Last week, speaking at the White House, President Obama announced that he was joining the European Union in filing a major trade complaint against China, for its export controls on so-called "rare earth" minerals. These are used in everything from micro-electronic devices like smartphones to flat-screen televisions, hybrid car batteries, energy-efficient lighting and wind turbines. China dominates world production of rare earths and refuses to allow their export and sale to follow normal commercial principles.
Despite this get-tough stance, however, the administration's main trade initiative towards Asia is a little known pending agreement, the proposed Trans-Pacific Partnership. This deal, which the White House hopes to conclude by year's end, would sidestep the mercantilism of China and other Asian nations that is displacing U.S. manufacturing; it would do nothing to raise labor or social standards, and would make the outsourcing problem worse.
The deal, announced last November, is being sold as a way to create a U.S.-led, rival group of nations to Chinese domination of the Pacific economic region, through trading partnerships with several smaller nations including Vietnam, Malaysia, Singapore, New Zealand, and eventually South Korea and Japan. The deal is being negotiated in secret, using the "fast track" provision characteristic of trade agreements, so that there can be no advance scrutiny by Congress or the public. The final deal just gets an up or down quickie vote. However, more than 600 corporate representatives have been given access to the negotiating documents, which suggests whose interests the deal is really intended to serve.
Official pronouncements and leaked documents suggest the following:
The proposed TPP would make it easier for domestic and foreign corporations to challenge a broad range of health, safety, environmental, consumer, labor, and financial regulations as interfering with "trade." Gretchen Morgenson, in Sunday's New York Times, pointed to the danger that NAFTA poses to financial regulation by giving both foreign governments and trans-national corporations a rationale for challenging, say, the Dodd-Frank Act. The proposed TPP, which Public Citizen's Lori Wallach calls "NAFTA on steroids," would be far more damaging. Private firms could sue governments directly to challenge regulatory policies.
The deal would not improve on the weak labor provisions of recent bilateral trade deals.
Participating countries could continue to bash unions with impunity. There is no meaningful enforcement mechanism to enforce labor rights. Though corporations get to appeal to special tribunals if they feel that national regulations of corporations or banks interfere with their business strategies, there is no counterpart for direct appeals of violations of labor rights.
The TPP would actually make it easier for China's state-led capitalism to organize production and supply chains with member nations of the TPP agreement. China-financed and subsidized products partly produced outside China would then enter US markets labeled as if they originated in, say, Vietnam, even though most of their content could actually originate in China. The deal would be a real menace to U.S. industries that are struggling to survive, such as auto parts, steel, and renewable energy.
The deal would also accelerate outsourcing by U.S. firms, since it would provide new guarantees to protect US investment in Asia. It would do little or nothing to reduce hidden Asian barriers to American exports.
Given the very real problems that China poses -- its under-valued currency, its WTO-illegal export subsidies, its theft of intellectual property, its coercion of technology transfer -- none of which the TPP addresses -- why on earth is the Administration promoting this deal?
There is old joke about a drunk looking for his keys under a streetlight. A passerby asks if the drunk dropped the keys nearby. The drunk replies no, but the streetlight is where the light is shining.
The real problems that the U.S. needs to address in its trade with Asia are hard. A more assertive stance toward China would alienate the U.S. corporations that profit from its capital subsidies and oppressed labor. It's far easier to find a streetlight that illuminates a different, less contentious set of issues that corporate America supports.
The small Asian nations both fear China's regional domination but need China's collaboration, and also need access to the U.S. market. By binding them more closely to America's economic orbit, U.S. officials have convinced themselves that this helps create a counterweight to China. But this is an illusion. In the absence of real counter-pressure and serious diplomacy, China's lethal combination of state-subsidy, cheap capital, and exploited labor will continue displacing American industry. A bilateral trade deal with Korea, or a multilateral one with several smaller Pacific nations, does nothing to solve the more pressing problems.
This is supposed to be a period of bitter bipartisan deadlock, in which Republicans and Democrats can agree on nothing. But when it comes to trade deals that serve corporate but not the national interest, bipartisanship is all too alive and well.
Like NAFTA before it, which was cooked up under Bush I and completed by Clinton, the proposed Trans-Pacific Partnership was conceived by a Republican administration (Bush II) and is being carried forward by a Democratic one (Obama).
NAFTA did immense damage to relations between Democrats in Congress and the Clinton White House. It was eventually approved mostly by Republicans, with two-thirds of Democrats in the House opposed. It contributed to the mutual bad feeling that helped Republicans take control of Congress in the 1994 mid-terms.
The TPP has a much lower profile, but its economic effects would be at least as damaging. Political and diplomatic capital that should be expended on the far more serious China trade problem are going instead to enact a secret deal that would only make it harder to have a regulated form of capitalism with decent standards both for production and for trade.
The bipartisan trade establishment and its corporate allies have been pushing these cookie-cutter trade deals for three decades. With each succeeding deal, our trade imbalance worsens and our manufacturing industry gets more hollowed out. There is a parallel bipartisanship in the failure to regulate finance, and this trade deal would weaken financial regulation as well.
Going into a crucial election, if the administration and its political strategists wonder why there is not more appreciation of Obama's good deeds on the part of ordinary working people, they need look no further than its policies on Wall Street and on trade.
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is "A Presidency in Peril."
Leo Hindery, Jr.: China Trade: A 'Target Rich Environment.' Now, It's American Auto Parts
Let's start making stuff again, shall we?
How do you think that US Government contracts, guaranteed (Solyndra type) loans, grants, and/or any other laws giving tax money to only a few people (campaign contributors) were created by our elected US Presidents, US congressmen, US senators, and their bureaucratic administrators?
It's sad that two of the very few who fight this are soon gone from congress - Mr. Paul and Mr. Kucinich.
Because the real problems are rooted in our monetary system. Few people realize it, but our currency is created out of debt. That means for every new dollar in money created, a new dollar in debt must be created, by definition. That is the insanity of the Federal Reserve System. All new dollar-money that government brings into existence must be borrowed from banks, with interest.
The US government buys some paper and ink, then prints and sells freshly printed paper US Treasury Bonds to people in industrialized nations to get some and US Dollars that they earned manufacturing things for US consumers back to spend on government activities.
These freshly printed paper US Treasury Bonds have ABSOLUTELY NO VALUE, except that they are redeemable for title to (corporations that own) privately owned businesses, factories, casinos, hotels, farms, land, ports, breweries, refineries, forests, ports, breweries, refineries, and other privately owned assets located in the USA that were created by previous US generations, instead of Gold from Ft. Knox.
Foreigners continue purchase these freshly printed paper US Treasury Bonds (at greater and greater discounts from face value or current value) only because these US Treasury Bonds can be quickly exchanged for title to privately owned land, hotels, farms, businesses, casinos and other wealth and assets located in the USA that were created by previous generations of US citizens, before the de-industrialization of the USA, instead of Gold.
The US government refers to these sales of existing US assets to foreigners to pay for the imported products that the US citizens consume and US federal government activities that are in excess of tax collections as "INVESTING IN AMERICA"
US citizens are racing to sell title to everything in the USA of value that was created by previous working generations of US citizens in order to keep US citizens from working today to make the things that US citizens purchase and consume.
This will keep the USA from re-industrializing and allow US citizens to not work as required to produce the things that US citizens consume until the USA has no more assets to pay for our imported products and our increasing government expenses.
Foreign individuals in foreign industrial nations that create wealth will eventually own everything of value in the USA as they redeem their freshly printed paper US Treasury Bonds and US dollars that they earned by manufacturing US consumer products for title to all of our privately owned businesses and other privately owned wealth and assets located in the USA that were created by previous US generations prior to de-industrialization.
Foreigners will then immigrate to the USA and eventually become the major (or maybe the only) source of employment for US citizens after they redeem their US Treasury bonds and US Dollar (electronic) credits for title to and control of all of the businesses located in the USA
It is hard to wrap your mind around the concept, but consider it this way: since all dollars in circulation represent actual dollars of debt, what would happen if all dollar-based debts were suddenly paid off? There would be no dollar-money left. Obviously, this means there is no possible way to pay off all debt, because to do so would require more money... and more money, by definition, means assuming more debt. It is a never-ending cycles of the bankers getting richer and everyone else taking on more debt.
This explains the pyramiding of debt we see in the world today, why so many countries are on the verge of default, and we we have an enormous trade deficit and enormous public and private debt. All those debts represent the trillions of dollars, whether real or cyber, used by virtually every country in the world to pay for commodities like oil.
Once you grasp this, you realize our monetary system is an epic Ponzi scheme that MUST take on new debt to survive. So it is not capitalism alone that makes the rich richer and the poor poorer, it is the very nature of the way government creates money. I am happy to explain in further detail to anyone confused. Here is a link to start:
http://www.thestreet.com/story/10477710/1/opinion-a-way-out-of-government-debt.html
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
The US International Trade Balance (Deficit for the USA) indicates that Brazil, Russia, India, China, (BRIC) nations, plus Pakistan, South Korea, and the other industrialized countries of the world with positive net foreign trade balances are NET CREATORS of NATIONAL WEALTH for their nations, and the de-industrialized USA and most of the European nations with negative net trade balances are NET CONSUMERS (DESTROYERS) of the existing NATIONAL WEALTH in their nations, whose citizens live “high on the hog” by continuously borrowing wealth from the industrialized countries to pay for government activities.
Greece economic policies are similar to the USA except that Germany will not be able to loan the USA more money when people holding US Dollars stop buying US Treasury Bonds, or loaning the US Dollars back to the USA in order to finance US government activities.
The US dollars (or electronic credits) that we pay foreigners to manufacture our consumer goods and services that we consumed/received have NO VALUE, except that they are redeemable for title to privately owned businesses, factories, casinos, hotels, farms, land, ports, breweries, refineries, forests, ports, breweries, refineries, and other privately owned assets located in the USA that were created by previous wealth producing US generations before de-industrialization instead of (or in addition to) Gold from Ft. Knox.
Why did all of the Copper mines and smelters close in Northern Michigan? EPA
Why did all of the Paper Mills close everywhere in the USA? EPA
Why did all of the Steel Mills close in Pittsburg and the Midwest? EPA
Why did the computer chip manufacturing plants close in the USA? EPA
If the EPA's proposed "Cap and Trade" is passed by the US congress, our remaining petrochemical industries will relocate to foreign countries and then they will lay off most all of their thousands of employees as they close down their refinery businesses in the USA.
If the EPA had been created in 1865, the USA would probably be a third world country of unemployed beggars today, or maybe a part of Germany or Japan.
If the US economy implodes, the USA will probably resemble India, Mexico, China, etc., as these countries were in the decades before they industrialized. I do not believe that any of these foreign countries will help the US citizens if the USA is in distress.
Almost all products are made with steel, aluminum, plastics, lead, copper, lumber, paper, gasoline, diesel fuel, electricity, and other products that pollute or destroy the environment as they are produced.
I cannot think of any product that is manufactured using any processes that do not pollute the environment. Can you think of any?
The EPA is destroying the few US manufacturing jobs that remain in the USA.
US Steel sort of went all wobbly and reinvented itself out of existence didn't it? Bad trade deals with Japan helped some, and their technology was from the previous century.
Computer chips were outsourced for greedy profit motives, and bad trade deals with China.
The EPA has been trying to clean up our water and air, and keep up with constant assaults by greedy corporate interests who would rather socialize the clean-up costs of their operations as it frees up more bonus money for campaign contributing.
After the EPA destroys all jobs, then we will have clean air to breathe and clean rivers to swim in, as we listen to our children cry as they starve to death!
Had the EPA been created in 1865 it would've been because the industrial community was listening to "cooler heads" (yes, they were around) and decided that health and happiness were kinda important. We would have been LEADERS. "Third world" is a state of mind created to let us feel superior to folks that didn't necessarily need or want our "technology". Had the greed and lack of foresight been allowed to be addressed, Germany and Japan would not part of this conversation.
The US economy has not imploded, it has come of age. And this is no IF. Your statement(s) only confirm the laziness of greed and corruption. We had, and have, the capability to remedy the threats all of these industries pose. Doing so would mean a sharing of responsibility AND benefit but, alas, too many have chosen/choose the low-road.
It has to end before we cannot come back from it. Reagan-Bush were also the first to start borrowing in the trillions from China.
Americans better wake up and start producing and stop consuming all the time or we are going to be in serious trouble!!!
Bill Clinton's granting of "Most Favored Nation" status for China certainly destroyed many US jobs.
Maybe it is time for a third party if the two major parties believe that unemployment and re-industrialization are not important.
Ross Perot was right!
Ross Perot who looked like Alfred E Newman from the Mad Magazine comic books and talked through his nose. He ran as a third party candidate against President Bush 41 and President Bill Clinton in1992 and he got almost as many popular votes as either of the major party candidates.
He had the right message but he was the wrong messenger.
He was not attractive, and I sadly believe that a lot of the American people vote based upon looks more than intelligence or policy.
He had a lot of graphs and charts to indicate his points.
I remember him saying that "NAFTA will suck the remaining jobs out of the USA".
He might have been the last chance to preserve US jobs, US industry and the US economy.
He also said, "We need to keep the high tech jobs, it is better than being a nation of chicken farmers.”
I think that he would certainly be for repealing all of the legislation that created all of those FREE TRADE AGREEMENTS that our past three presidents created!
I guess that it is too late now.
If access to rare earths (not so rare) is truly the goal, it would be a wonderful opportunity for America to gain a leg up on the other industrial players (such as Germany, Japan, and S. Korea) that are true peer competitors with America. China is still so very much lower on that tech step ladder, its industries are more complementary (rather than competitive) with American manufacture.
WHY is this a good opportunity? China + America can easily control the pricing of Rare Earths. Do a cartel with China and stick it to the other industrial competitors. If processing the ores is too environmentally unfriendly, it can always be subcontracted out to China, with contracts to bring back the refined products (i.e., have the likes of Molycorp export the ores to be processed in China, with agreements to bring back the refined products). Japan and German and S. Korea do not have the ores, and would thus be disadvantaged.
Mining and exporting provide good jobs. The refined rare earth materials (pure metals, instead of radioactive ores), imported at substantially lower prices (vis-a-vis the true peer industrial competitors) and to be processed further into high tech products by American companies in America - now that's a viable industrial policy that takes advantage of the high end expertise of America.
Were our elected congressmen ignorant, stupid, dishonest, or some combination of these factors?
How do you think that all of that "FREE TRADE AGREEMENT LEGISLATION" to ratify various trade agreements were created?
Do you think that maybe the foreign product manufacturers that export consumer products to the USA might have paid professional US lobbyists to spend hundreds of thousands of US dollars on wine, food, women, song, vacations, cash, sexual services, corporate jobs for the (unemployable) children/wives/girlfriends on enough of the US senators and US congressmen (and their congressional aids who actually control the members of congress) plus campaign contributions to entice (bribe) enough of our Republican and Democratic US Presidents, Congressmen and Senators for the past 20 years to create all of that "FREE TRADE AGREEMENT LEGISLATION" to ratify various trade agreements that allowed, caused, and ECONOMICALLY REQUIRED our businesses to take advantage of the lower labor costs, lower electrical energy costs, lower business taxes, lower payroll taxes to pay for health care costs, lower unemployment insurance costs, lower environmental manufacturing costs and other anti-business costs that are not required in various foreign countries with fewer anti-business laws that are/were applicable to businesses in the USA?
I believe that I need to be a better wordsmith, but I usually add words rather that delete words each time that I review something that I write.
Moreover, China is merely the final assembly place, and that $300 Billion really is a combined trade deficit of America with many other nations which businesses assembled the final products in China. Note that China's imports for 2010 were 30% of GDP (compared to less than half that in the U.S.), and quite a bit of that are the components imported for final assembly. The iPhone is the extreme case - of the $200+ import price, China's value added (basically Foxconn assembles all the imported parts) is $6 or $7 - yet the entire import price is counted towards the trade imbalance with China.
When the economy is bad, the solution must be to make the pie bigger, thus there are more jobs for everyone. You cannot do that via pissing off the biggest and fastest growing export market in China.
The American political process had been hijacked by a parasitic financial class, and it is bipartisan. As the direct result, America had already chosen an industrial policy for the post-industrial world. In place of pushing particular technologies, America, with bipartisan support, chose ultra highly leveraged FINANCIAL ENGINEERING as a post-industrial era "industrial policy", and in the last 15 years has staked the policy with the full faith and credit of the nation, and the best minds (smartest, if not wisest) the country can offer. This "industry" does not produce anything. It provides "financial services", in the form of an OTC derivatives casino almost 50 TIMES the size of the American GDP (US$700 Trillion by June 2010, according to Bloomberg).
By 2010 the banking industry's "profits" were $1.4 Trillion. Typical is B of A, reporting 90% of its profits from "trading". Since the $700 Trillion in "trading" does not produce anything, the money has to be extracted from the Main Street economy. That is unsustainable; that is destabilizing.
The TPP contains unpublicized provisions to remove sovereign control of capital flows across borders, AND other financial service "liberalization" requirements, making member nations more susceptible to marauding by banksters. What better victims than central banks of governments that rely on the good graces of the mighty American military?