U.S.-China Trade: How Long Will the U.S. Be China’s Doormat?
When it comes to speaking at once from the heart and the gut on behalf of American workers, there’s no one better than Senator Sherrod Brown (D-OH), who said back in June and several times since, that China is great at gaming the system on trade and thus the President “shouldn’t just check the box and view China’s currency abuse and its numerous other trade abuses closed.” Even more pointedly, the Senator and ten of his colleagues, in a recent letter to the President, have elaborated on their views of China’s persistent trade abuses by saying that the administration’s focus on growing gross exports should instead have been on net exports (i.e., our trade balance) and in any event it “must not and cannot come at the expense of ensuring a fair playing field for our manufacturers.”
The eleven Senators, I should add, also decried “the Department of Commerce’s unwillingness to use the trade enforcement authorities and tools it has readily available to defend American manufacturers and workers against unfairly subsidized imports.” I and many others have made this point for years, and it is especially nettlesome that it is now being made against the non-actions of the Obama administration. I would go even one step further, however, and move trade enforcement to a fully enabled and funded office in the Justice Department — trade negotiation and the enforcement of agreements are distinct activities requiring very different skills, and enforcement best belongs with ‘enforcers’, not with those who negotiated the trade agreements.
President Obama’s current hide-the-pea approach regarding China trade is of course in complete contradiction to Candidate Obama’s promises throughout the ’08 campaign, which he most notably advanced in a speech he gave to the United Steelworkers on July 2, 2008. In that speech he said: “Change is knowing that for trade to work for America, it has to work for all Americans; that we have to stand up to countries that are manipulating their currency or flooding our markets with subsidized goods; that it’s wrong to have a “one-size fits all” trade policy that treats countries as different as China and Mexico as if they were the same; and that our job ends not when a trade deal is signed, but when it’s enforced.” Mr. Obama’s tolerance today of China’s trade abuses also contradicts the assertion of Tim Geithner in his January 2009 confirmation hearing to become Secretary of Treasury that China is a trade cheat and a “currency manipulator”.
The President’s views also run counter to the views of nearly two-thirds of Americans who, according to the latest polls, are only somewhat or not at all confident that the administration has the right domestic and trade policies to improve the economy and believe that:
* Foreign trade has been bad for the U.S. economy because imports have reduced demand for American-made goods and cost jobs here at home;
* We are at a tipping point as a nation when it comes to offshoring American jobs;
* Free trade agreements or FTAs lead to job losses; and
* There should be tough regulations to limit imports of foreign goods.
It’s important to look at what’s happened since the Toronto meeting in June to understand the absurdity of the administration’s continued aversion to confronting China:
* China’s overall trade surplus surged in July to28.7 billion, its highest level in 18 months. Its surplus with just the U.S. was about26 billion, or an almost unbelievable 90% of the total. China’s exports rose 38% year on year, while its pace of growth in imports slowed sharply.
* After three decades of double-digit growth, China just passed Japan to become the world’s second-largest economy behind only the United States, and it will now pass the U.S. as the world’s biggest economy as early as 2030. This year China’s economy is forecast to expand about 10%. China passed Germany last year to become the world’s biggest exporter.
When China wins in trade, as it now does every day, it’s really only the U.S. which loses.