International Economic Law and Policy Blog

Trade in Last Night's Democratic Primary Debate

The candidates were asked about some trade/climate issues in last night's debate. Here's what they said:

David Muir: (52:49)
... I want to turn to climate change and jobs here in America. President Trump just signed the United States-Mexico-Canada Agreement, many call it an updated NAFTA. But it does include incentives to make cars here in North America and it does open Canadian markets for American dairy farmers. Senator Sanders, as we sit here in New Hampshire tonight, both New Hampshire senators Maggie Hassan and Senator Jeanne Shaheen supported this, calling it a real win for workers and for farmers. You voted no, because you said you believe it takes us back years on climate. Were the senators from New Hampshire wrong?

Bernie Sanders: (53:26)
Yes. I mean, it’s a disagreement, but if you look at every environmental group in this country, including the Sunrise organization, we’re so proud to have their support, because we have introduced the most comprehensive climate change proposal I think ever authored by a presidential candidate. But they are saying, what the environmental groups are saying, we’re simply exporting fossil fuel emissions to Mexico. There is not one word in that trade agreement that deals with climate change and I don’t know how in 2020 you can do that. Second of all, there is, in terms of outsourcing of jobs, a major crisis in this country. Nobody believes that under this Trump trade agreement that they will not be continued and significant outsourcing of jobs into low wage Mexico, where workers are paid in some cases less than $2 an hour. So I think the right vote was the vote against that agreement. I don’t apologize for that.

George S.: (54:36)
Senator Sanders, thank you. I do want to go to Senator Klobuchar. You’ve heard what Senator Sanders just said there. He said not one word on climate in the trade deal. So why did you vote yes?

Amy Klobuchar: (54:44)
Well, first of all, I want to defend the honor of the incredible two senators from New Hampshire, Jeanne Shaheen and Maggie Hassan, who work so hard for this state every day and I voted with them. Why did I vote with them? Because there were some major improvements in this trade agreement when it comes to labor inspections, when it comes to getting rid of a sweetheart pharma deal that was in place and when it comes to climate change, I think we have to have a North American trading block. We have to have Mexico and Canada and America working together and the best way to take on climate change as president, yes, I’ll work to make this a part of every future trade agreement, but the best way to take on climate change is by getting back into the international climate change agreement, which I will do on day one. It is bringing back the clean power rules. It is bringing back the gas mileage standards and it is introducing sweeping legislation to put a price on carbon and you cannot divorce trade from that, and in future trade agreements, that should be part of our negotiations. But I’m telling you right now, having no trade agreement with Canada and Mexico puts us at such a disadvantage when it comes to dealing with China and pushing China to do better when it comes to climate change.

George S.: (55:59)
Senator Klobuchar, thank you. Senator Warren, you voted yes as well.

Elizabeth Warren: (56:03)
Yes I did, and I’ll tell you why, because there are a lot of farmers around this country that are really hurting because of Donald Trump’s trade policies. There are a lot of workers who are hurting because they can’t get enforcement of any workers’ rights. So this NAFTA provision, after a lot of negotiation with Democrats, Senator Sherrod Brown helped make it a whole lot better. This makes things somewhat better for workers and for farmers and when I see a law that makes things somewhat better for hardworking people in this country, I’m saying, I’ll sign up for that and then I’ll get up tomorrow morning and I’ll start working hard for a better trade deal on climate, a better trade deal that has a basic coherence to it. Everyone wants to get to the American market. We should be raising standards on climate around the world to get access to our market.

George S.: (56:56)
Mr. Steyer.

Tom Steyer: (56:58)
Yeah, I got to agree with Bernie Sanders, I do. Senator Warren is right. Everybody wants to get into our market, and that’s how we convince them that they’ve got to be right on climate too. That we have to stop making foreign policy decisions in the old way. Yeah, of course, we want to make things better for American workers, and it’s absolutely critical that when we think about trade policy, we’re thinking about it from the point of view of the American people, not of the American corporations. That’s a huge positive change. And I agree with the senators on that, but there’s something else going on here when we think about our foreign policy. We talked about whether it was right to kill General Soleimani, and there was no discussion in that about where that leaves the United States in the community of nations around the world. So if we actually want to be the leaders of the world, the leaders of the free world who can actually negotiate a climate treaty around the world that sticks, that makes a difference, we’re going to have to put climate first, and when we think about doing the wrong thing, the way Mr. Trump did with General Soleimani, we have to ask, does that help us build a coalition of countries around the world to do the right thing? It absolutely does not. Being all by ourselves, being the Empire in the Star Wars movie does not put us in a position to get done what we need to get done as the leader of the free world. So in fact, the USMCA is something, that’s the first step, but the second step is exactly what Bernie Sanders is saying. Use access to our market as a negotiating thing to make sure not only that we represent American workers, but that we represent the American people in the long run and we make sure that we get a safe climate deal.

Amy Klobuchar: (58:50)
One of the things about being in the arena is you have to make decisions all the time and these things aren’t always exactly how you would do them. But in this case, if you want to criticize Trump for not ever having any friends, and I would agree, he always sides with tyrants over innocents. He always sides with dictators over allies, but I think you’ve got to have some friends and those two countries, our neighbors, may not be perfect, but they are our friends, and we have a president that literally blames everyone in the world, and we have not talked about this enough. He blames Barack Obama for everything that goes wrong. He blames his federal reserve chair that he appointed himself. He blames the King of Denmark, who does that? He blames the prime minister of Canada for, he claims, cutting him out of the Canadian version of Home Alone 2, who does that? That’s what Donald Trump does. So my point here is that when we have opportunities to work with our allies, and New Hampshire is such a great example of this, New Hampshire, Bretton Woods, New Hampshire, with senators like Jeanne Shaheen and Maggie Hassen, who believe we need to work with NATO and the rest of the world who sees it as a smaller state, but a state that is a piece of the world. We cannot be alone, and that trade agreement was not perfect, but the point of it is, if we start isolating ourselves from the rest of the world, we are going to hurt ourselves economically and we are going to hurt our nation’s security.

Joe Biden on Trade Policy

This is from a Joe Biden interview with the NY Times editorial board: 

BA: You’ve talked about the urgency of the climate change. The new NAFTA agreement includes no measures aimed at dealing with climate change. At what point should Democrats stop voting for international agreements that fail to deal with climate change?

Well, first of all, the two things that the new NAFTA agreement has, is they have enforcement mechanisms. I’ve not read them yet. O.K.? I’m told by staff. Enforcement mechanisms that have environmental protections, as well as, not talking for fundamental climate change, but though you cannot compete and disregard existing climate regulations that exist. So environmentalists are at the table, I’ve been told, and labor’s been at the table and they should be. They should be.

Now, if in fact what I propose is as president, I’m, by the way, I’m not joking. I did. I’m the guy that came back and said, we can embarrass Xi Jinping to join the Paris accord. And everybody looked at me like I was nuts. Well, it did. But what happened was that only works if in fact we are the aggressive leader. So number one, I would immediately rejoin the Paris accord, number one. And number two, I would do what the accord calls for. Upping the ante as circumstances change and more science becomes available that we have less time. For example, think of what we should be doing now in the biggest carbon sink in the world, the Amazon. Instead of talking about $2 billion, I’d be organizing, not a joke, organizing the world as I did in Latin America on other issues, like Colombia and so on. Anyway, to make sure that they in fact either, and we would provide, the world would provide, $20 to $30 billion for them to be able to make up for what they’re going to lose by not having agriculture.

BA: Those are good programs, but do you think Democrats should vote for an agreement that does not affirm the Paris accord and does not contain any binding commitments to deal with climate change?

Look, it’s like saying would you sign an agreement with Turkey on a base closure because it didn’t have that in it? It depends on if it’s related to climate. Absolutely they should be part of it.

BA: But this is not a hypothetical. This is a deal that exists and is coming before the House ——

It is, but the deal relates to matters of trade, that in fact, there is no circumstance where we are saying anything that we’re going to do more or less relative to what we’re selling back and forth across the border. Here’s an example that would matter. China. China, in fact, in their “Belt and Road” proposal is in fact exporting more dirty coal around the world and is subsidizing more than anybody in the world. The answer is, what we should be saying to them is, you keep your agreement on the climate accord, which you signed up to. If you don’t, you will pay a price for it. You will not be able to sell product here. And organize the world to make sure that no, they couldn’t sell product anywhere. To make sure that they in fact have a requirement to stick to what they committed to. They’ve already signed it, so I don’t know. It’s a little bit like saying to me, should we ——

BA: Why wouldn’t you apply that standard to Canada, which is a larger energy exporter than China?

Well, no, by the way, I would. That’s what we should be doing to everybody in the world. I’m basically giving you one example. That’s why I oppose what China’s, what Canada’s doing in terms of the pipelines and the dirty crude they’re sending south on us, letting it go forward. We have to do that. We have to. But we can’t do a damn thing if we don’t meet our responsibility. We make up 15 percent of the problem in the world. We walk away from it all and the rest of the world says, what the hell are you holding me accountable for? You’re not doing anything. That’s why this president’s does such incredible damage, incredible damage to our effort to deal with climate change.

Trade in Last Night's Democratic Debate

All the candidates on the stage got a chance to weigh in on trade in last night's Democratic debate. Here's what they said:

PFANNENSTIEL: Thank you, Mr. Steyer. Let's stay with the theme of America's role in the world and talk about trade. Tomorrow, President Trump is expected to sign phase one of a trade agreement with China. And the Senate will likely soon approve a new trade deal with Mexico and Canada, Iowa's largest trading partners. 

Sen. Sanders, you have said that new deal, the USMCA, quote, "makes some modest improvements," yet you are going to vote against it. Aren't modest improvements better than no improvements...

SANDERS: No, we can do much ...

PFANNENSTIEL: ... for the farmers and manufacturers who have been devastated here in Iowa?

SANDERS: The answer is we could do much better than a Trump-led trade deal. This deal — and I think the proponents of it acknowledge — will result in the continuation of the loss of hundreds of thousands of good-paying jobs as a result of outsourcing.

The heart and soul of our disastrous trade agreements — and I'm the guy who voted against NAFTA and against permanent normal trade relations with China — is that we have forced American workers to compete against people in Mexico, in China, elsewhere, who earn starvation wages, $1 or $2 an hour. 

Second of all, every major environmental organization has said no to this new trade agreement because it does not even have the phrase "climate change" in it. And given the fact that climate change is right now the greatest threat facing this planet, I will not vote for a trade agreement that does not incorporate very, very strong principles to significantly lower fossil fuel emissions in the world.

PFANNENSTIEL: But, Sen. Sanders, to be clear, the AFL-CIO supports this deal. Are you unwilling to compromise?

SANDERS: The AFL-CIO does. The Machinists Union does not. And every environmental organization in this country, including the Sunrise Organization, who are supporting my candidacy, opposes it.

So I happen to believe — and I hope we will talk about climate change in a moment — if we do not get our act together in terms of climate change, the planet that we're going to be leaving our kids and our children — and our grandchildren will be increasingly unlivable and uninhabitable.

PFANNENSTIEL: We're going to get to climate change, but I'd like to stay on trade. Sen. Warren ...

SANDERS: Well, they are the same in this issue. 

PFANNENSTIEL: Sen. Warren, you support the USMCA. Why is Sen. Sanders wrong?

WARREN: I do. I wasn't here. I haven't been in Congress long enough to have voted against NAFTA, but I led the fight against the trade deal with Asia and the trade deal with Europe, because I didn't think it was in the interests of the American people, the American workers, or environmental interests.

But we have farmers here in Iowa who are hurting. And they are hurting because of Donald Trump's initiated trade wars. We have workers who are hurting because the agreements that have already been cut really don't have enforcement on workers' rights.

This new trade deal is a modest improvement. Sen. Sanders himself has said so. It will give some relief to our farmers. It will give some relief to our workers. I believe we accept that relief, we try to help the people who need help, and we get up the next day and fight for a better trade deal. 

We need a coherent trade policy. We need a policy that actually helps our workers, our farmers. We need them at the table, not just to trade policy written for big, international companies. I'm ready to have that fight, but let's help the people who need help right now.

PFANNENSTIEL: Thank you. Sen. Sanders, can you please respond to Sen. Warren?

SANDERS: Well, I think that it is not so easy to put together new trade legislation. If this is passed, I think it will set us back a number of years.

Sen. Warren is right in saying we need to bring the stakeholders to the table, that — it is the family farmers here in Iowa and in Vermont and around the country. That is the environmental community. That is the workers. Bottom line here is, I am sick and tired of trade agreements negotiated by the CEOs of large corporations behind doors.

PFANNENSTIEL: Sen. Klobuchar, I'd like to bring you in here. 

KLOBUCHAR: Brianne, I want to hit reality here. I serve on the Agriculture Committee, and I will never forget going to Crawfordsville here in Iowa — and thank you for bringing up Iowa, Brianne, since that is where we are — and I went to this plant and there was one worker left in that plant. That plant had been shut down because of Donald Trump's trade policies and because of what he had done to those workers with giving secret waivers to oil companies and ruining the renewable fuel standard. That worker brought out a coat rack of uniforms and he said, these are my friends, they don't work anymore. And their names were embroidered on those uniforms, Derek, Mark, Salvador. And that guy started to cry.

These are real people hurt by Donald Trump's trade war. So what we should do, and I support the USMCA, I am glad that these improvements were made that are supported by people like Richard Trumka and Sherrod Brown on labor and environment and on pharma, the sweetheart deal...

PFANNENSTIEL: Thank you. 

KLOBUCHAR: ... because I think we need a big trading block... 

PFANNENSTIEL: Thank you, Sen. Klobuchar. 

KLOBUCHAR: ... with North America to take on China. And the way you are stronger...

PFANNENSTIEL: Sen. Klobuchar, your time is up. 

KLOBUCHAR: ... China is with our allies. 

PFANNENSTIEL: Mayor Buttigieg, do you support the USMCA, yes or no? 

BUTTIGIEG: Yes, it has been improved, it is not perfect. But when you sit down with the people who are most impacted, they share just how much harm has been done to them by things like the trade war and just how much we can benefit, American consumers and workers and farmers, by making sure we have the right kind of labor and enforceability, as Democrats ensured we got in this USMCA.

But let's acknowledge why there is such fear and frustration. You know, my part of the country, in the industrial Midwest, I remember when they came around in the '90s, selling trade deals, telling us, don't worry about your slice of the pie, the pie will get so much bigger that everyone will be better off. And that promise was broken.

The part about the pie getting bigger happened. It's just that the part about it getting to most people where I live did not. That is why there is such frustration, the sense that these decisions in boardrooms...

PFANNENSTIEL: Thank you. 

BUTTIGIEG: ... and in committee rooms in Washington are being made not based on what's best for us...

PFANNENSTIEL: Thank you, Mayor Buttigieg. 

BUTTIGIEG: ... but based on their own gain.

PFANNENSTIEL: Vice President Biden, Sen. Sanders has said that Donald Trump will, quote, “eat your lunch” for voting yes on what he calls terrible trade agreements. When it comes to trade, why are you the best candidate to take on President Trump?

BIDEN: There will be no trade agreements signed in my administration without environmentalists and labor at the table. And there will be no trade agreement until we invest more in American workers. We should be putting our money and our effort and our time in preparing American workers to compete in the 21st Century on the high-tech side, dealing with all artificial intelligence. We should be focusing on equipping American workers to do that.

And by the way, the idea — I don't know that there's any trade agreement that the senator would ever think made any sense, but the problem is that 95 percent of the customers are out there. So we better figure out how we begin to write the rules of the road, not China. 

PFANNENSTIEL: Sen. Sanders? 

SANDERS: Joe and I have a fundamental disagreement here, in case you haven't noticed. And that is NAFTA, PNTR with China, other trade agreements were written for one reason alone. And that is to increase the profits of large multi-national corporations. And the end result of those two, just PNTR with China, Joe, and NAFTA, cost us some 4 million jobs, as part of the race to the bottom.

I am sick and tired and will not tolerate, and we will use the power of the federal contracting system. If a corporation in America wants to shut down in Iowa or Vermont or any place else, and then they think they're going to get on line for our generous federal contract, they've got another thing going. 

We need some corporate responsibility here and we need to protect good-paying jobs in America, not see them go to China, Mexico, Vietnam, and all these other countries.

PFANNENSTIEL: Mr. Vice president, what's your response? 

BIDEN: We need corporate responsibility and I agree with that completely. But we also need to have enforcement mechanisms in the agreements we make. Enforceable agreements. That's one of the things that has been improved with the trade agreement with Mexico. And that's what we should be doing in any agreement we have. 

But let's get back to the basics here. If we don't set the rules of the road by going out to our partners, instead of poking our eye — excuse me, poking our finger in the eye of all of our friends and allies, we make up 25 percent of the world's economy. We've got to bring the other 25 percent of our allies along with us to set the rules of the road so China cannot continue to abuse their power by stealing our intellectual property and doing all the other things, using their corporate state system to our significant disadvantage. 

PFANNENSTIEL: Sen. Warren? 

WARREN: You know, our problem is not just that we need corporate responsibility. It has been the structure of how these trade deals have been negotiated. The United States has had this strategy for decades. And that strategy has been to have government trade negotiators, a small number, and then surround them with giant multi-national corporation lobbyists and corporate executives, who whisper in the ears of our negotiators and then get deals cut that are great for the giant multi-national corporations, not good for America, not good for American workers, not good for the environment. 

We need a different approach to trade and it starts by calling out the corruption of these giant corporations that have cut our trade deals. Everybody wants to get to the American market. And we need to put some standards in place. You want to be able to sell your goods here, then you've got to meet some environmental standards. You've got to meet labor standards.

PFANNENSTIEL: Thank you, Sen. Warren. 

WARREN: We need a...

(CROSSTALK)

WARREN: ... approach. 

PFANNENSTIEL: I would like to bring in Mr. Steyer here. 

Mr. Steyer, even though farmers and manufacturers here in Iowa and around the country could see some relief from the China deal, they've been crushed by the current administration's trade war. What will you do as president to help them get back on their feet? 

STEYER: Look, on the first day, I would undo Mr. Trump's tariffs. On the first day, I would get rid of his waivers that Sen. Klobuchar was referring to, to oil refiners, so that not having to use corn-based ethanol.

In fact, these trade deals have been exactly what Sen. Sanders and Warren have been saying, which is that they've been designed to grow the American GDP for the corporations of America, not for the working people of America, and not to protect the climate.

So let me say this. I'm the only person on this stage who says climate is my number one priority. I would not sign this deal, because if climate is your number one priority, you can't sign a deal, even if it's marginally better for working people until climate is also taken into consideration. 

Look, I've got four kids between the ages of 26 and 31. I cannot allow this country to go down the path of climate destruction. Everybody in their generation knows it. Frankly, Mayor Buttigieg, you're their generation. I think you would be standing up more — look, that's why I'm standing up for it. 

We cannot put climate on the backseat all the time and say we're going to sign this one more deal, we're going to do one more thing without putting climate first. That's why it's my number one priority. We can do it in a way that makes us richer, but we have to do it. 

As I said yesterday, Sanders is very blunt about these issues, but at the same time he is quite vague. He seems to oppose competition between American  workers and workers in countries with low wages. Does that mean he would block all competing imports from those countries? There's a (small) part of me that wants to see him become president just to understand what his policies would look like!

Sanders and Warren Talk Trade with the NY Times

Bernie Sanders and Elizabeth Warren both talked to the NY Times editorial board recently, and trade was one of the issues raised (a tiny bit with Sanders, a lot with Warren). This is from the interview with Sanders:

AK: I’m wondering if you could explain how your approach to dealing with China would be different from the president and how it would elicit better outcomes.

China is one of the most powerful and important countries in the world, and it’s a country that we have got to work with and live with. It is a country I voted against permanent normal trade relations with China, which was the right vote because between Nafta and P.N.T.R. [permanent normal trade relations] with China, this country has lost some four million decent paying jobs.

So I’ll get to your question, but in terms of trade, I believe in trade. But it’s got to be based on principles that are fair, not unfettered free trade. So if companies want to shut down in America to find cheap labor in China or Vietnam, I’m against that and that’s how I have voted.

Bernie's answers to policy questions are often blunt and definitive, but then leave me confused as to what he means. He starts by saying he believes in trade, which is reassuring. He then says trade should be "fair" rather than "unfettered free trade," which I could take as concerning, but since currently trade is far from unfettered and free, maybe it's not as worrying as it wounds. Then he gives a very specific example that sounds clear but really isn't: He doesn't want companies "to shut down in America to find cheap labor in China or Vietnam," and he votes against trade deals that lead to that. But obviously it's possible that moving a factory to another country is the only way to stay in business. If the company keeps the factory open in America and a few years later has to declare bankruptcy and shut down completely, that doesn't help American workers. And what if a company is thinking of opening a factory, and has a choice between the U.S and China/Vietnam. Is it OK to choose China/Vietnam in those circumstances, where there is no shutdown? And more generally, is he saying that he is OK with tariff liberalization through a trade agreement where it doesn't lead to factories moving broad?

The conversation with Warren went into much greater detail:

SS: Well, speaking of using leverage, you’ve argued that nations that want to trade with the United States should be held to higher standards.

Yeah.

SS: The Obama administration tried that, Trump administration tried that in different ways, but no results. What kind of leverage would you use? What would you do?

Well, I’m not sure I accept the premise of the question, that they actually tried what I was talking about. Look, our No. 1 leverage is everybody wants the American consumer. They want access to the American consumer. They want to be able to sell us all of their stuff because the American consumer is not only the engine of about 70 percent of our economy; it’s a worldwide engine. So I think it’s perfectly reasonable to say, if you want to be able to trade with United States on the best possible terms, then everybody needs to raise their standards just a little. Who wants to do that?

And you may start out with modest increments and increase them over time, but there’s no reason that we should be treating a country that is producing goods through prison labor or child labor or unsafe working standards or by polluting the earth, that we should treat a country that produces goods in that way the same way we’re treating a country that produces goods with standards that are much closer to ours. We simply put our own businesses and our own workers at a competitive disadvantage, so we end up doing things like exporting pollution. Can’t pollute here in the United States, but move this polluting industry. This way that you’re going to paint dolls or produce chips, move it somewhere else where they have no environmental standards and then resell, and then sell those goods back in the United States.

Binyamin Appelbaum: Would you reduce existing —

We just undercut ourselves when we do that.

BA: Would you reduce existing access in order to achieve that goal?

Yeah.

BA: So you’d put tariffs on existing foreign imports?

It’s that you don’t get the tariff benefit. This is what it’s really about. Where’s the baseline? Right? And is the baseline one that says, across the board, you’ve got to give plenty of notice. You’ve got to work through, make sure you’ve got something that’s achievable for countries we trade with. But this is not like trying to institute a trade war. This is not like saying we’re mad at you and therefore we’re going to impose all these tariffs on you, and doing it as Donald Trump has done by tweet.

But it’s to work with nations and say, you want access to the American consumer, you’ve got to start raising your standards in a meaningful way. And here’s where the long-term goals are, here’s where you are, here’s what constitutes moving toward those. And I think that’s where a lot of folks would like to go, and frankly we should be working with other nations on helping, not just those who lag way behind, but those who have good standards to be using the same kind of approach to trade. The idea that trade is just about tariffs is just old 20th century. Trade today in the 21st century is about regulation. It’s about who’s going to have to meet what regulatory standards.

Whether we’re talking about workers or we’re talking about the environment, who has to meet what standards? And there are big corporations who figured out how to game the system. Where standards are high, then move that part of the operation somewhere else where standards are low and save a nickel. Because these corporations, they don’t have any loyalty to a country, they just have loyalty to their own bottom line. And they play this all around the world.

BA: Are tariffs the leverage that you use to secure those types —

Tariffs are one of the tools. Economic agreements across countries, that many countries join together, and say, we’re not going to let anyone import if they’re using prison labor, for example, or if they’re dumping dangerous chemicals into the water. There are lots of ways to do this, but we can’t simply think of this as a tariff, no tariff protectionism barrier. It’s not. It’s about regulations. Look at the dang NAFTA 2.0, look at what we were negotiating for T.T.I.P. T.T.I.P. was about financial regulations, not about goods that were moving, in a sense, the old way that people think about, that you put a bunch of stuff on a barge and you ship it across the Atlantic Ocean. And we just need to tune into the fact we know what our advantage is and we need to use it, not to try to lock others out, but to try to encourage others to come in.

Nick Fox: What did you think of the standards in the Trans-Pacific deal?

I disagreed with them. So for example, the Trans-Pacific Partnership had a robust investor state dispute resolution mechanism, which multiple of our trade treaties have had for decades now. And I just think that’s fundamentally wrong. It’s a two-tier system that says, in effect, we’ll make a bunch of promises in a trade deal on the environment, on use of prison labor, child labor and on anything else, and then we’ll give two entirely different enforcement mechanisms.

If you are a giant multinational corporation and any regulation comes along that you don’t like, the local country raises the minimum — we’ve actually seen this — raises its environmental standards, you get to sue them to get them to drop those standards. And who will your case be heard by? It’ll be heard by a handful of corporate lawyers, who when they’re not sitting on this arbitration panel are working for big law firms that are doing work for you or other multinational corporations like you. That’s one set of how the path will run.

But the other half, let’s say you have a complaint because the trade agreement had said that some other country would permit unionization or would not use low-wage workers beyond a certain point. Do you get a path like that? A quick resolution? And by the way, I should point out: That quick resolution? There’s no appeal from it. It is immediately enforceable against a government. So you can go straight against Canada for raising its environmental standards. You can go straight against a South American country for raising its standards to protect its children’s health from smoking.

But if your complaint is a labor complaint, that is, gee, here I am in America and I’m trying to compete against workers in a foreign country who are getting paid a dollar a day. What’s your path? Well, first you’ve got to go to the U.S. government and persuade the U.S. government that they should go after this country, for which we know what has happened. U.S. government has repeatedly — and this is not just by — well, yeah, we get your point.

But on the other hand, we have other diplomatic initiatives and it’s really important that we’re trying to work with this country, and they’re important to us strategically for this reason and we have this ongoing negotiation in that political thing. Drag your heels, drag your heels, drag your heels, until the jobs have disappeared here. And then once you go forward, you’ve got to go forward through a different kind of court that’s much slower.

So the effect is that the promises that are put into trade agreements like T.P.P., they may all look the same on paper, but man, they are nowhere close to each other in terms of what happens with enforcement. Multinational corporations are given the opportunity basically to opt out of laws they don’t like, where protections that are supposed to be written for our workers, for the worldwide environment, for human rights standards, just get left by the curb.

Warren says she wants to use tariffs and other leverage to induce other countries to raise their regulatory standards. We already do this to some extent. But as she describes things above, it seems like a major expansion of that policy, although it's hard to get a sense of what exactly this policy would look like in practice. Is she talking about withdrawing from existing trade agreements? Using domestic statutory power to impose new tariffs?

USMCA in Last Night's Debate

This is from last night's Democratic debate:

WOODRUFF: Let's turn now to an issue that is on the minds of all Americans, and that is the economy.

Senator Sanders, today, the House of Representatives voted for a new bipartisan trade agreement among the United States, Canada and Mexico. It was supported by union-friendly leaders like Speaker Nancy Pelosi and big labor groups like the AFL-CIO. They say it is going to be a big job creator.

Senator, my question is, will you support this deal? And, if not, why not?

SANDERS: Judy, you're talking to somebody who, unlike some of my colleagues here, voted against NAFTA, voted against PNTR with China -- two agreements that cost us over 4 million decent-paying jobs.

Now, I don't agree with the -- your statement that people think this is going to be a great job creator. This is a modest improvement over what we have right now. It would allow, hopefully, Mexican workers to organize into unions, independent unions and be able to negotiate decent contracts.

But at the end of the day, in my view, it is not going to stop outsourcing. It is not going to stop corporations from moving to Mexico, where manufacturing workers make less than $2 an hour.

What we need is a trade policy that stands up for workers, stands up for farmers. And, by the way, the word "climate change," to the best of my knowledge, is not discussed in this new NAFTA agreement at all, which is an outrage. So, no, I will not be voting for this agreement, although it makes some modest improvements.

WOODRUFF: Senator Klobuchar?

KLOBUCHAR: I have a different view. I'll go with my friend, Sherrod Brown, who has voted against every trade agreement that's come in front of him, and he's voting for this, and I am, too.

And the reason I am voting for it is that I believe that we have a change with this agreement. I would not have voted for the agreement that President Trump put forward, but we've got better labor standards, better environmental standards, and a better deal when it comes to the pharmaceutical provision, which I also opposed.

Ninety-five percent of our customers are outside of our borders. And we have to make sure that we have trade agreements that are more fair, because if we can encourage work made in America, every time you hold something in your hand that says "Made in America," it is the ingenuity of our workers, it is the quality of a product, it is equality of our workers, and it is the hopes and dreams of the American people.

I think this agreement -- while Senator Sanders is correct, there are some issues with it -- is much better than the one originally proposed. And for those farmers in the Midwest and for those people that have been hurt by the fact that we will not have a trade segment with Mexico and with Canada and the United States, I think that this is a much better deal.

I wish more candidates had a chance to answer the question. Anyway, Sanders gave his usual trade policy answers. We still don't know if there is any version of trade agreements he would support. Does that mean he would pull out of existing agreements? Is there some alternative model he could accept? Klobuchar associated herself with Sherrod Brown and said she would support it. Seems like a safe way to play to both sides of the debate. What would Warren and Buttigieg have said? Hopefully we'll hear something from them soon. (Warren, obviously, will get to vote on it.)

Trade in Last Night's Democratic Debate

Trade didn't come up too much in last night's Democratic debate, but here are a couple items:

MADDOW: ... American farmers are struggling under the effects of President Trump's trade war with China. The Trump administration's payments to farmers to offset those losses already have a price tag that is more than double what was spent on the Obama administration's auto bailout.

Mayor Buttigieg, would you continue those farm subsidies?

BUTTIGIEG: We shouldn't have to pay farmers to take the edge off of a trade war that shouldn't have been started in the first place. I will support farmers, but not long ago, I was in Boone, Iowa, a guy came up to me, he said I got my Trump bailout check, but I would have rather spent that money on conservation.

By the way, this isn't even making farmers whole. If you're in soybeans, for example, you're getting killed. And it's not just what this president has done with the trade war. In a lot of parts of the country, the worst thing is these so-called small refinery waivers, which are killing those who are involved in ethanol.

Look, I don't think this president cares one bit about farmers. He keeps asking them to take one for the team, but more and more I'm talking to people in rural America who see that they're not going to benefit from business as usual under this president.

I believe that so many of the solutions lie with American farmers, but we have to stand up for them, not just with direct subsidies and support, but with making sure we do something about the consolidation, the monopolies that leave farmers with fewer places to purchase supplies from and fewer places to sell their product to.

And American farming should be one of the key pillars of how we combat climate change. I believe that the quest for the carbon negative farm could be as big a symbol of dealing with climate change as the electric car in this country. And it's an important part of how we make sure that we get a message out around dealing with climate change that recruits everybody to be part of the solution, including conservative communities where a lot of people have been made to feel that admitting climate science would mean acknowledging they're part of the problem.

MADDOW: Mr. Mayor, I'm sorry to interrupt, but I need you to answer the question. Would you continue those subsidies or not?

BUTTIGIEG: Yes, but we won't need them because we're going to fix the trade war.

...

MADDOW: On the issue of China, Senator Booker, China is now using force against demonstrators in Hong Kong where millions have taken to the streets advocating for democratic reforms. Many of the demonstrators are asking the United States for help. If you were president, would the U.S. help their movement, and how?

BOOKER: Well, first of all, this is president who seems to want to go up against China in a trade war by pulling away from our allies and, in fact, attacking them, as well. We used a national security waiver to put tariffs on Canada. And so at the very time that China is breaking international rules, is practicing unfair practices, stealing technology, forcing technology transfer, and violating human rights, this nation is pulling away from critical allies we would need to show strength against China.

Some Unsolicited Advice for Warren's Trade Policy Team

One of the most notable things about Elizabeth Warren's trade policy plan is what she doesn't talk about. She doesn't talk about the WTO. She doesn't talk about "national security" tariffs. She doesn't have much to say about U.S.-China trade relations. The lack of detail is perhaps a sign that despite any misgivings free traders might have about what she does say about trade agreements, there would be room to improve on Trump's trade policy in a Warren administration. With that in mind, here are a few suggestions for Warren and her advisers as to what might make us pro-trade folks less critical. 

Let's start with the WTO. The Trump administration has raised three big issues: The role of the Appellate Body; the treatment of developing countries; and the inadequacy of the notifications provided by many countries. (There is also the ability of WTO rules to deal with China, but I'll address China issues separately.)

In my view, the issues related to developing countries and notifications are real and challenging, and it's worth continuing to pursue them. By contrast, the Trump administration's approach to the Appellate Body has been flawed and needs to be abandoned. The first step the Warren administration should take is to stop blocking appointments to the Appellate Body. That would demonstrate a good faith effort to participate in WTO affairs, and to support neutral adjudication procedures and the international rule of law (rather than unilateralism).

The second step would be to articulate a vision of how the Warren administration sees the role of the Appellate Body. It's not just the Trump administration political appointees who have had concerns about the Appellate Body. There are a wide range of U.S. actors who have been critical of some of the Appellate Body's decisions and behavior. The question is, what do they want the Appellate Body to be instead? They need to figure this out, articulate it clearly, and make the case for it to other WTO Members. For example, do they want to get rid of DSU Article 11 appeals? I don't think that's an unreasonable position. But if that is their position, they need to convince everyone else of the merits. A number of remarks from Trump administration officials have been along the lines of, "We need to go back to what we agreed in the DSU in 1995." But there are different interpretations of what was agreed, so spell out what you think the Appellate Body should be doing.

Now let's move to the Section 232 national security tariffs, which of course involves the WTO as well. The best option here is to repeal the steel and aluminum tariffs, and to explicitly rule out imposing tariffs on autos. There isn't a reasonable justification for these tariffs under the terms of the statute, and imposing them has caused serious trade conflict in the form of tariff wars and abuse of the GATT Article XXI security exception (as well as the safeguards provisions invoked in response). Repealing the Section 232 tariffs would be a great way to start working with our allies again, which will be relevant to the China issues discussed below.

It's worth noting that there are plenty of legal ways to impose tariffs (trade remedies, for example), so there is no need for Section 232 in this regard. Of course, someone might point out that certain WTO rulings have made using trade remedies more difficult. Here, I would go back to what I said about the role of the Appellate Body. If there are specific concerns (e.g., the Appellate Body's rulings on "unforeseen developments") the answer is to make the case to other Members for a particular alternative approach.

And then there's China. I never had much hope for Section 301 tariffs as an effective way to change China's behavior, but the Trump administration has some time left before the election, and we'll see how it goes. But if it hasn't worked by the time there is a President Warren, perhaps then we could consider an alternative. One possibility is something along the lines of what President Obama tried, which is to negotiate liberalization with others in order to force China to behave better. Obama's broad strategy made some sense, but in my view the execution was botched, in two ways. First, the TTIP expectations were unrealistic. And second, the domestic politics of TPP were handled badly, and as a result Congress did not ratify it.

But it's not hard to imagine a President Warren joining a version of the TPP (without ISDS, etc.) and negotiating a trade deal with the EU. She'll have to compromise on a bunch of the conditions she set out in her trade policy plan, but that's OK. It's my understanding that politicians sometimes do this sort of thing.

In addition, governments should bring a wide range of WTO complaints against China. China's accession protocol has some pretty broad obligations in it. In my view, it's worth testing them out in dispute settlement.

And then finally on China, if we want China to make significant structural changes to its economy, there needs to be a negotiation that offers China something as well. Otherwise, for political reasons, China simply won't be able to sign on. For example, given how potent normal anti-dumping rules are, it seems to me that trading off the extra bad treatment China gets in anti-dumping in exchange for some significant Chinese reforms would be worth it. But I know that's a sensitive issue, and I'm open to other possibilities.

A Critique of Warren's Trade Policy Plan

Back in July, I offered some quick thoughts on presidential candidate Elizabeth Warren's trade policy plan (entitled, "It's Time for a New Approach to Trade"). Now I'm going to offer a more detailed critique, and I'll follow with a post that puts forward some suggestions as to how she might calm the nerves of critics who see her ideas as pretty close to Trump's confrontational trade policies.

She leads off with this:

Last month, I released my economic patriotism agenda — my commitment to fundamentally changing the government’s approach to the economy so that we put the interests of American workers and families ahead of the interests of multinational corporations. I’ve already released my ideas for applying economic patriotism to manufacturing and to Wall Street. This is my plan for using economic patriotism to overhaul our approach to trade.

For decades, big multinational corporations have bought and lobbied their way into dictating America’s trade policy. Those big corporations have gotten rich but everyone else has paid the price. We’ve lost millions of jobs to outsourcing, depressed wages for American workers, accelerated climate change, and squeezed America’s family farmers. We’ve let China get away with the suppression of pay and labor rights, poor environmental protections, and years of currency manipulation. All to add some zeroes to the bottom lines of big corporations with no loyalty or allegiance to America.

We need to completely transform our approach to trade. America enters into trade negotiations with enormous leverage because America is the world’s most attractive market. As President, I won’t hand America’s leverage to big corporations to use for their own narrow purposes — I’ll use it to create and defend good American jobs, raise wages and farm income, combat climate change, lower drug prices, and raise living standards worldwide. We will engage in international trade — but on our terms and only when it benefits American families.

I probably shouldn't get too hung up on the spin in her introduction, but nevertheless I'm going to point out a few things: We've gained millions of jobs from foreign companies "outsourcing" their production to the United States; I would worry just as much about the negative impact of carbon emissions from inefficient manufacturing caused by protectionism; and trade agreements have opened foreign markets to "America's family farmers." More generally, she is concerned about the influence of big corporations on U.S. trade policy. Initially, as I read the history, taking some trade policy power away from Congress and giving it to the executive branch led to diminished influence from corporations, but over time I think it's fair to say that they regained their influence. At the same time, environmental and labor groups also gained influence, which is why there are environmental and labor chapters in trade agreements.

Now on to the substance. Here is her overall vision:

A New Approach to Trade

My plan is a new approach to trade — one that is different from both the Washington insider consensus that brought us decades of bad trade deals and from Donald Trump’s haphazard and ultimately corporate-friendly approach.

Unlike the insiders, I don’t think “free trade” deals that benefit big multinational corporations and international capital at the expense of American workers are good simply because they open up markets. Trade is good when it helps American workers and families — when it doesn’t, we need to change our approach. And unlike Trump, while I think tariffs are an important tool, they are not by themselves a long-term solution to our failed trade agenda and must be part of a broader strategy that this Administration clearly lacks.

To ensure that American families benefit from international trade in the decades to come, I want to invest in American workers and to use our leverage to force other countries to raise the bar on everything from labor and environmental standards to anti-corruption rules to access to medicine to tax enforcement. If we raise the world’s standards to our level and American workers have the chance to compete fairly, they will thrive — and millions of people around the world will be better off too.

Achieving this vision isn’t about tough talk or tweets. We must do the hard work of transforming every aspect of our current approach to trade: from our negotiating process to the negotiating objectives we pursue to the way we enforce agreements. That’s what I intend to do.

First of all, let me say that I'm not sure how "new" any of this is. To me, it seems like the same basic approach: Gathering the various insider interest groups and formulating a policy based on those views. The only change is a shift in which interest group views will be most influential.

Second, it would be nice if she and her advisers provided more detailed explanations as to how they would use tariffs. She says that "tariffs are an important tool," but a tool for what exactly? For negotiating leverage? For shielding domestic corporations from competition? How will they not be abused by special interests, as they have been throughout history? Clearly, tariffs are not going away any time soon, but I'm just trying to point out to the Warren folks that tariffs were a problem long before Trump, and they cannot easily be administered strategically and effectively.

As for the point about using "our leverage to force other countries to raise the bar on everything from labor and environmental standards to anti-corruption rules to access to medicine to tax enforcement," I'll come back to this later, but just to start things off here, let me ask a few questions: Can this work? Is it the right thing to do? Are there better ways to work with poor countries to improve their living standards than imposing financial penalties on them if they do not adopt the policies we demand? 

Now she talks a bit about process:

A Trade Negotiation Process that Reflects America’s Interests

Our current approach to negotiating trade agreements works great for the wealthy and the well-connected. The negotiating text is kept confidential from all but a small set of advisory groups comprised mostly of corporate executives and industry trade group representatives. Once those corporate interests are finished whispering in the ears of our negotiators, the completed text is released. Then, under the expedited “Fast Track” procedure Congress typically uses to approve trade agreements, our elected representatives must vote up or down on the agreement with no ability to propose and secure any changes to it. Meanwhile, the negotiators who constructed it often breeze through the revolving door to take jobs with the corporations whose interests underlie the deal.

This is undemocratic and obviously corrupt. In a Warren Administration, we will negotiate and approve trade agreements through a transparent process that offers the public a genuine chance to shape it:

• Trade negotiators will publicly disclose negotiating drafts and provide the public with an opportunity to comment. When federal agencies write new rules, they typically must publish a proposed version of the rule and permit the public to submit comments on it. I will adopt a similar approach for our trade deals. Prior to negotiations, our negotiators will publish a draft of their proposals in the Federal Register, let the public offer comments on the draft, and take those comments into consideration during negotiations. And then as talks proceed, they will publish drafts of the negotiating texts so the public can monitor the negotiations.
• Trade advisory committees will prioritize the views of workers and consumers. I will ensure that there are more representatives from labor, environmental, and consumer groups than from corporations and trade groups on every existing advisory committee. And I’ll expand the current list of advisory committees to create one for consumers, one for rural areas, and one for each region of the country, so that critical voices are at the table during negotiations.
• The US International Trade Commission will provide a regional analysis of the economic effects of a trade agreement. Trade agreements can hollow out communities and transform regional economies. Yet the report the ITC provides before Congress considers a trade agreement only includes a nationwide analysis of a trade deal’s economic impact. I will push for the agency to provide a region-by-region analysis so the public and Members of Congress can understand how an agreement is likely to affect the places they live and represent.
• The congressional approval process will offer more opportunities for the public and elected representatives to shape trade agreements. I will seek expedited congressional approval of trade agreements only when every regional advisory committee and the labor, consumer, and rural advisory committees unanimously certify that the agreement serves their interests. I will also expand the list of congressional committees that must review any agreement before it is eligible for expedited consideration.

Together, these changes will ensure that our negotiations reflect the views of American families, not corporate interests.

First off, her comparison of trade agreements with domestic regulations (and their notice and comment process) seems misguided to me. I would compare trade agreements to statutes, and there the process is very opaque. Trade agreement negotiations are probably a good deal more transparent in many cases. Regardless, I suppose you could have notice and comment for trade agreement texts. But if you include the detailed regulatory issues that she seems to want included, you might never see a trade agreement concluded.

As for putting more labor, environmental, and consumer groups on the advisory committees, that's fine, but my impression is that some of the groups out there are really just protectionist front groups who would never accept any trade liberalization, and if you give these folks a big say here, you might never get a trade agreement approved.

And finally, having the ITC do a regional analysis seems fine in theory (I'm not sure how difficult this will be in practice), but while we are expanding the ITC's role, I think they should do an analysis of any new tariffs. It would be helpful when deciding whether to impose tariffs to have a sense of all the people who would be adversely affected.

Now we get to the part about using U.S. economic power to influence developing countries:

Using Our Leverage to Demand More for American Families and to Raise the Global Standard of Living

While a better process will produce better agreements, we also must fundamentally shift the goals of our trade agenda so they are aligned with the interests of America’s families.

With certain important exceptions, we live in a low-tariff world. Modern trade agreements are less about the mutual reduction of tariffs and more about establishing regulatory standards for everything from worker rights to pollution to patent protections.

My approach to trade reflects that reality. For too long, we have entered into trade deals with countries with abysmal records on labor, environmental, and human rights issues. In exchange for concrete access to the American market, we get vague commitments to do better, which we then hardly enforce. The result is that millions of people in our trading-partner countries don’t gain the benefits of higher standards — and companies can easily pad their profits by shifting American jobs to countries where they can pay workers next to nothing and pollute the air and water freely.

That will end under my Administration. I am establishing a set of standards countries must meet as a precondition for any trade agreement with America. And I will renegotiate any agreements we have to ensure that our existing trade partners meet those standards as well.

My preconditions are that a country must:

• Recognize and enforce the core labor rights of the International Labour Organization, like collective bargaining and the elimination of child labor.
• Uphold internationally recognized human rights, as reported in the Department of State’s Country Reports on Human Rights, including the rights of indigenous people, migrant workers, and other vulnerable groups.
• Recognize and enforce religious freedom as reported in the State Department’s Country Reports.
• Comply with minimum standards of the Trafficking Victims Protection Act.
• Be a party to the Paris Climate agreement and have a national plan that has been independently verified to put the country on track to reduce its emissions consistent with the long-term emissions goals in that agreement.
• Eliminate all domestic fossil fuel subsidies.
• Ratify the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
• Comply with any tax treaty they have with the United States and participate in the OECD’s Base Erosion and Profit Shifting project to combat tax evasion and avoidance.
• Not appear on the Department of Treasury monitoring list of countries that merit attention for their currency practices.

A country should only be considered an acceptable partner if it meets these basic standards. Shamefully, America itself does not meet many of these labor and environmental standards today. I am committed to fixing that as President. And to help bring other countries up to these standards, I’ll revitalize our commitment to providing technical assistance to help countries improve.

I will also go beyond these minimum standards in key areas to promote the interests of American workers and families.

In my view, a good way to raise the global standard of living would be to encourage development by buying products from poor countries. But Warren has something else in mind: She wants to restrict trade until these countries bring their labor/environment/etc. standards up to our level. But is that even possible? Does the sequence have to go in the other direction, where first developing countries use trade as one element in their industrial economic growth, and then later they can raise their regulatory standards?

As to the specific conditions she would impose, with a lot of them, I think she is missing the point of trade agreements. There are a number of areas where she seems to be trying to carve out the ability to be protectionist:

Labor. I will ensure trade agreements protect Buy American and other programs designed to develop local industry, contain strong rule-of-origin standards to promote domestic manufacturing, protect worker pensions, promote equal pay for equal work for women, and prohibit violence against workers. Unlike previous trade deals agreements that have put labor standards in side agreements that are difficult to enforce, I will make labor standards central to any agreement.

Climate Change and the Environment. Climate change is real, it’s man-made, and we’re running out of time to address it. America should be leading this fight, but we have turned our backs on our responsibilities — with communities of color in the U.S. and developing countries bearing a disproportionate amount of the harm.

Trump is moving us in the wrong direction — withdrawing from the Paris Climate Accord, renegotiating NAFTA without even a mention of climate change, and handing special carve outs to oil and gas companies.

Beyond requiring implementation of the Paris Climate accord and the elimination of fossil fuel subsidies as preconditions for any trade agreement, I have already proposed a Green Marshall Plan to dedicate $100 billion to helping other countries purchase and deploy American-made clean energy technology.

But we must do more. I will push to secure a multilateral agreement to protect domestic green policies like subsidies for green products and preferential treatment for environmentally sustainable energy production from WTO challenges. And because big corporations will move their production to the countries with the weakest greenhouse gas emissions standards — undermining global efforts to address climate change and penalizing countries that are doing their part — I will impose a border carbon adjustment so imported goods that these firms make using carbon-intensive processes are charged a fee to equalize the costs borne by companies playing by the rules.

Prescription Drugs. Last year, Americans spent more than $500 billion on prescription drugs. That’s a 50% increase since 2010. Nearly 3 in 10 Americans report not taking their medicine as directed because of costs. And yet, one of the core elements of America’s current trade agenda is guaranteeing pharmaceutical firms monopoly protections so they can avoid competition from generic drugs — driving up costs and reducing access to necessary medicine abroad, and undermining our efforts to reduce drug prices here at home. That’s exactly what the Trump Administration has done as part of their failed effort to renegotiate NAFTA.

While medical innovation is important, there is no link between extremely long exclusivity periods and pharmaceutical innovation. These are giveaways to drug companies, plain and simple, which allow them to maintain ludicrously high drug prices.

As President, I will fight to bring down the costs of prescription drugs here and around the world. I will never use America’s leverage to push another country to extend exclusivity periods for prescription drugs. I will support efforts to impose price controls on pharmaceuticals. And I will actively seek out opportunities to reduce exclusivity periods in our existing trade deals in exchange for securing other changes that will help America’s working families.

Agriculture. For decades, trade deals have squeezed family farmers, with Black farmers losing their land particularly quickly. Between the trade fights incited by Trump’s haphazard tariffs and a series of natural disasters, America’s farmers are now facing the worst crisis in almost 40 years. They are also facing unprecedented levels of uncertainty and instability. Trump’s tariffs have reduced crop prices, threatened farmers already operating on razor-thin margins, and opened up new non-American markets against which our farmers are now forced to compete. Like trade deals of the past, Trump’s NAFTA 2.0 is written to help giant multinational agribusinesses at the expense of family farms, and it will do nothing to solve the newly created market insecurity Trump’s tariffs have caused.

As President, I will fight for trade agreements that reward American farmers for their hard work by negotiating for fair prices for goods, breaking up the monopolies in grain trading and meat packing, and protecting domestic markets to create stability for America’s family farms. And I will impose Country-of-Origin Labeling rules to protect American producers and provide transparency to consumers.

Consumer protection. We must ensure that the food we eat is high-quality and safe. But our trade agreements have limited safety standards and the inspection of imported foods, while simultaneously enabling a new flood of food imports that overwhelm food safety inspectors. In my Administration, our trade pacts will require imported food to meet domestic food safety standards, including enhanced border inspection requirements.

As with imported food, our current trade deals require us to allow imports of other products and services that do not meet domestic safety and environmental standards. My trade agreements will ensure that imported products and services must meet the same standards as domestic products and services.

Antitrust. We are in an era of massive consolidation across many sectors of the economy. One of the reasons why is that we have a narrow, permissive approach to mergers that looks only at economic efficiency and consumer welfare instead of assessing the impact that a merger will have on competition itself.

In recent years, we have added this problematic standard into trade agreements and proposed it as the defining objective for competition policy in new and renegotiated agreements. Under my administration, we will not propose this standard in any new agreement, and we will work to renegotiate agreements to remove it.

A problem with a lot of the points she makes above is that she is arguing for economic nationalism, which is the main thing (in my view) trade agreements are intended to get rid of or limit. She mentions Buy America programs "designed to develop local industry"; strong rules of origin standards "to promote domestic manufacturing"; helping other countries purchase and use "American-made clean energy technology"; and using country of origin labelling to "protect American producers." If you follow this approach, others are likely to do so as well, which will lead to trade wars and inefficient production.

Speaking of trade wars and inefficient production, a multilateral agreement to "protect domestic green policies like subsidies for green products and preferential treatment for environmentally sustainable energy production from WTO challenges" could also be a big problem. What would make more sense is a policy of subsidizing consumers of these products (rather than producers), which for the most part should not be in conflict with trade agreements.

There is also her usual criticism of pharmaceutical companies, which I'm fine with, but intellectual property protection is complicated. Is she really going to be against all of it? I suspect she will decide to compromise on these issues, and will seem a lot less like a warrior against big companies if she is president.

With regard to food safety, I've heard statements such as "our trade agreements have limited safety standards and the inspection of imported foods" before, but I'm not sure what they mean. I followed her link, but I am deeply skeptical that trade agreements would constrain the implementation of our safety and inspection standards. If anyone involved in these activities is concerned, I hereby volunteer my time to help navigate the trade obligations!

Finally, on antitrust, those provisions tend not to be enforceable in trade agreements, but regardless I'm fine with taking them out and dealing with international antitrust cooperation elsewhere.

She also wants to take ISDS out:

Delivering for American Families with Stronger Enforcement

Our approach to enforcing trade agreements drives down standards worldwide and undermines American families. We offer big corporations fast and powerful methods to enforce the provisions that benefit them but make it nearly impossible for Americans to enforce labor and environmental protections. Foreign governments only fear a challenge to strong rules that might hurt corporate bottom lines, not to weak rules that might not adequately protect workers, the environment, or public health.

I will entirely reorient our approach to enforcement so we drive standards up, not down. I’ll start by ending “Investor-State Dispute Settlement,” or ISDS, the favorable enforcement approach we offer corporations. Under ISDS, a company that believes that a new law violates some aspect of a trade agreement can skip the courts and challenge the law before an international panel of arbitrators. If the company wins, the panel can order that country’s taxpayers to pay out billions in damages — with no review by an actual court. What’s worse, the arbitration panels handing out these binding rulings are often made up of corporate lawyers whose day jobs are representing the very same companies that seek judgments before them.

Companies have used ISDS to undermine laws intended to benefit the public interest. A French company challenged Egypt when it increased the minimum wage. A Swedish company challenged Germany when it decided to cut back on nuclear power after the Fukushima disaster. These cases have real effects across the globe: an ISDS panel’s decision to hear a challenge that Philip Morris brought against Uruguay’s anti-smoking campaign prompted several other countries to abandon similar public health efforts.

As President, I will not include ISDS in any new agreement and will renegotiate existing agreements to remove ISDS from them.

No one will be surprised to hear that I'm on board with that. And just in case she wasn't thinking beyond procedural issues, I think it's worth considering the substantive obligations as well.

And she has an institutional innovation on labor/environment enforcement:

And I’ll strengthen our approach to enforcing labor and environmental standards. Unlike a corporation under ISDS, a labor union seeking to enforce labor standards can’t bring a claim on its own — it must convince the federal government to bring a claim on its behalf. Even in the face of overwhelming evidence, our government can refuse to act for diplomatic or other unrelated reasons.

As a result, the federal government has only pursued one such claim in the last 25 years. In that one case, the American government, AFL-CIO, and Guatemalan unions spent nine years trying to challenge the Guatemalan government for violating the labor chapter of one of our trade deals because Guatemalan workers were being murdered for trying to join a union. In the end, we lost because the trade agreement required a showing that the violations had affected trade.

I will replace this broken process by creating independent commissions — made up of experts in the area — to monitor potential violations, respond to complaints, and investigate claims. The commissions must review and investigate claims promptly so that claims don’t languish for years. If one of these commissions recommends that the United States bring a claim against another country, the United States will be required to do so, without exception.

I will also fix the problem that arose in the Guatemala case by pushing to remove language from our deals that require us to show that a violation of rights was “sustained or recurring” and “affecting trade or investment.” A violation is a violation, and I won’t let another case like Guatemala happen ever again.

I'm not sure what to make of the commissions. Would it be easier just to let the labor department decide whether to bring cases?

And is the USMCA fix to the language that was a problem in CAFTA sufficient?

Finally, she makes a few other points related to enforcement:

I will strengthen our enforcement approach in other ways as well:

• Under WTO rules, a country designated as a “non-market economy” can face more serious trade penalties. I will push for a new “non-sustainable economy” designation that would allow us to impose tougher penalties on countries with systematically poor labor and environmental practices. We cannot allow countries that treat their workers and the environment poorly to undercut American producers that do things the right way.
• I already have a plan to move the lead American trade negotiator — the Office of the United States Trade Representative — within my new Department of Economic Development. That will ensure that America’s trade policy supports our broader economic agenda of defending and creating good American jobs. I will also create a new labor and environment enforcement division at the USTR to more effectively enforce obligations, and embed a labor attache at U.S. embassies to monitor compliance with our labor standards.
• Unlike the current approach that lets our government ignore unfair trade practices, my administration will create automatic triggers to initiate investigations into unfair trade practices. If those investigations produce compelling evidence of a violation, the Department will impose trade remedies immediately until the offenders show they are no longer engaging in an unfair trade practice. These automatic triggers will also apply to violations of labor and environmental standards.
• Finally, when we impose duties to support particular domestic industries, I want to ensure that the money we collect actually goes to American workers, instead of being sucked up by executives and shareholders. I will fight to change our trade laws so that we review duties every six months and lift the duties if companies can’t demonstrate the benefits of the duties are going to their workers.

On these last points, I'm skeptical of the “non-sustainable economy” designation, but I want to hear more about it. "Non-market economy" status is a part of trade remedies. Would “non-sustainable economy” status be part of this as well? Or part of GSP? I'll just reiterate what I asked earlier, which is, are there better ways to work with poor countries to improve their living standards than imposing financial penalties on them if they do not adopt the policies we demand? 

The final two points seem like a trade-off. Automatic triggers for "unfair trade practices" seem unnecessary, as we are pretty aggressive already. But I'm fine with removing the duties if workers aren't beneftting.

So that's my critique of what she did say, and it must seem like I would melt down under a Warren presidency. On the other hand, there's a lot she did not say, which perhaps suggests there is room for rules-oriented, trade liberalization supporters like myself to find ways to support a Warren administration on trade policy. I'll talk about those possibilities in the next post.

My Quick Take on the Trade Talk In Last Night's Democratic Debate

The Democratic debates have (thankfully!) been narrowed from 20 to 10 candidates. Many of them had a chance to weigh in on trade policy at the debate last night. Here's what they said:

STEPHANOPOULOS: Welcome back. We want to turn now to national security and the foreign policy issue that has such a direct impact here at home. The U.S. relationship with China, trade, and President Trump's tariffs. We received more than 100 questions from viewers wanting to know how all of you are going to handle these tariffs.

And, Mr. Yang, let me begin with you. Would you repeal the tariffs on your first day in office? And if so, would you risk losing leverage in our trade relationship with China?

YANG: I would not repeal the tariffs on day one, but I would let the Chinese know that we need to hammer out a deal, because right now, the tariffs are pummeling producers and farmers in Iowa who have absolutely nothing to do with the imbalances that we have with China.

A CEO friend of mine was in China recently and he said that he saw pirated U.S. intellectual property on worker workstations to the tune of thousands of dollars per head. And he said, one, how can my workers compete against that? And, two, think about all the lost revenue to American companies.

So, the imbalances are real. But we have to let the Chinese know that we recognize that President Trump has pursued an arbitrary and haphazard trade policy that has had victims on both sides.

So, no to repealing the tariffs immediately, but yes to making sure we come to a deal that addresses the concerns of American companies and American producers.

STEPHANOPOULOS: Mayor Pete, let me take that question — let me take that question to you, because you've seen President Trump's tweets. He says what's going to happen here is the Chinese are just going to wait him out so that they can get a Democrat who they can take advantage of.

How do you think about China? We've seen President Trump call President Xi both an enemy and a friend.

BUTTIGIEG: Well, the president clearly has no strategy.

You know, when I first got into this race, I remember President Trump scoffed and said he'd like to see me making a deal with Xi Jinping. I'd like to see him making a deal with Xi Jinping.

(LAUGHTER)

Is it just me, or was that supposed to happen in, like, April? It's one more example of a commitment not made. When that happens on the international stage, people take note, not just our competitors, our adversaries, but also our allies take note of the inability of the United States to keep its word or follow through on its plans. And when that happens, there are serious consequences.

We saw it at the G7. The leaders of some of the greatest powers and economies of the world sitting to talk about one of the greatest challenges in the world, climate change, and there was literally an empty chair where American leadership could have been.

The problem is, this is a moment when American leadership is needed more than ever, whether it's in Hong Kong, where those protesters for democracy need to know that they have a friend in the United States, or anywhere around the world where increasingly we see dictators throwing their weight around. The world needs America, but it can't be just any America.

STEPHANOPOULOS: Would you repeal the tariffs?

BUTTIGIEG: I would have a strategy that would include the tariffs as leverage, but it's not about the tariffs. Look, what's going on right now is a president who has reduced the entire China challenge into a question of tariffs, when what we know is that the tariffs are coming down on us more than anybody else and there's a lack of a bigger strategy.

STEPHANOPOULOS: Senator Klobuchar, you've actually supported the tariffs on steel.

KLOBUCHAR: What we've got right now, though, George, it's not a focused tariff on steel. What he has done here, he has assessed these tariffs on our allies. He has put us in the middle of this trade war and he is treating our farmers and our workers like poker chips in one of his bankrupt casinos. And if we are not careful, he is going to bankrupt this country.

One forecast recently says that it has already cost us 300,000 jobs, all right? There is soybeans that are mounting up in bins all over the Midwest, in my state of Minnesota and in Iowa.

So what I think we need to do is to go back to the negotiating table — that's what I would do. I wouldn't have put all these tariffs in place. And I wouldn't have had a trade policy where on August 1st he announces he's going to have tariffs on $300 billion of goods, on August 13th, he cuts it in half, a week later, he says he's going to reduce taxes, the day after that, he says he's going to do it.

The leaders of the world are watching this, and it undermines our strength as a nation. And, yes, we want fair trade, but we must work with the rest of the world. And he has made a mockery of focused trade policy, which I think means enforcement, like we've done in northern Minnesota, passing bills, getting President Obama to do more on that, so that our workers can benefit, so we are importing, exporting goods and making sure that it's a competitive policy where our goal is that we are making things, inventing things, and exporting to the world. He is defeating that goal.

STEPHANOPOULOS: Secretary Castro, you actually, in one of the previous debates, identified China as the most serious national security threat to our country. I want to pick up on what Senator Klobuchar was saying. She said she would go back to the negotiating table. The question is, what do you do for leverage? Where do you get it?

CASTRO: Well, look, I agree with those who have said that this erratic, haphazard trade war is hurting American families. As Senator Klobuchar said, 300,000 American jobs. It's estimated that it's cost $600 to the average American family. Just a couple of days ago, 60 percent of Americans said that they believe that we're in for a recession next year.

So when I become president, I would immediately begin to negotiate with China to ratchet down that trade war. We have leverage there. I also believe, though, that we need to return to a leader when it comes to things like human rights.

We have millions of Uighurs, for instance, in China that right now are being imprisoned and mistreated.

(APPLAUSE)

And in North Korea, this president is elevating a dictator. We need to stop that. We need to return to ensuring that America leads again on human rights. When it comes to this trade war, I would immediately begin ratcheting that trade war down. We have leverage in that discussion.

STEPHANOPOULOS: Senator Warren, let me bring you in on this conversation. President Obama signed the Trans-Pacific Partnership. In part, it was designed to rein in China, to bring China into some kind of regulation. What do you think he got wrong?

WARREN: So our trade policy in America has been broken for decades, and it has been broken because it works for giant multinational corporations and not for much of anyone else. These are giant corporations that, shoot, if they can save a nickel by moving a job to a foreign country, they'll do it in a heartbeat.

And yet for decades now, who's been whispering in the ears of our trade negotiators? Who has shaped our trade policy? It's been the giant corporations. It's been their lobbyists and their executives.

The way we change our trade policy in America is, first, the procedures. Who sits at the table? I want to negotiate trade with unions at the table. I want to negotiate it with small farmers at the table. I want to negotiate it with environmentalists at the table. I want to negotiate with human rights activists at the table.

And you asked the question about leverage. If I can just respond to that one, the leverage, are you kidding? Everybody wants access to the American market. That means that we have the capacity to say right here in America, you want to come sell goods to American consumers? Then you got to raise your standards. You've got to raise your labor standards. You've got to raise your environmental standards...

(APPLAUSE)

... so our companies can compete on a level playing field. We can use trade not to undermine American workers and not to undermine American farms and not to undermine small businesses in this country. We can use trade to help build a stronger economy.

(APPLAUSE)

STEPHANOPOULOS: Senator Harris, how would your trade policy differ from President Obama's?

HARRIS: Well, first of all, I have no criticism of that more than just looking at where we are now, which is we've got a guy in the White House who has been erratic on trade policy. He conducts trade policy by tweet, frankly born out of his fragile ego. It has resulted in farmers in Iowa with soybeans rotting in bins, looking at bankruptcy.

When we look at this issue, my trade policy, under a Harris administration, is always going to be about saying, we need to export American products, not American jobs. And to do that, we have to have a meaningful trade policy.

I am not a protectionist Democrat. Look, we need to sell our stuff. And that means we need to sell it to people overseas. That means we need trade policies that allow that to happen.

You asked earlier about China. It's a complicated relationship. We have to hold China accountable. They steal our products, including our intellectual property. They dump substandard products into our economy. They need to be held accountable.

We also need to partner with China on climate and the crisis that that presents. We need to partner with China on the issue of North Korea. I am on — and I think the only person on this stage — the Senate Intelligence Committee and the Senate Homeland Security Committee. We need a partner on the issue of North Korea.

But the bottom line is this. Donald Trump in office on trade policy, you know, he reminds me of that guy in "The Wizard of Oz," you know, when you pull back the curtain, it's a really small dude?

(LAUGHTER)

STEPHANOPOULOS: Okay. I’m not even going to take the bait, Senator Harris. But I am going to take...

HARRIS: Oh, George, it wasn't about you.

STEPHANOPOULOS: I'm going to take this to Senator Sanders right now.

SANDERS: Well, there is a reason — there is a reason why, in the last 45 years, the average American today, despite an explosion of technology and worker productivity, is not making a penny more than he or she made 45 years ago. And one of the reasons is that, for decades, we have had disastrous trade policies.

I got to say to my good friend, Joe Biden, Joe and I strongly disagree on trade. I helped lead the opposition to NAFTA and PNTR, which cost this country over 4 million good-paying jobs.

(APPLAUSE)

And what happened is people who had those jobs ended up getting other jobs making 50 percent of what they made in manufacturing.

So Trump, obviously, hasn't a clue. Trump thinks that trade policy is a tweet at 3 o'clock in the morning. What we have got to do is develop a trade policy that represents workers, represents the farmers in the Midwest and elsewhere, who are losing billions right now because of Trump's policy, a trade policy which understands that if a company shuts down in America and goes abroad, and then thinks they're going to get online to get a lucrative federal contract, under Bernie Sanders, they got another guess coming.

STEPHANOPOULOS: Vice President Biden, he invoked your name.

BIDEN: Yeah, well, look, we're either going to make policy or China's going to make the rules of the road. We make up 25 percent of the world economy. We need another 25 percent to join us.

And I think Elizabeth — Senator Warren is correct. At the table has to be labor and at the table have to be environmentalists. The fact of the matter is, China — the problem isn't the trade deficit, the problem is they're stealing our intellectual property. The problem is they're violating the WTO. They're dumping steel on us. That's a different issue than whether or not they're dumping agricultural products on us.

In addition to that, we're in a position where, if we don't set the rules, we, in fact, are going to find ourselves with China setting the rules. And that's why you need to organize the world to take on China, to stop the corrupt practices that are underway.

STEPHANOPOULOS: Senator Booker, close out this round.

BOOKER: Sure. There’s one point we’re really missing on the stage right now, which is the fact that Donald Trump’s America first policy is actually an America isolated, an America alone policy.

BIDEN: Exactly right.

BOOKER: From trade to battling China to the global crisis of climate change, the challenges in the Middle East, he is pulling us away from our allies, out of the Iran deal, out of the Paris climate accords.

And on trade, he's deciding to take on China, while at the same time taking on tariff battles with all of our allies. You literally have him using a national security waiver to put tariffs on Canada. Now, look, I'm the only person on this stage that finds Trudeau's hair very menacing, but they are not a national security threat.

(LAUGHTER)

We cannot go up against China alone. This is a president that has a better relationship with dictators, like Duterte and Putin, than he does with Merkel and Macron. We are the strongest nation on the planet Earth, and our strength is multiplied and magnified when we stand with our allies in common cause and common purpose. That's how we beat China. That's how we beat climate change on the planet Earth, and that's how American values are the ones that lead on issues of trade and workers' rights.

My quick take on each candidate's answer:

-- Yang didn't say much of anything.

-- Buttigieg had a good one-liner and a good overall take, although I'm skeptical of the "tariffs as leverage" theory (that's being tested right now and we'll see how it goes.)

-- Klobuchar's answer was vague.

-- Castro's answer was decent, although he didn't really answer the leverage point. (One thing I would say here is that it's not clear that tariff threats give us leverage, and generally speaking, if we are willing to do some liberalizing ourselves, other countries are also willing.)

-- Warren ignored the "TPP reining in China" part of the question, which is actually an interesting idea, and just repeated her usual talking points. I understand her general point about using access to the U.S. market as leverage to get others to raise their standards. In practice, though, I think this can be more complicated than she is imagining, in a lot of ways.

-- The "I am not a protectionist Democrat" line from Harris will have great appeal to policy wonks at free trade-oriented think tanks. We'll see how it plays to primary and general election voters. I hope this is where the electorate is, but we'll see!

-- Sanders repeated his usual talking points.

-- Biden was fine and said many things he usually says.

-- Booker's strong defense of Canada was heartening and his reference to Justin Trudeau's hair was funny for anyone who knows who Justin Trudeau is (might not be too many American voters though!).

Beto O'Rourke on Trade Policy

In a new post, he has a lot to say! Here are some snippets:

President Trump’s disastrous trade war, which he claims was designed to save American jobs, has done just the opposite. “If I’m elected,” President Trump told workers and businesses, “you won’t lose one plant.” Yet, across our country, factory after factory has shuttered its doors. Manufacturing just shrank for the first time in nearly a decade. Trump’s tariffs have amounted to one of the largest middle-class tax hikes in decades. And many farmers — already underwater from climate change — have nowhere to export their crops because President Trump’s tantrums and tweets destroyed their markets overnight.

Off to a good start! Now let's see what he wants to do instead:

Beto has a better way. ...

On day one, Beto will end Trump’s trade wars, which have not only failed to curtail China’s economic aggression, but hurt American workers. And recognizing that trade can unlock opportunity for growth for all communities and enhance small businesses across the country, Beto will aggressively pursue smart trade agreements that defend American values and interests. This will ensure American workers are not only protected, but are the most competitive in the world.

Still good. Now more details:

As President, Beto will:

• End Trump’s trade war
• Defend American values and interests against competitors like China
• Pursue trade agreements that support working families
• Work to enhance the competitiveness of U.S. workers and small businesses

Let's take these one by one:

I. End Trump’s trade war

Donald Trump has enacted tariffs on over $500 billion worth of goods from China, which amount to a $100 billion tax increase on American consumers and businesses, hitting low-income Americans especially hard.

Trump’s tariffs are an attack on U.S. exporters. They have driven up the price of imported intermediate parts, made the dollar less competitive, and caused other countries to retaliate against us with their own tariffs. And they have been a disaster for American farmers and ranchers, destroying their long-standing relationships with customers abroad and forcing many family farms into bankruptcy.

Beto recognizes that targeted tariffs are a tool that may sometimes be necessary, but they must not be used as a threat to drive anti-immigrant agendas or in a way that causes further pain to American businesses and workers. Trump started his trade war with China to reduce the U.S. trade deficit, but the deficit is rising, not shrinking. Auto plants have been closing, not opening. Manufacturing activity has declined. And as the U.S. may now be headed for a recession, it has become increasingly clear that tariffs are not part of a larger strategy, but rather part of a pattern of conducting foreign policy by tweet.

As President, Beto will:

• Suspend Trump’s tariffs immediately. On day one, Beto will end the trade war with China by eliminating the Trump tariffs. In exchange, China would revoke its retaliatory tariffs on American products like soybeans, beef, cars, and planes. 

This is all very good. There are better ways to address trade issues with China, and ending the Section 301 tariffs makes sense.

Now on to his proactive agenda:

II. Defend American values and interests against competitors like China

The failure of President Trump’s strategy is no reason to ignore China’s anti-competitive actions. China made several commitments to open up its markets in exchange for joining the WTO, but it has failed to honor them. Instead, China has used currency manipulation, subsidies, restrictions on market access, corporate espionage and other strategies to frustrate U.S. companies’ attempts to compete in China. And it is deploying these powerful tactics as part of a “Made in China 2025” initiative to dominate industries of the future like green vehicles, telecommunications, and artificial intelligence. This is not just a question of ensuring that the United States is competitive in the 21st century — American dependence on China for our robotics, aeronautics, and information technology also constitutes a threat to our national security.

As President, Beto will:

• Modernize the World Trade Organization to address 21st century trade issues. Our difficulties with China reflect the failures of the World Trade Organization (WTO) to deal with the trade issues of the 21st century. The WTO has generally been successful in reducing tariffs around the world, resulting in lower prices and higher productivity. Yet it has proven itself unable to deal with key topics of international trade disputes, such as currency manipulation and state-owned enterprises. Moreover, despite the hopes of the architects of the post-World War II trading system, the WTO still lacks robust, enforceable labor rights. And it similarly lacks strong, enforceable environmental standards despite the clear need to address global climate change. That is why an O’Rourke Administration will demand the following reforms of the WTO:
• Updating the WTO agreement to tackle currency manipulation, competition, overcapacity, industrial subsidies, and other modern trade issues. These issues are the main obstacles to a level playing field in international trade today and a global body for solving trade disputes needs rules addressing them.
• Creating enforceable labor standards. By amending WTO agreements to include the International Labor Organization’s core conventions, Beto would ensure the WTO combats child labor and protects collective bargaining rights. Countries’ failure to uphold these standards would be considered an unfair subsidy and subject to countervailing duties.
• Making “sustainable development” an explicit goal of the WTO. This would require that WTO rules be interpreted consistent with this fundamental value and ensure that any national efforts to advance the globally established Sustainable Development Goals should be considered presumptively permissible.
• Improving the WTO dispute settlement system. Beto would solve the current impasse over the WTO’s dispute settlement system while ensuring that it respects negotiated outcomes.
• Lead a global coalition to stop China’s anti-competitive behavior.Modernizing the WTO is critical for the long-term health of the global trading system. But as it does not have adequate authority or appetite to address the most pressing problems in international trade, Beto will not take action off the table to defend our values and interests.

As President, Beto will launch an aggressive WTO case with other countries against China, arguing that it has failed to live up to the specific commitments it made when it joined the WTO. If the case does not bring swift changes in China’s behavior, he will also be prepared to act unilaterally to enact a series of progressive actions that will increase pressure on China. Unlike Trump, Beto will work with our allies while bringing that pressure. Actions Beto will consider taking against China if it does not change its behavior include:

• Delisting Chinese companies from U.S. stock exchanges when they refuse to make their audit work-papers available for inspection by the U.S. Public Company Accounting Oversight Board
• Limiting access to the U.S. banking and financial system to Chinese companies that have been found — after receiving due process — to be stealing U.S. companies’ intellectual property.
• Screening and potentially limiting Chinese investment in certain U.S. sectors until it ends its most egregious anti-competitive practices.
• Working with our allies to be prepared to engage in concerted countervailing duties cases in sectors that are injured as a result of Made in China 2025 subsidies. This is in stark contrast to the broad duties Trump has announced, which cover over half a trillion dollars in imports, and which have already pushed the average tariff rate on Chinese imports from 3 percent to around 20 percent.
• Aggressively counter currency manipulation. The most effective way for a country to boost its trade balance is not tariffs — but rather by reducing the value of its currency to make its exports cheaper and imports from other countries more expensive. China recently taught President Trump this lesson when it reacted to a recent round of announced tariffs by letting its currency fall. Over the course of the “decade of manipulation” of 2003–2013, currency manipulation cost the U.S. up to 5 million jobs.

Beto will take real action to address currency manipulation when it arises including:

• Investing in the analysis needed to detect currency manipulation. Countries increasingly rely on informal forms of manipulation that are difficult to detect by, for example, using state-owned enterprises to intervene in currency markets. Beto will invest in the expertise needed to study and detect those forms of manipulation.
• Revamping the U.S. Treasury Department’s currency report to focus on countries that have large trade surpluses and substantial trade balances with the U.S.
• Enabling the federal government to engage in defensive, countervailing currency intervention in extreme cases. When countries continue to engage in currency manipulation after warning from the U.S. Treasury Department, the federal government could intervene by offsetting another country’s purchases of dollars by purchasing other countries’ currency. The U.S. would encourage other countries that have been afflicted by manipulation to participate as well.
• Consider other ways to counter currency manipulation, particularly in the case of China — which forbids the purchase of its domestic bonds by foreigners. The U.S. would consider options such as taxing its purchases of U.S. assets if the revamped currency report finds it to be a manipulator and it ignores our warnings.

Whew. There's a lot going on there. Someone put a good deal of thought into this. There are things I agree with (WTO cases against China, solving the DS crisis) and things I disagree with (labor standards at the WTO), but on balance it's a big improvement on what's happening right now.

Next up, what kind of trade agreements would he support:

III. Pursue trade agreements that support working families

Beto not only believes that trade can unlock economic growth across the country, but that trade agreements can provide opportunities to address income inequality as well as global problems that require international coordination. As president, Beto will aggressively seek trade agreements that center on the needs of working families and will prioritize labor rights and environmental standards during trade agreement negotiations. Trade agreements will not include provisions that restrict governments’ ability to regulate in the public interest, such as locking in pharmaceutical patent lengths. Beto will not sign any agreement unless its benefits for working families and the environment are clear.

As President, Beto will:

• Negotiate trade agreements with strong labor and environmental standards. This will make it easier for countries to compete with one another based on productivity and innovation instead of how successfully they suppress labor unions and how much they pollute the environment. All agreements will:
• Include the core labor rights of the International Labor Organization and other key labor protections such as strong country-specific minimum wages.
• Include the provisions of the Paris Climate Accord and other key environmental protections addressing issues such as deforestation, wildlife trafficking, and whaling.
• Prevent the race to the bottom that is international tax competition by committing to the OECD Base Erosion and Profit Shifting Project.
• Avoid net declines in union membership or increases in U.S. income inequality without offsetting changes to tax, labor and other economic policy as part of the same legislative package.
• Require major employers in industries that would benefit from an agreement to sign neutrality agreements with labor unions that will make it easier for their workers to form a union. This will help ensure that workers share in the gains of trade instead of having their voices diminished.
• Create an independent Trade Enforcement Commission. Beto will call for creating a Trade Enforcement Commission that is independent of the Office of the U.S. Trade Representative to identify violations of labor and environmental standards. It will use dedicated resources, technology, and data to dramatically increase the speed with which violations can be investigated and determined. When the commission concludes that there is a violation, the U.S. government will be required to bring a case. This will come with a commensurate increase in the number of trade prosecutors with the authority and technical tools to investigate violations — and bring cases against violators.
• Build enforcement capacity in developing countries. Recognizing the difficulty some developing countries have in enforcing labor and environmental standards, the U.S. and foreign governments would collaborate on the inspection of facilities that may be violating standards. Facilities found to be in violation would be denied preferential tariffs and, in some cases, access to the U.S. market altogether. This is modeled off the U.S.-Peru agreement’s timber annex.
• Enact strict rules of origin. Rules of origin ensure that only the parties in the agreement benefit from it, but those rules are typically weak. Under the Trans-Pacific Partnership, for example, 55 percent of the components of a car could have been made in countries that were not party to the agreement and its rules on labor and the environment. Beto will enact strict rules of origin in new trade agreements while collecting better data so that exports from countries not party to the agreement do not get the benefit of tariff reductions without playing by those rules.
• Include labor, environmental and consumer groups in trade agreement development. Beto will include representatives from each of these groups and small business in every Trade Advisory Committee to ensure that their voice is heard. U.S. International Trade Commission reports will include specific analyses of industry- and region-specific dislocations and job losses, assessments of environmental risks and opportunities, and potential effects on small and minority-owned businesses, union membership, and income inequality. The ITC will also periodically perform analyses of existing trade agreements and reciprocity evaluations to identify countries with unfair practices that could be worth addressing in future agreements such as labor rights, environmental practices, and misaligned currencies.

This mostly seems like boilerplate language from pro-trade Democrats.

And finally there is this, "IV. Work to enhance the competitiveness of U.S. workers and small businesses," which is more about domestic policy issues, so I'm going to skip it.

Overall, sounds like a reasonable, moderate statement of Democratic trade policy. I'm not sure it's going to give him the surge in the polls he needs, but we'll see. It would be nice if it got some attention at the next primary debate.

Trade in the Second Night of the Democratic Primary Debate

Here is the discussion of trade in last night's Democratic primary debate:

HARRIS: First of all, Donald Trump came in making a whole lot of promises to working people that he did not keep. He said he was going to help farmers. He said he was going to help auto workers.

...

Because of this so called trade policy that this president has that has been nothing more than the Trump trade tax that has resulted in American families spending as much as $1.4 billion more on everything from shampoo to washing machines. He betrayed the American people, he betrayed American families, and he will lose this election because folks are clear ...

...

BASH: ...

I want to turn now to a question about trade and for Congresswoman Gabbard. Many saw the Trans-Pacific Partnership issue as something that would be a critical tool to deal with the rise of China. You were against it. How would you ensure that the United States is able to remain competitive against China on the world stage?

GABBARD: By pushing for fair trade, not trade deals that give away the sovereignty of the American people and our country, that give away American jobs, and that threaten our environment. These are the three main issues with that massive trade deal, the Trans-Pacific Partnership.

I think the central one was the fact that it gave away our sovereignty to a panel of international corporations whose rulings would supersede any domestic law that we would pass, either a federal law or a state or a local law. This is extremely dangerous and goes against the very values that we have as a country.

What to speak of the fact that it would have a negative impact on domestic jobs and that it lacked clear protections for our environment. These are the things that we have to keep at the forefront as we look to enact fair trade deals with other countries to make sure that we continue to be a thriving part of our global economy.

(APPLAUSE)

BASH: So to be clear, Congresswoman, would you keep President Trump's tariffs on China in place?

GABBARD: I would not, because the approach that President Trump has taken has been extremely volatile without any clear strategic plan, and it has a ravaging and devastating effect on our domestic manufacturers, on our farmers, who are already struggling and now failing to see the light of day because of the plan that Trump has taken.

BASH: Vice President Biden, would you rejoin the Trans-Pacific Partnership, which, of course, President Trump withdrew from? Please respond.

BIDEN: I'd renegotiate. We make up 25 percent of the world's economy. In order -- either China is going to write the rules of the road for the 21st century on trade or we are. We have to join with the 40 percent of the world that we had with us, and this time make sure that there's no one sitting at that table doing the deal unless environmentalists are there and labor is there.

And to make sure we equip our workers first to compete by investing in them now, in the things that make them more competitive. That's what we have to do. Otherwise, they are going to write the rules of the road. We must have the rest of the world join us to keep them in check from abusing.

BASH: Thank you. Thank you. Vice President Biden, just to be clear, would you or would you not rejoin the TPP, yes or no?

BIDEN: I would not rejoin the TPP as it was initially put forward. I would insist that we renegotiate pieces of that with the Pacific nations that we had in South America and North America, so that we could bring them together to hold China accountable for the rules of us setting the rules of the road as to how trade should be conducted. Otherwise, they're going to do exactly what they're doing, fill the vacuum and run the -- and run the table.

BASH: Thank you, sir. Mayor de Blasio, you also oppose the deal. Please respond.

DE BLASIO: Yeah, and I just want to ask this question of all the candidates, but particularly of Vice President Biden. President Trump is trying to sell NAFTA 2.0. He's got a new name for it. It's just as dangerous as the old NAFTA. It's going to take away American jobs like the old NAFTA, like it did to Michigan. And we cannot have Democrats be party to a new NAFTA.

So, Vice President, I believe you're the only person on the stage who voted for the original NAFTA. Are you ready to say here and now that you will oppose a new NAFTA and that what you will believe in, which is a lot of us hope for, is trade treaties that empower organized labor across the boundaries of the world and give working people power again, not just multinational corporations.

BASH: Mr. Vice President?

BIDEN: Yes.

BASH: Your response? Your response, sir?

(LAUGHTER)

BIDEN: Yes.

BASH: That's it?

BIDEN: No, he said, would I insist that labor be engaged?

(APPLAUSE)

The answer is yes.

Harris seems to be going for the moderate center on trade by being so critical of Trump's tariffs (while going for the progressive left on health care).

Criticizing the TPP as it stands now and saying you'll renegotiate and bring labor to the table, as Biden did, is the safe play. It's unlikely that anyone will ask a follow-up question which demonstrates that you have no idea what you mean by that. The same thing applies to the renegotiated NAFTA. He is against what exists now, and is for some new, undefined improvement.

Gabbard was also against the status quo of trade agreements, but didn't say what she would do instead (although maybe eliminating ISDS would be enough). However, she was pretty bold to say she would get rid of the China tariffs. If she stays in the race long enough, she could get a follow-up about what she would do instead.

Trade In Last Night's Democratic Primary Debate

There was some discussion of trade in last night's Democratic primary debate:

[DON] LEMON: ...

Let's turn now to the economy.

Congressman Ryan, President Trump's tariffs have boosted the U.S. steel industry but hurt auto manufacturers like those here in Michigan, which could drive up the cost of cars. As president, would you continue President Trump's steel tariffs?

RYAN: Look, I think President Trump was onto something when he talked about China. China has been abusing the economic system for a long time. They steal intellectual property. They subsidize goods coming into this country. They've displaced steel workers, auto workers, across the board, eroded our manufacturing. And we basically transferred our wealth of our middle class either up to the top 1 percent or to China for them to build their military.

So I think we need some targeted response against China. But you know how you beat China? You out-compete 'em. And that's why I'd put a chief manufacturing officer in place to make sure that we rebuild the manufacturing base.

We've got to fill these factories that -- in Detroit, in Youngstown, that used to make cars and steel. We've got to fill them with workers who are making electric vehicles, batteries, charging stations, make sure they're making solar panels.

As I said earlier, China dominates 60 percent of the solar panel market. They dominate 50 percent to 60 percent of the electric vehicle market. We're going to make 10 million electric vehicle somewhere in the world in the next 10 years. I want them made in the United States. That's why I have a chief manufacturing officer that will sit in the White House and help drive this agenda.

LEMON: Congressman, thank you. Just as a point of clarification, as president, would you consider President Trump's steel tariffs, yes or no?

RYAN: Well, I would have to re-evaluate. I think some of them are effective. But he's bungled the whole thing, obviously. He has -- see, here's the problem with President Trump. He has a tactical move -- one of many -- he has a tactical move. What's the grand strategy for the United States? China has 100-year plan, a 50-year plan, a 30-year plan, a 20-year plan. We live in a 24-hour news cycle. That spells disaster for our economy and disaster for our global politics.

LEMON: Thank you, Congressman. Congressman Delaney, your response?

(APPLAUSE)

DELANEY: So, listen. This is what I don’t understand. President Trump wants to build physical walls and beats up on immigrants. Most of the folks running for president want to build economic walls to free trade and beat up on President Obama. I’m the only one running for president who actually supports the Trans-Pacific Partnership. President Obama was right about that. We should be getting back in that.

Senator Warren just issued a trade plan...

WARREN: You bet I did.

DELANEY: ... that would prevent the United States from trading with its allies. We can't go and -- we can't isolate ourselves from the world. We have to engage...

LEMON: Thank you.

DELANEY: ... with fair, rules-based trade.

LEMON: Thank you, Congressman Delaney. Senator Warren, please respond.

WARREN: You know, for decades, we have had a trade policy that has been written by giant multi-national corporations to help giant multi-national corporations. They have no loyalty to America. They have no patriotism. If they can save a nickel by moving a job to Mexico, they'll do it in a heartbeat. If they can continue a polluting plant by moving it to Vietnam, they'll do it in a heartbeat.

I have put out a new comprehensive plan that says we're not going to do it that way. We're going to negotiate our deals with unions at the table, with small businesses at the table, with small farmers at the table, with environmentalists at the table, with human rights activists at the table. And then, we're going to use the fact that everybody in the world wants to get to America's markets. They want to sell to you...

DELANEY: That was the TPP.

WARREN: I'll finish.

LEMON: Congressman Delaney...

WARREN: ... is everyone wants to get to America's markets.

LEMON: Thank you, Senator.

WARREN: No. So the question is...

LEMON: Senator, thank you. Please abide by the rules.

WARREN: ... how we need to raise our standards.

LEMON: Congressman Delaney, it's your turn. Thank you, Senator. Congressman Delaney?

DELANEY: So that was the Trans-Pacific Partnership. I think President Obama was right. He did include environmental standards. He did include labor standards. We would be in an entirely different position with China if we had entered the Trans-Pacific Partnership.

We can't isolate ourselves from the world. We can't isolate ourselves from Asia. Senator Warren's plan, basically, that she put out, we would not be able to trade with the United Kingdom.

WARREN: No, what this is about...

DELANEY: We would not be able to trade with the E.U. It is so extreme that it will isolate...

LEMON: Thank you, Congressman Delaney. Thank you, Congressman.

DELANEY: ... the American economy from the world.

LEMON: Senator? Senator Warren. Senator Warren.

SANDERS: I was...

WARREN: I think he said...

(CROSSTALK)

LEMON: Senator Sanders, please let Senator Warren respond.

SANDERS: Oh, I'm sorry.

(LAUGHTER)

WARREN: What the congressman is describing as extreme is having deals that are negotiated by American workers for American workers. American workers want those jobs, and we can build the trade deals that do it.

People want access to our markets all around the world. Then the answer is, let's make them raise their standards. Make them pay workers more. Let their workers unionize. Raise their environmental standards before they come to us and say they want to be able to sell their products.

Right now, the whole game is working for the big multinationals. It's just not working for the people here in the United States, and we can change that.

LEMON: Senator, thank you very much. Congressman O'Rourke, your response?

(APPLAUSE)

O'ROURKE: You know, the question was about tariffs. And they're a huge mistake. They constitute the largest tax increase on the American consumer, hitting the middle class and the working poor especially hard, and farmers in Iowa and across the country are bearing the brunt of the consequences.

When have we ever gone to war, including a trade war, without allies and friends and partners? As president, we will hold China accountable, but we will bring our allies and friends, like the European Union, to bear, and we'll also negotiate trade deals that favor farmers and American workers and protect human rights and the environment and labor, not just here in the United States...

LEMON: Congressman O'Rourke, thank you so much. Senator Sanders, please respond to Congressman O'Rourke.

WARREN: I'd like to respond to this.

SANDERS: Yeah, OK. You're looking, I believe, at the only member of Congress who not only voted against these disastrous trade agreements, NAFTA, PNTR with China, which cost us over 4 million jobs, but also helped lead the effort against these agreements.

Now, Elizabeth is absolutely right. If anybody here thinks that corporate America gives one damn about the average American worker, you're mistaken. If they can save five cents by going to China, Mexico, or Vietnam, or anyplace else, that's exactly what they will do.

As president, let me tell you what I will do. These guys line up at the federal trough. They want military contracts. They want all kinds of contracts. Well, under my administration, you ain't going to get those contracts if you're throwing American workers out on the street.

LEMON: Senator Sanders, thank you very much. Governor Hickenlooper, your response?

WARREN: I'd like a chance to respond.

HICKENLOOPER: So -- so I think -- again, I think Congressman Delaney has got a point here. And there is a way of looking at trade that is therapeutic.

The bottom line is, you talk to any economist, there is not a single example in history where a trade war had a winner. Trade wars are for losers. And the bottom line is we've got to recognize, let's negotiate a better trade deal. But you're not going to win against China in a trade war when they've got 25 percent of our total debt.

And step back and look it. Here's Trump gives a giant tax cut and at the same time -- so we're paying in tariffs about $800 to $1,200 per household and then we give this incredible tax cut to the rich. Essentially what's happening is now he's transferred that tax obligation onto the middle class. That's what's outrageous. But tariffs are not the solution.

LEMON: Governor, thank you. Senator Warren?

WARREN: Anyone who thinks that these trade deals are mostly about tariffs just doesn’t understand what’s going on. Look at the new NAFTA 2.0. What’s the central feature? It’s to help pharmaceutical companies get longer periods of exclusivity so they can charge Canadians, Americans, and Mexicans more money and make more profits.

That's what trade deals have become. They have become a way for giant multinationals to change the regulatory environment so they can suck more profits out for themselves and to leave the American people behind. We have to have the courage to fight back against that corruption.

LEMON: Senator, thank you. Governor Bullock, your response?

BULLOCK: You know, a farmer in Rippy said to me, every time that Trump tweets, we lose hundreds of thousands of dollars. If Montana had to eat all the wheat that we produce, every Montanan would have to eat 40 loaves of bread a day.

But by the same token, what we have is -- I actually agree with Senator Warren on this in part. Corporations can move capital easy. Workers can't move. So going forward, we need to make sure that our trade deals actually are protecting -- thinking about the workers. They can't be the stepchild. But the way to do it, with this blunt instrument of tariffs that the president is doing, that's not how we get a fair deal for farmers anywhere or the manufacturers here in Detroit.

O'Rourke and Delaney made the most sense here. By contrast, Warren says things that are very misleading. For example, whatever you think of 12 year biologic exclusivity (I'm against it), it's not the case that it is the "central feature" of USMCA. And given the scope of labor provisions in modern trade agreements, it is clear that unions already have a big role "at the table" to help draft these agreements. And she didn't have a response to the point that her approach is "so extreme that it will isolate the American economy from the world."

But I don't think voters have strong feelings about trade, and no one got very deep into the issues, so as important as Trump has made trade policy, I'm not sure it will play a big role in deciding this primary. Maybe things will change when we can narrow it down to 4 or 5 candidates, and we can contrast the views of Biden and Harris with those of Sanders and Warren.

Some Quick Thoughts on Warren's Trade Policy Plan

Elizabeth Warren's campaign team has just posted a document entitled "It's Time for a New Approach to Trade." My initial reaction is that it's difficult to see how there would be much, if any, trade liberalization in a Warren administration; however, there would be some experimentation with new forms of protectionism.

Early on she sets out this general principle: "America enters into trade negotiations with enormous leverage because America is the world’s most attractive market. As President, I won’t hand America’s leverage to big corporations to use for their own narrow purposes — I’ll use it to create and defend good American jobs, raise wages and farm income, combat climate change, lower drug prices, and raise living standards worldwide."

The reality, of course, is that tariffs and other forms of protectionism are something demanded by big corporations, and unless you support liberalization, you are handing leverage to at least a few "big corporations to use for their own narrow purposes." But that's just the political rhetoric that led off the piece. Let's focus on the substance.

First, she has a new plan for the process of negotiating trade agreements: "In a Warren Administration, we will negotiate and approve trade agreements through a transparent process that offers the public a genuine chance to shape it." Here are some key elements:

• "Trade negotiators will publicly disclose negotiating drafts and provide the public with an opportunity to comment."
• "Trade advisory committees will prioritize the views of workers and consumers."
• "The US International Trade Commission will provide a regional analysis of the economic effects of a trade agreement."
• "The congressional approval process will offer more opportunities for the public and elected representatives to shape trade agreements."

The current trade negotiating process is cumbersome and challenging. Adding these additional elements may make it impossible to get a trade deal done (which is, perhaps, the objective).

Now on to the substance. She says this: "With certain important exceptions, we live in a low-tariff world. Modern trade agreements are less about the mutual reduction of tariffs and more about establishing regulatory standards for everything from worker rights to pollution to patent protections."

Those exceptions are very important, and reading through the WTO's World Tariff Profiles is enlightening.

But she's right about the regulatory standards. So what's her plan here? This:

I am establishing a set of standards countries must meet as a precondition for any trade agreement with America. And I will renegotiate any agreements we have to ensure that our existing trade partners meet those standards as well.

My preconditions are that a country must:

• Recognize and enforce the core labor rights of the International Labour Organization, like collective bargaining and the elimination of child labor.
• Uphold internationally recognized human rights, as reported in the Department of State’s Country Reports on Human Rights, including the rights of indigenous people, migrant workers, and other vulnerable groups.
• Recognize and enforce religious freedom as reported in the State Department’s Country Reports.
• Comply with minimum standards of the Trafficking Victims Protection Act.
• Be a party to the Paris Climate agreement and have a national plan that has been independently verified to put the country on track to reduce its emissions consistent with the long-term emissions goals in that agreement.
• Eliminate all domestic fossil fuel subsidies.
• Ratify the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
• Comply with any tax treaty they have with the United States and participate in the OECD’s Base Erosion and Profit Shifting project to combat tax evasion and avoidance.
• Not appear on the Department of Treasury monitoring list of countries that merit attention for their currency practices.

Yikes! That rules out a lot of countries. (Including the United States, of course, although she expects that her administration will meet all these standards).

Beyond that, she also makes clear that she will be keeping a bunch of U.S. trade restrictions:

I will ensure trade agreements protect Buy American and other programs designed to develop local industry, contain strong rule-of-origin standards to promote domestic manufacturing, ... 

And she may be trying to push to allow more protectionism in green energy as well:

I will push to secure a multilateral agreement to protect domestic green policies like subsidies for green products and preferential treatment for environmentally sustainable energy production from WTO challenges. 

If she means subsidies to consumers of green products that's fine, but if she is talking about allowing producer subsidies tied to local content requirements, that is both protectionist and anti-green.

And protectionist COOL measures might make a reappearance:

I will impose Country-of-Origin Labeling rules to protect American producers and provide transparency to consumers.

Country of origin labeling is fine if it is used to provide consumers with information, but in the past it was used for protectionist purposes, and when says she will impose it "to protect American producers" it sounds like we are going in that direction again.

And here's some more protectionism:

Under WTO rules, a country designated as a “non-market economy” can face more serious trade penalties. I will push for a new “non-sustainable economy” designation that would allow us to impose tougher penalties on countries with systematically poor labor and environmental practices.

I'm not sure exactly how this is going to work, but I'm pretty sure it's going to abused for protectionist purposes, because this kind of thing always is.

And one more:

Unlike the current approach that lets our government ignore unfair trade practices, my administration will create automatic triggers to initiate investigations into unfair trade practices.

She also wants to get rid of ISDS and scale back IP protections, which I have no problem with abandoning, but others might. And there is actually one proposal that sounds like it could act as a constraint on trade remedy abuse:

... when we impose duties to support particular domestic industries, I want to ensure that the money we collect actually goes to American workers, instead of being sucked up by executives and shareholders. I will fight to change our trade laws so that we review duties every six months and lift the duties if companies can’t demonstrate the benefits of the duties are going to their workers.

That seems like it could be difficult to demonstrate, so maybe trade remedies will be a little harder to maintain.

Overall, my sense is that this proposal means there would probably not be any trade deals in a Warren administration, while there would be various proposals to add new protectionism to U.S. domestic trade policy.

Joe Biden on Trade Policy

In a recent speech on foreign policy, Joe Biden said the following about trade policy (as prepared):

Our trade policy has to start at home, by strengthening our greatest asset – our middle class. 

We have to take care of everything I’ve talked about on the campaign trail – giving every student the skills or training they need to obtain a good 21st century job; making sure every single American has access to quality, affordable healthcare; investing in rebuilding our bridges and roads, modernizing our airports and trains; making sure Americans have access to broadband networks; reforming our taxes to reward work, not just wealth; leading the clean-economy revolution to create 10 million new jobs right here in the United States. 

I will make investment in research and development a cornerstone of my presidency so that the United States is leading the charge with innovation. 

There’s no reason we should be falling behind China or anyone else when it comes to clean energy, quantum computing, artificial intelligence, 5G, and high-speed rail.

And there’s no reason that we cannot ensure that our people are ready – for the transition that will inevitably accompany this new technology. 

Ladies and Gentlemen – we have the greatest research universities in the world. The most agile system of venture capital. We’re virtually energy independent. We have a strong tradition of the rule of law. 

And most important, we have an extraordinary population of workers and innovators who have never let our country down.

A foreign policy for the middle class will also work to make sure the rules of the international economy are not rigged against us.

Because when American businesses compete on a fair playing field – we win.

President Trump may think he’s being tough on China, but all he has delivered is more pain for American farmers, manufacturers, and consumers.

His economic decision making is as short-sighted as the rest of his foreign policy. China is playing the long-game – extending its global reach and investing in the technologies of the future – while Trump is designating our closest allies – from Canada to the European Union – as National Security Threats in order to impose damaging and pointless tariffs. 

By cutting us off from the economic clout of our partners, he knee-caps our capacity to take on the real economic threat. 

We do need to get tough with China. 

If China has its way, it will keep robbing the U.S. of our technology and intellectual property, or forcing American companies to give it away in order to do business in China.

And the most effective way to meet that challenge is to build a united front of friends and partners to challenge China’s abusive behavior – even as we seek to deepen cooperation on issues where our interests converge, like climate change and preventing nuclear proliferation.

There’s no going back to business as usual on trade.  We need new rules, and a new process that has the voices of all stakeholders at the table – including leaders representing labor and the environment.

We must negotiate from the strongest possible position. 

On our own, we represent about one-quarter of global GDP. When we join together with fellow democracies, that number doubles. 

China can’t afford to ignore half the global economy. 

That gives us substantial leverage to shape the future rules of the road on everything from the environment to labor, trade, technology and transparency so they continue to reflect democratic interests and values – America’s interests and values. 

Not China’s. Not Russia’s. 

The world does not organize itself. If we do not shape the norms and institutions that govern relations among nations, rest assure – that some other nation will step into the vacuum, OR – no one will – and chaos will result. 

There are a lot of reasonable sounding ideas in here. But if I were a reporter staking out Biden events, I would ask him the following question: What exactly would be different about your trade policy than Obama's, and how would you achieve success where he failed (in particular, on the TPP and TTIP)?

Joe Biden on Trump's Trade Policy

From a CNN interview with Chris Cuomo:

BIDEN: With regard to North Korea, with China, I make it clear that we're going to move our defenses up, as we did before, and we're going to make sure we have the capacity to deal with it near term. I'm going to let South Korea and Japan know we're there for them. We are their nuclear umbrella. We're there for them. And China understands, if you don't want us in your throat, if you don't want us in your face, do something. 

CUOMO: Do you stop the trade battle with China? Do you go back to TPP? 

BIDEN: By the way, the idea that this trade battle makes any sense, is benefiting anybody, is absolutely ludicrous. And just ask the farmers here or around the world -- I mean, around the United States, and the manufacturers. It's killing us. 

What we should do is we deal with China -- I had a conversation with Xi before I -- Xi Jinping before we left. And he said, "Well, you know, remember, they set up their no-fly zone. 

I said, "We're not going to pay attention to it." 

He said, "What do you want me to do, just withdraw it?" 

And I said, "No, but just understand we're just going to fly through. We'll fly a B-52 through it. We are a Pacific power. We're not going anywhere. Understand that's the reason why you have security is because we've allowed stability in the region." 

They get it. But what they're doing now is we're not dealing with China's problem, for us. China's problem is they're stealing intellectual secrets. 

CUOMO: Yes.

BIDEN: There's cybersecurity. Deal the same way. You say you've got to invest here in the United States. You want to be able to invest here, and you say, "We want to invest in China, but you've got to have a 51 percent owner." No deal, man. Deal for deal.

CUOMO: This administration is fighting that same fight, isn't it?

BIDEN: But they're not. No, they're fighting in trade. Trump thinks it's about trade deficits and trade surpluses. It's not about that. Look, while he's tweeting, China's going to own the 5-G market. While in fact, he -- they're spending billions in artificial intelligence. 

What are we doing? They're doing a whole lot of things that make no sense for us to stand still. 

Those were some pretty reasonable questions from Cuomo, but Biden's answer is a bit of a ramble. It doesn't seem that difficult to me for the Democratic presidential candidates to articulate a trade policy that is critical of Trump's trade policy, but also critical of past U.S. trade policy, while still supporting a trade policy that is engaged with the world. Some key elements that could work for a Democrat would be: negotiate new FTAs, support the WTO, scale back intellectual property protection and investment protection, push for stronger labor/environment provisions, drop the trade wars (Section 232) with our allies, and work together with those allies on addressing China's trade practices.

The Democratic Candidates Debate Trade (A Tiny Bit)

In the debate on Wednesday involving 10 of the 20 Democratic candidates, trade barely came up. Given how much activity, shall we say, there has been on trade under the Trump administration, that was a bit of a surprise. Last night, though, in the debate involving the other 10 candidates, there was a question on trade:

HOLT: We're going to turn -- we're going to turn to the issue of trade now, if we can. Last night, we asked the candidates on this stage to name the greatest geopolitical threat facing the U.S. Four of them mentioned China. U.S. businesses say China steals our intellectual property and party leaders on both sides accuse China of manipulating their currency to keep the cost of goods artificially low.

I want to ask this to Senator Bennet, to start off with. How would you stand up to China?

That's not a terrible question, but it's not a great one, in the sense that it's easy to come up with an answer that sounds substantive without saying much of anything. Here's what the candidates who got a chance to answer said:

BENNET: Well, I think that, first of all, the biggest -- the biggest threat to our national security right now is Russia, not China. And, second, on China, we've got -- because of what they've done with our election.

In China, I think the president has been right to push back on China, but has done it in completely the wrong way. We should mobilize the entire rest of the world, who all have a shared interest in pushing back on China's mercantilist trade policies, and I think we can do that.

...

HOLT: Mr. Yang, let me bring you in on this, on the issue of China. You have expressed a lot of concerns about technology and taking jobs. Are you worried about China? And if so, how would you stand up against it?

YANG: Well, I just want to agree that I think Russia is our greatest geopolitical threat, because they have been hacking our democracy successfully and they've been laughing their asses off about it for the last couple of years. So we should focus on that before we start worrying about other threats.

Now, China, they do pirate our intellectual property. It's a massive problem. But the tariffs and the trade war are just punishing businesses and producers and workers on both sides.

I met with a farmer in Iowa who said he spent six years building up a buying relationship in China that’s now disappeared and gone forever. And the beneficiaries have not been American workers or people in China. It’s been Southeast Asia and other producers that have then stepped into the void. So we need to crack down on Chinese malfeasance in the trade relationship, but the tariffs and the trade war are the wrong way to go.

HOLT: All right, Mayor Buttigieg...

HOLT: How would you -- how would you stand up against China?

BUTTIGIEG: I mean, first of all, we've got to recognize that the China challenge really is a serious one. This is not something to dismiss or wave away. And if you look at what China is doing, they're using technology for the perfection of dictatorship.

But their fundamental economic model isn't going to change because of some tariffs. I live in the industrial Midwest. Folks who aren't in the shadow of a factory are somewhere near a soy field where I live. And manufacturers, and especially soy farmers, are hurting.

Tariffs are taxes. And Americans are going to pay on average $800 more a year because of these tariffs. Meanwhile, China is investing so that they could soon be able to run circles around us in artificial intelligence. And this president is fixated on the China relationship as if all that mattered was the export balance on dishwashers. We've got a much bigger issue on our hands.

But at a moment when their authoritarian model is being held up as an alternative to ours because ours looks so chaotic compared to theirs right now because of our internal divisions, the biggest thing we've got to do is invest in our own domestic competitiveness. If we disinvest...

HOLT: All right, Mayor, thank you.

BUTTIGIEG: ... in our own infrastructure, education, we are never going to be able to compete. And if we really want to be an alternative, a democratic alternative, we actually have to demonstrate that we care about democratic values at home and around the world.

Those answers are fine, but fairly superficial. It was easy to answer this question with generalities. I'm glad the candidates don't like tariffs, but I'm not sure exactly what they would do instead with regard to China.

I wish we could get more specific questions on trade, such as: Would you maintain the tariffs that the Trump administration has imposed on steel and aluminum imports under Section 232? With which countries, if any, would you negotiate new trade agreements first? Should there be any provisions on biologic drugs in the USMCA? Should Congress take back some of the power it has delegated to the executive branch on trade?

Joe Biden on Tariffs and Trump's Trade Strategy

This is from a speech today by Democratic presidential candidate Joe Biden:

America's farmers have been crushed by his tariff war with China.

 

No one knows that better than Iowa.

 

He thinks he's being tough.

 

Well, it's easy to be tough when someone else is feeling the pain.

 

How many farmers across this state and across this nation have had to face the prospect of losing their business, of losing their farm because of Trump's tariffs?

 

How many have had to stare at the ceiling at night wondering how they're going to make it?

 

How many sleepless nights do you think Trump has had over what he's doing to America's farmers?

 

Here's the answer: Just as many as he had when he stiffed the construction workers and electricians and plumbers who built his hotels and casinos. Zero.

 

And how about manufacturing? Trump's tariffs and trade wars are hitting a lot of American manufacturing -- especially the American automobile industry -- Choking it to within an inch of its life.

 

One of my proudest moments in the White House was when President Obama and I led the rescue of the American auto industry.

 

We knew what it meant to the millions of jobs in the auto companies and the supply chain.

 

We also knew what it meant to the pride of the nation.

 

Now I'm watching Trump destroy the industry President Obama and I helped save.

 

Do you think he just backed off his tariff threat with Mexico because he got some tough new deal? Maybe there's some secret development yet to be revealed — But based on what we know, it seems more like old wine in new bottles.

 

And the truth is he's scared -- his economic folks told him his tough talk was about to cost to him Michigan and Ohio and Iowa.

 

But don't kid yourself -- another bad news story -- and he'll be back with tariffs to change the subject. And the people who will get hurt are just pawns in his game.

 

Trump doesn't get the basics.

 

He thinks his tariffs are being paid by China. Any beginning econ student at Iowa or Iowa State could tell you that the American people are paying his tariffs. The cashiers at Target see what's going on -- they know more about economics than Trump.

 

And let me take one additional moment to talk about this — because it's important, and I don't want anyone to misunderstand what I mean.

 

We are in a competition with China.

 

We need to get tough with China.

 

They are a serious challenge to us, and in some areas a real threat.

 

And every single step that Donald Trump is taking is only exacerbating the challenge.

 

While Trump is tweeting, China is making massive investments in technologies of the future.

 

While Trump is name-calling, China is building roads, bridges, and high-speed rail.

 

While Trump is pursuing a damaging and erratic trade war, without any real strategy, China is positioning itself to lead the world in renewable energy.

 

While Trump is attacking our friends, China is pressing its advantage all over the world.

 

So you bet I'm worried about China — if we keep following Trump's path.

 

...

 

So when it comes to taking on China, First, let's invest in ourselves — that's why I've proposed a historic initiative in scientific research, cutting-edge infrastructure, and a modern workforce that will help American workers and entrepreneurs compete and win.

 

Second, let's build a united front of allies to challenge China's abusive behavior. Trump is attacking the very partners we need with us to deal with China. We need to rally more than half the world's economy to hold China to account for their cheating. And get a chorus of voices speaking out on China's repression.

 

Third, let's tighten up our defenses so that American companies don't have to keep giving away technology to China, or having it stolen. In the Obama-Biden administration, we got China to curb its cyber-theft -- it's gotten worse under Trump.

 

Finally, let's find areas to cooperate where it's in our interest. We got the Chinese to agree for the first time to limit their carbon pollution. There's a lot more we can do on climate change, and nuclear weapons, and other issues where our interests converge.

 

But time and time again, on issue after issue, Trump makes the wrong choices. He is motivated by the wrong thing.

I didn't hear it delivered live, but this seems like a passionate rant. But as I asked with the post about Pete Buttigieg, what exactly would Biden's trade policy look like? Would it be the TPP/TTIP again, or has he learned some lessons from those battles and has some adjustments to make?

Pete Buttigieg on Tariffs and Trump's Trade Strategy

This is from Democratic presidential candidate Pete Buttigieg at a recent town hall event:

The San Joaquin Valley helps feed not just America, but the world. The products that are grown here are world-class and yet what we’re finding is because of a short-sighted, I can’t even call it a strategy, I can’t even call it a policy, it’s a pattern, it’s a pattern of poking people in the eye to see what will happen. But when you don’t have — look — I completely get the idea if China is doing something unfair, I get the idea of standing up to them. If there are trade deals that are not benefitting us enough, I get the idea of adjusting them to make sure that it’s fairer trade, but that’s not what we’re seeing right now. What we’re seeing right now is basically politically motivated gamesmanship and it’s coming down on your back.

It’s hurting farmers. It’s hurting workers. It’s hurting consumers. I wonder how many consumers are aware that that the projection is we all on average will pay 800 bucks more a year starting now because of these tariffs, and by the way, a tariff is a tax, so if you ever believe the Republicans don’t raise taxes, that’s what they’re doing right now.

The Democratic candidates are all lining up against Trump's trade policy, but what trade policy are they for? What exactly does it mean to Buttigieg to adjust trade deals to make sure trade is fairer?

Elizabeth Warren's "Plan for Economic Patriotism"

Elizabeth Warren just released "A Plan For Economic Patriotism." Here's how it starts:

I come from a patriotic family. All three of my brothers joined the military. And I’m deeply grateful for the opportunities America has given me. But the giant “American” corporations who control our economy don’t seem to feel the same way. They certainly don’t act like it.

Sure, these companies wave the flag — but they have no loyalty or allegiance to America. Levi’s is an iconic American brand, but the company operates only 2% of its factories here. Dixon Ticonderoga — maker of the famous №2 pencil — has “moved almost all of its pencil production to Mexico and China.” And General Electric recently shut down an industrial engine factory in Wisconsin and shipped the jobs to Canada. The list goes on and on.

U-S-A! U-S-A!

Sorry, I got caught up in the patriotic fervor.

So will this nationalist, anti-corporate rhetoric pull any Trump/Sanders voters over to her? I'm skeptical that it will, but we'll see how it plays out. (Tucker Carlson liked it, which is telling, although ultimately he seemed to conclude that it was not enough to get him in the Warren camp).

And will No. 2 pencils be made in the good ol' US of A again? I'm skeptical of that too, but I think the SATs will survive this.

In terms of the substance, she put forward in this piece a number of proposals related to manufacturing, and it sounds like maybe some more specific trade proposals are coming. While Trump emphasizes that the foreigners are cheating us, Warren seems to look admiringly at the industrial policy of other countries and wants to copy it. I'll come back to that some other time. For now, I wanted to focus on an institutional point she made:

• Consolidating existing government programs that affect job creation into a new agency with the sole responsibility to create and defend quality, sustainable American jobs. The new Department — the Department of Economic Development — will replace the Commerce Department, subsume other agencies like the Small Business Administration and the Patent and Trademark Office, and include research and development programs, worker training programs, and export and trade authorities like the Office of the U.S. Trade Representative. The new Department will have a single goal: creating and defending good American jobs.

...

... there are some government agencies that undermine sustainable American jobs. For example, the Office of the United States Trade Representative — whose mission is to negotiate trade deals on behalf of America — is captured by the interests of corporate executives and lobbyists. Its actions across Administrations demonstrate a deep ideological opposition to anything that might put the interests of American workers above the interests of multinational corporations or Wall Street.

I don't doubt that the U.S. government is, to a great extent, captured by special interests -- corporate, labor union, various NGOs, lobbyists in general. But on what basis would someone say that USTR is more captured than others? And why would her Department of Economic Development be any different? If you are going to expand the role of government and have it spend more money, as she suggests in the piece, it's inevitable that the role of interest groups and lobbyists is going to increase. She spends a lot of the piece trying to sound anti-corporate, but I think that many big businesses are going to be pretty happy to have the federal government throwing more money around. This, for example, sounds like a special interest bonanza:

Our international competitors like China, Germany, and Japan develop concrete plans for promoting domestic industry and then make serious investments to achieve their goals. China’s Made in China 2025 plan aims to dominate advanced manufacturing in the coming decades using various incentives and “hundreds of billions of euros” in subsidies. Germany and Japan have also developed plans that identify long-term goals for domestic production and put real money behind achieving them.

This is a pretty straightforward idea. But outside of the defense context, the United States has nothing remotely like it.

Kamala Harris on the Proposed Tariffs on Mexico

Here is presidential candidate Kamala Harris being interviewed by Telemundo’s Julio Vaqueiro, talking about Trump's proposed tariffs on Mexican imports to deal with immigration issues:

Vaqueiro: “President Trump just yesterday said that he is going put some tariffs on all Mexican imports, until Mexico stops illegal immigration from Central America. What’s your take on that?”

Harris: “I have a couple of thoughts. One is that this President continues to push forward what I call the Trump trade tax. This is about taxing American consumers. People are going to have to pay more for washing machines, pay more for clothing, pay more for shampoo. When we look at the trade policy he is conducting in terms of China, now with Mexico, it’s going to result in people here paying billions of dollars more a year for consumer products.”

“It is also about an ongoing policy by this administration and Trump to vilify immigrants and to not deal with the real issue, which is that we cannot continue to have policies that are about vilifying people and rejecting those who are fleeing harm. We are creating human rights abuses in a way that this is occurring and it has to stop.”

Vaqueiro: “So how would you describe this approach of using trade to reduce immigration?”

Harris: “I think it’s foolish. I think it’s foolish. And the reality of it is this: We have families who are fleeing the murder capitals of the world in Central America, traveling through the country of Mexico, often paying coyotes to do so. Facing unknown peril. When a mother puts her child in the hands of a stranger to transport them through another country with unknown peril—the only reason mothers are doing that is knowing that if the child stays where they are they face greater harm. But what is this president saying when they arrive here? He says, ‘Go back to where you came from’. (…)”

I suspect that many of the Democratic presidential candidates are agonizing over how to deal with trade issues. With Trump being such an economic nationalist, and polls showing Democratic voters being more pro-trade these days, there will be a temptation to move the party towards free trade. But at the same time, there is important labor union support up for grabs. It's difficult for some of the candidates to figure out how to manage that. These tariffs on Mexican imports were probably an easy call, but still, I thought it was interesting that Harris is using the term "Trump trade tax." It seems like perhaps she is positioning herself, on this issue at least, as the moderate-friendly alternative to Sanders and Warren.

Kamala Harris on Trade Policy

This is from an interview by Jake Tapper with presidential candidate Kamala Harris:

TAPPER: President Trump, as you know, slapped higher tariffs on Chinese exports on Friday morning, dialing up pressure for a trade deal with the Chinese. 

HARRIS: Yes. 

TAPPER: Now, your leader, Chuck Schumer, tweeted earlier this week saying -- quote -- "Hang tough on China, President Trump. Don't back down." 

Do you agree with Leader Schumer that President Trump is doing the right thing when it comes to the Chinese? 

HARRIS: I think that part of the failure of this administration on foreign policy as general matter is that this president and this administration have failed to understand that we are stronger when we work with our allies on every issue, China included. 

TAPPER: China is an ally? 

HARRIS: No, meaning working with our allies to address China, in terms of the threat that it presents to our economy, the threat it presents to American workers and American industries. 

But we -- but, instead, this president seems to believe and has a preference for conducting trade policy, economic policy, foreign policy by tweet. And that's irresponsible. It is a display of a president who thinks that -- apparently, that unilateral action is better than working with the friends to address issues that not only impact our country, but impact the globe. 

[09:05:00]

And I think it puts us in a weaker position. 

TAPPER: As a more broad manner, President Trump, on the campaign trail 2015-'16 and as president, says, trade deals in this country, by Democrat presidents and by Republican presidents, have been too tilted towards helping corporations and helping Wall Street and too tilted against the middle class and the manufacturing sector. 

Do you disagree with that premise? 

HARRIS: I believe that there is no question that, over many decades, the rules have been written in a way that have been to the exclusion of lifting up the middle class and working people in America and working families in America. 

And, in fact, that's why I'm proposing that one of the things that we do to address that is that we reform the tax code in a way that we'll give middle-class working families that are making less than $100,000 a year a $6,000 tax credit that they can receive it up to $500 a month. 

TAPPER: But on the subject of trade, it doesn't sound like you disagree with the president on his premise, on his general argument that the middle class keeps getting screwed by these trade deals, and he's trying to renegotiate better deals. 

HARRIS: I believe that we have got to have policy that better protects American workers and American industries. 

I believe very strongly that we have to have policies that understand that, as it relates to the issue of trade, as it relates to the issue of various countries, including China, which we just talked about, that we have to supply and equip the American worker with the skills and the resources that they need to thrive, not only survive, but thrive. 

TAPPER: Trade has been drawing some dividing lines in the Democratic field, when it comes to NAFTA, for example.

Bernie Sanders, one of your opponents, attacked Joe Biden, another one of your opponents, last week, saying -- quote -- "I helped lead the fight against NAFTA. Biden voted for NAFTA." 

Who is right on NAFTA, Biden or Sanders? 

HARRIS: Well, I'm not going to choose between the two of them. 

(LAUGHTER) 

HARRIS: But I will tell you... 

TAPPER: Well, would you have voted for NAFTA? 

HARRIS: I would not have voted for NAFTA, and because I believe that we can do a better job to protect American workers.

I also believe that we need to do a better job in terms of thinking about the priorities that should be more apparent now perhaps than they were there, which are issues like climate, the climate crisis, and what we need to do to build into these trade agreements. 

I thought her answer to the question about how best to address concerns with China's trade practices was pretty good in terms of its condemnation of the Trump administration's approach. Tapper put Chuck Schumer's "hang tough" message out there, and she clearly moved away from the Schumer statement and towards working with allies, something that is not happening to a great extent right now. It's not clear what Harris sees as "tough," or how she views tariffs, but it seems like she clearly rejects unilateralism.

The rest of her comments are a bit vague. She wants to "better protect American workers and American industries," and "to supply and equip the American worker with the skills and the resources that they need to thrive." That could mean a lot of different things (e.g. reforming the tax code, as she mentions, or using tariffs). 

And saying she would not have voted for NAFTA doesn't really mean much at this point. The question is, what kind of trade agreements or trade policy does she want going forward? She talks about "issues like climate, the climate crisis, and what we need to do to build into these trade agreements." This sounds like it would fit very nicely with EU trade policy, so does this mean a US-EU trade deal would be on her administration's agenda?

Normally, I don't expect much substantive discussion of trade policy during a campaign, but given the importance of trade policy these days, maybe we will get more exchanges like the one above, hopefully with even more specifics.

What Would a Progressive Trade Policy Look Like?

This is from a Vox interview by Zack Beauchamp with Ganesh Sitaraman, a professor at Vanderbilt and "a longtime adviser to Sen. Elizabeth Warren (D-MA)":

Zack Beauchamp

Would you say that, broadly speaking, a progressive foreign policy is critical of free trade as an idea, maybe even open to the kind of tariffs that Trump has been willing to employ?

Ganesh Sitaraman

I think it’s the wrong binary to talk about free trade or protectionism. No one believes in either purely free trade or pure protectionism. And we know that because we have economic sanctions on various countries that lots of people support. Those are restraints on trade, and that’s well understood to be an appropriate tool that we use in our foreign policy and national security policy.

I think the way to think about it is when and with whom are we trading? In what ways and how are we building the rules around trade?

And I think that’s a place where progressives have a different view to where a lot of the consensus has been over the last generation, which I think is a little bit more concerned with concluding trade agreements and a little bit less concerned with what the distributional consequences of those trade agreements might be.

There was also this:

A second thing that I think we see is an interest in what I’ve called selective disentanglement. The idea here is that in areas of critical national security importance, we should think about having domestic capacity to be able to produce those goods or services.

It worries me that when asked directly about tariffs, he did not say what he thought of tariffs, and talked about "when and with whom are we trading" as the real question. My answer would be, as much as possible and with as many countries as possible. His answer seems likely to be different. And his approach to "national security" might not be very different from the current Trump administration Section 232 policies.