Biden vs. the Free-Trade Blob: The influence of corporate free-traders is at last ebbing, and they are not going quietly

[Celerity]

https://prospect.org/blogs-and-newsletters/tap/2024-05-24-biden-vs-free-trade-blob/

President Joe Biden is flanked by members of the United Steelworkers union as he signs a tariff document during an event in the Rose Garden at the White House, May 14, 2024, in Washington.

President Biden’s initiative to quadruple tariffs on made-in-China EVs, related batteries, solar products, steel, and aluminum has engendered the usual cries of outrage from the usual suspects. But there's clearly been a major shift in the thinking of the foreign-policy establishment, and that is all to the good. This overdue policy reversal isn't just about trade, or even trade and industrial policy. It’s about a realistic and comprehensive strategy to contain an adversary who plays by entirely different rules. Even Treasury Secretary Janet Yellen, one of the few trade traditionalists in the Biden administration (she disparaged an earlier round of tariffs as a “tax on Americans”) now gets it.

In her speech to the G7 on Thursday, Yellen pointed to China’s chronic “overcapacity and unfair trade practices.” Yellen added, “This is currently leading to production in some industries that significantly exceeds not only China’s domestic demand but also what the global market can bear.” She hailed Biden’s tariff increases, and called for a “united front” with European leaders against China’s aggressive mercantilism. This is an astonishing turnabout for Yellen. China’s threat to the West is not just industrial. The whole Chinese system, orchestrated by the Chinese Communist Party, uses a combination of theft of intellectual property, partnerships with Western companies on coercive terms, extensive spying on Chinese and non-Chinese alike, and a variety of tactics to gain allies in the West, including sweetheart deals with financiers and extensive cultural exchanges that lavish free trips and stipends on potential useful idiots.

But listen to the rearguard arguments by those who either naïvely or disingenuously invoke “free trade,” as if the Chinese system had anything to do with free trade. Steven Rattner, a journalist turned Wall Street major player, writing in a New York Times op-ed, contends: “America’s new protectionist stance will raise prices, limit consumer choices and risk our growth.” But the increase in prices on Chinese exports is an issue only if you take a short-run economic snapshot. For the long run, Biden’s industrial and trade strategy increases American prosperity by reducing dependence on China and bringing production home. Rattner, in a cheap shot, also contends that Biden’s China policy is mainly political, “motivated by Mr. Biden’s desire to outflank his opponent in Rust Belt swing states.”

This is also nonsense. The tariffs, under Section 301 of the Trade Act, are the result of an investigation of Chinese subsidies and dumping that began in 2018. Biden’s policy has been consistent since he took office. Rattner ends by invoking David Ricardo, as if China’s state-led capitalism had anything to do with the kind of natural “comparative advantage” that the British economist described more than 200 years ago. Wall Street benefits financially from an embrace of China. Others stuck in the traditional free-trade camp are merely misinformed.

snip

[Voltaire2]

1. Trade wars are worse.

Also they tend to degenerate into real wars.

The right correction to ‘free trade’ is ‘fair trade’ where all production has to meet agreed on labor and environmental standards.

[former9thward]

3. Fair trade never works.

No one will agree to labor and environmental standards in the real world. And any such agreement is absolutely unenforceable in the real world.

[Voltaire2]

5. We've never really tried.

Last edited Sat May 25, 2024, 06:52 AM - Edit history (1)

But again trade wars really do increase costs and have stupid consequences.

Consider the ev tariffs on China. The effect is not going to be domestic manufacturers producing low cost competitive evs. Instead with zero low end pressures they will avoid having to produce a 20k car. US consumers won’t benefit and neither will us workers. And perversely it will delay conversion to an all electric fleet.

[Celerity]

4. Worse than what? Also, Sherrod Brown & others, years ago, put out a 'fair trade' agreement as a renegotiated version

of the odious original TPP.

One press release that deals with some of that:

BROWN TO ADMINISTRATION: TRANS-PACIFIC PARTNERSHIP SHOULDN'T BE CONSIDERED UNTIL RENEGOTIATED

https://www.brown.senate.gov/newsroom/press/release/brown-to-administration-trans-pacific-partnership-shouldnt-be-considered-until-renegotiated

WASHINGTON, D.C. — Today, U.S. Sens. Sherrod Brown (D-OH) told the Obama Administration that the Trans-Pacific Partnership (TPP) should not be considered by Congress until it is renegotiated. In a letter to the Administration today and during a press conference he held, Brown outlined TPP’s fundamental flaws and the need to fix them before Congress votes on the agreement, which is the biggest trade agreement ever negotiated.

“TPP is a sellout for workers, a handout for corporations, and a handout for China and countries that don’t play by the rules. And it’s clear that the public has had enough,” said Brown. “The anger and dissatisfaction among working class voters, here and around the world, didn’t come out of nowhere – it’s proof that the way we’ve been doing trade deals for the past 30 years doesn’t work. We need to back to the drawing board with this deal. This deal should not be considered by Congress unless it is renegotiated to put American workers – not corporations – first.”

Footage from today’s press conference is available here.

The letter was also signed by U.S. Sens. Bob Casey (D-PA), Jeff Merkley (D-OR), Mazie Hirono (D-HI), Edward J. Markey (D-MA), Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Al Franken (D-MN), Richard Blumenthal (D-CT), Brian Schatz (D-HI), Tammy Baldwin (D-WI), and Elizabeth Warren (D-MA).

Full text of the letter is available below.

Dear President Obama:

We write to underscore the fundamental flaws of the Trans-Pacific Partnership (TPP) agreement. Until these provisions are fixed through renegotiation, it is not appropriate for Congress to consider this trade agreement. Passing the TPP in its current form will perpetuate a trade policy that advantages corporations at the expense of American workers.

First and foremost, the agreement includes investor-state dispute settlement (ISDS), which means our country’s own public health, worker safety, and environmental standards, among others, are vulnerable to corporate challenges. Recent investigative reporting by BuzzFeed reveals the extent to which ISDS has become an integral part of profit-maximizing strategies for corporations. ISDS challenges, and even mere threats of ISDS challenges, have been used to secure extractive permits over community objections, to get executives out of criminal convictions, and to exonerate managers connected to a factory’s lead poisoning of children. Such a corporate handout does not belong in our trade agreements.

The TPP labor provisions are also unacceptable. The text does not ban trade in goods made with forced or child labor; it simply requires each party to discourage, in whatever manner it considers appropriate, the importation of goods produced by forced or compulsory child labor. And the language on acceptable conditions of work with respect to minimum wages will be enforced only in export processing zones, which leaves TPP parties free to reduce worker safety protections and minimum wages provided they do so economy-wide. The consistency plans for Vietnam, Malaysia and Brunei are inadequate and will not ensure full compliance with international labor rights before the TPP enters into force. Vietnam, for example, will not have to allow free and independent unions at any level greater than a single enterprise for the first five years of the agreement. And Mexico, which refused to negotiate a consistency plan, has made promises of improvement but presently has no credible plan for protecting workers’ rights once TPP is implemented.

The TPP countries’ joint declaration on currency is similarly insignificant. It established a forum for TPP partners to discuss currency manipulation, but there is no enforcement mechanism to ensure our trading partners do not manipulate their exchange rates for export advantages. The forum will meet annually to consider exchange rate policies and their impact on TPP countries. They will issue only a report on their findings, leaving U.S. workers and manufacturers, including those in the auto sector, without any recourse if a TPP trading partner intervenes in its currency for economic benefit.

The U.S. auto sector will also be hurt by TPP’s rules of origin for autos, which will undermine the North American Free Trade Agreement’s rules of origin. Under TPP’s rules of origin, non-TPP countries can contribute more than half the value of a TPP-traded car. Overnight, the North American supply chain will be changed. TPP’s weak rules of origin will threaten the hundreds of thousands of American jobs in the U.S. auto supply chain because the components they produce can now be sourced from China or other countries without losing the agreement’s tariff benefits.

We also want to respond to claims that TPP is important for U.S. national security. We fear that the agreement would further erode American manufacturing and our defense industrial base. Empowering multinational corporations, who have allegiance to no country, through ISDS will actually weaken the ability of our TPP partners to govern. Meaningful government engagement and relationship-building with our allies will advance U.S. national security interests in the Asia Pacific far more effectively than a trade agreement that promotes the interests of corporations at the expense of citizens.

This list of TPP flaws is not exhaustive, but it signifies some of the provisions that need to be renegotiated before the agreement is considered by Congress. It is simply not accurate to call an agreement progressive if it does not require trading partners to ban trade in goods made with forced labor or includes a special court for corporations to challenge legitimate, democratically developed public policies. Passing TPP before these and other provisions are fixed will hasten the erosion of U.S. manufacturing and middle class jobs, and accelerate the corporate race to the bottom.

We urge you to work with our TPP partners to negotiate a trade agreement that stands up for American workers and grows our middle class.

[former9thward]

2. I believe in tariffs.

I believed in them when Trump was imposing them, and many posters were blasting them as something that would raise prices in the U.S. I believed in them when Biden came in and kept the Trump tariffs. I still believe in them as Biden is now raising them.