Tags: fair trade | free trade | trump | economy | deficit | china

Trade That's Not Fair Can't Really Be Free

Trade That's Not Fair Can't Really Be Free
President Donald Trump gives a speech about trade at U.S. Steel's Granite City Works steel mill in Granite City, Illinois July 26, 2018. (Saul Loeb/AFP/Getty Images)

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Thursday, 09 August 2018 02:52 PM Current | Bio | Archive

Every U.S. president has an opportunity to leave a unique mark on America. For Donald Trump, the most consequential impact his administration may have is in the area of international trade. In no other sphere have the president’s actions been more decisive and potentially transformative.

Many previous presidents have struggled with America’s lopsided trade imbalance. But none to date have been willing to challenge hidebound economic orthodoxy to truly shake up the world trading order. Mr. Trump has shown no such reticence. If he sticks to his guns — and does not get sidetracked with petty and distracting side fights — he has a real chance to correct unfair international trade practices that have gone on for decades and left too much of America a hollowed-out economic shell.

The challenge President Trump faces is particularly steep. The U.S. has run $500 billion yearly trade deficits for a decade. As much as $375 billion of that annual deficit is in trade with China, which uses every single tool to unfairly promote its exports and repel imports. Prohibitively high Chinese import tariffs keep foreign goods out. Below cost dumping of exports and blatant manipulation of its currency artificially subsidizes goods it ships out. Non-tariff barriers and bureaucratic overkill further squeeze out foreign competition. Chinese industrial espionage and patent pilfering steal U.S. technology and know-how.

What does China do with all the billions it rakes in from this unfair competition with the U.S.? A big portion has gone towards loaning money back to America. China is the largest single holder of U.S. Treasury debt. As of this year it has bought over $1 trillion dollars of U.S. government securities. The cycle goes like this: we buy Chinese goods, ship U.S. dollars to government-supported Chinese companies, and Chinese government-industrial-complex loans a good chunk of those dollars back to the U.S. government, which uses them in part to finance U.S. government deficits. That’s right, the U.S. trade deficit helps finance U.S. budget deficits.

If this sounds like an unsustainable and dangerous death spiral for America, it is. Eventually, if this pattern is not changed, the U.S. will be in such hock to foreign creditors like China that not only our financial independence will be challenged. The U.S. will become a debtor nation so beholden to foreign loans that our very democracy will be threatened. Maybe we aren’t yet a bankrupt country like Greece, but we’re heading dangerously in that direction.

For me this fight is intensely personal. In the inimitable words of Yogi Berra, it’s like “deja vu all over again.” Years ago, as New York’s “Junior Senator,” I saw first-hand how unfair foreign competition was eating away at America’s industrial muscle. Back then the problem was below-cost dumping of early generation Japanese-made word processors into the U.S.

To offset this Japanese dumping, the iconic American company Smith-Corona, which had a factory in Upstate NY employing hundreds of U.S. workers, decided to move its plant to Mexico, where it could pay workers half what it paid in the U.S. For months I struggled in vain with U.S. trade officials to take decisive action against this blatant double-edged foreign assault on American jobs. But U.S. bureaucrats dragged their feet, afraid to take on the threat for fear it might somehow upset the “international trading order.”

Finally, in a last-ditch effort to force our own government to act, I took to the Senate floor with my colleague Pat Moynihan for a marathon fifteen hour filibuster to try to add a provision to tax legislation directing U.S. officials to simply enforce trade rules that might help save the New York plant (you can see it here.) But the “free trade” argument prevailed over the case for “fair trade,” and the rest, as they say, is history.

Looking back now, I realize Pat Moynihan and I were not just fighting a tide, we were fighting a sea-change. Over the ensuing decades factory after factory in New York and everywhere else in America would be shuttered and moved to other countries. To this day much of our state and nation have not recovered from this hemorrhage of good paying industrial jobs.

All of which helps explain the historic importance of President Trump’s effort to bring some balance back to America’s world trading relationships. It’s something both Democrats and Republicans, liberals and conservative, should agree on. If it’s the one big thing Donald Trump’s Presidency achieved, it would be more than big enough. Because what’s not fair can’t really be free.

This column was originally published in the Long Island Herald Community Newspapers.

Former Senator D’Amato served a distinguished 18-year career in the U.S. Senate, where he chaired the Senate Banking Committee and was a member of the Senate Appropriations and Finance Committees. While in the Senate, Mr. D’Amato also Chaired of the U.S. Commission on Cooperation and Security in Europe (CSCE), and served on the Senate Intelligence Committee. The former Senator is considered an expert in the legislative and political process, who maintains close relationships with Members of Congress on both sides of the aisle. He is regularly called upon for his advice and counsel, and is recognized for his incisive analysis of national and international political affairs. The former Senator will share insights gained from his years in Washington “with a clear-eyed view of the political forces that shape the world we live in today.” To read more of his reports — Click Here Now.

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Every U.S. president has an opportunity to leave a unique mark on America. For Donald Trump, the most consequential impact his administration may have is in the area of international trade.
fair trade, free trade, trump, economy, deficit, china
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2018-52-09
Thursday, 09 August 2018 02:52 PM
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