Romney’s China Trade Talk Is Hot Air

March 14, 2012

By Nina Hachigian and Jacob Stokes

March 14, 2012 | Politico

Former Massachusetts Gov. Mitt Romney’s stump speech has been filled with strong words on China and trade recently, served up with the charge that the Chinese have “walked all over” President Barack Obama. These statements reflect Romney’s acute sense of poll numbers and a desire to chip further away at the president’s approval ratings on national security. But this ignores both Obama’s record and Romney’s own past positions on trade policy with China.

Romney’s contention that the Obama administration has accepted Chinese cheating lying down is inaccurate. The White House has brought more major trade actions against China than any of its predecessors. This includes five World Trade Organization cases brought against China since 2009, compared with seven during the entire George W. Bush administration.  The President announced another action Tuesday on China’s continued restriction of rare earths.

This administration has also taken a variety of actions through the Commerce Department to oppose dumping, fight Chinese export controls and investigate unfair trade practices. Commerce has so far issued 15 countervailing duty and 22 antidumping orders on products imported from China. Building on those efforts, the president recently announced the new interagency Trade Enforcement Unit, to investigate unfair trade practices in countries like China.

In another tack to encourage China to, in the president’s words, act like a “grown up” and “play by the rules,” the Obama administration breathed new life into the Trans-Pacific Partnership, a trading regime started by Asian nations and designed to set high standards for labor, environmental and legal trade practices — standards China will have to meet to join.

The administration’s negotiations with China through the U.S.-China Strategic and Economic Dialogue as well as the Joint Commission on Commerce and Trade, has also achieved real progress. For example, on intellectual property enforcement, which is a costly problem for the U.S., the Chinese have, for the first time, agreed to include intellectual property rights enforcement among the performance criteria for local and provincial officials.

In addition, the Chinese currency has appreciated — though the process is not fast enough. Obama has marshaled other nations to join Washington in pressing Beijing on this. The renminbi has appreciated nearly 12 percent since June 2010, on a real, inflation-adjusted basis, and nearly 40 percent since China began currency reform in 2005.

That results-oriented dialogue, coupled with vigorous enforcement, draws a sharp contrast with Romney’s approach. Romney, in his 2010 book, “No Apology,” opposed actions by both the Bush and Obama administrations to combat unfair trade practices. He said those moves – aimed at steel and tires, respectively — were “decidedly bad for our nation and our workers.”

Romney has also tapped former Bush Commerce Secretary Carlos Gutierrez to be his top advisor on trade. Gutierrez has consistently opposed legislation to label China a currency manipulator, yet this is a move Romney promises on “day one.”

As Guiterrez knows, labeling China a currency manipulator on “day one” is not a silver-bullet solution to U.S. trade problems with China. He noted in a 2007 letter to Congress that pegging China as a currency manipulator “will not accomplish our shared goal of persuading China to implement economic reforms and move more quickly to a market-determined exchange rate.”

Romney says he will label China on “day one,” but what is his plan for day two? Declaring China a manipulator is a symbolically hostile gesture, coming as it would before he will have ever spoken to any Chinese leader officially. Yet, all this designation requires is further talks with Beijing — made all the more difficult by the declaration itself.

This is why Jon Huntsman, a former U.S. ambassador to China who now supports Romney, had formerly described the governor’s policy as “wrongheaded,” saying it would spark a trade war that would harm America.

What’s more, focusing only on currency ignores the need for solutions on broader issues — including protecting intellectual property; opening up government procurement, and ending the practice of demanding companies hand over technology in exchange for market access.

Romney acknowledges those problems. But he offers no new solutions beyond what the Obama administration is already doing. Romney‘s “Reagan Economic Zone” also bears a striking resemblance to the Trans-Pacific Partnership.

Oscillating between two extremes – bad-mouthing trade enforcement measures as union-coddling, then threatening immediate sanctions– to score political points is no way to shape national policy toward the fastest-growing, most-populated country on the planet.

We need a successful strategy that gets China to play by the rules so that both countries can benefit from free and fair trade. Romney should be explaining how he will strengthen the robust efforts started under the Obama administration. Not first opposing them and then pretending they didn’t happen.

Nina Hachigian is a senior fellow at the Center for American Progress Action Fund. Jacob Stokes is a policy analyst at the National Security Network. This article is based on their report, “U.S.-China Relations in an Election Year.”

For the original piece, click here.

 

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