Meet mr. ‘death by china,’ Trump’s man on trade

Af­ter fail­ing as a Demo­cratic can­di­date in Cal­i­for­nia, lit­tle-known pro­fes­sor Peter Navarro is en­sconced in the White House

The Washington Post Sunday - - BUSINESS - BY STEVEN MUFSON

If Pres­i­dent Trump were to make a movie en­cap­su­lat­ing his feel­ings about China, it might look a lot like this:

A red, white and blue ball with the word “jobs” ap­pears on the screen. It rolls un­der the por­trait of Mao Ze­dong through an an­i­mated Gate of Heav­enly Peace, the iconic en­trance in Bei­jing. There, where the an­cient For­bid­den City should be, belch­ing smoke­stacks jut sky­ward.

Words then roll against a black back­ground, say­ing that 57,000 Amer­i­can fac­to­ries have dis­ap­peared since China joined the World Trade Or­ga­ni­za­tion and “be­gan flood­ing Amer­i­can mar­kets with il­le­gally sub­si­dized ex­ports.” Next, a bread knife with the words “Made in China” is plunged into a map of the United States and an­i­mated blood runs out, trick­ling into the ti­tle: “Death by China.”

The movie ac­tu­ally ex­ists, and it was writ­ten, pro­duced and di­rected by Peter K. Navarro, a 67-year-old pro­fes­sor in the Univer­sity of Cal­i­for­nia at Irvine’s busi­ness school who is the head of the new White House Na­tional Trade Coun­cil. His task: to help re­write the rules of global trade, from Mex­ico to China to Bri­tain, and to bring back Amer­i­can man­u­fac­tur­ing and jobs.

“The best jobs pro­gram is trade reform with China,” Navarro says in the movie, which is nar­rated by Martin Sheen, who starred in “Apoc­a­lypse Now” and as lib­eral hero Pres­i­dent Josiah Bart­let in the TV se­ries “West Wing.”

Navarro’s ideas have been widely crit­i­cized by other econ­o­mists. “The big­gest source of U.S. eco­nomic chal­lenges and the big­gest set of solutions are to be found in do­mes­tic pol­icy,” said Ja­son Fur­man, chair­man of the Coun­cil of Eco­nomic Ad­vis­ers un­der Pres­i­dent Barack Obama. “While in­ter­na­tional is­sues and a level play­ing field all mat­ter, China is not the source of ev­ery prob­lem, nor is do­ing some­thing about China the an­swer to ev­ery prob­lem.”

But Navarro has struck such a chord with Trump that he could end up play­ing an out­size role in the ad­min­is­tra­tion’s eco­nomic pol­icy. The pres­i­dent’s an­nounce­ment of his ap­point­ment called him “a vi­sion­ary econ­o­mist.”

“I read one of Peter’s books on Amer­ica’s trade prob­lems years ago and was im­pressed by the clar­ity of his ar­gu­ments and thor­ough­ness of his re­search,” Trump said in a state­ment. “He has pre­sciently doc­u­mented the harms in­flicted by glob­al­ism on Amer­i­can work­ers, and laid out

a path for­ward to re­store our mid­dle class.”

Put­ting na­tions on no­tice

Few of the peo­ple Trump has brought into the White House seem to be so in tune with the pres­i­dent. And for the mo­ment , he has filled a pol­icy vac­uum by be­ing vis­i­ble while other Cabi­net nom­i­nees strug­gle with con­fir­ma­tion.

Navarro has been one of just a hand­ful of White House of­fi­cials at Trump’s side for the sign­ing of ex­ec­u­tive orders, such as with­draw­ing the United States from the Trans-Pa­cific Part­ner­ship and block­ing fed­eral funds for groups that pro­vide abor­tions or abor­tion coun­sel­ing.

In early Fe­bru­ary he at­tended a White House meet­ing about trade that in­cluded Trump and the Hill’s “big four” — Se­nate Fi­nance Com­mit­tee Chair­man Or­rin G. Hatch (R-Utah) and rank­ing Demo­crat Ron Wy­den (Ore.), House Ways and Means Com­mit­tee Chair­man Kevin Brady (R-Tex.) and rank­ing Demo­crat Richard E. Neal (Mass.).

On Feb. 14 and 15, he briefed Se­nate Fi­nance Com­mit­tee mem­bers. Ac­cord­ing to peo­ple there, Navarro laid out prin­ci­ples — free and fair trade; bi­lat­eral deals, not mul­ti­lat­eral ones; a re­duced trade deficit; a strength­ened de­fense in­dus­trial base; and au­to­matic trig­gers for rene­go­ti­a­tion when trade deficits oc­cur.

Al­though he didn’t de­scribe any mech­a­nisms, Navarro also listed about a dozen more spe­cific trade goals, in­clud­ing boost­ing the num­ber of U.S. parts in im­ported fin­ished goods; de­vel­op­ing tools to pun­ish cur­rency ma­nip­u­la­tion; crack­ing down on in­tel­lec­tual prop­erty theft that Navarro said cost $300 bil­lion a year and “steals the seeds of in­no­va­tion for the fu­ture”; and re­strict­ing heav­ily sub­si­dized, state-owned en­ter­prises.

He also said that World Trade Or­ga­ni­za­tion de­ci­sions had been “un­fair” to the United States and that Chapter 19 of the North Amer­i­can Free Trade Agree­ment had al­lowed Cana­dian soft­wood lum­ber ex­porters to avoid du­ties. Navarro said that the Cana­di­ans “have played us.”

And like Trump, Navarro has put other coun­tries on no­tice that the United States would con­front its ma­jor trad­ing part­ners even when they are close al­lies. In a Jan. 31 in­ter­view with the Fi­nan­cial Times, Navarro sent shock waves through Europe when he said that Ger­many was get­ting an un­fair com­pet­i­tive ad­van­tage by ma­nip­u­lat­ing the euro to lower its value and make its ex­ports cheaper.

‘The one that got away’

Navarro got his start in politics at the lo­cal level — as a Demo­crat. He ran un­suc­cess­fully for mayor of San Diego in 1992, city coun­cil in 1993, county su­per­vi­sor in 1994 and Congress in 1996.

“My cit­i­zen ac­tivism is a di­rect out­growth of a clas­si­cal and fis­cally con­ser­va­tive train­ing in eco­nom­ics at Har­vard,” he wrote in “San Diego Con­fi­den­tial,” a re­veal­ing, cut­ting and read­able mem­oir of his years in politics there. “It is a per­spec­tive rooted in one of the most im­por­tant con­cepts in eco­nom­ics — the need for gov­ern­ment in­ter­ven­tion in the pres­ence of a mar­ket fail­ure.”

Ini­tially he be­came ac­tive in a pop­u­lar lo­cal group called Pre­vent Los An­ge­liza­tion Now (PLAN) op­pos­ing de­vel­op­ers.

“A city should de­cide where it doesn’t want to de­velop,” he wrote, “sav­ing at least some of the canyons and hill­sides and wet­lands from the bull­dozer’s blade.”

But in­stead of run­ning for county su­per­vi­sor, a race he might have won, Navarro jumped into the San Diego mayor’s race. His op­po­nent, Su­san Gold­ing, launched three neg­a­tive ads and he re­sponded with an ad at­tack­ing Gold­ing, whose ex-hus­band was con­victed of laun­der­ing il­le­gal drug money. Ahead in the polls go­ing into the last week­end of the race, Navarro at­tacked her again in a tele­vised de­bate. In tears, she called the at­tacks on her fam­ily un­fair; Navarro ac­cused her of re­hears­ing the re­sponse and came off as dis­mis­sive. He lost.

Years later, he wrote that he still thought about “the one that got away.”

“He was al­most the mayor,” said Larry Re­mer, a po­lit­i­cal con­sul­tant who worked on three of Navarro’s cam­paigns af­ter that one. “He flubbed it, is what re­ally hap­pened.”

Re­mer said Navarro was a hard­work­ing can­di­date who “re­al­ized the need to stay on a clear, con­cise mes­sage, a lot like ‘make Amer­ica great again.’ Noth­ing could ap­peal to peo­ple in San Diego more than say­ing ‘not L.A.’ ”

But, he added, what un­did Navarro as a can­di­date was his per­son­al­ity. “He would just burn through vol­un­teers,” Re­mer said.

“He’s not quite as prickly as Trump, but he has the same ego is­sues.”

In 1996, Navarro took on then-U.S. Rep. Brian Bil­bray (RCalif.), hop­ing that the back­lash to the Newt Gin­grich rev­o­lu­tion would sweep a Demo­crat into the House. He later wrote that Bil­bray “was as much of an id­iot as he was when he first ran” for Congress “but this time he was an id­iot with a record — a bad one.” None­the­less, heav­ily out­spent, Navarro lost soundly.

Dis­cour­aged, di­vorced and in debt, he moved on.

A ‘de­cent trade deal’

Navarro res­ur­rected his pub­lic per­sona by turn­ing to writ­ing, do­ing a set of on­line ba­sic eco­nom­ics books and a how-to in­vest­ing book ti­tled “If It’s Rain­ing in Brazil, Buy Star­bucks.”

In the mid-2000s Navarro latched onto the is­sue of China’s grow­ing global am­bi­tions, writ­ing “The Com­ing China Wars,” “Death by China” and “Crouch­ing Tiger; What China’s Mil­i­tarism Means for the World.”

Ac­cord­ing to the New Yorker, Navarro in 2011 read that Trump told the Chi­nese state news agency Xin­hua that he liked Navarro’s first book on China. They com­mu­ni­cated af­ter that but met in per­son only dur­ing the pres­i­den­tial cam­paign, when Navarro was one of the few econ­o­mists to take Trump se­ri­ously.

At times, Navarro sounds mod­er­ate. “The last thing a Trump ad­min­is­tra­tion plans is a trade war,” he said at a Tax Pol­icy Cen­ter event in Oc­to­ber. “The is­sue sim­ply is get­ting a de­cent trade deal with each of the ma­jor trad­ing part­ners.”

And many of the is­sues he raises about China are real: Chi­nese com­pa­nies steal in­tel­lec­tual prop­erty, re­ceive cheap credit from Chi­nese banks, pay lower wages, and gen­er­ally cough up more pol­lu­tion and pay less for pol­lu­tion con­trols. Navarro es­ti­mated in 2006 that un­fair trade prac­tices ac­counted for 41 per­cent of China’s com­pet­i­tive ad­van­tage over U.S. firms.

But the film, in which Navarro at­tempts to be to­ward China what Michael Moore is to the au­to­mo­bile in­dus­try, is hy­per­bolic in tone. It in­cludes com­ments by con­ser­va­tives fear­ful of China, AFLCIO leader Richard L. Trumka, or­di­nary shop­pers and Navarro him­self, who fires salvos at Amer­i­can cor­po­ra­tions that do busi­ness in China.

The nar­ra­tor says that “no com­pany has been hap­pier” to move its cap­i­tal off­shore than Gen­eral Elec­tric. Then Navarro ap­pears and in­ter­jects. “When I go out and do speeches to cor­po­rate au­di­ences on China, they want me to talk about strat­egy,” he says. “It’s like, ‘Hey, you’re go­ing over to China. You’re giv­ing them your avion­ics so you can par­tic­i­pate in a re­gional jet game in China, and two or three or five years from now you’re go­ing to try to sell your re­gional jets in Europe — and your big­gest com­peti­tor is go­ing to be that China guy. How stupid is that?’ ”

Crit­i­cism over tax pro­pos­als

Navarro’s tough­est au­di­ence has been his fel­low econ­o­mists.

He started his ca­reer writ­ing a book about the util­ity in­dus­try. In a re­view, Robert A. O’Neill, now a spe­cial­ist in elec­tric­ity reg­u­la­tion at the law firm McCarter & English, said its in­dict­ment of the reg­u­la­tory process “greatly sim­pli­fies the complex is­sues af­fect­ing the elec­tric util­ity in­dus­try.” He said that read­ers would “find am­ple rea­son sim­ply to dis­count the book as pro-util­ity pro­pa­ganda.”

Now, as a key Trump ad­viser, Navarro has run into more flak.

In a pa­per he wrote last year with now-Com­merce Sec­re­tary Wil­bur Ross, Navarro said that Trump could im­pose tar­iffs and en­cour­age changes in con­sumer buy­ing habits to erase the huge U.S. trade deficit. That would go hand in hand with greater in­vest­ment in the U.S. econ­omy, a com­bi­na­tion of events that Wil­liam Gale, a Brook­ings In­sti­tu­tion econ­o­mist, has called “math­e­mat­i­cally im­pos­si­ble.”

Navarro and Ross say that get­ting rid of the trade deficit and boost­ing in­vest­ment would also spur faster eco­nomic growth, which would bring in $1.74 tril­lion in tax rev­enue over a decade.

Hooey, say econ­o­mists across the po­lit­i­cal spec­trum. (Navarro de­clined to an­swer ques­tions in emails or re­spond to phone calls.)

N. Gre­gory Mankiw, chair­man of Pres­i­dent Ge­orge W. Bush’s Coun­cil of Eco­nomic Ad­vis­ers and a Har­vard Univer­sity eco­nom­ics pro­fes­sor, said in a Septem­ber blog post that Navarro and Ross’s pa­per makes el­e­men­tary mis­takes by over­stat­ing growth and not un­der­stand­ing that a smaller trade deficit means lower in­vest­ment along with pos­si­bly higher in­ter­est rates and less con­sump­tion. “Even a fresh­man at the end of ec 10 knows that trade deficits go hand in hand with cap­i­tal in­flows,” Mankiw wrote.

In ad­di­tion, if the United States erects tar­iff bar­ri­ers to China, fac­to­ries might go to other lower-cost coun­tries such as Viet­nam, Bangladesh or In­dia.

Fur­man said that “if you’re try­ing to in­tim­i­date com­pa­nies about mov­ing op­er­a­tions or yell at them over sup­ply chains, that’s not the way to make Amer­ica a more at­trac­tive place. The way to do that is to build in­fra­struc­ture, train work­ers and in­vest in technology, not to just beat up on other coun­tries.”

Navarro and Ross have also come un­der crit­i­cism for their tax pro­pos­als. A tax credit for in­fra­struc­ture would re­ward projects that would hap­pen any­way and would not ad­dress long-over­due maintenance, ex­perts say, lead­ing to larger bud­get deficits.

Navarro’s close re­la­tion­ship with Ross could serve him well when Cabi­net mem­bers ar­rive and lead­er­ship on is­sues grows more frac­tured, po­ten­tially cre­at­ing ri­val­ries with more savvy in­fight­ers such as Na­tional Eco­nomic Coun­cil head Gary Cohn. Yet for now, Navarro and Ross ap­pear to be in sync with the pres­i­dent and his threats on trade.

That po­si­tion is one that Navarro has held for at least a decade. His “Death by China” film takes a video of Obama speak­ing in the White House brief­ing room and splices in a Chi­nese sol­dier who re­moves the White House in­signia be­hind Obama and puts up a Chi­nese flag.

The film also shows an empty fac­tory with bro­ken win­dows and un­em­ploy­ment lines, and jux­ta­poses that with Chi­nese con­tainer ships and busy Chi­nese fac­tory work­ers. In the end, the cred­its roll to the tune of a glum, folky song whose lyrics Navarro helped write.

“Look around, tell me what you see.

Ev­ery day more peo­ple in the street. I used to work in a fac­tory. By now I’d work for any­thing

It’s not me, it’s my fam­ily I wish to feed. Not much, we got sim­ple needs. Too bad they sent our jobs away. In China they’re not work­ers, they’re just slaves.

Peo­ple, wait, it’s a world of trade and greed.

And the CEOs get richer, and our jobs all move off­shore.”

It could be an ode de­scrib­ing the plight of Trump’s sup­port­ers. And it struck a chord with one cru­cial viewer, who said in a blurb on the film’s Web page: “Death by China” is right on. This im­por­tant documentary de­picts our prob­lem with China with facts, fig­ures and in­sight. I urge you to see it.”

The re­viewer: Don­ald Trump.

LEONARD OR­TIZ/OR­ANGE COUNTY REG­IS­TER

Pro­fes­sor Peter K. Navarro is a key eco­nomic ad­viser to Pres­i­dent Trump.

KEVIN LAMARQUE/REUTERS

Peter K. Navarro, seen at right in Jan­uary, heads the new White House Trade Coun­cil. The pres­i­dent’s an­nounce­ment of his ap­point­ment called him “a vi­sion­ary econ­o­mist.”

DBC PRO­DUC­TIONS

The movie “Death By China” was writ­ten, pro­duced and di­rected by Navarro and nar­rated by Martin Sheen.

PEAR­SON FT PRESS

In the mid-2000s, Navarro be­gan writ­ing sev­eral books crit­i­cal of China’s eco­nomic poli­cies, in­clud­ing this one.

In 1996, Navarro, then a Demo­crat, ran un­suc­cess­fully to un­seat U.S. Rep. Brian Bil­bray (R-Calif.).

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