- The Washington Times - Tuesday, November 3, 2009

OPINION/ANALYSIS:

Last week’s Cabinet-level U.S.-China trade negotiations and their lead-in were such an embarrassing flop for the United States that President Obama should probably skip Beijing on his upcoming visit to Asia. The talks, ostensibly aimed at righting the two countries’ dangerously lopsided economic relationship, instead have made incontrovertibly clear the pointlessness of holding trade talks with China in the first place.

Not that the evidence hasn’t been piling up for years - in the form of continuous American sycophancy, the downright insulting Chinese bluster that invariably follows, plus a Chinese determination to violate commitments nearly as intense as Washington’s determination to look the other way or serve up excuses.

What’s different this time? Timing. Between the early 1990s and the middle of this decade, America’s patronizing and coddling of China seemed affordable. Now, of course, those years of anesthetizing, bubble-ized U.S. prosperity are over. Indeed, no less an economic establishmentarian as Federal Reserve Chairman Ben S. Bernanke is warning that America’s unprecedented bubble-era trade and current account deficits mustn’t reappear when the recession finally ends - because the tidal wave of capital they sucked into the United States gave the entire world the bubble and its inevitable, ruinous bursting in the first place.

Yet the Obama-nauts have staged a rerun of his predecessor’s approach to China, which provided most of the bubble’s air. A main reason: George W. Bush’s model was the Clinton approach, which much of Team Obama - from National Economic Council Director Lawrence Summers to White House Chief of Staff Rahm Emanuel - formulated in previous lives. Consequently, we’re seeing the same photo-op ceremonies for signing the same kind of transparently phony or token agreements. (A telling example: Beijing promised to end trade barriers affecting wind turbines, but didn’t say when.)

We’re hearing the same breezy American confidence about obvious overriding mutual interests marginalizing individual spats, coupled with the same kind of legalistic sophistry designed to rationalize appeasement. And we’re seeing the same Chinese insistence on ignoring and even publicly trashing American platitudes. (For domestic political consumption? Out of sheer contempt? Both reasons?) As a result, the chances of real progress keep shrinking while the economic dangers of such play-acting keep growing.

Think of China’s premeeting actions. In September, the Obama administration exercised its internationally recognized rights and imposed tariffs on surging imports of Chinese tires that have destroyed thousands of high-paying American manufacturing jobs for the past four years. Critics were correct in pointing out that no accusations were leveled of predatory trade practices like providing illegal subsidies or dumping the tires into the U.S. market. But according to the global agreement that brought China into the World Trade Organization, none were needed. And Beijing had agreed to these terms.

China’s response? Although Mr. Obama backed off levying the maximum tariffs allowed, Beijing conspicuously began investigating whether the United States is exporting chicken products to China fairly and threatened retaliation against U.S. auto parts.

In October, the Obama administration for the second time declared China innocent of manipulating its currency for trade advantages. A manipulation finding triggers no sanctions, but it would speed the passage of legislation tackling this most destructive of China’s predatory trade practices. Moreover, the decision marked a major broken promise by the president. While seeking blue-collar votes in industrial Midwestern primary states last year, he both accused China of manipulation and explicitly endorsed a bill capable of offsetting manipulation’s effects.

In a congressionally required report on currency policies, the administration did urge China to “correct” its currency policy in order to help reduce still-dangerous global imbalances, but Beijing clearly found America’s deference unimpressive. The very next day, China announced that its currency policies would remain unchanged.

Right before last week’s talks opened, China announced another anti-American trade investigation. Apparently, the Chinese will charge that the GM and Chrysler bailouts represent subsidies that have injured Chinese automakers - an inane accusation given that the Big Three annually sell in China about 9,000 U.S.-made vehicles between them, and the Chinese auto market already has exceeded 9 million unit sales this year.

And China imposed more tariffs just this Monday, on imports of a chemical used to make nylon supposedly dumped into its market from the United States, Europe, and South Korea.

The Obama administration is obviously clueless about the disastrous record of America’s recent China trade policy, or is deliberately shilling for America’s outsourcing multinational companies - which like the bilateral trade status quo just fine, thank you, because the products they increasingly make and procure in China rather than export there (like autos) benefit from predatory Chinese trade practices like currency manipulation. Why else would U.S. Trade Representative Ron Kirk proudly declare that this latest meeting “gave us the chance to see the great things our two countries have accomplished”? And that “our work here has built momentum for future successes, and our priority of creating and saving American jobs”?

So two fundamental changes need to be made in America’s approach. First, Washington must stop talking with China about trade and start acting unilaterally. And second, despite its inadequate record on these matters, Congress is not yet completely hopeless. So it should enact much tougher and smarter China trade policies into law ASAP, starting with the bipartisan legislation reintroduced in both houses that would enable all U.S. victims of China’s rigged currency policies to win full relief promptly.

And please - no drivel about the need to continue “engagement” with China. The new policy would engage China plenty - only this time to restore genuine economic health to the U.S. and global economies, not to pump up the short-term profits of outsourcers.

Alan Tonelson is a research fellow at the U.S. Business and Industry Council, a national business organization whose nearly 1,900 members are mainly small- and medium-sized domestic manufacturers. Author of “The Race to the Bottom,” Mr. Tonelson also is a contributor to the council’s Web site: www.AmericanEconomicAlert.org.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide