Saturday, July 21, 2012

Digganalysis of Romney's 59 Point Plan: Part III Trade Policy


In Part III of the Digganalysis of Mitt Romney’s 59 point plan we will take a look at the former Salt Lake City Olympic Savior’s thoughts on trade policy.  In a nutshell: Free trade good, China bad.  Romney spends most of this section attacking President Obama’s record on dealing with China and the lack of free  trade agreements.  Unfortunately for Mr. Romney, the facts do not back up his assertions. 

Once again, this document is written in the third person, quotes and italics are words taken directly from the Romney plan.

·         “President Obama has also singularly failed in handling commercial relations with China.”  Mr. Romney is either delusional  and/or lying.  The Obama administration has successfully argued and WON six rulings at the WTO in 3.5 years.  That’s twice as many as the Bush administration did in 8 years.  A seventh case has been submitted regarding auto tariffs. But instead of dealing in facts, Romney has adopted the Donald Trump (“China is raping us”) bloviating approach and has issued veiled threats of economic war with China.  Does China have corrupt trading practices?  Absolutely.  But the likes of Romney who espouse the great free market and reject the role of government want the same government to step in and fight.  I fully endorse the notion of a strong government role in trade discussions, but US multinationals who decide to business in China know the rules, if they don’t shame on them for failing to conduct proper due diligence.

·         “Entirely fake Apple Stores operate openly in Chinese cities.  It is hard to be more brazen than that.”   Does US Intellectually property get ripped off in China?  Absolutely.  Is the problem exacerbated by the companies themselves?  Yes indeed.  The Apple supply chain is so dependent on one company, the contract manufacturer Foxconn, in China that knock off products are easy to develop.  American companies know this is the biggest risk in China, but they still CHOOSE to do so due to the lower costs of goods sold (COGS)and the fact that no US manufacturing company is willing to make the necessary investment to do what Foxconn has done.  Oh and the only reason Foxconn agreed to build the massive factories in China was guarantees from the Chinese government.

·         “President Obama’s delay in submitting the Colombia, Panama, and South Korea agreements to Congress for implementation has already inflicted injury on our GDP and job market.”  This is classic Romney and GOP tactics of throwing out a statement without any data.  Ok Mitt, please quantify what the delay cost us?  While you’re at it, please quantify the impacts of the delay to negotiate better terms.  Fact is, the agreements are in place, no thanks to House obstructionism.

·         “American presidents should be invested with Trade Promotion Authority that gives them the power to conclude trade agreements and submit them for up-or-down votes in Congress.”  Poor Mitt, still thinks being president is like being a CEO.  Just because you say so, doesn’t make it happen.  Perhaps he’s watched Yul Brynner in Ten Commandments a few too many times: “So let it be written, so let it be done.”   This is just another example of Romney projecting executive power that is not granted in the Constitution.  In this case he basically he believes he can set aside congressional rules to expedite his agenda.

·         “A president invested with Trade Promotion Authority could explore the possibility of agreements with dynamic economies such as Brazil and India.”  Actually governor, you do not need Trade Promotion Authority to start any trade discussions, just ask Presidents Bush and Obama who have established trade agreements with the countries you mention.  Though I wonder if the ‘severely conservative’ Mitt Romney would enter a trade agreement with Brazil.  A country that just approved the admittance of the socialist Venezuela into the South American Mercosur trading block that is dominated by tariffs and pro-union sentiments.

·         “If China fails to move quickly to bring its currency to fair value, the Department of the Treasury in a Romney administration will designate China as a currency manipulator.”  In reality the Chinese Yuan has been appreciating for several years including 2011 where, against the dollar, it increased by 5%.  Of course, export driven economies like China’s will always be protective of its currency.  But for the U.S. to call another nation a currency manipulator would be pure hypocrisy.  Two rounds of Quantitative Easing and near zero interest rates have devalued the dollar against just about every global currency.  It is why nations like Brazil have been so vocal about the weakness of the dollar and in turn throw up protectionist trade barriers to imports.

So what we have from Governor Romney is a lot of tough talk about what he will do to China were he to become president.  Tough talk from a candidate usually results in little action if elected.  Why?  China is now our third leading export market and the largest foreign holder of our debt.  This means we are tightly connected with China and belligerence from a so-called business expert is alarming.  Perhaps Romney has spent too much time with Trump. 

Clearly Mr. Romney put a lot of tough talk in his trade policy to win over conservatives from the Perry-Gingrich-Bachmann-Santorum camps.  It is a lot of rhetoric with no substance behind it or as Gingrich might say a bunch of imported pious bologna. 

Next in Part IV we will tackle Romney’s Energy Policy.  Here’s a spoiler: it includes drilling EVERYWHERE!

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