Trump understands that brand matters, and the latest version of brand America is failing badly. At this year’s World Economic Forum in Davos, business executives expressed not only concern, but outright dismay, over the investment climate in the U.S. And they aren’t just sitting on their capital waiting for better days.
Investors are voting with their money and heading for other countries. The statistics for Foreign Direct Investment in the U.S. (FDIUS) show a troubling trend. In the second quarter of last year FDI turned negative, a reversal of fortune not seen in years. That followed a drop of 41% year-on-year to $277 Billon in 2017, after peaking at nearly $472 billion 2016, according to U.S. government data.
Companies including Tesla, Unilever, and Foxconn are looking elsewhere to invest due in part to the uncertainty around the U.S.-China trade war. Imports and exports have been hit along with supply chain disruptions. While the upcoming trade talks in Washington were bathed in a positive light from governments on both sides of the Pacific, the outcome has been thrown into serious doubt after the Department of Justice announced criminal charges against Huawei and its CFO Meng Wanzhou.
She is currently detained in Canada on an extradition request that is now sure to move forward. Trump has said he may intervene in her case if it serves the trade talks and U.S. national security. What he can actually do, politically or legally, remains unclear.
The souring on brand America isn’t just about China trade disruptions. Trump’s immigration policies, his tacit acceptance of jingoistic and racist dog whistling by his most ardent supporters, and the perception that the U.S. is retreating from global affairs is turning away international students that might otherwise invest in a coveted U.S. education.
Enrollment in undergraduate programs dropped for the second year in a row with a 6.6% fall for 2017-2018. That’s putting new strains on colleges and universities that have grown accustomed to full-tuition paying foreign students.
The longer term cost to the U.S. will show up in worker shortages, primarily in science, technology, engineering, and math disciplines. These professions are already woefully short on trained graduates and unfilled jobs create a drag on economic growth.
While the administration touted $1.5 trillion dollars in corporate tax reductions that began in 2018, a survey by the National Association of Business Economics shows that companies are not in fact spending more. Trickle-down economics didn’t work under Reagan and it certainly isn’t working now even with a new, slick cover promising to make America great again.
A brand is only as good as what it delivers and so far Trump’s promises made continue to be promises broken. The U.S. accumulated a lot of good will over the decades. That hard-earned reputation is now at risk of being destroyed in only a few years.
Trump Chaos Rattles China Trade Negotiations Before They Even Begin
Just days after President Trump claimed success in trade disputes with China, disagreement over the details have emerged. That rings with a familiar tune.
The Trump-Kim Summit this past June in Singapore raised similar doubts about what, if anything, was actually accomplished. It turns out that even with a loosely worded document we now know that nothing was formalized after that highly touted success.
While North Korea continues to develop missiles and possibly more nuclear weapons, Trump complains he hasn’t been offered the Nobel Peace Prize for his efforts.
The Saturday Trump-Xi dinner in Buenos Aires didn’t even offer anything in writing and journalists were left guessing why applause erupted from behind closed doors as the dinner ended. There was no press conference or photo op to clear up the issue as Trump & Co. headed for the airport.
After landing, Trump claimed Chinese auto tariffs were being lifted. The White House has now walked that back. Trump claimed China would spend over $1 trillion on U.S. goods. His economic advisor Larry Kudlow said that was more aspirational than specific and would be determined by private entities and economic conditions. Trump said if China doesn’t make bold moves in ninety days, he’s Mr. Tariff, and then suggested the timeline might be extended.
No one knows what success looks like three months from now, and that’s a serious problem.
Now China has expressed its discontent with the White House version of winning it all. Yet again, Trump excels at undiplomatic posturing while others are left to clean up his mess.
The pattern here is clear. Trump’s erratic words cannot be trusted, only managed, even by those closest to him. It’s another episode of “Promises Made, Promises Broken.”
U.S. markets didn’t like that kind of uncertainty, and along with other negative financial news on Tuesday, they shed over 3% in one of the worst days in their history.
Making matters worse, US Trade Representative Lighthizer replaced Treasury Secretary Mnuchin as lead negotiator. Lighthizer is a known China hawk, and while having someone strong-willed and skeptical at the table is an advantage, if the lead isn’t considered to be negotiating in good faith that will not end well for bilateral relations or the international trading system.
The biggest risk at the end of February will be China claiming they did everything they said they would do and the U.S. saying whatever they did wasn’t enough.
Chinese state media has already started making the list and announced increased punishments for firms found guilty of IP theft, but will they be implemented?
If Trump really wants to reduce the trade deficit, protect intellectual property, and remove investment barriers, he and his team are going to have to be far more disciplined than they have been to date, and that seems highly unlikely.
Playing loose and fast with the facts, tweeting exaggerated wins, and painting Chinese negotiators into a corner will not make this relationship work. Both sides have to be able win.
11/30/18 – Updates on potential Trump-Putin meeting below.
The city center is bulking up on barricades and armed officers as world leaders being arriving for this year’s G20 meeting. Some 22,000 security personnel are being enlisted to keep the peace as anti-globalization and leftist political protests are expected, though they’ll be confined to a largely emptied part of town. The Argentine economy is under significant stress with 45% inflation and the peso more than doubling over the last two years against the dollar. Major parts of downtown will be completely closed, including cafes and shops.
Saudi Arabia’s Crown Prince Mohammed Bin-Salman arrived on Wednesday and French President Macron is on the ground today. Trump is expected Friday along with several hundred press in tow. How many are fake news, but real people, will likely be tweeted ad nauseam starting late Saturday as Trump winds up his 48 hour stint in Argentina.
Here are a few of the potentially most controversial issues to come out of the annual gathering.
Will there be a joint statement?
After the debacle at APEC where the U.S. and China were at loggerheads over the final text and in an unusually thuggish move, the Chinese delegation stormed the offices of the Papua New Guinea Prime Minister’s office demanding changes. In the end there was no agreement over language for a final statement, the first time since APEC’s founding in 2003.
For context, those final statements are mostly aspirational with very watered down, benign language that all participating countries can sign off on. They aren’t even legally binding. Early drafts are usually negotiated well in advance.
Will the same happen at the G20 with an even more complex set of issues in play including climate change (which Trump doesn’t believe is a scientific fact), migration (U.S. troops still on the border with Mexico), economic growth, health, sustainable development, the international financial architecture, and a host of other issues in addition to an “Action Plan.”
Part and parcel of G20 gatherings are major business deal announcements and project financing, aka deliverables. Most, if not all of these, have either been in the works for months or already started, but it makes the event look like a venue where things get done. China is funding Argentina’s fourth nuclear power plant and if the proliferation of China’s ICBC bank branches across the capital are any indication, financial ties are strengthening even during Argentina’s economic downturn (Citibank sold its retail operations to Santander in 2016 further shrinking U.S bank presence in the country.)
What, if anything, will the U.S. be announcing in terms of large deals in Latin America? The re-negotiated NAFTA with Mexico and Canada is already old news as is Argentina’s new beef exports to the U.S. China’s financing largesse is likely to overshadow any announcements by Trump unless the numbers are “bigly” and “yuge.” There are no signs of that happening.
Rumor has it Trump and Xi are meeting for dinner on Saturday night, with the venue and menu yet to be reported. The outcome of that feast may well determine the near-term future of global trading relations, major stock market movements, and a wave of punditry over the temperature of a new Cold War. Trump’s economic adviser, Larry Kudlow, tried to strike a positive tone this week suggesting a deal could be made over the tit-for-tat tariffs that have roiled markets, while hedging with a statement that China needs to offer more. Trump, with his illimitable bravado, threatened even more tariffs.
Meanwhile China’s President Xi continues to travel the world (most recently Spain) and continues to tout support for free markets and the allure of China’s growing market. So far there’s been no mention of structural reform and there likely won’t be. State-owned enterprises are a fixture of China’s Communist Party rule despite its turn towards capitalism, and no threat from the U.S is going to change that.
Update 11/30/18 12:54 – Russia says a meeting with Trump is still on as with other leaders. WH says nothing has changed. They may be splitting hairs on what “meeting” means. Technically a “pull aside” is not an “official” meeting since it doesn’t involve a formal sit down with advisors, etc. and can take place for a very short time. A pull aside also doesn’t carry the same gravitas as a formal meeting, but leaders still talk to each other, and usually without press or even a briefing afterwards.
Update 11/29/18 11:45 – Trump tweets cancellation of his G20 meeting with Putin citing Russia’s continued seizure of Ukrainian ships and crew. That leaves door open if they’re released in the next two days, but suspicions swirl that this has to do with more Cohen revelations of pursuing a Moscow deal during the campaign.
As of 11/29 the meeting has been cancelled via Trump’s tweet and then on 11/30 Russia says they will still meet. Who knows what “meet” means anymore.
No matter how this pans out, the on-again, off-again announcements make the U.S. look weak and confused. If Trump does end up meeting Putin, even in an “unofficial” pull-aside, he appears to be dancing to Russia’s balalaika (stringed Russian musical instrument.) There will be no time for an in depth discussion of Iran, missile treaties, Ukraine, North Korea, Syria, or a handful of other pressing issues.
It’s amateur hour in Buenos Aires for the U.S. delegation, in part or by design thanks to Trump’s inability to stay on point and engage with the international community in any strategic way. Have no doubt though that WH Comms will spin this as a series of successful events during an intense two days of high stakes diplomacy.
. . . It will certainly be a whirlwind few days of summitry, though don’t expect any mountain peaks to be topped with major announcements.
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It should come as no surprise that winning the peace in Iraq after winning the war a decade earlier proves harder in practice than in theory.
After years of occupation, an election and billions of dollars in U.S. funding, the all-inclusive society of Shi’ites, Sunnis and Kurds has failed to materialize. A new military built from the ground up as Saddam’s forces were disbanded turned tail at the first signs of organized radical resistance. Add to the transition equation a porous Syrian border in civil war, well-funded radical groups pursuing a mythologized Caliphate and a stream of foreign fighters eager for a new front — Iraq’s unresolved domestic fissures could only expand.
All of the official optimism about a new pluralistic Iraq, under both the Bush and Obama administrations, flew in the face of what political-military planners, historians and diplomats knew as far back as the late 1990’s when Iraq War I was waged.
Democracy is a tough sell.
In a region where centuries of animosity and mistrust continue to fuel a cycle of violence and counter-violence, pluralism, let alone democracy, has never been an ideal. And no amount of U.S. troop presence would change historical momentum fueled by ideological, ethnic and tribal divisions. Not at least without a new identity forged by the Iraqis themselves.
Why would the Kurds, for decades suppressed, gassed and murdered, find comfort in Baghdad under any rule but their own? The borders of modern Iraq, after all, were lines drawn by the British forcing traditional enemies together into a tentative order.
The Sunnis too, had no home in Prime Minister Nouri al-Maliki’s new Iraq. Once an oppressor-class under Saddam Hussein’s dictatorship, they were quickly forgotten by the new Shi’ite-dominated government.
There has never been a South Africa-styled national reconciliation. No new equality in the ebb and flow of power and pain in the Middle East. Only old wounds and new scars.
Perhaps the existential threat posed by the Islamic State of Iraq and Syria (ISIS), the latest in a long line of radicalized groups, and its military rout of Iraq’s major cities, will fuse a fractured nation into a common front. That’s the most the U.S. could hope for (and support) until Iraq’s larger fate can be addressed.
New calls for al-Maliki’s ouster will hardly solve the problem. President Obama has insisted on a “political solution” while ISIS takes Mosul and marches towards the capital. Inclusion certainly helps, but now it must be in the fight for a unified Iraq.
First Iraqis will have to rally under one flag. Then they can decide for themselves whether to create a future of partition or pluralism.
In many parts of the world the long curve of history continues dragging nations back to the brink of war. Take Northeast Asia where recent tensions between China and Japan risk erupting into conflict. The Senkaku/Diaoyu islands, home to rocky outcroppings and resource rich waters nearby has become the latest potential flashpoint.
What started as a manageable confrontation in the East China Sea between Chinese fishing vessels and Japanese Coast Guard cutters has now escalated well beyond natural resources. Chinese fighter jets have shadowed Japanese planes in the skies above. Japan has threatened to fire warning shots. A hawkish Chinese general has warned that would be their only shot while Beijing announced plans to formally survey the islands. The U.S. has weighed in against any unilateral action that challenges Japan’s administration of the area.
If there’s a red line where rhetoric and posturing turns into open conflict (intended or otherwise) we’re close to crossing it.
Neither side shows any signs of compromise with Shinzo Abe back as Japan’s Prime Minister, and Xi Jinping inheriting an increasingly nationalistic country in transition. In a January International Crisis Group report Stephanie Kleine-Albrandt notes that:
“While neither Beijing nor Tokyo desires a major conflict, their tacit agreement to set aside the dispute has been broken and there is deepening pessimism on both sides over the prospects of a peaceful settlement.”
As Bill Bishop points out in his daily Sinocism report, stepping back from the brink becomes increasingly difficult.
“China’s relentless media campaign since the summer, the anti-Japanese teachings so prevalent in the Chinese education system and the imperative of any new leadership to not look weak, especially toward the Japanese, could mean that if an accident did occur, especially one that resulted in the death of a Chinese citizen, Beijing might have so painted itself into a corner that it would have respond with force…”
The spiral of escalation, once started, can be difficult to unwind including any real shots fired by the increasing number of naval ships (both Chinese and Japanese) now plying the nearby waters or jets flying overhead. Similarly if either side attempts to land on the islands the other side will counter with a landing of their own. Calls for retaliation will be hard, if not impossible, to resist.
Complicating this current territorial flare-up is a centuries old rivalry. An economically emboldened China, with a military budget to match, has begun reasserting itself as a regional power. For centuries it was the trading hub of the region and an imperial power coercing its neighbors into paying annual tribute for peace and security. To be fair, the long arc of Chinese history also includes imperial dynasties that eschewed regional intervention – a fact currently lost on current policymakers.
Schools to this day continuing painting the country as a weak, aggrieved nation. The lesson: China must defend itself against a mythical recurrence of exploitation at the hands of foreign powers. These slights of history dating back to early 1900’s treaty ports (a time of unequal trading relations) are re-lived as if they were yesterday. Yet, the more recent reign of Mao Tse Tung driving the country into devastating famine, financial ruin and global isolation gains barely a footnote.
The cognitive dissonance between present day reality: China as the world’s second largest economy, with one of the world’s largest militaries and more than equal inclusion in the global trading system; and views of a distant, weakened past continue influencing China’s foreign policy. In Japan as well, historical revisionists continue celebrating war criminals at Yasakuni Shrine. The current administration has also contemplated changing its account of the use of sex slaves during World War II.
On a limited but positive note Japan sent, and China received an official delegation to discuss the territorial dispute. Former Japanese Prime Minister Hatoyama visited China’s Nanjing Massacre memorial which marks Imperial Japan’s World War II atrocities. And U.S. Assistant Secretary of State for East Asia and the Pacific Kurt Campbell has been making the regional rounds calling for dialogue.
For now at least lines of communication remain open while both sides try to reign in their political extremes. Space for rational discussion, however continues shrinking under the pressure of nationalistic vitriol. If push comes to literal shove the damage to the region and international trade could be devastating.
Conflict has never been pre-ordained. It is the result of decisions, by people, to follow a course into crisis. New histories can and have been forged. Consider the U.S.-Vietnam relationship of today versus forty years ago. Trade has replaced hostilities and Americans travel to tourist destinations in straw hats rather than as soldiers in helmets. The past should not be forgotten, but neither should it be allowed to replay itself in an endless, self-destructive loop. Hopefully that’s not a lesson lost on Beijing and Tokyo in 2013.
(From CNN GPS – full list here.) Barack Obama has won reelection as America’s president. But while the economy – and avoiding the so-called fiscal cliff – will inevitably take up much of his time, there are numerous foreign policy challenges facing the next administration. GPS asked 10 leading foreign policy analysts to name 10 things that Obama should focus on next. The views expressed are, of course, the authors’ own.
Drop China ambiguity
By Brian Klein
Brian P. Klein is a global strategist and former U.S. diplomat. He blogs at Klein’s Commentary.
China’s economic rise and increasing military assertiveness have pushed U.S. strategic ambiguity to its limits. If a decisive position isn’t taken soon, allies and friendly countries will question whether the U.S. can back up its Asia pivot talk with action. Focusing on realistic trade liberalization, increased military contacts with China and firm engagement rather than the blame and shame tactics of the past must become a priority.
Meanwhile, the once vaunted Arab Spring, so full of promise and democratic zeal, shows signs of entering a long dark winter. Egypt’s President Mohamed Morsy whittles away at reforms in the marginally secular republic, while Syria’s civil war now threatens regional stability, with conflict overflowing into Turkey and Lebanon. Boots on the ground may not be an option, but a focused effort to influence, if not completely resolve these destabilizing trends will be essential to restoring peace.
It was supposed to be a conspiracy of epic proportions. The U.S. government knew about the threats in Benghazi and did nothing, even when pleas for help came from the Consulate. No other major news organization would follow the story. The CIA called for back-up but was told to “stand down”. U.S. government officials said it was a mob action following the release of a third-rate anti-Islam internet movie, and then changed their story. Could it be any clearer? Why wasn’t anyone doing anything about it?
In “The Real Benghazi Lessons” on CNN’s website I wrote about the need to de-politicize this issue and the realities of incomplete information, especially during a crisis. Over 100 comments poured in full of conspiracy theories and anti-Obama screeds. These replies, it turns out, were parroting the very same set of narrow criticisms that Fox News has been broadcasting at increasingly louder volumes in the run-up to election day.
And now the mainstream media swings back with detailed reporting on what actually happened. The Wall Street Journal dove deep into the confusion of the night itself, multiple attacks, a DoD drone brought in to provide real-time pictures (yes, the military did try and help), and squabbling between the State Department and CIA over who was ultimately responsible for security of the main Consulate building.
According to the New York Times the CIA “played a pivotal role in combating militants . . . deploying a rescue party from a secret base in the city, sending reinforcements from Tripoli, and organizing an armed Libyan military convoy to escort the surviving Americans to hastily chartered planes that whisked them out of the country.”
The response occurred within an hour of the reported first attack. Thirty people were successfully evacuated, including support from U.S. military assets. An unnamed official also stated that no one was told to “stand down.”
So why no detailed account until now?
Because so much of what was apparently going on in Benghazi was under the radar and classified. That’s how you fight terrorism and dictatorships, not in the headlines or the fanatical press chasing ratings. The risks to Libya’s fragile democracy, a hallmark of the Arab Spring uprisings, still remain high. Now, thanks to all of this talk of a cover-up U.S. foreign policy operations have been dealt a significant blow. Fox’s unrelenting politicizing of the issue has thrust these operations onto the public stage, jeopardizing future U.S. government operations in Benghazi and elsewhere.
Are there real concerns over the security at forward operating diplomatic posts? Of course. And Congress is following up on their October showmanship of a hearing with a detailed investigation. They even set a post-election Nov. 8th deadline for a full accounting of what happened (State is also conducting another review according to an article in Foreign Policy.)
Exposing troubling and sometimes illegal U.S. government activity (say in the possible use of torture or the subversion of democracy in Watergate) certainly provides a critical and necessary check on authority. That’s the power of a free press.
This shouldn’t be confused with prime time personalities slinging unsubstantiated conspiracy claims and peddling innuendo as if it were real news. In the end Fox’s irresponsible coverage has generated a politically motivated blame game damaging U.S. national security in the process.
The Legatum Institute, an “independent, non-partisan, public policy organization” based in London came out with their annual Prosperity Index this week. Among the key findings in an analysis of 142 countries around the world: From 2009 to 2012 prosperity* rose in every region despite the global economic downturn. Central Asia and Southeast Asia top the charts with index scores rising approximately half a point followed closely by Sub-Saharan Africa and East Asia. Unsurprisingly the U.S., Asia Pacific (including Japan and South Korea) and Europe round out the bottom. Other findings include:
Prosperity may not be growing at the highest rates in North America, Europe and the Asia Pacific writ large, but advanced economies in these regions still dominate the upper echelons of overall rankings ( 40 out of the top 50).
However, the U.S. fell to #12 overall and out of the top ten for the first time with a lackluster showing in Economy (#20) and Safety/Security (#27) sub-indices. Of particular concern “Fewer US citizens agree that working hard results in success.”
A country on the move, Indonesia jumped 26 spots since 2009 finishing 63rd overall this year. China finished at #55 with a strong showing on Economy and Social Capital indicators but failed to break into the top category across all other sub-indices with a particularly poor showing in Personal Freedom (#129) and Safety/Security (#101).
The largest sub-indice gains were found in Entrepreneurship/Opportunity and Health while Social Capital and Governance barely changed. Safety/Security declined driven by the Arab Spring and high rates of theft and assault in Latin America.
Accountable government was seen as a “key stepping stone to prosperity” with the notable exception of India, where corruption concerns continue to grow, falling ten places. Twenty-seven of the top thirty countries in the index are democracies.
A strong correlation was also found between tolerance indicators and high overall prosperity rankings. Win won for immigration and integrative social values.
* Prosperity was defined as income and wellbeing which include both numeric data and survey results standardized for statistical comparison. Details on their methodology can be found here and their full press release.
A recently publicized series of State Department email by CNN lays out in harrowing detail the attack on the U.S. Consulate in Benghazi. They are sure to provoke another round of finger-pointing and more politically-motivated pabulum.
At 4:05pm: “The Regional Security Officer reports the mission is under attack. Embassy Tripoli reports approximately 20 armed people fired shots.; explosions have been heard as well.”
Ambassador Stevens and four other personnel, according to the same email, are in the safe haven and the 17th of February Militia is providing security support. Based on this early assessment it appears the situation is under control. Diplomats are safe. Armed entities are defending.
Further reassurance comes at 4:54pm: “Embassy Tripoli reports the firing at the U.S. Diplomatic Mission in Benghazi has stopped and the compound has been cleared. A response team is on site attempting to locate COM personnel.”
Unfortunately all was not under control, the compound was overrun, and Ambassador Stevens died along with three other personnel.
The political spin machine has been busy politicizing this tragedy since its onset. The same Congresspeople that cut State security funding hauled up department officials to berate them on the lack of high security at the Consulate (the same happened after the disastrous 1998 bombing of the U.S Embassy in Nairobi.) In the second Presidential debate Romney berated Obama for taking so long to identify the attack not as an unruly mob but the work of a specific terrorist organization (even though Obama did characterize the attack as a terrorist act shortly after events unfolded).
In another email released by CNN Ansar Al-Sharia claimed responsibility on Facebook and Twitter. Aha, go the conspiracy theorists, proof the administration knew but didn’t say anything for weeks. But no, that doesn’t prove a thing.
On any given day in the complex world of threat analysis people and groups make all kinds of claims. It isn’t as if terrorists are holding a press conference for the world’s media to ask questions. Individual bits of information are simply that. Single puzzle pieces that tell very little about the full picture of what happened until amassed and reconstructed. Details must be verified, cross-checked and analyzed before informed assertions are made.
This very small selection of email give the impression of control but information at the beginning of any crisis is often hard to come by and spotty at best. No single account could immediately identify a specific attacker. Even establishing the facts of a traffic accident requires a police report and potential review by a judge or jury. It’s a process. An armed assault on a U.S. diplomatic mission, thousands of miles away, in a far flung province recently freed of civil war creates an infinitely more complicated undertaking. It requires, it demands time to assess and judge.
There are ways to address the serious issues involved in the loss of our diplomatic personnel. Inquiries can and should be made. Did the rush to set up a presence in Benghazi trump normal security procedures? Why was a rosy picture being portrayed of a post-uprising Libya when in fact serious threats remained. How critical was it to set up a new consulate in the first place?
Using the attack in Benghazi as fodder for more November electioneering, however serves only the short-term interests of those who benefit by not giving the security of our diplomatic missions the thorough review (and funding) it requires. This does nothing to ensure the future security of our diplomatic personnel. They deserve better.
The final 2012 U.S. Presidential Debate went off without a hitch last night as both candidates stuck closely to their foreign policy talking points. China was meant to feature prominently with time devoted explicitly to the bilateral relationship. After brief opening remarks both Obama and Romney veered off topic and returned to the jobs question, a perennial favorite whenever China comes up.
What we know of the candidates’ positions from last night’s sometimes testy exchange paint a picture of a complicated U.S. relationship with the world’s second largest economy. These include concerns over the loss of domestic manufacturing, rule of law and growing military strength balanced against commercial opportunities half a world away (see full transcript starting with the China question here.)
Romney came out swinging with the now somewhat antiquated claim that China is a currency manipulator. In his own words:
“We’ll also make sure that we have trade relations with China that work for us. I’ve watched year in and year out as companies have shut down and people have lost their jobs because China has not played by the same rules, in part by holding down artificially the value of their currency. It holds down the prices of their goods. It means our goods aren’t as competitive and we lose jobs. That’s got to end.
They’re making some progress; they need to make more. That’s why on day one, i will label them a currency manipulator, which allows us to apply tariffs where they’re taking jobs. They’re stealing our intellectual property, our patents, our designs, our technology, hacking into our computers, counterfeiting our goods.
They have to understand we want to trade with them. We want a world that’s stable. We like free enterprise, but you got to play by the rules.”
Technical issues aside (as the Treasury Department has ruled against that legally very specific manipulator charge in the past), inexpensive Chinese manufactured goods are the result of low cost labor, economies of scale and exchange rates.
No matter what happens the jobs lost to China (and many other countries including Mexico, Turkey, India, and Bangladesh), including low-end garment production, household goods, and assembly work won’t be returning. If Chinese products became more expensive production would shift to other low-wage countries. Check the labels the next time you go shopping and you might be surprised where clothing is manufactured these days.
Even if Romney as President labeled China a currency manipulator, the remedy includes tariffs against Chinese goods. As the moderator Bob Scheiffer accurately pointed out, that would risk a trade war with China. Romney replied that China exports more to the U.S. than the other way around so they have more to lose. This simplistic version of trade does not reflect the realities of international commerce.
Sudden tariff increases would be a particularly reckless course of action which does absolutely nothing to solve the core problems facing U.S. labor, namely better paying U.S. jobs. The effects of punitive action would wreak havoc with trade on both sides of the Pacific and the intricately linked global supply chain.
China’s currency has also been appreciating over the past several years and labor costs are rising as well. Romney’s missive, along with the ear-catching phrase that they “must play by rules” which Obama also reiterated, did little to address real trade frictions like further opening of Chinese markets to U.S. goods, greater Chinese enforcement of intellectual property rights protection, and cracking down on counterfeits entering the U.S. That’s more of what we needed from both candidates.
Obama countered with his own “get tough” strategy including an increasing number of WTO cases levied against China (most of which are won by the U.S.) that did give temporary advantage to U.S. manufacturers of tires and steel. Both industries, however are slow growth and lacking in innovative strategies to remain globally competitive.
Clear examples and real world solutions were needed, only the solutions part was sorely lacking.
On the security front there was precious little mentioned about China’s rise, the U.S. pivot to Asia, tensions in the South China Sea, North Korea, or recent China-Japan disputes. Obama did say:
“We believe China can be a partner, but we’re also sending a very clear signal that America is a Pacific power; that we are going to have a presence there. We are working with countries in the region to make sure, for example, that ships can pass through; that commerce continues. And we’re organizing trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards.”
And then the conversation veered off into Detroit autos and cuts to education. There was no grand U.S. policy towards Asia offered by or asked of the candidates.
For the most part U.S. voters aren’t even that concerned about U.S. foreign policy when it comes to picking the president. What they want to see is a candidate capable of securing the country against threats, decisiveness and calmness under pressure. The real concern remains jobs, jobs, and then jobs. That’s why the debate consistently put foreign policy back into the domestic context.
All the candidates really needed to do was get in a few good verbal punches here and there and stay off the ropes. That’s what the debate delivered, but little else.
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