have the requisite technical trade and legal skills.”

But with its new tariff hike threat (which has the Chinese scurrying back to Washington to try to restart talks), the Trump administration has just suggested how easily this allegedly formidable challenge can be overcome: Tell the Chinese to get serious – and work with standard English – or they get higher tariffs imposed on their goods heading for the U.S. market that their economy desperately needs to produce adequate growth and employment.

Ditto for the claim by Bruce Hirsh, “assistant USTR for Japan and South Korea under former US president Barack Obama,” that “Haggling over individual words was 90 per cent of the game. How much of that was a language and translation issue and how much of that was just the actual negotiation over the substance is hard to say.”

Indeed, if anything, Hirsh’s position – and that of his boss – was even less acceptable, since both Japan and South Korea have even less economic leverage over the United States than China, and they also depend on American nuclear guarantees for their defense. As soon as they started haggling over words, Hirsh should have walked out of the room and urged his President to lower the tariff boom.

Nicole Bevins Collinson, “a textiles negotiator for the USTR in the 1990s,” inadvertently let readers know just how pathetic such excuse-making can become:

“The issue of commas and where they’re placed, and whether you use the words ‘and’ or ‘or’ were always big sticking issues. The other big thing was ‘may’ and ‘shall’. In some languages, those words are the same – or maybe they would just tell us that. What we thought was ‘shall’, they translated into ‘may’ and we were told we can’t use the word ‘may.’”

No wonder the American textile industry has struggled so mightily in the face of often predatory global competition and grew only about a fifth as fast in real terms as U.S. manufacturing overall during the 1990s.

Another type of nonsense-enabling was served up by Jean Heilman Grier, “who between the USTR and US Department of Commerce, spent 25 years negotiating and advising on trade agreements for the US government.”

Grier told Bermingham that “The Japanese…prefer more ‘conceptual’ text. ‘They don’t want the exactitude that we’re often looking for. So that’s where you can kind of get into problems with some of the translations.’” Talk about a great stalling tactic, especially when the folks on the other side of the table seem too happy to play along.

About the kindest interpretation that can be put on this manifest incompetence is that these diplomatic veterans valued reaching any kind of deal, even a bad one, over risking a no-deal outcome. In the words of Mary Ryckman, “who spent 30 years with USTR negotiating a host of trade agreements,” “You have the ‘art of the being vague’ and you agree to be vague because you want to come to an agreement.”

Ryckman’s point underscores a critical truth about American trade diplomacy – the diplomats quoted above and most of their colleagues in the pre-Trump decades weren’t making trade policy. They were simply carrying out orders from the globalists above. So Ryckman, for example, can’t be blamed for the “agreement or bust” imperative she followed. That blunder was on the President at the time.

But the South China Morning Post piece also indicates that none of the officials quoted had the slightest problem with their instructions, even though they all but guaranteed failure from the U.S. standpoint, at least defined commonsense-ically. Despite decades of experience, and of clear failure to achieve the stated goals of their efforts (usually meaningful foreign market opening), they apparently were content to play the dupe. Whether witting or unwitting, though matters much more when it comes to the intentions and records of their superiors than to their own.

(What’s Left of) Our Economy: The Alternative Facts Behind America’s China Trade Policy

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alternative facts, Bill Clinton, Charlene Barshefsky, China, exports, imports, Long Yongtu, manufacturing, offshoring, services, The Wall Street Journal, Trade, trade law, U.S. Trade Representative, USTR, World Trade Organization, WTO, {What's Left of) Our Economy

After reading her interview with The Wall Street Journal, it’s hard to tell whether Clinton-era chief U.S. negotiator Charlene Barshefsky is mainly clueless or mainly arrogant. In other words, is Barshefsky oblivious to how badly she (and colleagues) botched the challenge of admitting China into the World Trade Organization (WTO)? Or is she confident that the bipartisan American economic policy establishment remains so strongly wed to this epic failure that her reputation and current cushy job as a leading trade lawyer won’t suffer in the slightest even when it’s scope is made unmistakable?

Most disturbing, nothing could be clearer from the interview – in which she was joined by one of her former top Chinese counterparts – that her views on the WTO deal and those of Beijing are as close, as the Chinese like to say, “as lips and teeth.” The only significant difference: then Chinese vice commerce minister Long Yongtu denies that his country’s economic reform efforts have gone off the rails in recent years. Barshefsky insists that China “has stopped the process of economic reform and opening and that, instead, has put in place a spate of measures that are zero sum. They’re highly mercantilist and discriminate against U.S. and foreign companies.”

That’s nice to hear. But this claim also underscores how completely blindsided Barshefsky, the rest of the Clinton administration, and the rest of the powers-that-be in American government, business, and academe were by an about-face in a country with a recent history of political instability and course changes, and no record of viewing trade as a positive-sum game or economic openness as a crucial objective in and of itself.

Barshefsky also demonstrates her belief that the phony promises that fueled the Clinton administration’s successful drive to secure China’s WTO entry still hold water – at least with the high and mighty. For example, according to Barshefksy, “The U.S. didn’t alter its trade regime, nor did any other country alter its trade regime. As in any WTO negotiation, it is the acceding country that needs to reform its economy.” But as she surely knows, WTO membership won for China substantial immunity from the national trade law system the United States historically had used to safeguard its legitimate trade interests unilaterally. Once China entered the WTO, Washington’s internationally recognized responses to China’s predatory trade practices largely depended on the assent of the WTO membership – which has been numerically dominated by economies that were major users of Chinese style protectionism.

Barshefsky continues to claim that the safeguards she negotiated with China were adequate to protect domestic industries – at least temporarily – from surges of Chinese imports. The only problem, she contends, is that these mechanisms were “”almost never used.” What Barshefksy omitted, however, was that the big U.S.-based multinational manufacturers that lobbied so lavishly and successfully on behalf of China’s entry were also offshoring production and jobs like crazy to China largely to supply the America market much more cheaply. Limiting America’s imports from China, especially from factories with which they were linked, was the last thing they wanted.

According to Barshefsky, the post-WTO ballooning of the U.S. goods trade deficit with China can be brushed aside because “we have a substantial services surplus with China.” It’s too bad she didn’t provide any numbers, but not at all surprising – since that surplus last year was only about a tenth as big ($37.4 billion) as the merchandise shortfall ($347 billion). Moreover, the manufacturing-heavy nature of this merchandise deficit – which is increasingly comprised of advanced manufactures – should concern all Americans.

And finally, Barshefsky repeated the widely expressed canard that “the trade deficit is a function of macroeconomic factors. Principally, the difference between what Americans save, which is nada, and investment, which is plentiful.” But the relationship between national trade balances and savings rates is simply a mathematical identity – which by definition says “nada” about causation. Indeed, there are plenty of reasons to suppose that, the more the trade deficit grows, the lower the savings rate is bound to become.

Yet interviewing Barshefsky has at least performed one public service. It reminds Americans that alternative facts began shaping the nation’s politics and policy long before the last presidential election.

(What’s Left of) Our Economy: What’s Really Wrong with Obama’s Aluminum Trade Case

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aluminum, Fareed Zakaria, Obama, overcapacity, subsidies, Trade, Trump, U.S. Trade Representative, USTR, Washington Post, World Trade Organization, WTO, {What's Left of) Our Economy

What’s most laughable about the Obama administration’s new World Trade Organization (WTO) challenge against China’s subsidies to aluminum producers isn’t the decision to file the complaint with just over a week left in office (although admittedly that’s pretty laughable). What’s most laughable is the continuing belief that the WTO is an effective instrument for fighting such predatory trade practices.

After all, as claimed by a U.S. industry leader in a statement cited by the U.S. Trade Representative’s (USTR) office itself, “China’s subsidies have done enormous damage to the U.S. and global aluminum industries.” USTR’s press release, moreover, goes on to present data making clear that the PRC’s state-supported overcapacity building dates back to at least 2007, and that private sector American rivals that need profits have been forced to respond to the resulting global price crash by dramatically slashing both production and capacity.

It’s bad enough, as USTR admits, that President Obama’s main response until yesterday was completely ineffectual “engagement” with Beijing in various official bilateral talk shops. Mr. Obama allegedly even brought up the subject with Chinese president Xi Jinping last September. The results, according to USTR? “[W]hile China has expressed a willingness to continue talking about the excess aluminum capacity situation….China has not been willing to take concrete steps to address it.”

And now, with the number of aluminum smelter in the United States having fallen from 14 to five since 2011 – “with only one operating at full capacity” – the administration has decided to begin a WTO process that could take 15 months (counting appeals) to complete and, if Washington wins, authorize countervailing tariffs. Further, if Beijing loses and promises to end its aluminum transgressions, the United States will be faced with the probably insuperable challenge of monitoring compliance by China’s highly secretive bureaucracies.

This morning, Washington Post and CNN pundit Fareed Zakaria wrote that “Chinese elites” he’s recently met with are “remarkably sanguine about [President-elect] Trump” and his attacks on Beijing’s trade-related economic practices. If the incoming president relies heavily on the WTO to fight China’s predation, their complacency will be amply justified.

(What’s Left of) Our Economy: Looks Like Obama Aide’s Conceding a Major TPP Argument

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AIIB, Asian Infrastructure Investment Bank, China, exports, free trade agreements, Free Trade Area of the Asia Pacific, GDP, imports, Michael Froman, Obama, Regional Comprehensive Economic Partnership, TPP, Trade, Trans-Pacific Partnership, U.S. Trade Representative, USTR, {What's Left of) Our Economy

Compelling evidence just appeared that the Obama administration is conceding that many critics are right to call its Pacific Rim trade deal is a nothing-burger economically – at best. It came in the form of U.S. Trade Representative Michael Froman’s official comment on the new, Congressionally mandated U.S. International Trade Commission (USITC) projection of the deal’s economic effects.

The USITC did a good enough job pouring cold water on the notion that the Trans-Pacific Partnership (TPP) would be a major boon for the American economy. As has been widely reported, the Commission forecasts that the impact on the nation’s growth and real incomes is statistically insignificant.

These findings logically challenge critics’ descriptions of the deal as disastrous. But at the same time, the USITC assumes full compliance with the TPP’s terms by the eleven non-U.S. signatories. As I’ve explained, even if Washington performed a dramatic about-face and treated trade monitoring and enforcement as a priority, logistical and political barriers mock the belief that the United States can hold its TPP partners’ feet to the fire.

Indeed partly because its methodology can’t adequately take such problems into account, the USITC has a long and sorry track record of greatly understating the net harm to the American economy from new trade agreements.

But Ambassador Froman’s strategy for handling the USITC report strongly indicates that President Obama has decided to gloss over the claim that his aides did a great job at the TPP talks. For the U.S. Trade Representative evidently has decided to change the subject.

Froman did make some token stabs at portraying the TPP’s terms as economic winners for Americans. For example, he took the time-honored official Washington tack of touting export projections while ignoring predictions for imports (which globally would be greater according to the USITC) and thus the net economic impact of trade flows.

Yet Froman quickly exited this specifics-oriented economic debate and pointedly contended that “What cannot be quantified in this study or any other is the cost to American leadership if we fail to pass TPP and allow China to carve up the Asia-Pacific through their own trade agreement.”  

Unfortunately for him and the president, this position puts them on no stronger ground. On the one hand, after all, Froman is implicitly conceding that any set of TPP provisions to which the United States agrees is better than none because simply signing the treaty creates an American seat at the Asia-Pacific rule-writing table. On the other hand, as I’ve repeatedly noted, expectations that such American participation will create even longer-term benefits is laughable for at least four main reasons.

First, most of America’s main regional allies – and most major TPP signatories – are already taking part in those Chinese initiatives that Froman describes as so hostile to American interests. These initiatives include not only China’s new Asia infrastructure bank, but its Regional Comprehensive Economic Partnership – its explicit counterpart trade agreement.

Second, the United States itself has given its blessing to another Chinese-backed regional trade scheme – a proposed Free Trade Area of the Asia Pacific.

Third, these Chinese measures have attracted such regional support largely because so many East Asian countries in particular (as opposed to TPP’s Western Hemisphere members) pursue the kinds of Chinese-style trade and broader economic policies that the administration has long noted have undercut U.S. Domestic economic interests. Regardless of the piece of paper they have signed, the last thing these neo-mercantilist powers want to see is an enforceable set of “rules for trade” that reflect America’s more free-market-oriented values and practices.

Fourth, because U.S. and Asian definitions of acceptable and unacceptable economic behavior contrast so strikingly, even sitting at the TPP table can’t possibly guarantee pro-American results – unless the TPP’s dispute-resolution mechanism breaks with all recent precedents and awards outsized authority to the United States, as opposed to operating on consensual, or one-country, one-vote, principles.

Not that Froman or the rest of the administration are running out of arguments yet. They could refocus the debate on the national security claim that TPP is essential for preserving and/or strengthening America’s geopolitical position in the Asia-Pacific region, especially as China’s power and influence surge (even though this administration has done little at most to stem the flow of defense-related technology and valuable economic wherewithal to that same China). They could also warn that President Obama’s international credibility will be undercut if TPP is rejected (even though his presidency is nearly over).

Wouldn’t it be much better if Mr. Obama and his aides just threw in the towel, admitted that despite decades of experience, neither Democratic nor Republican administration’s have figured out how to negotiate trade agreements that work for America on net, and if the next president spent time and resources developing a learning curve instead?

Those Stubborn Facts: No Art to This Obama WTO Tech Trade Deal

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China, Information Technology Agreement, ITA, Michael Froman, Obama, tariffs, technology, Those Stubborn Facts, Trade, U.S. Trade Representative, USTR, World Trade Organization, WTO

“Last night, we reached a breakthrough in our ongoing efforts to expand the Information Technology Agreement [ITA]. This is a WTO agreement that eliminates tariffs on high-tech products among 54 economies, including the U.S. and China….it shows that the U.S. and China work together to both advance our bilateral economic agenda, but also to support the multilateral trading system.”

–U.S. Trade Representative Michael Froman, November, 2014

“ITA’s completion is a major win for American technology exporters and a step forward for President Obama’s Middle Class Economics trade agenda.”

–Office of the U.S. Trade Representative, July, 2015

“Nearly five months after 54 WTO member economies agreed to expand the scope of duty-free products under the Information Technology Agreement (ITA), China has not pared down the number of products that it wants to keep tariffs on for an extended period of five to seven years.”

—South China Morning Post, December 11, 2015

(Sources: “What They’re Saying: Breakthrough in Negotiations of the WTO Information Technology Agreement,” Tradewinds: The Official Blog of the United States Trade Representative, Press Office, Office of the United States Trade Representative, November, 2014, https://ustr.gov/tradewinds/2014/November/What-Theyre-Saying-Breakthrough-in-Negotiations-of-WTO-Information-Technology-Agreement; “U.S. Lead WTO Partners in Clinching Landmark Expansion of Information Technology Agreement,” Press Release, Press Office, Office of the United States Trade Representative, July, 2015, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/july/us-leads-wto-partners-clinching#; and “China ‘has not budged an inch’: Beijing urged to make changes to global tariff-cut deal on ICT products ahead of WTO meet,” by Bien Perez, South China Morning Post, December 11, 2015, http://www.scmp.com/tech/innovation/article/1889830/china-has-not-budged-inch-beijing-urged-make-changes-global-tariff)

(What’s Left of) Our Economy: More Trade Double-talk from Obama

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fast track, free trade agreements, Obama, TPP, Trade, Trans-Atlantic Trade and Investment Partnership, Trans-Pacific Partnership, U.S. Trade Representative, USTR, {What's Left of) Our Economy

President Obama has repeatedly tried to justify to critics his progressive trade policy bona fides by acknowledging how far so many previous trade deals have fallen short of their promises – and then insisting that his proposed Trans-Pacific Partnership (TPP) and a companion European deal are incorporating the right lessons.

The trouble is, the rest of his administration doesn’t seem to have gotten this message, conveying the impression of a government speaking literally out of both sides of its mouth – and therefore undeserving of sweeping new fast track trade negotiating authority.

Speaking at the headquarters of offshoring-happy Nike earlier this month, the president acknowledged that “past trade agreements, it’s true, didn’t always reflect our values or didn’t always do enough to protect American workers.  But that’s why,” he insisted, “we’re designing a different kind of trade deal.”

Addressing progressive activists in Washington a few weeks earlier, Mr. Obama was even more emphatic:

“[P]ast trade deals didn’t always live up to the hype.  A lot of trade deals didn’t include the kinds of protections that we’re fighting for today.  And I saw it in Chicago and in towns across Illinois where manufacturing collapsed, plants closed down, jobs dried up.  When I ran for office, I’d talk about a man I met who had to pack up his own plant before he was laid off.  And that made a mockery of the value of community and the dignity of work.  So for a lot of Americans, they attribute those changes to what happened in the aftermath of trade agreements.  And I understand that.  But we’ve got to make sure we learn the right lessons from that.”

No one, however, seems to have told the U.S. Trade Representative’s (USTR) office, the Commerce Department, or even the White House staff.

Thus according to USTR, “The process of opening world markets and expanding trade, initiated in the United States in 1934 and consistently pursued since the end of the Second World War, has played an important role in the development of American prosperity. According to the Peterson Institute for International Economics, American real incomes are 9% higher than they would otherwise have been as a result of trade liberalizing efforts since the Second World War. In terms of the U.S. economy in 2013, that 9% represents $1.5 trillion in additional American income.

“Such gains arise in a number of ways. Expanding the production of America’s most competitive industries and products, through exports, raises U.S. incomes. Shifting production to the most competitive areas of our economy helps raise the productivity of the average American worker and through that the income they earn. With the ability to serve a global market, investment is encouraged in our expanding export sectors and the rising scale of output helps lower average production costs. Such effects help strengthen America’s economic growth rate. Moreover, imports increase consumer choice, and help keep prices low raising the purchasing power for consumers. Imports also provide high quality inputs for American businesses helping companies and their U.S. employees become or remain highly competitive in both domestic and foreign markets.”

What’s not to like?

Then there’s Commerce: “Free Trade Agreements (FTAs) have proved to be one of the best ways to open up foreign markets to U.S. exporters. Trade Agreements reduce barriers to U.S. exports, and protect U.S. interests and enhance the rule of law in the FTA partner country. The reduction of trade barriers and the creation of a more stable and transparent trading and investment environment make it easier and cheaper for U.S. companies to export their products and services to trading partner markets. In 2014, 47 percent of U.S. goods exports went to FTA partner countries. U.S. merchandise exports to the 20 FTA partners with agreements in force totaled $765 billion, up 4 percent from 2013. The United States also enjoyed a trade surplus in manufactured goods with our FTA partners totaling $55 billion in 2014.”

In other words, and contrary to the president, past free trade deals have indeed promoted American values as well as American economic interests.

Finally, the White House itself: “The Administration has made progress in expanding global trade opportunities for U.S. exporters by signing into law three trade agreements, enforcing U.S. companies’ rights under existing trade agreements, and strengthening trade relationships in major emerging markets.” So it seems like the president learned the right trade policy lessons even before launching into the TPP talks?

It’s perfectly reasonable (if factually challenged) for U.S. officials to argue that past trade deals have been big successes, and that therefore America needs more of them. It’s also perfectly reasonable for Mr. Obama to claim that past trade deals have often failed, but that he’s discovered a real recipe for success. But it’s anything but reasonable for a single administration to be taking both positions. If anything, it’s a tell-tale sign of a time-honored political trick: Throw enough mud at a wall and expecting some of it to stick.

(What’s Left of) Our Economy: Obama’s New China Trade Case Barely Qualifies as Tokenism

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China, fast track, free trade agreements, Michael Froman, Obama, subsidies, TPA, TPP, Trade, trade enforcement, Trade Promotion Authority, USTR, {What's Left of) Our Economy

According to U.S. Trade Representative Michael Froman, the Obama administration’s decision to file a World Trade Organization challenge to certain Chinese export subsidies once again demonstrates the president’s commitment to ensuring “a level playing field” for American producers in international trade. That’s an important message to convey as Congress takes up the trade deals Mr. Obama is pursuing, as well as a renewal of fast track negotiating authority. It’s also completely misleading.

Froman acknowledges that “Due to China’s lack of transparency, it is difficult to assess the exact extent of the subsidies” his agency is challenging. The only specifics his office provides: “…evidence that certain Demonstration Base enterprises have received at least $635,000 worth of benefits annually.  In addition, China has given almost $1 billion over a three-year period to Common Service Platform suppliers that agree to provide discounted or free services to Chinese companies.”

Here, however, is a sense of the kinds of Chinese trade-related subsidies Obama’s level playing field campaign has continually missed:

In October, 2010, China’s State Council announced plans to support development of seven “strategic emerging industries” between 2011 and this year. Estimated price tag? $1.5 trillion.

In addition, in 2012, Simon Evenett of Switzerland’s St. Gallen University reported that China’s Value-Added Tax system has served as a subsidy for some $1.1 trillion worth of Chinese exports every year. That’s seven percent of total global exports.  

And no one should forget the cheap-currency subsidy that China has long handed out.  That affects all of its exports – including those turned out by the offshoring multinational companies that so strongly support fast track, the Trans-Pacific Partnership (TPP), and the rest of the administration’s trade agenda.  

Clearly, the real lesson taught by this latest U.S. announcement is that, as with its predecessors, the Obama administration’s trade enforcement approach is so piecemeal and reactive that the most accurate label is not “strategy” but “tokenism.” And even that seems awfully charitable.

(What’s Left of) Our Economy: Could More Critics Start Making the Smart Arguments Against Obama’s Trade Deals?

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fast track, free trade agreements, Michael Froman, Nancy Pelosi, Obama, offshoring, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership, transparency, USTR, {What's Left of) Our Economy

As with other policy issues, there are smart and..uh…not-so-smart arguments that can be made against the trade deals being pursued by President Obama. A new NBC News interview of House Democratic Leader Nancy Pelosi makes painfully clear that, during the run-up to the debate Congress is sure to have about these deals plus fast track negotiating authority, too many trade policy critics have been infatuated with the latter kind.

The evidence? Pelosi’s remarks, presented here, that fast track approval is possible “if there’s transparency; if we know what is in this bill, if there’s consultation.”

Pelosi of course is referring to the widespread complaints that the Trans-Pacific Partnership (TPP) in particular has been negotiated in secret. Allegedly only the lobbyists for offshoring interests have been privy to the Obama administration’s strategy and tactics– and thus have been able to shape them – and representatives of the rest of America’s economy and society have been left in the dark.

As anyone who knows my work realizes, I’m no fan of U.S. Trade Representative (USTR) Michael Froman (not that he seems any worse than any of his predecessors over the last forty years). But he has stated that “any Member of Congress can review the negotiating text and has the opportunity to receive detailed briefings,” and I have yet to hear any lawmaker claim that such a request has been rejected. Although the USTR office’s trade policy advisory system is indeed heavily and inexcusably weighted in favor of the offshoring lobby, enough Members of Congress are trade policy skeptics to ensure that the concerns of trade deal opponents are relayed in full to negotiators.

As for complaints that the actual trade talks are secret and that the public isn’t kept adequately informed: Please. That’s standard and vitally necessary operating procedure for all such negotiations, where governments always need to float ideas both serious and cynical, to test out possibilities and tradeoffs, and to smoke out their interlocutors’ real intentions and bottom lines.

Moreover, once the deals are concluded, the texts will be made public, so the secrecy arguments will be null and void, and critics will have to debate substance. There’s no shortage of major economic objections to the deals. But the fact that at this late date, the House Democratic leader seems so unaware of them, or so uninterested, strongly indicates that most critics have given short shrift to the – overriding – economic case.

It’s true that the TPP is far from being finished, and that the President has just made a new request to Congress for fast track authority. It’s also true that Pelosi made some (brief and – transparently – silly) comments about trade critics’ need to demonstrate good faith to the president in order to safeguard worker interests. But the ground should have been paved much more effectively over the last few years about what’s really wrong with these agreements and the predecessors on which they’re modeled.

Now the critics will need to win the equivalent of a relatively short and very intense firefight. Given the tide of money and armies lobbying manpower that can be quickly mobilized by the trade cheerleaders, they may well rue the opportunity they’ve wasted.