Saturday, June 11, 2005

Capitalizing China, Part Two

A bit more insight on the CAFTA/NAFTA/WTO/MFN situation from an ex-Congressional staffer (Republican), now engaged in the fight to save small manufacturing through US Business and Industry Council:

The Pentagon’s annual report on China’s military modernization (largely financed by its trade surplus and the transfer of technology from America and Europe) was supposed to be released in March, but has been delayed as the State Department and other agencies try to water it down. The U.S. Treasury refuses to officially declare that Beijing is manipulating its currency, as that would mandate serious negotiations. The Commerce Department opposes challenging China at the World Trade Organization. On May 27, the U.S. Trade Representative rejected a petition by 12 Senators and 18 House members to launch a formal trade investigation into the impact of Chinese currency practices.

President Bush came into office correctly calling China a “strategic competitor.” But then President Clinton had also come into office concerned about China, but changed his tune under corporate pressure. As former Clinton Commerce official Jeffrey Garten wrote of this transformation [The Big Ten: The Big Emerging Markets, 1997], “I saw no issue which raised more concern and emotion in the business community....not only were business leaders totally united, with no nuanced differences that I could see, but they were passionate in arguing that the United States was heading down a dangerous road in confronting China.”

Their motive was not really what was best for the country, however, but only what was dangerous for their business interests. As Garten noted, “Many of the Fortune 100 had placed large bets on China.” In the real world of geopolitics, betting on China means betting against the United States. Not only have factories and jobs been outsourced to China in recent years, public policy making has also been outsourced to private interests who think they can profit from building Chinese power, without regard for the larger consequences to American security. This is an outrage that should shock every American who trusts that government officials will uphold their oaths, do their jobs, and put their country first. Until the White House regains control and recasts priorities in their proper order, its arguments on trade policy are not going to be credible. One of the main reasons that CAFTA is in legislative trouble is that so many members of Congress are tired of a decade of rosy scenarios about “free trade” and globalization that have turned into a black hole of rising deficits, closing factories, and declining job opportunities.

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