With a fledgling economy the focus of the 2012 presidential campaign, there has been one glaring omission from the debate so far: the failure of our current trade policy, particularly with China. Trade policy affects national security by putting the safety of our people and their jobs at risk.
Between 2000 and 2010, the United States ran an aggregate trade deficit in goods of $6.8 trillion. This is one measure of how much money went to support production and job creation overseas rather than here at home. Last year, the trade deficit in goods was $635 billion. The import share of the domestic economy has grown very rapidly in textiles, machinery, computers, electrical equipment and motor vehicles. We buy a third to a half of these products from overseas, leaving American factories idle and American people jobless.
One-third of the trade deficit in goods over the past decade was with communist China. Our 2011 trade deficit with Beijing is on track to hit a record $300 billion. In their new book, “Death by China,” University of California at Irvine economists Peter Navarro and Greg Autry calculate that this deficit has cost America 10 million jobs over the past decade.
Putting us back on a path of national prosperity requires a dramatic change in trade policy. A weakened U.S. industrial base and a monstrous public debt also make it difficult to sustain the kind of national power we need to meet the across-the-board challenges posed by a rising China.
Most-favored-nation (MFN) status was given to China on a permanent basis in 2000 when President Clinton unwisely decided to let Beijing join the World Trade Organization. MFN forces us to treat a hostile, totalitarian government just like our allies England and Japan. Since 2000, the trade deficit with China has more than tripled. It was a horrible economic bargain with dire strategic consequences. MFN has enabled Beijing to build financial and military capabilities that support ambitions at odds with U.S. security.
Global Times, a state-run communist media outlet, has argued, “China has a good reason to seek substantial retaliation” over the sale of defensive weapons to the democratic island of Taiwan, which Beijing has vowed to conquer. Among the threats listed, “China can also slash the imports from the U.S. side, leading to the loss of employment.” Beijing is prepared to wage economic warfare in ways the Obama administration and most of Congress cannot bring themselves even to consider. Too often, trade, defense and foreign policy are kept in separate boxes despite their obvious interconnection. It is time to think outside of these boxes.
Beijing uses a plethora of regulations to keep its leverage over American firms that have recklessly invested in China, such as forcing them into joint ventures and blocking their access to “strategic industries.” In addition, Chinese theft of U.S. intellectual property is at epidemic levels.
Washington decision-makers have allowed China to rig the trading relationship to the detriment of American firms and American workers. U.S. trade policy must come to mirror the great wall of Chinese protectionism if this nation’s industrial base and technological edge are to be maintained. Washington should be talking about cutting imports and weakening China.
The Chinese economy is not a free market. It is dominated by state-owned enterprises, government banks and sovereign wealth funds and is a controlled and calculated system run by the world’s worst human-rights-abusing regime. Let’s not forget, China is the diplomatic backer of other gangster regimes from North Korea to Iran, Burma to Sudan.
Yet, Gao Xijing, head of the China Investment Corp., had the audacity to say at the recent meeting of the International Monetary Fund that “democracy” is working better in China than in America. Mr. Gao would love to buy up large parts of the U.S. economy (factories, oil wells, research labs) and put them to Chinese use. But selling America bit by bit to a regime that kills its own people while plotting against the territory of its neighbors is unacceptable.
We have put ourselves and others at risk by allowing a massive transfer of wealth and power to Beijing through trade. This must stop. Restricting commerce is not the way America likes to do business. My motto has always been “free trade with free people.” But we cannot naively apply this same principle to a dictatorial regime that manipulates trade in ways that threaten both American prosperity and security.
American must place the advancement of its own economy first.
Rep. Dana Rohrabacher, California Republican, is a senior member of the House Committee on Foreign Affairs.