China trade war

Oregonians to Play Key Role in Congressional USMCA Review

Oregon Congressman Earl Blumenauer and Congresswoman Suzanne Bonamici will play pivotal roles on drug pricing and environmental issues as part of the House review of the US-Mexico-Canada trade agreement negotiated by the Trump administration.

Oregon Congressman Earl Blumenauer and Congresswoman Suzanne Bonamici will play pivotal roles on drug pricing and environmental issues as part of the House review of the US-Mexico-Canada trade agreement negotiated by the Trump administration.

Next to immigration, US trade policy is one of the top priorities of President Trump. Winning congressional approval of the US-Mexico-Canada trade agreement (USMCA), which his administration negotiated, is a key plank of Trump’s 2020 presidential election agenda.

House Democrats, led by Speaker Nancy Pelosi, are the major obstacle for Trump’s ambition. Pelosi took steps this week to begin negotiations with Trump’s trade advisers and she put two members of the Oregon congressional delegation in pivotal leadership positions. She also signaled support for a labor enforcement proposal championed by Oregon Senator Ron Wyden.

Oregon Congressman Earl Blumenauer will co-chair a team focused on drug pricing, while Oregon Congresswoman Suzanne Bonamici will co-chair the team examining environmental issues.

Pelosi hasn’t committed to a House floor vote on the USMCA until changes are made, which would require further negotiations with Mexico and Canada. Without House Democratic votes, the trade deal cannot move. Trump has indicated he would like USMCA approved before Congress adjourns for its August recess. Ways and Means Chairman Richard Neal, D-Mass, expressed hope that negotiations with House work groups could wrap up in as little as 30 days. 

The delicate negotiations come in the shadow of Trump’s threats to impose escalating tariffs on all Mexican exports to the United States if the country doesn’t do more to stem the flow of migrants from Central America. Trump pulled back from imposing the tariffs after what appears to be a provisional deal was struck with Mexican leaders. He also has pulled back tariffs on steel and aluminum.

Stalemated negotiations and a continuing trade war with China also muddy the congressional water for USMCA. Even in its current form, the USMCA isn’t a slam dunk to pass the legislatures in Mexico and Canada.

The USMCA is effectively an update of NAFTA (the North American Free Trade Agreement), including provisions relating to the digital economy that didn’t exist a quarter century ago. During his presidential campaign and early in his term, Trump threatened to talk away from NAFTA. However, strong business opposition dissuaded that drastic move, which would have disrupted supply chains of US manufacturing and imperiled US agricultural markets in Mexico and Canada.

Since the USMCA was unveiled last fall, congressional Democrats and US labor leaders signaled disappointment with enforcement procedures for labor provisions aimed at closing the pay gap between Mexican and US manufacturing workers. Wyden and Ohio Democrat Sherrod Brown have proposed tougher enforcement provisions. A bipartisan, bicameral delegation of congressional trade staffers returned from a fact-finding mission in Mexico with suggestions for beefing up enforcement. They include new ways to enforce labor provisions auditing 700,000 collective bargaining agreements in Mexico, which could take years to complete.

Provisions related to drugs and environmental issues are other areas that Democrats want to bolster in the USMCA and which Blumenauer and Bonamici will influence.

US Trade Representative Robert Lighthizer and business groups representing major US exporters are lobbying for approval now. Influential Congresswoman Debbie Dingell, D-Mich, told Bloomberg News, “I talked to Ambassador Lighthizer and everyone understands the things that need to be fixed. There are a number of us who want to get a trade bill. We need a new NAFTA. People are working toward a good bill.”


Carter Offers New Year Advice on China Relationship

Former President Jimmy Carter offers advice on how to avoid a cold war with China based on his experience 40 years ago normalizing diplomatic relations with Chinese leader Deng Xiaoping that led the two countries to “become engines of global prosperity.”

Former President Jimmy Carter offers advice on how to avoid a cold war with China based on his experience 40 years ago normalizing diplomatic relations with Chinese leader Deng Xiaoping that led the two countries to “become engines of global prosperity.”

With all the division in Washington, DC, former President Jimmy Carter offered some useful historical perspective on how to find common ground with China, as opposed to putting a “critical relationship in jeopardy.”

Drawing on his own experience of normalizing diplomatic relations with Chinese leader Deng Xiaoping 40 years ago in an op-ed published by the Washington Post, Carter says the key is to identify common goals to address intractable global problems that require leadership by the world’s two largest economic powerhouses.

“While today’s leaders face a different world [than 1979], the cause of peace remains just as important,” Carter says. “Leaders must bring new vision, courage and ingenuity to new challenges and opportunities…. They also must accept our conviction that the United States and China need to build their futures together, for themselves and for humanity at large.”

Carter’s retrospective of his own dealings with China comes with a backdrop of President Trump engaging in a trade war with China. The negotiated 90-day pause in further escalation of the trade war affords an opportunity, Carter says, to recalibrate the relationship and the means to resolve disputes.

“The U.S. imposition of tariffs on $200 billion worth of Chinese good and China’s retaliatory tariffs contribute to the deteriorating relationship, hurting both countries,” he says, which could descend into a Cold War over the Pacific.

Carter recalls that establishing a normalized relationship with China put an end to three decades of hostility and “led to an era distinguished by peace in East Asia and in the pacific Region.” “China’s spectacular economic growth, in conjunction with its continuing integration with the much larger US economy, has enabled the two countries to become engines of global prosperity.”

Political and economic concerns over Chinese economic ascendancy, growing military power and resistance to full democratization can overshadow the opportunities the two nations could pursue together, Carter insists. “The 40thanniversary of this relationship is a testament to the ability of countries with different histories, cultures and political systems to work together for the greater good.”

He urges quick resolution of trade issues, including “trade imbalances, intellectual property theft, forced technology transfers and unfair barriers to US investments.”  Carter dismisses use of “national security” as a reason to obstruct to commercial relationships and claims, “China needs competition for its economy to innovate and grow. Pursuing a fair and reciprocal relationship is the only way for both countries to remain economically strong.”

While he doesn’t say as much in his op-ed, Carter implies that US negotiators must approach their Chinese counterparts differently than, say, European officials. The Chinese view themselves as the oldest nation on earth and the cradle of many of the world’s most important inventions. As such, they bridle at direct criticism and resist confrontational tactics. Cultural sensitivity is a must to get anywhere. Much of the debate over access to the Taiwan Strait and South China Sea can be traced to historical dominance by China of major trading lanes in Southeast Asia and Eastern Africa.

The current government in China is a post-WWII product and the winner of a civil war. While communist in name, China’s ruling party has moved from communal to a form of market-oriented economics, with a strong role for state-sponsored policies. Those policies can be very effective because of Chinese acquiescence to collective goals. However, Chinese officials are mindful that their way of doing business can rub the rest of the world the wrong way. The secret is to find approaches and compromises that don’t offend the Chinese, offer concrete resolutions to legitimate disputes and restore a level of comity between the two nations that will be major competitors and collaborators for the foreseeable future.

For its part, Carter says, the United States should return to the Paris climate accord to strike a collaboration with China on how to decrease greenhouse gas emissions in both the developed and undeveloped world. The US should continue to invite China to play an intermediary role in reducing, if not eliminating, the nuclear threat on the Korean Peninsula. And, the two countries should work hand in hand to develop Africa economically in ways that enrich its citizens, not dictators.

Other forms of collaboration might include joint space research. The Chinese currently have a robotic space probe on the dark side of the moon, the first such probe by any nation. Current US policy forbids exchange of space technology with China. A new space race would be costly and counter-productive, while collaborative efforts may advance knowledge and eventually colonization of the moon and Mars much faster. They might even have a benefit on earth, as the Chinese have announced plans to launch a man-made moon, which is actually a gigantic mirror designed to provide lunar lighting that cuts heating bills.

The two nations also could team up to deal with cyber-terrorism. Intelligence suggests there are state-sponsored cyber-hackers in China. An improved relationship with China may turn hacking into common defense against hackers and disinformation agents. While China still has censorship, its citizens are increasingly exposed to foreign ideas and ideals. Its economic aspirations lie closer to the United States than Russia, which could be persuasive for Chinese officials to join US efforts to combat Russian interference designed to create division and dysfunction.

As has often been the case in his post-presidency, Carter offers plenty to chew on in the new year. One of his signal achievements as President serves as a useful, timely reminder that the harder road to take can be the most productive – and peaceful.