Our Incoherent China Policy

By Hunter Wallace

In the latest issue of The American Prospect, Clyde Prestowitz has a comprehensive breakdown of the Trans-Pacific Partnership:

“In the summer of 2009, I was invited with a few other policy analysts to the White House for a briefing on the newly proposed Trans Pacific Partnership (TPP). At that time, the potential participants included Canada, Mexico, Peru, Chile, New Zealand, Australia, Singapore, Brunei, Malaysia, Vietnam, and, of course, the United States. Whether or not Japan would be invited to join had not yet been decided.

Noting that the United States already had free trade agreements with Canada, Mexico, Peru, Chile, Australia, and Singapore, I asked why we needed an agreement that added only the tiny economies of New Zealand, Brunei, Malaysia, and Vietnam. The reply from a member of the National Security Council staff was that it would reassure our Asian allies that America was back; that this agreement would be the economic complement to the increased military deployments of the recently announced “Pivot to Asia” foreign policy, obviously aimed at counterbalancing the spread of Chinese power and influence. Along with health care and a possible treaty on nuclear weapons with Iran, TPP would be a major part of the president’s hoped-for legacy. …”

David Dayen has another article on how free trade deals have been a “fast track” to the corporate wish list:

“NAFTA made it easier for American capital to access Mexico, and for Mexican goods to enter U.S. markets. The deal gave Mexico a free pass on its terrible labor conditions and less-stringent laws on health and the environment. NAFTA threw this pool of cheap labor into direct competition with U.S. workers. The deal also put limits on food safety and financial regulations, cracked down on intellectual property theft, and included a chapter protecting corporate investments abroad through ISDS. “Most of the analysis leaves all that stuff out, and just looks at the textbook benefits of lowering tariffs,” says Jared Bernstein, former chief economist for Vice President Joe Biden, now at the Center on Budget and Policy Priorities. “The problem is that’s not really what these creatures are like anymore.”

Partially resulting from NAFTA-style trade deals, the last 14 U.S. trade deficits have been among the largest in U.S. history, an average of $500 billion every year. While some government reports show that NAFTA had a minor impact on the U.S. economy, others point to the wipeout of manufacturing jobs. The Economic Policy Institute estimates nearly one million net jobs lost from NAFTA, and another 2.7 million lost since permanent normal trade relations (PNTR) were established with China. The Clinton administration said PNTR “would only increase the trade deficit by $1 billion,” claimed Democratic Representative Brad Sherman of California. “The proponents were off by 30,000 percent.” …”

In The Los Angeles Times, Prestowitz again explains why TPP is a terrible deal for American workers:

“As counselor to the secretary of Commerce in the Reagan administration, I was involved in a number of trade negotiations, including the so-called MOSS (market-oriented sector-selective) talks. Some veteran negotiators waggishly renamed those negotiations — to paraphrase in family friendly terms — “more of the same old stuff.” And that’s what President Obama called for in his State of the Union proposal for completion and adoption of the Trans-Pacific Partnership free-trade agreement, or TPP, for the Asia-Pacific region. …”

The Wall Street Journal is crowing that TPP will set off a stampede of companies to Southeast Asia:

“Even before the ink is dry on the Trans-Pacific Partnership trade deal, companies are laying out plans to expand in Vietnam and Malaysia, both rapidly developing Asian nations whose growth depends heavily on external trade. …”

As Prestowitz points out, the TPP really isn’t much of a trade deal because the US already has free trade agreements with Mexico, Canada, Peru, Chile, Australia and Singapore. Tariffs are also already extremely low on most Japanese exports. The deal really only creates free trade with Malaysia, Vietnam, Brunei and New Zealand.

In communist Vietnam, the average worker is paid less than 65 cents an hour, so look for a surge of low wage manufacturing jobs flooding into Southeast Asia. This could become a tsunami if the deal were to expand to include Thailand, Indonesia and China.

About Hunter Wallace 12366 Articles
Founder and Editor-in-Chief of Occidental Dissent

13 Comments

  1. Under global communism an oligarchy of bureaucrats control all the wealth.
    Under global capitalism an oligarchy of billionaires control all the wealth.

    Under either system the common folk are serfs, subject to use, abuse or outright genocide determined by the oligarchs.

  2. http://time.com/4065267/trans-pacific-partnership-american-workers/

    It could hurt U.S. automakers. Japanese auto manufacturers are thrilled with the new rules because TPP will reduce U.S. tariffs on cars and trucks Japan sends to the U.S. Those cars may have a Japanese name on the outside, but everything that actually makes it a working car could be Chinese. I don’t know how U.S. Trade Representative Mike Froman can look at any auto supply chain worker in the U.S. (or Canada or Mexico for that matter) and tell them with a straight face that TPP is a good deal.

  3. The China policy is all about the Jews hiding their swindled loot there as they prepare to amass enough funds to swindle and bleed China. The problem is the Jew is too racially dissimilar in appearance to the Chinaman that he has to play the Chinese with finesse.

    A good example of how our China dealings make no sense is this. China murders millions, sells organs, etc and we host their leaders at the White House and have done this since Nixon. Cuba does a miniscule amount of things yet they were on the embargo list until Obama took them off. Does this make sense to you? In effect Cuba was no more or less evil than all of the other tin pot dictators in Latin America, yet we singled it out. China on the other hand we awarded with jobs, breaks, money, you name it.

    Intelligent? Nope

  4. So, basically so far this TPP is just a gift to Vietnam, the left rewarding their old allies and perhaps building up a bulwark against China by taxing the U.S. economy, particularly the middle class economy and below, and shifting the wealth to Vietnam similar to the way it was done for Japan and South Korea.

  5. TPP is not free trade or free markets. It’s crony capitalism and economic central planning rolled up into one.

  6. It’s not pure free trade, but the effect of these deals is to lower trade barriers over time.

    Take Japan for example. In Japan, the auto manufacturers own the dealerships and exclude US auto imports that way to protect their home market. In contrast, I can buy a Japanese car or truck anywhere around here in the United States. Japan also manipulates its currency to offset the effect of lowering trade barriers which makes its auto exports less expensive.

    In Vietnam, the average worker is paid 65 cents an hour. What do you suppose will happen when US manufacturers can set up shop in Vietnam and export back to the US market without the current tariffs in place?

  7. From my reading I found out that Japan doesn’t have any tariffs on foreign cars, which does surprise me. They do have non tariff barriers but I think a lot of the low sales of US cars in Japan is due to the same reason why Japanese cars have gained market share in the US; consumer preference. I visited Japan 15 years ago on a business trip I prices that there were foreign made cars in Japan but they were not from Ford, GM, or Chrysler. They were mostly European cars (VW, BMW, M-B, etc). Foreign cars make up less than 10% of the Japanese auto market. GM sales is less than 1% of that less than 10%. Porsche sells more cars in Japan than GM.I think this has less to do with barriers than it does with the Japanese not preferring US cars. GM is further hobbled in that many of the cars they offer in Japan are left hand drive while Japan is a right hand drive country. Not to say that these non tariff barriers don’t play a part in the low sales but it doesn’t account for everything. If the products are equal or near equal, sales should be near equal. But if. the products aren’t equal, one couldn’t expect for sales to be equal. In trade all that should be expected is equal market access. Equal results may not be achievable due to consumer preference. As it pertains to currency, I don’t think Japan has the ability to manipulate their currency on their own. All governments and central banks manipulate their currencies. Back in 2012 the Yen was weak (75-80 ¥ to the dollar) but today it is strong (120 ¥ to the dollar). Not being susceptible to a strong Yen was one of the factors that brought Japanese auto manufacturing to the South.

    On the flip side of Japan, GM’s Buick division is VERY popular in China. They sold over 900K Buicks in China alone in 2014. Back in 2009 when GM axed Pontiac and Saturn, Saab, and Hummer, serious consideration has given to axing Buick. The only thing that saved the brand is its popularity in China. I am certain all of these cars were built in China. Granted, there are no Chinese manufactured cars sold in the US but they do sell a lot of parts. Typically when it comes to China, in order to get access to their market they require for companies to build their products in China. Furthermore, they require that companies turn over their technology. I don’t know if this is the case with the Chinese auto industry. Unfortunately there have been stories coming out that Buick is considering importing Chinese made Buicks to the US domestic market. It wouldn’t surprise me if this is tied to TPP.

    http://autoweek.com/article/car-news/report-all-two-buick-models-will-be-built-china-after-2016

    Although wages are cheaper in east Asia, I don’t think if this is the only factor in deciding where to build. US workers have the highest productivity (on average) than any worker in the world. Granted, it can’t make up all of the wage gap but that is a factor. Political stability is another factor. Just applying common sense alone, if wages were the only or deciding factor for where to produce, most US factory jobs would have moved to Mexico within the last 20+ years. The immigration crisis would be reversed; America’s would be crossing the Rio Grande looking for work and Mexico would have an illegal immigration problem. That hasn’t happened.

    The oligarchs have a lot of power but if masses of workers are left unemployed by TPP, I would there to be enough political uproar to have the US walk away from it. I think they are smart enough not move all production overseas and leave 10s of millions out of work. We will have to wait and see how this works out.

  8. http://www.theatlantic.com/business/archive/2015/10/trans-pacific-partnership-tpp-manufacturing/409591/?utm_source=SFFB

    NAFTA led to some auto job losses and accelerated the shift of low-skilled factory jobs to Mexico, said Hopp. Companies either automated operations or moved them to somewhere that labor was cheaper when tariffs went away. Foreign direct investment in Mexico tripled as a share of that country’s GDP since NAFTA, according to Scott. Companies such as Whirlpool and virtually every U.S. automaker have moved some operations there. Even now, companies are moving auto production to Mexico.

    “It’s just that, given the low tariffs, the low transportation costs, and the low labor costs in Mexico, it’s hard to make an argument for auto to locate in a place like Tennessee, let alone a place like Michigan,” Hopp said.

  9. Companies either automated operations or moved them to somewhere that labor was cheaper when tariffs went away

    Another way at looking at this is wages determines the factors of production. For production that was originally being performed in the US, some of the jobs may have gone away despite NAFTA due to automation. When the cost of labor is cheap, it makes sense to use manual labor rather than automation. Many of the jobs being performed overseas for $0.65/hr would not be performed by manual labor at $7/hr to $10/hr. A lot of that labor is very tedious and highly repetitive and could be performed via automation. Politicians who are pushing for a $15/hr minimum wage don’t consider that artificially raising wages will push companies to automating tasks that are normally performed by humans. For example, there are machines that can make a hamburger better than humans. Some restaurants are employing kiosks to take orders rather than human cashiers. When amnesty advocates say that without cheap labor from Mexico we won’t have lettuce because it’s a job that Americans won’t do they are lying. Farmers would be required to chose from paying the prevailing wage to pick lettuce or choose automation (most will probably choose the latter).

    • What’s going here is that trade policy is being used as a weapon to ship jobs overseas and fire US workers.

      Once the trade barriers are lowered (see NAFTA), US companies set up shop overseas, produce their products with cheap foreign labor, avoid any number of labor and environmental regulations, pay a pittance in taxes, undermine the bargaining power of US workers, and then ship their products back to the US market without having to pay the high tariffs. Basically, it is what Northern companies used to due in the South before the end of the Cold War opened the yellow brick road to cheap labor in the Third World.

      It’s really as simple as that:

      1.) It explains why the American middle class and working class, especially in the big cities, is hollowed out.

      2.) It explains why American workers are more productive and the economy grows, but all the benefits of the productivity and growth accrue to the top of the income pyramid.

      3.) As taxes are cut, regulations are scrapped, trade barriers are lowered, and unions are undermined, it explains why the income distributuon is increasingly out of whack.

      4.) It explains why there are so many big box stores like Wal-Mart filled with foreign imports – almost everything you can buy in a small town except for the food.

      5.) It explains the paradox of global poverty in retreat combined with the retreat of the American middle class.

      6.) It explains the industrial boom going on in places like China, South Korea, and Mexico.

      Immigration policy is the other side of the coin. Bringing foreign workers to the United States to soak the American middle class and working class – see Disney, a recent example – has the same effect of tilting the income pyramid in favor of the wealthy.

      Free market economics always produces the same result. It is always a bonanza for the wealthy and without restraint gradually lowers the standard of living for the rest of the population.

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