Amer­ica’s trade traitors

China isn’t play­ing fair, and some of our busi­ness groups are ea­ger to help it un­der­cut the U.S.

Los Angeles Times - - Op-Ed - Peter Navarro Peter Navarro is a busi­ness pro­fes­sor at UC Irvine and the coau­thor of “Seeds of De­struc­tion: Why the Path to Eco­nomic Ruin Runs Through Washington.” pe­ter­navarro.com

There is no honor among thieves, and no pa­tri­o­tism among Amer­i­can cor­po­rate ex­ec­u­tives do­ing busi­ness with China. That’s the clear sub­text of a re­cent let­ter sent to Congress op­pos­ing HR 2378, a long-over­due bill that would fi­nally crack down on one of the biggest ob­sta­cles to a sus­tained Amer­i­can eco­nomic re­cov­ery — Chi­nese cur­rency ma­nip­u­la­tion.

China’s grossly un­der­val­ued yuan gives Chi­nese ex­porters a huge eco­nomic ad­van­tage, al­low­ing them to price Chi­nese-made goods far lower than those made in the United States. At the same time, the yuan’s un­der­val­u­a­tion im­poses the equiv­a­lent of a heavy tax on U.S. ex­ports to China.

This cur­rency ma­nip­u­la­tion, in con­cert with China’s mas­sive ex­port sub­si­dies, has re­sulted in chronic U.S. trade deficits, a se­vere weak­en­ing of our man­u­fac­tur­ing base and the loss of as many as 20 mil­lion Amer­i­can jobs, even as China’s econ­omy has boomed.

In a sys­tem of truly free trade and float­ing ex­change rates, Amer­ica’s mas­sive trade deficit with China could not per­sist. As the deficit rose, the dol­lar would fall rel­a­tive to the yuan. U.S. ex­ports to China would rise, Chi­nese im­ports would fall and trade would re­bal­ance.

How­ever, a ma­nip­u­la­tive and mer­can­tilist China sub­verts this float­ing ex­change rate ad­just­ment even as it sys­tem­at­i­cally de­stroys a global free-trade frame­work based on the prom­ise of mu­tual gain.

When Barack Obama was run­ning for pres­i­dent, he re­peat­edly promised to crack down on un­fair Chi­nese trade prac­tices, par­tic­u­larly when he was cam­paign­ing in key in­dus­trial swing states such as Illi­nois, Michi­gan, Ohio and Penn­syl­va­nia. Once in of­fice, how­ever, Obama hasn’t de­liv­ered on those prom­ises. His Trea­sury Depart­ment has re­peat­edly re­fused to brand China a cur­rency ma­nip­u­la­tor, a move that would al­low the U.S. to im­pose coun­ter­vail­ing du­ties to elim­i­nate one of China’s most im­por­tant mer­can­tilist edges.

De­spite re­peated prom­ises, China also has re­fused to al­low any mean­ing­ful ap­pre­ci­a­tion of the yuan. That’s why Congress is con­sid­er­ing leg­is­la­tion that would im­pose du­ties on some Chi­nese im­ports. This is an im­por­tant step, and Congress should not be swayed by the let­ter op­pos­ing ac­tion, which was signed by 30 U.S. busi­ness groups with an in­ter­est in main­tain­ing the sta­tus quo.

The let­ter’s sig­na­to­ries in­clude agri­cul­tural groups such as the Amer­i­can Soy­bean Assn. and the Amer­i­can Meat In­sti­tute, which have signed it be­cause they fear re­tal­ia­tory tar­iffs. Other sign­ers in­clude mer­chan­dis­ers, such as the Na­tional Re­tail Fed­er­a­tion, which fear they would lose busi­ness if the prices of Chi­nese goods were to rise sharply. A third group is com­posed of man­u­fac­tur­ers that have moved pro­duc­tion to China and don’t want their off­shore ad­van­tages di­min­ished.

Though some of these fears may be jus­ti­fied, they don’t jus­tify lob­by­ing ac­tions that ma­te­ri­ally harm the broader in­ter­ests of the United States and its work­ers as the coun­try tries to come to grips with one of the worst eco­nomic down­turns in its his­tory.

What these groups fail to un­der­stand, and what many Amer­i­cans have failed to grasp, is this: The flood of ar­ti­fi­cially cheap Chi­nese goods putting Amer­ica out of busi­ness has merely been a down pay­ment on this coun­try’s present and fu­ture un­em­ploy­ment, and higher un­em­ploy­ment means less pur­chas­ing power for con­sumers and less busi­ness for Amer­i­can re­tail­ers over the longer run.

Over the last decade, as more and more Amer­i­can jobs and fac­to­ries have moved to China, Amer­i­can or­ga­ni­za­tions such as the Busi­ness Roundtable have been trans­formed from staunch crit­ics of Chi­nese mer­can­til­ism to meek apol­o­gists for China’s anti-free trade poli­cies. These or­ga­ni­za­tions are the very essence of the dic­tum of­ten at­trib­uted to Vladimir Lenin that a cap­i­tal­ist will hap­pily sell the rope that will be used to hang him.

Take the U.S. Cham­ber of Com­merce and its var­i­ous coun­ter­parts in China. The groups were sig­na­to­ries to the let­ter lob­by­ing against con­gres­sional at­tempts to force China to play fair. In ad­di­tion, the Amer­i­can Cham­ber of Com­merce in Shang­hai has lob­bied against key pro­vi­sions in a pro­posed Chi­nese law that would have ex­panded pro­tec­tions for Chi­nese work­ers, and thereby given Amer­i­can work­ers a bet­ter chance to com­pete.

What all of these Amer­i­can busi­ness groups and cor­po­rate ex­ec­u­tives now do­ing busi­ness with China fail to un­der­stand is this: When jobs move to China, Amer­i­cans are dam­aged. These days, you don’t have to look far to see the vic­tims.

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