Will The Republican Debate Cover China And Trade?

Dave Johnson

The US has an enormous, humongous and continuing trade deficit, caused by our trade policies. The trade deficit measures the loss of jobs, factories, industries and wealth from our economy. A  continuing trade deficit also measures the loss of the “ecosystem” for making and doing things — the institutional memory that remembers “how to,” the suppliers, schools, knowledgable investors, etc.

In the last few months American industrial production has been “edging down,” as a result of these terrible trade policies, including the government’s refusal to do anything about currency manipulation. A few months ago, China again devalued its currency, and this partly reflects the impact on US factories.

This matters to a lot of factories, a lot of people and to our economy overall. Will the Republican candidates address trade — and especially China — in Wednesday evening’s debate?

Where The Republican Candidates Stand

Any discussion of the Republican Presidential candidates should start with the front-runners Donald Trump and Ben Carson.

Donald Trump is very clear about his stance on trade. He says the US is being taken by other countries, “Whether it’s China or Japan or Mexico, they’re all taking our jobs, and we need jobs in this country. It’s enough, what we’re doing with foreign trade.”

On the Trans-Pacific Partnership (TPP) Trump recently tweeted, “The Trans-Pacific Partnership is an attack on America’s business. It does not stop Japan’s currency manipulation. This is a bad deal.” He says we need “fair trade not free trade.” He called the North American Free Trade Agreement (NAFTA) a “disaster.”

Ben Carson also opposes TPP but not “free trade,” saying not quite coherently:

“I think they [Congress] need to fight it [TPP], not because I’m against free trade—and not because I’m against finding a way to empower our allies in the whole Pacific basin,” Carson said. “That’s not the point. The point is the current agreement gives too much say to powers outside of the United States. I want the people and their representatives to be a much bigger part of something that significant. And I don’t necessarily trust the current administration to have the interest of the people at heart.”

This weekend Trump said of Carson:

“I like Ben, but he cannot do with trade like I do,” Trump said. “He can’t do with a lot of things like I do, so we’ll just have to see what happens.”

He added that he worries that Carson is “just not going to be able to do deals with China, to be able to do deals with Japan.”

Other Republican candidates are varied on trade and TPP. CNBC took a look last week, in GOPers split over a deal Trump calls ‘terrible’, finding that Jeb! supports TPP (and generally anything called “trade,”):

“I have no problem supporting TPP,” he wrote in a post earlier this year. “We’ve worked with some of our most important allies in negotiations to help make this possible  —  and asked them to take political risks of their own to open their markets to American goods, agricultural products, and services.”

… “I know there is political risk in supporting free trade. TPP is President Obama’s biggest trade initiative. I know some political constituencies in my own political party don’t favor it,” he wrote. “But I agree with what Hillary Clinton said about TPP in 2012: This is a great deal for America.”

Ted Cruz supported Fast Track Trade Promotion Authority (TPA), which essentially pre-approved TPP, before he didn’t:

Sen. Ted Cruz of Texas originally supported giving the White House TPA, saying that he “could not in good conscience vote against a bill whose most significant impacts will be jobs, growth, and opportunity for struggling American families.” By June, Cruz flipped, voting against TPA because of what he said was backroom dealmaking on the issue.

Senator Marco Rubio says not signing TPP, which includes 40% of the world’s economy, will result in the US being “locked out” of 95% of the world’s markets.

Carly Fiorina says she supports “free trade,” but has spoken out in opposition to TPP, saying it is because she does not trust President Obama.

“The devil is usually in the details, and that is particularly true with this president. The truth is we don’t know what’s in this deal,” she said on NBC”s “Meet the Press.”

“This administration unfortunately has a track record of burying things in fine print … that turn out to be very different from their selling points,” said Mrs. Fiorina, who announced her White House bid last week.

Mike Huckabee, Bobby Jindal and Rick Santorum have spoken in opposition to TPP.

What To Ask

If they do discuss trade and China, what should they talk about? Scott Paul of the Alliance for American Manufacturing recently addressed this at CNBC, in “GOP candidates need to talk about China,” writing:

It’s no wonder the public is interested in how the next president plans to address China. Voters want to know:

● What will be done about China’s inability to maintain its trade commitments? Despite its entry to the world Trade Organization, China still forces technology transfer on firms as a condition of market access, its state-owned enterprises have grown massive, and it maintains artificial barriers to market access.

● Do any of the candidates believe China is a market economy, or deserves to be treated like one? There will be a decision made soon at the WTO about whether to graduate China to market economy status, which will have ramifications on the types of tariffs unfairly traded Chinese imports can face.

● What about Beijing’s past behavior on trade agreements gives faith that it will live up to its recent promise to refrain from government-sponsored cyber theft of industrial secrets? Independent reports suggest that cyber-intrusions have continued even after an agreement was reached.

● How would a Republican administration respond to the threats posed to our own economy by a Chinese that’s in full slowdown, just as its authoritarian government clumsily attempts a turn toward market orientation? Did the latter cause the former?

● What would the next president say about China’s inability to keeps its hands off the market value of the yuan? China has manipulated its currency to gain a trade advantage for decades, but no administration – Republican or Democratic – has taken firm steps to curb it. Will any of them commit to being any different?

● And what will the candidates have to say about an increasingly globalized military supply chain? Many of the essential inputs for U.S. defense systems are sourced in places like China, which has a history of anti-competitive behavior in industries with national security repercussions.Do the candidates think we can credibly deter China while our fleet in the Pacific depends in no small part on Chinese-made material?

Now that Democratic candidate Hillary Clinton has come out in opposition to TPP, we will see if this moves all of the Republican candidates to support it.

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