President Obama went to a Q&A session with Senate Democrats yesterday (these are folks is his own political party). The very first question for the President was on China policy, asked by the senior Senator from Pennsylvania, Arlen Specter.

I have a two-part question, and just a brief statement of the issue. We have lost 2.3 million jobs as a result of the trade imbalance with China between 2001 and 2007. The remedies to save those jobs are very ineffective — long delays, proceedings before the International Trade Commission, subject to being overruled by the President.

OK, let’s stop there. Specter identifies a problem, the trade imbalance. This is mostly due to very large structural economic issues related to China’s currency regime, fixed asset investments, and export policy, not to mention the U.S. fiscal deficit.

But instead of recognizing this, Specter goes on to talk about bilateral dispute mechanisms. He calls these “remedies,” implying that these procedures have been put into place to save jobs, and says that they are “ineffective.” At bringing jobs back to the U.S.?

What an amazingly idiotic and dishonest bit of populist bullshit.

We have China violating international law with subsidies and dumping — really, a form of international banditry. They take our money and then they lend it back to us and own now a big part of the United States.

As Specter knows, anti-dumping is primarily a U.S. law issue, while subsidies may be in violation of WTO or U.S. law, depending on the situation. In either case, the choice of the word “banditry” is again fake outrage and essentially naked China bashing. Using “banditry” in one sentence and then talking about China “taking our money” makes it sound like some sort of theft or extortion.

Got that? Attention Wal-mart shoppers: those tube socks you’re buying? You aren’t purchasing those because of the cheap price. No, you’re actually the unwitting pawn of China’s nefarious scheme to take money out of your pockets.

I assume that Specter believes that whenever the U.S. is accused of dumping or providing illegal subsidies, it is always innocent of such charges. China is the only bad guy.

Look, anti-dumping and anti-subsidy rules are not jobs programs and conflating the different concepts is a cheap, cynical political ploy. One could argue that such remedies could lead to the protection of domestic jobs, but that’s one of several possible secondary results. These remedies are primarily about protecting domestic enterprises from competition. The result in such cases are (if the ruling goes against the foreign party) increased tariffs or countervailing duties.

One could, I suppose, measure the “effectiveness” of these remedies by the assessment of these duties or whether the domestic industry was able to then compete against imports. But you would never, ever, in no way, use domestic jobs as a metric of success. It’s simply apples and oranges.

For the record, anti-dumping is an incredibly ridiculous area of trade law that has no place in the current international trade regime. In my opinion, if your metric of success is decreased competition (i.e. local protectionism), then the remedy in question isn’t valid to begin with.

The first part of my question is, would you support more effective remedies to allow injured parties — unions which lose jobs, companies which lose profits — by endorsing a judicial remedy, if not in U.S. courts perhaps in an international court, and eliminate the aspect of having the ITC decisions overruled by the President — done four times in 2003 to 2005, at a cost of a tremendous number of jobs on the basis of the national interest. And if we have an issue on the national interest, let the nation pay for it, as opposed to the steel industry or the United Steel Workers.

I have no idea what this “international court” reference means. Not sure if anyone else knows what he was getting at there either.

And the second part of the question, related, is when China got into the World Trade Organization, a matter that 15 of us in this body opposed, there were bilateral treaties. And China has not lived up to its obligations to have its markets open to us, but take our markets and take our jobs. Would you support an effort to revise, perhaps even revoke, those — that bilateral treaty, which gives China such an unfair trade advantage?

This is outrageous on many fronts. This would be easier with bullet points:

• Does Specter believe that the China market is closed to U.S. companies? I’ve got hundreds of clients who might disagree with that.
• What specific obligations has China not lived up to? Are they so significant that China should be kicked out of the WTO? If so, is Specter OK with China rolling back ten years of foreign investment and IP law that protects U.S. companies?
• What has China done to “take markets” and “take jobs” from the U.S.? This sounds like a hostile act. If he is referring to selling goods to U.S. consumers at low prices, that’s generally legal the last time I checked. If and when those sales are in violation of anti-dumping and subsidy rules, there are laws out there to address those problems, even if (as Spectre claimed earlier) they may be “ineffective” at getting jobs to return to the U.S.
• Does Specter really believe that the bilateral trade imbalance between the U.S. and China is the result of substantive provisions in the bilateral WTO Accession agreement, in effect giving China an “unfair advantage”? He voted against normal trade relations with China in 2000, so I guess he had problems with either the agreement or the relationship in general. I would be interested to know, however, what specific measures in that agreement were “unfair” and gave China such a huge advantage over the U.S. in trade and how this was more important than, for example, currency and export policies. I know that Specter used to be a prosecutor, but it wouldn’t kill him to read a little bit about economics once in a while — might be educational.

Obama was smart enough to distance himself from this hyperbolic rhetoric.

This entry was posted on Thursday, February 4th, 2010 at 10:02 pm and is filed under International Trade, U.S.-China Relations. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.