The election year 2020 in the USA seems for many Western people to be decisive. Many hope that Trump is not reelected and Biden will bring back the golden old era and a reset of the tradtional transatlantic West and the liberal USA and benign hegemon. However, the times of engagement with China will be the past, whoever becomes president of the USA.
An article from the Atlantic about the readjustment of the Republican Party in Foreign Affairs and an SCMP article about Biden’s likely policy gives us an impression on the coming debate and readjustments of the US foreign and China policy. And the Europeans and especially the Germans should understand the US point of view about the Asian Pivot. The foreign policy of the Democrats to Europe won ‘t be just a simple reset of the good old times as the USA primarily has to counter China in the future.
The article “Will Trumpism Change Republican Foreign Policy Permanently?“published August 28, 2020 by Thomas Wright,Senior fellow at the Brookings Institution in The Atlantic analyses the different factions of the Republican Party and their likely influence on the coming US foreign and China policy. While only a minority of the former Republicans support the old Republican mantra of globalization, promotion of free trade, democracy and freedom, other more influential groups and factions of the Republicans prefer more congagement, state interventionist industry policy and more geopolitical great power categories instead of value-based democracy promotion. Of course corporate and business interests of the multinational companies still resist a decoupling from China or a decoupling of China from the US dollar as they still want to have access to the giant Chinese supermarket and will lobby for that purpose in the Democratic and the Republican party. During the engagement era, the business interests were dominant, but after Trump this won’t be possible more to this extent. The business interests will be part of, but not that dominant anymore in the congagement strategy. The Military-Industrial Complex (MIC) and the security apparatus will play a more important role in relation to the business interest than before. And there will be a trend to a more resilient, not that export-dependent economy. The USA has an export dependency of 15%, the EU 40%, China had 36% in 2010 and reduced it to 20%. Trump´s America First on the one side wants to bring jobs and outsourced productive industry back home, reindustrialize the USA, import less and export more to get a mercantilist trade surplus, diversify the surviving supply chains, however, the goal won´t be to make the USA a primarily export-driven and dependent world power. And it remains to be seen if the relocation of the outsourced industries and multinationals “back home” will work.
The programmatic article „How to Make Trade Work for Workers – Charting a Path Between Protectionism and Globalism“ by Robert E. Lighthizer published in July/Auguist 2020 in the Foreigns Affairs explains the main differnece between the engagement, The Washington Consensus and old freetrade policy oft he former Republican and Democratic goverments and the congagement policy and America First economic nationalism of the Trump adminsitration:
„The new coronavirus has challenged many long-held assumptions. In the coming months and years, the United States will need to reexamine conventional wisdom in business, medicine, technology, risk management, and many other fields. This should also be a moment for renewed discussions—and, hopefully, a stronger national consensus—about the future of U.S. trade policy.
That debate should start with a fundamental question: What should the objective of trade policy be? Some view trade through the lens of foreign policy, arguing that tariffs should be lowered or raised in order to achieve geopolitical goals. Others view trade strictly through the lens of economic efficiency, contending that the sole objective of trade policy should be to maximize overall output. But what most Americans want is something else: a trade policy that supports the kind of society they want to live in. To that end, the right policy is one that makes it possible for most citizens, including those without college educations, to access the middle class through stable, well-paying jobs.
That is precisely the approach the Trump administration is taking. It has broken with the orthodoxies of free-trade religion at times, but contrary to what critics have charged, it has not embraced protectionism and autarky. Instead, it has sought to balance the benefits of trade liberalization with policies that prioritize the dignity of work.
Under this new policy, the Office of the U.S. Trade Representative, which I head, has taken aggressive and, at times, controversial actions to protect American jobs. But it has done so without sparking unsustainable trade wars and while continuing to expand U.S. exporters’ access to foreign markets. The U.S.-Mexico-Canada Agreement (USMCA), which was first signed in 2018 and is scheduled to enter into force this year, offers the best and most comprehensive illustration of this new approach. This new way of thinking has motivated the administration’s policies toward China and the World Trade Organization (WTO), as well. In addressing the challenges that remain, the administration has the same goal: a balanced, worker-focused trade policy that achieves a broad, bipartisan consensus and better outcomes for Americans.
THE LIMITS OF INTERDEPENDENCE
Before World War II, tariffs were high by contemporary standards. From the 1820s until the late 1940s, the weighted average U.S. tariff (which measures duties collected as a percentage of total imports) rarely dipped below 20 percent. President Franklin Roosevelt and the New Deal Congress ushered in a period of relative tariff liberalization in the 1930s, but the rate remained in the mid- to high teens throughout the decade. After the war, however, both Democrats and Republicans came to champion tariff reduction as a means of preventing yet another conflict, arguing that trade fostered interdependence between nations. Trade liberalization therefore came to be seen not just as a tool of economic policy but also as a path to perpetual peace.
Subsequent events seemed to vindicate this view. Exports to U.S. consumers helped Japan and West Germany rebuild and become responsible members of the world community. The tearing down of trade barriers within Europe, starting with the establishment of the European Coal and Steel Community in 1951, surely contributed to postwar security, as well, by bringing the democracies of Western Europe closer together and setting a template for future cooperation.
But interdependence does not always lead to peace. In the United States, economic ties between the North and the South did not prevent the Civil War. Global trade grew rapidly in the years right before World War I; exports as a percentage of global GDP peaked at nearly 14 percent in 1913, a record that would hold until the 1970s. Likewise, it would be hard to argue that the rise of Germany as a major exporter in the late nineteenth century helped pacify that country in the first half of the twentieth. Japan’s dependence on raw materials from the United States motivated its attack on Pearl Harbor. More recently, China’s accession to the WTO in 2001—which was supposed to make the country a model global citizen—was followed by massive investments in its military capabilities and territorial expansion in the South China Sea.
On the flip side, conflict over trade is not always destabilizing or a threat to broader foreign policy objectives. The NATO alliance survived the tariff hikes associated with both the 1960s “chicken war,” when the United States clashed with France and West Germany over poultry duties, and the 1970s “Nixon shock,” when the United States effectively abandoned the Bretton Woods system. The United States and Japan fought about trade in the 1980s, but their bilateral security alliance stayed strong. Countries, like people, compartmentalize.
Concessions to achieve broader diplomatic aims can prove costly in the long run.
There may be situations when it is appropriate to make concessions on trade in order to achieve broader diplomatic aims, but one should keep in mind that such bargains can prove costly in the long run. Letting India join the General Agreement on Tariffs and Trade (the precursor to the WTO) in 1948 with nearly a third of its industrial tariffs uncapped, for example, no doubt made sense to Cold Warriors, who thought that it would help bring India into the U.S. camp. Yet the negative repercussions of that decision persist to this day, now that India has become one of the world’s largest economies and, at times, a troublesome trading partner for the United States. Over the years, such concessions have piled up.
Sometimes, the tendency to view trade through the lens of diplomacy has led to excess timidity. The most vivid example is the failure of the George W. Bush and Obama administrations to meaningfully confront China’s market-distorting subsidies and policy of forcing foreign companies to share their technology. But there are many others. For instance, until the current administration took office, the United States had never invoked the procedures for enforcing environmental commitments it had bargained for in its free-trade agreements. The Trump administration has used those tools to crack down on illegal timber harvesting in Peru and illegal fishing in South Korea.
Although the United States should not wield its economic leverage blithely, fear of rocking the diplomatic boat cannot be an excuse for inaction. The Trump administration has demonstrated that it is possible to take targeted yet aggressive trade actions while managing the risk of escalation. Despite the “sky is falling” rhetoric that has greeted many of the administration’s policies, the United States has remained the most open of the world’s major economies throughout Donald Trump’s presidency. Even with the recent tariffs imposed against China, along with efforts to rescue the domestic steel, aluminum, and solar power industries, the United States’ weighted average tariff was only 2.85 percent in 2019 (and 1.3 percent for imports from countries other than China). That’s slightly higher than the 1.5 percent rate that prevailed during the last year of the Obama administration but still lower than a comparable figure for the EU: the 3.0 percent weighted average rate it imposes on imports from other WTO members.
History will judge the ultimate effectiveness of the Trump administration’s targeted duties. But experience has already proved wrong the Cassandras who said that its actions would inevitably lead to a 1930s-style trade war.
THE EFFICIENCY OBSESSION
The other dominant school of thought in trade policy is the economist’s perspective. For adherents of this faith, the sole objective of trade policy is market efficiency. Lower tariffs and nontariff barriers reduce the costs of producing and distributing goods and services; that, in turn, makes society as a whole better off—so the argument goes. How such policies affect the men and women who do the producing and distributing is of little or no consequence.
Rather than envisioning the type of society desired and fashioning a trade policy to fit, economists tend to do the opposite: they start from the proposition that free trade should reign and then argue that society should adapt. Most acknowledge that lowering trade barriers causes economic disruption, but very few suggest that the rules of trade should be calibrated to help society better manage those effects. On the right, libertarians deny that there is a problem, because the benefits of cheap consumer goods for the masses supposedly outweigh the costs. On the left, progressives promote trade adjustment assistance and other wealth-transfer schemes as a means of smoothing globalization’s rough edges.
Neither response is satisfactory. Those obsessed with efficiency tend to see employment simply as a means of allocating resources and ensuring production. In so doing, they greatly undervalue the personal dignity that individuals derive from meaningful work. Commentators from Pope Leo XIII in the nineteenth century to Arthur Brooks and Oren Cass today have written eloquently about the central role of work in a well-ordered society. Doing honest work for a decent wage instills feelings of self-worth that come from being needed and contributing to society. Stable, remunerative employment reinforces good habits and discourages bad ones. That makes human beings better spouses, parents, neighbors, and citizens. By contrast, the loss of personal dignity that comes from the absence of stable, well-paying employment is not something that can be compensated for either by increased consumption of low-cost imported goods or by welfare checks.
None of this is to suggest that market efficiency should be irrelevant. But it should not be the sole factor in trade policy, and certainly not an object of idolatrous devotion, as some have made it. When it comes to taxes, health care, environmental regulation, and other issues, policymakers routinely balance efficiency with other competing goals. They should do the same for trade.
In recent years, however, the fixation on efficiency caused many to ignore the downsides of trade liberalization. Particularly as elites came to accept free trade as an article of faith, businesses found that they could send jobs abroad without attracting much negative publicity. General Electric’s hard-charging CEO from 1981 to 2001, the late Jack Welch, told suppliers at one point that his company would stop doing business with them if they weren’t outsourcing jobs. “Supply chain relocation” became a cure-all peddled by management consulting firms. Unfortunately—as COVID-19 has made painfully apparent—many companies caught up in the outsourcing frenzy failed to appreciate the risks.
Economic groupthink also led policymakers to stop worrying about trade deficits. In recent years, the U.S. trade deficit in goods has rivaled the size of many G-20 economies. In theory, if the United States could produce enough goods domestically to eliminate its $345 billion goods deficit with China, that would be the equivalent in revenue terms of adding two and a half more General Motors to the U.S. economy. Yet in most policy circles, discussion of the trade deficit has been limited to why it supposedly doesn’t matter.
Many take comfort in the following trope: “I run a trade deficit with my barber; since both of us are better off as a result, trade deficits are benign.” This analogy is flawed. A deficit with the barber is one thing, but if I run a deficit with the barber, the butcher, the baker, the candlestick maker, and everyone else with whom I transact, the situation is altogether different. Moreover, long-term trade deficits must be financed through asset sales, which can prove unsustainable over time. To carry the analogy further, the trade deficit I run with providers of goods and services I consume is benign if it is offset by the surplus I run with my employer through the sale of my labor. But the situation may prove unsustainable if I’m funding my consumption by taking out a second mortgage on my home. And that is essentially what the United States has been doing over the past three decades by running a trade deficit year after year. These persistent deficits are financed by net inflows of capital—which means that every year, the country must sell U.S. assets to foreign investors in order to sustain the gap between exports and imports.
Academic theory also cannot hide the basic fact that if a country imports goods it could produce domestically, then domestic spending is employing people abroad rather than at home. This tradeoff might be worth it if it frees up workers to move to more productive, higher-paying jobs. It might make sense, too, if reciprocal agreements for market access create new export-related jobs that replace those lost to competition from cheaper imports. But persistent trade deficits should, at the very least, cause policymakers to question the tradeoff and inquire as to the reasons behind the imbalance. Such scrutiny should increase with the size of the deficit. And particularly when trade deficits are the result of currency manipulation, a lack of reciprocity in market access, unfair labor practices, or subsidies, the United States should try to change the rules of trade.
THE DARK SIDE OF FREE TRADE
The trade policy of the future should be informed by a balanced assessment of the past. On the positive side of the ledger, lower trade barriers and the proliferation of free-trade agreements in recent decades swelled the profits of many multinational corporations. That benefited not only CEOs but also middle-class Americans who hold equities in their retirement accounts. Trade helped revive many of the country’s great urban centers. Cheap imports and the rise of big-box and online retailers have made an ever-expanding class of consumer goods available to the masses. In China, India, and throughout the rest of the developing world, millions of people have been lifted out of poverty.
Yet the dark side is undeniable. Between 2000 and 2016, the United States lost nearly five million manufacturing jobs. Median household income stagnated. And in places prosperity left behind, the fabric of society frayed. Since the mid-1990s, the United States has faced an epidemic of what the economists Anne Case and Angus Deaton have termed “deaths of despair.” They have found that among white middle-aged adults who lack a college education—a demographic that has borne much of the brunt of outsourcing—deaths from cirrhosis of the liver increased by 50 percent between 1999 and 2013, suicides increased by 78 percent, and drug and alcohol overdoses increased by 323 percent. From 2014 to 2017, the increase in deaths of despair led to the first decrease in life expectancy in the United States over a three-year period since the 1918 flu pandemic.
Trade has not been the sole cause of the recent loss of manufacturing jobs or of the attendant societal distress. Automation, productivity gains, foreign currency manipulation, and the financial crisis of 2008 have played key roles, as well. But it cannot be denied that the outsourcing of jobs from high- to low-wage places has devastated communities in the American Rust Belt and elsewhere.
Outsourcing of jobs has devastated communities in the American Rust Belt and elsewhere.
Of course, economic upheaval is often the price of progress, and, economists insist, comparative advantage should encourage workers to move to more productive and higher-paying jobs. But this theoretical phenomenon has failed to materialize in recent years. Compared with those who lost their jobs in earlier periods of economic change, displaced workers in modern, developed economies typically have fewer and less attractive options. In the United Kingdom in the nineteenth century, for example, the repeal of the protectionist Corn Laws prompted agricultural workers to flee the countryside for industrializing urban areas where factory jobs were waiting. By contrast, the American factory workers who were displaced beginning in the 1990s either had nowhere to go or ended up working in low-skill, low-paying service jobs.
Rather than attempt to reverse these trends, some argue that mature economies should double down on services, the digital economy, and research and development. These sectors contribute greatly to the United States’ competitive edge, and the service sector employs most Americans today and will likely continue to do so for the foreseeable future. At the same time, however, it is difficult to imagine that the U.S. economy can serve the needs of working people without a thriving manufacturing sector.
The technology sector, for all its virtues, simply is not a source of high-paying jobs for working people. Over half of the United States’ roughly 250 million adults lack a college diploma. Historically, manufacturing jobs have been the best source of stable, well-paying employment for this cohort. Perhaps with massive new investments in education, former autoworkers could be taught to code. But even so, there probably wouldn’t be enough jobs to employ them all. Apple, Facebook, Google, and Netflix collectively employ just over 300,000 people—less than half the number that General Motors alone employed in the 1960s.
Moreover, the service and technology jobs most accessible to working people, such as data entry and call center jobs, are themselves vulnerable to offshoring. Economists have estimated that nearly 40 million service-sector jobs in the United States could eventually be sent overseas—that’s more than three times the number of current manufacturing jobs in the country.
Cheerleaders for globalization are quick to point out that many products manufactured abroad were designed by engineers and researchers located in the United States. But those jobs are not safe from offshoring, either. China is investing heavily in its universities, and India has no shortage of capable engineers. In the technology sector, in particular, there are valuable synergies from having engineers located close to manufacturing facilities. The back of today’s iPhone reads “Designed by Apple in California. Assembled in China”; tomorrow, it easily could read “Designed and Assembled by Apple in China.”
COVID-19 has exposed other problems with the erosion of the United States’ manufacturing capacity. The country has found itself overly dependent on critical medical equipment, personal protective gear, and pharmaceuticals from abroad. Even Germany and South Korea, strong U.S. allies, have blocked exports of key medical products as their own citizens have fallen ill. The crisis also has demonstrated how overextended supply chains increase the risk of economic contagion when a single link in the chain is broken. Even before the crisis reached American shores, many U.S. companies were feeling the effects of China’s economic shutdown. Now, as companies prepare to reopen their U.S. operations, many still can’t produce what they want, since their overseas suppliers do not yet have government permission to reopen.
The United States should not attempt to wall itself off from the rest of the world in response to the current pandemic, but it should reinforce its determination to maintain and grow its manufacturing base. Trade policy alone cannot do that. But as part of a broader suite of tax and regulatory policies designed to encourage investment in the United States, reforms to the rules of trade can play an important role.
A MODEL DEAL
A sensible trade policy strikes a balance among economic security, economic efficiency, and the needs of working people. When the administration began the task of renegotiating the North American Free Trade Agreement—one of the president’s signature campaign promises—two things were clear. One was that the agreement had become wildly out of balance, badly out of date, and hugely unpopular. The second, however, was that undoing 25 years of economic integration in North America would be costly and disruptive. The challenge in negotiating the USMCA was to right NAFTA’s wrongs while preserving trade with the United States’ two largest trading partners.
We started by identifying the main imbalances, particularly in the automotive sector, which accounts for nearly 30 percent of North American trade. Before Trump was elected, nine of the last 11 auto plants built in North America were built in Mexico. Yet 80 percent of the cars manufactured in those facilities are sold in the United States. Over time, auto companies started to use Mexico as a place not only for assembling compact sedans but also for manufacturing high-value-added parts such as engines and transmissions, as well as for producing highly profitable trucks and suvs. The net result was that the United States lost a third of its auto-industry jobs to Mexico: 350,000 since 1994, while Mexico gained 430,000.
This wage-driven outsourcing was not simply the work of Adam Smith’s invisible hand. The gap between U.S. and Mexican wages exists in part as a result of widespread corrupt labor agreements in Mexico. “Protection contracts,” as these deals are known, are struck between employers and unions, but the unions do not in fact represent workers. And the workers have no opportunity to vote on the contracts. No wonder predictions that NAFTA would cause American and Mexican wages to converge never came true. In fact, wages in Mexico are lower today in real terms than they were in 1994.
NAFTA had become wildly out of balance, badly out of date, and hugely unpopular.
The USMCA requires Mexico to eliminate protection contracts, ensure basic union democracy, and establish independent labor courts. Rather than seek to micromanage labor policies in Mexico— as critics have charged—the USMCA sets reasonable standards that correct a major source of labor-market distortion in North America. Although the new labor provisions received a chilly reception by some parts of the Mexican business community, they were warmly embraced by President Andrés Manuel López Obrador and his government. The new obligations will not prevent companies from taking advantage of efficiencies in integrated North American supply chains. But they will eliminate a form of regulatory arbitrage that hurts American workers.
The USMCA also overhauls the “rules of origin” that govern trade in the automotive sector. All free-trade agreements contain rules of origin, which require goods to be made mostly with component materials sourced from within the free-trade area in order to qualify for duty-free treatment. In theory, NAFTA’s rules of origin specified that 62.5 percent of the value of an automobile had to be made up of parts manufactured in North America. But the rules contained a peculiar quirk: the only parts that counted in the equation were those listed on a schedule created in the early 1990s and frozen in time. As cars evolved, many expensive parts, such as dashboard electronics and navigation systems, simply didn’t figure in the calculation of North American content. As a result, cars with more than half of their value composed of parts from outside the continent could still be exempt from duties. And the problem was only going to get worse over time, as electric and autonomous vehicles came online.
After discussions with the Canadian and Mexican governments, American labor unions, and the auto companies themselves, we arrived at a solution that will result in more investment throughout the region while still allowing manufacturers the flexibility to stay competitive. The USMCA sets a higher threshold for the minimum fraction of a car’s value that must be produced within North America (75 percent). It also includes separate requirements for the minimum share of regional content in the highest-value-added parts, as well as for steel and aluminum. The USMCA makes these requirements meaningful by eliminating loopholes, and it includes a mechanism for revisiting the rules of origin in the future to keep up with industry trends.
For the first time in any trade agreement, the USMCA also includes provisions that discourage a race to the bottom in wages, by requiring that 40 percent of the value of a car and 45 percent of the value of a light truck be manufactured by workers who make at least $16 per hour. This rate is aspirational for Mexico, where wages are closer to $3 per hour, but it will create new incentives for companies to invest not only in Mexico but also in Canada and the United States. The U.S. International Trade Commission, an independent, nonpartisan federal agency, projects that increased demand for U.S.-sourced engines and transmissions alone will create roughly 30,000 new automotive-sector jobs. By my office’s estimates, the effect on the entire supply chain will be close to 80,000 new jobs.
The USMCA’s rules have been designed to actually work.
Critics have labeled these changes “managed trade,” whereby governments set specific goals in lieu of letting market forces do their work. But rules of origin feature in all free-trade agreements. The key difference between those in the USMCA and those in NAFTA and other agreements is that the USMCA’s rules have been designed to actually work. They will ensure that the benefits of the agreement will flow principally to Canada, Mexico, and the United States, not to other countries that have not provided reciprocal market access. Indeed, NAFTA-enabled free-riding has long undermined U.S. leverage in negotiations with other trading partners. Until now, foreign automakers have been able to obtain duty-free access to the U.S. market by setting up assembly operations in Mexico, while manufacturing most of the high-value parts outside North America. With the loopholes closed, the United States will be in a stronger position to negotiate with China, the EU, and others.
The USMCA can be updated as circumstances change. It contains a sunset clause stating that it expires after 16 years. Every six years, however, the parties will have an opportunity to review the agreement and extend it for another 16 years. These periodic reviews will force policymakers in all three countries to avoid the temptation to defer maintenance of the agreement and will allow them to respond to unanticipated developments in their economies.
THE CHALLENGES AHEAD
The principles of a worker-focused trade policy should be front and center as the United States confronts two of the most significant trade challenges it will face in the coming years: market-distorting state capitalism in China and a dysfunctional WTO.
No trade policy decision since the end of World War II proved more devastating to working people than the extension of permanent normal trade relations to China in 2000—a legal status entitling it to the lowest possible tariffs. Despite President Bill Clinton’s prediction that the move would allow the United States to “export products without exporting jobs,” the opposite occurred. The U.S. trade deficit with China ballooned to over half a trillion dollars at its peak, and economists have calculated that the loss of at least two million jobs between 1999 and 2011 was attributable to the influx of Chinese imports. At the same time, Beijing increasingly forced foreign companies to share their technology, a policy that resulted in the theft of billions of dollars in U.S. intellectual property and helped China become the world’s top exporter of high-tech products.
Without much success, the George W. Bush and Obama administrations tried to correct these problems at the WTO. Our team has taken a different approach. We spent much of the first year of the Trump administration investigating China’s history of intellectual property theft and forced technology transfer. Where the WTO rules provided a remedy—as was the case with China’s discriminatory patent-licensing practices—we filed a complaint with the WTO. But where they did not, we turned to remedies available under U.S. trade law. We carefully identified products produced by Chinese companies that had benefited from China’s market-distorting practices and imposed a 25 percent duty on those products.
We remained open to a negotiated solution, however, and in January, the administration reached a Phase 1 agreement with China under which it will stop forced technology transfer, refrain from manipulating its currency, strengthen protections for intellectual property, and eliminate a host of nontariff barriers to U.S. exports. For the first time, these commitments are in writing and enforceable through a dispute-resolution mechanism. The agreement by no means resolves all the outstanding issues, but in roughly three years, we’ve made more progress than the previous two administrations made in 16.
No trade policy was more devastating to working people than the decision to extend permanent normal trade relations to China.
Most important—and often overlooked by knee-jerk, partisan critics of the deal—is that the administration has maintained pressure on China through a 25 percent tariff that remains on half of its exports to the United States, including nearly all high-tech products. These duties help offset the unfair advantage China has obtained through forced technology transfer and market-distorting subsidies. At the same time, China has made a series of purchasing commitments that will create long-term market access for U.S. exporters, particularly farmers. Whether there will be a Phase 2 depends on whether China complies with the terms of Phase 1 and whether it is willing to fundamentally change its model of state-run capitalism. Regardless, the policy in place today protects American jobs, blunts China’s unfair advantages, and minimizes the pain to U.S. exporters and consumers.
The challenges in the WTO are also vexing. Like many international organizations, the WTO has strayed from its original mission. Designed as a forum for negotiating trade rules, it has become chiefly a litigation society. Until recently, the organization’s dispute-resolution process was led by its seven-member Appellate Body, which had come to see itself as the promulgator of a new common law of free trade, one that was largely untethered from the actual rules agreed to by the WTO’s members. The Appellate Body routinely issued rulings that made it harder for states to combat unfair trade practices and safeguard jobs. This was one of the reasons why the Trump administration refused to consent to new appointments to it, and on December 11, 2019, the Appellate Body ceased functioning when its membership dipped below the number needed to hear a case.
The United States should not agree to any mechanism that would revive or replace the Appellate Body until it is clear that the WTO’s dispute-resolution process can ensure members’ flexibility to pursue a balanced, worker-focused trade policy. Until then, the United States is better off resolving disputes with trading partners through negotiations—as it did from 1947, when the General Agreement on Tariffs and Trade was signed, until 1994, when the WTO was created—rather than under a made-up jurisprudence that undermines U.S. sovereignty and threatens American jobs.
In confronting these and other challenges, the path forward lies somewhere between the openness of the 1990s and the barriers of the 1930s. Navigating it successfully will require flexibility, pragmatism, a willingness to break with past practice, and the courage to take positions that sometimes are unpopular with international elites. The United States must avoid the stale, reductionist paradigm of free trade versus protectionism, which oversimplifies complex issues and stifles creative policymaking. This almost religious approach to trade policy also obscures the fact that trade is an issue on which it is possible to achieve broad, bipartisan consensus in an otherwise divided time. After all, the USMCA won the support of 90 percent of both the House and the Senate.
This powerful consensus should last, because it is rooted in deeply held values. Where trade is concerned, most Americans want the same thing: balanced outcomes that keep trade flows strong while ensuring that working people have access to steady, well-paying jobs. Neither old-school protectionism nor unbridled globalism will achieve that. Instead, as the United States confronts future trade challenges, it should chart a sensible middle course—one that, at long last, prizes the dignity of work.
While Democrats blame Trump that he split the country by hate speech, xenophobia, racism and sexism, Trump says that the globalists in the Democrats and the Republicans have split the country by free trade leading to deindustrialization, shrinking of the middle class and the working class for whom the American dream becomes unachievable. Therefore Trump promises that the American dream for every American to become middle class or rich upper class or to have a well-paid working-class job becomes reality again. Trump´s economic nationalism perceives the American people as a totality being exploited and ripped off by foreign countries, be it China or the EU or Germany. Trump creates an national community, an economic people´s society (ökonomische Volksgemeinschaft) in which the Americans from big business to the middle and the working class are victims of the globalists and free traders of the Democrats and the Republicans and the Davos establishment. And Trump also promotes US American “exceptionalism”- not that much on the soft power or democracy or value-basis, but more on the American hard power and a new interpretation of US American soft power with the prosperity promise for all Americans.Therefore they have to unite and fight Therefore engagement with China has to be stopped and replaced by congagement or even containment.
An outdated model for engagement is Henry Kissinger who in his conversation with Graham Allison about China at Harvard University proposed that the USA should engage China by investing in its New Silk Road and its Asian Infrastructure Investment Bank (AIIB), focus on nuclear proliferation, especially North Korea and to come to a compromise about Hongkong, Taiwan, the South and the East China Sea. This sort of engagement model as that of the time of Bush sen. Clinton, Bush jr. and Obama is definitely dead. It is so dead as Zbig Brzezinski´s idea of a G 2, a Sino-American alliance, which would control the world, as now such a G 2 could only emerge if China would submit substantially under the world power USA. And the G 2 idea had also the error that China and Russian are promoting a multipolar world in which the USA is just one center and one pole. John Mearsheimer´s ideas are also not about a Sino-American G 2 control of the world, but about a tripolar multipolar world of great powers in which the USA could ally with Russia against China. But he sees this only as a coming option and not as an automatism. Trump also wants like Mearsheimer make a US-Russian alliance against China as can be seen in his proposal of an anti-Chinese G 11 including Russia. While Trump thinks in a short-term perspective with a deal, Mearsheimer is thinking in a mid- and longterm perspective.
However: Engagement with China is seen as making the strategic competitor stronger, “feeding the beast” and bringing down the US superpower. The common sense between Trump, the Republican and the Democrats is that engagement with China was a big mistake. Now the discussion is more between congagement and containment. The former engagement supporters are now shifting to congagement to save some elements of engagement, especially the business elites and the political lobbyists connected with them.Engagement was not the fault of the USA alone. The West had many ideological illusions about free trade, globalization, democratization and engagement of China. Starting with Nixon/Kissinger and Helmut Schmidt. However, Nixon’s engagement policy with Mao-China only started after the Soviet Union rejected his idea of a joint military strike against China´s nuclear facilities to prevent that it could become another important nuclear power. Afterward, he perceived China as the most important instrument in his anti-Sovjet axis and as a solution for the Vietnam war. But times are changing.
The apologets of “democratic peace” and “capitalist peace” have become silenced. According to the democratic peace theory, world peace would be achieved if all countries in the world would be democracies and Fukuyama´s teleological end-time manifesto “The End of History” had this vision. Capitalist peace claimed that world peace would be achieved if all countries in the world were capitalist countries and would focus on free trade and business instead of military and war. However, these assumptions are now openly questioned. Some also make the argument that WW 1 was a world war between capitalist countries and that the previous globalization and free trade at this time didn´t prevent the war. This was also the argument of the democratic peace supporters against the capitalist peace theory and the democratic peaceniks called for regime change of authoritarian regimes like the CCP or saw in the economic rise of the middle class a sort of historic materialism for the inevitable rise of global democracy and world peace by a global liberal middle class. As in the historic materialism of communism the historic subject leading to a peaceful world society and a worker´s paradise on earth worldwide was the working class, in the historic materialism of the liberal democratic peace theorists it was the middle class as historic and teleological subject. Democracies wouldn´t fight wars against each other and be peaceful free traders. An assumption which is now also questioned by the offensive realism school of John Mearsheimer and by people who also question the assumption that capitalism means cooperation and peace , but point out that capitalism means more competition and conflict, trade wars and even wars in the end. Locke is out, Hobbes and the Leviathan is in. John Mearsheimer´s offensive realism sounds a little bit like the Marxist analysis of Lenin about WW 1 “Imperialism as the highest stage of capitalism”. Even if Lenin made some theoretical mistakes as to see policies only as a fight between economic monopolies and as state-monopoly capitalism, but the uneven development of the world economy, economic and great powers and the system- inherent crisis of capitalism, the rise of new great powers is very similar to the analysis of Mearsheimer´s offensive realism with the exception that for Mearsheimer the economic system is not important, but just the state power relations. According to Mearsheimer wars can happen during an economic crisis and an economic boom, that´s not important, but the uneven development of great power relations is a key factor for war or even a world war. And even communist countries had conflicts and wars with each other like the Sovjet Union and China, Ho Chi Minh- Vietnam and Pol Pot-Cambodia or China and Vietnam as the central factor would be the competition as nation-states against each other.
Lenin, Trotzki and the Communist International saw the roots of WW 1 in the capitalist system, saw it as a capitalist war and therefore wanted to have a communist world state without capitalism and capitalist crisis, but with a planned world economy that had an even development and no conflicts and wars anymore. The crisis is part of the economic cycle of capitalism, say not only the Marxist economists, but also the so-called bourgeois economists who consider the solutions to the crises within the framework of capitalism to be possible and therefore also a long-term perspective of capitalism. But that capitalism always leads to “imbalances”, to crises, is a realization that, in view of the real situation, even the bourgeois economy and the feature pages have not been able to ignore it for a long time. The rediscovery of Marx after the financial crisis 2008 has above all this background of constantly recurring and intensifying crises.
How does Marx explain the crisis? For Marx, the siphoning off of surplus value by the capitalists means that there is continuously a higher potential for accumulation than demand for the products with purchasing power. The employees do not earn enough to be able to buy the values they produce. The products manufactured in the capital goods sector, which are in demand by the capitalists themselves to expand their production, cannot compensate for this loss of overall demand. After all, their investments are ultimately determined by the demand in the consumer goods markets. The decline intensifies, especially in the crisis phase. Because of the stagnation in final demand, investment spending is also reduced.
For Marx, only the economic devaluation of part of the accumulated capital in the final phase of the crisis creates space for new, additional accumulation, for new investments and more employment. The crisis and the bankruptcy of part of the accumulated capital are the prerequisites for new profit opportunities and a new upswing. Even with Marx, the scarcity of the internal market leads to the export of capital and the global hunt for maximum profit, which – that is also a Marxian insight – does not stop at any crime, including that of war. Rosa Luxemburg significantly expanded this Marxian position in her “Accumulation of Capital” in 1913, exactly 100 years ago. Like Lenin later, she was able to fall back on the 1902 study by John A. Hobson, what we would say today, a left-liberal English economist. Rosa Luxemburg’s basic thesis, which also includes a criticism of Marx’s argumentation: In principle, there is no sufficient demand for the accumulated surplus value within capitalism. Therefore capitalist countries are dependent on the export of goods and capital to non-capitalist regions. The new areas of exploitation are to be conquered and secured by force of arms, the struggle for these areas leads to a military conflict between the capitalist nation-states. The subtitle of their study is: A contribution to the economic explanation of imperialism. According to this, imperialism is a system of capitalist states that are in constant confrontation for extra-capitalist investment fields because of the surplus that cannot be deducted inside the countries. The permanent crisis of capitalism leads to a permanent danger of war. When capitalism has completely appropriated the extra-capitalist sphere, then it has reached the last economic limit, it can no longer accumulate, its existence comes to an end.
Luxemburg’s theory is based on the thesis that capitalism cannot accumulate surplus value internally and therefore has to expand its field of exploitation through war. Four years after Rosa Luxemburg’s book of accumulation, Lenin developed in his “Imperialism” pamphlet that imperialism does not adopt this warlike position because it cannot sell the surpluses internally, but because it strives for the extra profit that is possible globally. This motive, the highest possible profit, drives the imperialist countries to dominate the world and into military confrontation with one another. Is Luxemburg’s axiom of the unrealisability of the surplus in the capitalist economy also to be criticized – like above all Left Keynesians, but also Marxists like e.g. Bukharin have done it in detail – so the systematics of finance capital formulated by Hilferding and Lenin on the basis of Marx’s theory remains valid: Imperialism goes on the global hunt for maximum profit and, as history shows, it does not shy away from regional or global wars. After the world has been divided up among dominant imperialist groups, these wars are even an inevitable consequence of the rivalry between these groups for maximum global profits. The connections between internal accumulation and the lagging behind of internal demand behind the accumulation potential and the increased urge for exports – goods as well as capital exports – and the military enforcement of imperialist interests are completely clear with the neoliberal accumulation model, which was primarily thematized by Hobson and Rosa Luxemburg become. The domestic markets are no longer there to take up the manufacturable products – now it is officially produced for the global market. In Germany, over half of the GDP is exported. Mass incomes are capped so that international competitiveness is improved. Since all neoliberal societies are committed to this principle, the discrepancy between demand capacity and accumulated capital is now growing on a global scale. The contradiction thus grows to the heights of Luxemburg; in case of doubt, the globally deployed capital must be helped to realize it militarily. Later Marxist had an economic crisis- fascism/protectionism and trade war– war- model, which might have fit to the historic development of WW 2 and the Black Friday 1929 as described in the analysis of Eugen Vargas, but not to WW 1 when the capitalist great powers and the world economy at that time experienced an economic boom and globalization. And while Lenin saw capital export as an important indicator for imperialist countries, the most imperialist country today, the USA is a capital importer. Therefore this capitalist war theory had also its flaws. However, China has become a capital net exporter since 2006, has an overproduction crisis which it tries to channel by its New Silkroad, is expanding economically and militarily and fits very well to Lenin´s and Luxemburg’s model, especially since the Sinoamerican conflict is escalating continuously and could even lead from trade war to financial war to a real war as the US and Chinese elite are already discussing the so-called “Thucydides trap”, wars between rising and declining powers, in the particular case a Sino-American war between the net capital importing and declining imperialist power USA and the net capital exporting rising imperialist power China.
However, Marxist theories have become ignored since the fall of communism and liberal democratic peace and capitalist peace theorists had become mainstream before and afterward. But it is interesting that the democratic peace theory and the capitalist peace theory were also in conflict with concrete history. The First World war was a war between capitalist countries on the one side, but not a war between dictatorships and democracies on the other side. The authoritarian systems of German, Austrian and Ottoman Empires and monarchies were fighting a war against the democratic USA, France and British Empire in alliance with the authoritarian Russian Empire. Geopolitics trumped values. In the Second World War it was not democracies and/ or capitalist countries against communism and authoritarianism, but an alliance of the capitalist and democratic USA, France and British Empire in a war alliance with the totalitarian and communist Sovjet Union against fascist and capitalist Germany, Italy and Japan. It is interesting t see that both theories survived the wars and became ideological guidelines for teleologic, democratic and capitalist end- time philosophers and politicians. These schools are now in a defensive position.
Some Republicans even say that it doesn’t matter if China was under the rule of the CCP or a democratic government, but that it in each case was an adversary of the USA as a world power. This political position is in accordance with the ” offensive realism” of John Mearsheimer who only sees the competition between nation-states and great powers independent from their political system and even claimed that the paradigm that democratic states couldn´t fight wars against each other, but only dictatorships against democracies is the past and not the future. Even a democratic China could come to war with a democratic USA as a authoritarian China could also come to a war with an authoritarian USA or a democratic China with an authoritarian USA. It just doesn´t matter. According to Mearsheimer, it is not a matter of a democratic or Communist China, but just the existence of China as a rising great power. And that Chinese exile dissidents and Chinese democrats are claiming that a democratic China would be even more prosperous and more successful, is even more threatening to the ears of offensive realists. Regime change and democratization of China is not the goal, just the submission of China as a great power under the world power USA, be it democratic or Communist. Only after this sustainable submission, there could be the chance for a reengagement, but that´s for this school of thinking a distant perspective. And for the Mearsheimer Republicans, the mantra is not Clinton´s free trade slogan “It´s the economy, stupid”, but “Security trumps economy”.
From the 90s till 2000s the world economy and the West was experiencing a unprecedented globalization and hi-tech boom and also NATO and EU expansion, NAFTA, BRICS, emerging economies everywhere,the 100 days crash privatization program of US economist Jeffrey Sachs in Russia, a seemingly neverending golden age and success story. Neoliberalism, the Washington Consensus, privatization, deregulation, outsourcing, globalization, free trade, multilateralism were mainstream. But already the Asian crisis in 1997 and the New Economy crisis in 2000 was the first omen that the globalization boom of the 90s and 2000s was weakening, especially since Keynesian economist Paul Krugmann correctly analyzed that the Asian crisis was the first time that an industrialized country of the center of world capitalism was hit: Japan and he predicted that the next crisis would no longer come from the periphery of the world economy like the limited debt crises of the former Third World in the 70s and 80s, but would now emerge from the centers and metropolis of world capitalism, the USA and the EU. However economic and liberal globalists saw China’s WTO accession which subsequently generated a real takeoff of the Chinese economy, enlarging it from 4% of world trade to 20%, as the next milestone for a neverending globalization boom. And the next free trade areas were planned as TTIP and TPP: But the Iraq war2003 lead to enormous US state debts as it was not financed by taxes and also militarily and politically neutralized the unipolar momentum for George Bush sen. and now Bush jr.´ aspirations for a New World Order as Charles Krauthammer or Fukuyama with his End of History called it. However, this is not the economic reason for the financial crisis. The world markets, especially the emerging markets were saturated, there were signs of a global overproduction crisis. The US government tried to channel the over accumulated US capital which found no sphere of profit rate and expansion anymore by a combination of deregulation of the real estate market and state subsidies by state agencies like Fannie Mae or was sold and distributed to stupid European banks,. The oversaturated capital flew in the subprime credits to give every American the American dream in form of a house to rent or to own or to sell for higher profits. However, the real economy with its overproduction and the effect that many people couldn´t pay back their subprime credits lead to the situation that the whole outlet system for the capitalist overproduction crisis collapsed. And was not just a question that the US state didn’t rescue Lehmann Brothers as many neoliberal economists want to tell the world or to blame the state and Fannie Mae.
The financial markets are not a sphere that exist alongside and above the real economy and may even put it under pressure or force it to act irresponsibly, but rather meet real economic interests (e.g. originally to meet the increased demand on the US real estate market). The capitalist is compelled by competition to use the instruments of the financial markets. Their shape is determined by the real economic development, not the other way around. The crisis began in 2005 on the American real estate market as a real economic one: newly built houses could no longer be sold, the market contracted and refinancing became more difficult. As a result, the financial market got into its first crisis, which spread worldwide through refinancing. At the beginning of 2008, there was a worldwide overproduction crisis, only at the end of 2008 the crisis in the financial markets. Economic stimulus programs followed, but came up against limits and lead to the government credit crisis. It was just a result of the real economy and also the global overproduction crisis in the real economy and its effects on the financial bubble.
All these culminated in the 2008 financial crisis, which was mainly a Western financial crisis and not an Asian financial crisis while China and most parts of the world were facing an overproduction crisis and partly because of this China pushed the Chinese BRI/ New Silk Road and a hi-tech industrial policy Made China in 2025 while Obama already proclaimed the Asian Pivot and TTIP and TPP as economic NATO against China. But humanitarian wars of intervention, and the debts for the Iraq war were not the main economic factors for the decline of the US power, but also the engagement policy that made it possible for China to join the WTO and experience its meteoric rise why many politicians and Trump demand that engagement is to be replaced by congagement or even containment. The limits of US power also became apparent after the Iraq war, when the slogan of Robert Gates’ military strategy since then became: No boots on the ground! Airseabattle and Off-shore Control are a logical consequence of this.
While China tries to build up its military muscle, it also tries to transform its economy for a “protracted-war” and the USA tries to build an Asian NATO against China:.
In his SCMP article “Under US pressure, China is planning an economy that can survive a protracted war” published 15 Aug, 2020 Wang Xiangwei writes:
The prospect of all-round confrontation with America has invoked a Mao-era fighting spirit that is the driving force behind China’s 14th five-year plan
Beijing’s vision of a ‘dual circulation’ economy is likely to emphasise technological self-reliance and growth targets based on quality, not quantity”
In his article “US seeks formal alliance similar to Nato with India, Japan and Australia, State Department official say “published 1 Sep, 2020 Robert Delaney writes:
“Washington’s goal is to get countries in the Indo-Pacific region to work together as a bulwark against ‘a potential challenge from China’, says the US official
He says the four nations are expected to meet in Delhi sometime this autumn
However, the new view of parts of the Republicans following John Mearsheimer’s “offensive realism” which only sees China and the Chinese, be it Communist or democratic or whatever as a rising nation-state and great power and as the threat to the USA is mirrored in the comment by Alex Lo “Why China and the US can’t be friends anymore” published 23 Aug, 2020 in the SCMP who could be called a Chinese offensive realist and Chinese Mearsheimer:
“China’s real offence is not its lack of democracy or in-name-only communism, but its embrace of global capitalism that has co-opted foreign technologies and spread supply chains across the world economy
“China must industrialise. This can be done … only by free enterprise and with the aid of foreign capital. Chinese and American interests are correlated and similar. They fit together, economically and politically … The United States would find us more cooperative than the Kuomintang. We will not be afraid of democratic American influence – we will welcome it.”
Something from Deng Xiaoping? Actually, it was a message secretly passed on to Washington in 1944, from Mao Zedong, via John Service, a deputy to the US ambassador to China.
After long and intimate discussions with Mao and other communist leaders in Yanan, Service wrote to his superiors that besides the Kuomintang, Chinese Communists were “friendly to the United States and look to it for the salvation of the country, now and after the war”.Mao never received a reply. He would also approach Truman and Eisenhower, and again, no response.
Ironically, it was that great red baiter Richard Nixon who took up with Mao. China didn’t change; it never wanted to antagonise mighty America. By then, it was the US that had changed, because it faced new challenges with the Soviet Union and especially the Vietnam war.
Today, the US is reverting to its old hostile posture. Again, it is because circumstances and challenges, both domestic and foreign, have changed for America. China’s real threat? Its all-too-successful capitalism, not communism.
China’s posture to the US has remained the same. Xi Jinping is no more inclined to take on the US than Mao. When Foreign Minister Wang Yi said this month that China had “no intention of becoming another United States,” he meant exactly that.
But the anger and resentment of American leaders stem from the potential threat of China beating them at their own game – in hi-tech, in social media, in capitalist enterprises. That’s why the US is bent on killing Huawei and taking over Tik Tok, a social app mostly for American teenagers.
What Washington wants from China – what the West had wanted since the 18th century – is an open and unrestricted market for foreign interests to plunder, not for the Chinese to exploit a liberal global economic order to co-opt Western technologies and extend supply chains worldwide like tentacles.
That is what the US will not tolerate, even if it means war.“
It´s just the USA versus China, independent if it was a democratic or communist China, just the categories of hard power of great powers are important. But this is the most extreme point of view in the political discussion of the Republicans.
But first have a look on Thomas Wright´s analysis about the Republican factions:
“Last week, more than 70 Republican foreign-policy officials, including two from the Trump administration, signed a letter endorsing Joe Biden for president. Dozens more Republican foreign-policy experts signed earlier letters condemning Donald Trump. Many of these officials hope that, if Trump loses, as current polls suggest, Republican foreign policy will revert to where it was before he was elected. That seems unlikely. As the Republican National Convention has vividly illustrated, the GOP has morphed into the Party of Trump, and Republican foreign policy will likely have to reckon with Trumpism for years to come.
Eric Edelman, who served as an undersecretary of defense in the George W. Bush administration and who signed the letter endorsing Biden, told me that if Trump is reelected, Trumpism will be impossible to dislodge. If Trump loses, the country’s foreign policy will be more open to debate, but the chances of a restoration are still low. “The traditional Republican internationalists will hope for a Dallas-style twist, with Bobby showing up in the shower after a bad dream,” Edelman said, referencing the 1980s show that revealed that a whole season of plot had been a dream. “But it will honestly be very hard to put Humpty Dumpty back together again. The 2024 hopefuls will likely say the message was right, but the messenger was flawed.”
Trump has upended decades of Republican foreign policy. Presidents Ronald Reagan and George W. Bush put freedom and democracy at the heart of their worldview. They supported United States alliances and embraced free trade. Trump sees U.S. allies as free riders who take advantage of Americans. He is a protectionist who loves tariffs. He is naturally drawn to authoritarian strongmen. And he sees U.S. foreign policy as purely transactional, with no larger purpose of building a better world.
Trump did not just challenge Republican orthodoxy. He also blew up its establishment. Now, if he loses, his supporters will likely blame the Never Trumpers, now including former National Security Adviser John Bolton, for the president’s defeat and for everything a Biden administration subsequently does. With many of these officials pushed aside, new foreign-policy voices in the GOP are poised to fill the vacuum.
To understand where Republican foreign policy is headed, I recently had several conversations with Elbridge Colby and Wess Mitchell, who both served in the Trump administration (in the Defense and State Departments, respectively) and who have set up the Marathon Initiative, a new think tank focused on great-power competition, a concept they were closely associated with when they worked in government.
The history of U.S. foreign policy, particularly in the GOP, is characterized by the rise and fall of ideas—whether neoconservatism or realism in its Kissingerian and Scowcroftian guises. So a few people armed with a new idea can be highly effective, and Colby and Mitchell are widely regarded as two of the most influential geopolitical thinkers of the next generation of Republican foreign-policy experts.
They believe Republicans need a new worldview that incorporates significant elements of the Trump administration’s strategy. Mitchell told me:
The country is at a moment of self-correction. America’s external and internal environments have dramatically changed. We got used to three decades with no peer competitor and unlimited resources. These conditions are now gone. You can’t have a $24 trillion* debt and competition on all fronts and expect to continue business as usual. Far-reaching departures from our traditional foreign policy are now required. Otherwise, changes will be forced upon us later, with more pain than if we are proactive.
Colby and Mitchell believe the “unipolar moment,” where the United States is essentially unrivaled militarily, is over. The world is now bipolar, dominated by the dueling superpowers of China and the U.S., and features multipolarity in certain areas, such as nuclear weapons and the global economy. The end of unipolarity means that the U.S. must come to grips with new limits on its action. Washington must now make tough choices.
They believe the top priority for Republicans should be China’s rise. Deterring Russia and protecting NATO and the transatlantic alliance come second. Upholding the regional order in the Middle East is a distant third.
Although all Republicans are unified on the need to counter China’s power, Colby and Mitchell see the struggle less ideologically than many of their compatriots, and more in line with Trump’s personal view. The China challenge, Colby told me, has more to do with rising Chinese power than with the Chinese Communist Party. The risk to the American people is that China “could dominate the world’s wealthiest region and shape the global economy and global order in ways that are detrimental to the United States. The CCP makes it worse, but if China were a democracy, we would still need to worry about such a powerful country.”
For this reason, they think the United States should be wary of waging a long-term ideological competition that pits democracy against authoritarianism. “I’m in a hard-line place now,” Colby told me, “because we have neglected China for a very long time. But the goal of that hard line is to get to a place of strength where détente becomes possible. When we get to a stable equilibrium, we should be prepared to engage with China regardless of its system.” They are concerned about the clash-of-systems narrative for other reasons too. Universalism results in overextension. They worry that the democracy agenda has gotten out of control, that the U.S. invests resources in thorny challenges that are detached from the national strategy. And then on other occasions, Washington falls out with strategically important allies and partners—such as Hungary, India, Indonesia, and Saudi Arabia—because the countries do not liberalize domestically.
Little daylight exists between Marathon and Bush Republicans on Russia and Europe. Unlike Trump, Colby and Mitchell are strong supporters of NATO and see Russia as a dangerous actor in the region. Mitchell did tell me that he is wary of European efforts to create a third pole between the United States and China, a strategy that some European policy makers are considering in response to Trump’s nationalism and China’s aggression.
They break from traditional Republican orthodoxy on the Middle East and are more in line with Trump’s personal views. Colby and Mitchell do not see Iran as a threat equal to China or even Russia. If the U.S. is serious about China, it cannot place Iran at the center of its national-security policy, as some in the Trump administration have done. Colby, for instance, was publicly vocal in calling for the Trump administration not to strike Iran after Iranian drones attacked a Saudi oil facility in June 2019, because it would have “wrested” America’s “military focus” away from Asia. They believe that the United States must remain active in the Middle East but with reduced ambition, relying more on allies and partners to do the work in the region. On Afghanistan, Colby told me, “Trump is right to reduce the presence in Afghanistan to as low a level as possible.”
In terms of the economy, Colby and Mitchell are avowed capitalists, but they see unfettered globalization as a strategic vulnerability and think that partial decoupling from China is merited. They believe the global economy must also serve the interests of the middle class, rather than primarily facilitating the free flow of capital, goods, and services. This idea may seem rare among Republicans, but it reflects a growing body of opinion within the party that a shift of this kind may allow them to siphon off some of the progressive Democratic voters who support candidates such as Elizabeth Warren and Bernie Sanders.
Marathon is a small think tank, but is important because it represents one of the most serious attempts to date to reconcile Trumpism with elements of traditional Republican foreign policy. Nadia Schadlow, who served on the Trump National Security Council and authored the National Security Strategy, has also written about the future of foreign policy in the party. In an article for Foreign Affairs titled “The End of American Illusion,” she wrote:
Trump has been a disrupter, and his policies, informed by his heterodox perspective, have set in motion a series of long-overdue corrections. Many of these necessary adjustments have been misrepresented or misunderstood in today’s vitriolic, partisan debates. But the changes Trump has initiated will help ensure that the international order remains favorable to U.S. interests and values and to those of other free and open societies.
Schadlow ignores Trump’s personal hostility to alliances and democracy promotion and focuses on the great-power-competition concept that she and others in his administration championed.
Ironically, these efforts to define Trumpism are only likely to succeed if Trump loses. If he is reelected, he alone will decide, and the MAGA faction—ultra-loyalist operatives such as the former Trump Cabinet member Richard Grenell and cable-news commentators such as Douglas Macgregor—will be in the ascendant.
A number of Republicans still make the argument that Trumpism itself must be discarded altogether. Kori Schake is the director of foreign- and defense-policy studies at the American Enterprise Institute and previously served in the George W. Bush administration. She signed the letter against Trump and has endorsed Biden, but has not given up on the Republican Party. Classic liberal internationalism—support for alliances, freedom, democracy, and an open global economy—remains conservatives’ best option, she told me. Nothing else would have delivered the successes of the past half century. The party must learn the right lessons from the Bush years and from the mistake of the Iraq War. It must demilitarize U.S. foreign policy, avoid foolish interventions, and strengthen diplomacy, but it should not shrink its ambition. By helping others with their problems, she said, the United States can persuade others to help us with our challenges. Having a universal vision is a strategic asset. Marathon, Schake said, is “trying to move the needle away from its natural resting place.”
Internationalists such as Schake have an uphill fight in the GOP. Most Republican members of Congress are likely to try to preserve Trumpism. Senator Josh Hawley of Missouri, for instance, has been very active in arguing for many of the policies the Marathon Initiative stands for—on China, Iran (where he opposed strikes in June 2019), and globalized finance (where he is critical of its effects on the middle class). Only a few politicians—led by Representative Liz Cheney of Wyoming—are likely to speak out against Trumpism if the president loses. Senator Mitt Romney of Utah could play a role in restoring the old GOP strategy, but some political operatives speculate that he could be offered a senior role in a Biden administration. Even if that proves to be untrue, his impeachment vote, to remove Trump from office, could result in his exile if Biden wins.
For a significant number of the Republican Party’s Reagan-Bush foreign-policy establishment, Trump represents the greatest internal threat to the republic since the Civil War and a profound danger to U.S. interests internationally. They want to see Trump and Trumpism repudiated, not embraced and redefined.
The other force within the party is the neo-isolationists. They are sick and tired of U.S. involvement in the Middle East and have little interest in America’s alliances with Europe. They are mainly worried about the economic challenge from China. They’d pull up the drawbridge, build the wall, and live in the fortress. This faction has traditionally been led by a Paul—first Ron and then his son Rand—but others have joined the fray, including Senator Mike Lee of Utah and Representative Matt Gaetz of Florida. Several Republicans have told me that it is impossible to understate the appeal that this view has in the grassroots factions of the party, even though most elected officials are uncomfortable with it.
However, the foreign policy of Biden and the Democrats will also be influenced by Trumpism and also the relations between Democrats and Republicans, even if Trump is not reelected:
“If the Reagan-Bush Republicans are finished, and the fight is about what Trumpism means, the struggle could redefine the foreign-policy debate between Democrats and Republicans as well.
A key lesson that Democrats have taken from the past four years is that democracy is in crisis at home and abroad, so a Biden administration must move to the forefront of defending it. This viewpoint certainly includes competing with China and Russia, but it also means strengthening democracy domestically and overseas; standing up to authoritarian strongmen in Hungary, Turkey, and Saudi Arabia, all of whom have worked more closely with China as they have become more repressive; and reforming the global economy so it works for the middle and working class (a point on which some Trump supporters agree). Democrats also believe that nesting competition with China inside an affirmative agenda for democracies and free societies is a way of naturally limiting it and addressing other issues that the public cares about, including climate change and public health.
The post-Trump Republicans, including Colby and Mitchell, reject the idea that democracy is in crisis. They are generally comfortable with the nationalist and populist turns in the world, whether in the United States or Europe. They believe that putting pressure on the U.S. or its allies to reform will simply weaken them and highlight the west’s divisions. The party will use values and ideology instrumentally to put pressure on China, but these factors will not guide the party’s foreign policy toward other nations or the international order more generally.
In trying to claim and redefine Trump’s mantle, these Republicans will encounter substantive challenges, including criticism from the president’s ultra-loyalists. Also, Americans and citizens of other democracies may want to deal with the China challenge, but not at the expense of working on other problems. A nearly singular focus on great-power competition may seem detached from everyday lives.
Finally, not believing in—and not tending to—the crisis of democracy is a strategic liability for the U.S. and an asset for our rivals. The weakening of democracy provides China, Russia, and other authoritarian states with an opening to interfere in free societies, a reality that Australia and the European Union are grappling with now. This threat should be America’s focus after Russia’s attack on the 2016 election. However, the U.S. can’t fully tackle that problem until it fixes the fraying of democracy at home.”
The article „Joe Biden faces pressure to separate China trade policy from Donald Trump’s in US election“ in the South Cina Morning Post (SCMP by Finbarr Bermingha published1 Sep, 2020 analyzes Biden´s likely trade policy towards China:
„Americans feel more negative about China than ever before, yet healthy trade ties with the world’s No 2 economy remain surprisingly popular among US voters
Biden faces challenge in differentiating his China trade policy from Trump’s, with ex-White House aides expecting tactical changes rather than an overhaul.
At the start of August, a Joe Biden presidential campaign aide rushed to clarify comments the candidate gave in an interview with National Public Radio, which some news outlets interpreted as saying he would remove Donald Trump’s tariffs on Chinese goods.
Biden “would re-evaluate the tariffs upon taking office”, the aide insisted, and had not in fact committed to removing them. But the scramble to counter the suggestion that he might be weak on China – or weak on trade – shows the challenges Biden faces in running against an antitrade, anti-China incumbent.
“Oftentimes candidates will be critical of trade, that is a very common tactic on the campaign trail. President [Barack] Obama, for example, when he was on the campaign trail in 2008, was critical of the way the United States had done trade deals,” said Elizabeth Baltzan, principal at American Phoenix Trade Advisory Services and a US trade official under Obama and President George W. Bush. “But we’re now seeing a very unusual situation in that it is the sitting president who is so critical of trade.”
This tightrope Biden must walk appears even more fraught when looking at how Americans think about both issues in 2020.
Joe Biden and Kamala Harris take stage on US presidential campaign as Trump lashes out.Pew research from July shows that a record 73 per cent of Americans now hold an unfavourable view on China, yet 51 per cent want to broker a strong economic relationship with America’s greatest modern-day rival.
A Gallup poll from February – importantly taken before the ravages of the coronavirus pandemic – showed that 79 per cent view trade in a positive light, a surprising figure, if one only judged the nation by its political campaigns.
One of Biden’s major challenges should he gain the keys to the White House will be synthesising these divergent views into coherent policy. He must unite a polarised nation, but also a broad church of Democrats, many of whom have also had enough of freewheeling commerce and perceived acquiescence on China.
“Policymakers must move beyond the received wisdom that every trade deal is a good trade deal and that more trade is always the answer,” wrote Jake Sullivan, a campaign adviser tipped by many for a senior role in a potential Biden administration, in a recent article for Foreign Policy. “The details matter.”
The writings of Sullivan and others expected to be involved in a potential Biden administration have been key to understanding the direction the candidate may travel on both China and trade.Figures such as Kurt Campbell and Ely Ratner – senior officials in the Obama administration – have been issuing mea culpa on both counts for months, admitting the China threat was underplayed in the past, while preaching that free trade needs to be pursued in a less gung ho fashion.
On China, the common theme has been the need to compete on some fronts and cooperate on others, stopping short of the zero sum view of trade policy that has defined Trump’s approach.
“How I would frame it if I were Biden is: what can I do on trade, rather than what should I do?” said former under secretary for commerce Frank Lavin, who was among the signatories to a “statement by former Republican national security officials” that ran in newspapers last week endorsing Biden.
“My view is he is going to retain some elements of Trump policy, but he certainly will not retain the harsh tone and the sort of combative rhetoric. So just that will be an improvement,” he added.A recent Biden proposal to “rebuild US supply chains”, which name-checked China 10 times, with Russia the only other country named (three times), emphasised this fact.
A vow to create “new opportunities for US workers and businesses while also helping more parts of the world reduce their own over-reliance on countries like China”, was not a million miles from the Trump campaign. pledge to “Bring Back 1 Million Manufacturing Jobs from China”, leading many analysts to suggest the differences would be in the details, rather than the general strategy towards China.
“I think the real differences are going to be tactical. The main complaint the Biden camp has about Trump’s trade policy is that the US has picked a trade fight with allies rather than focusing ammunition on China, and it’s unnecessarily alienated countries that the US ought to remain close to,” said Edward Alden, a trade policy expert at the Council on Foreign Relations.
With that in mind, Biden would be expected to drop the controversial section 232 tariffs on aluminium and steel which were levied on allies from South Korea and Brazil, to Canada and the European Union. Whether China-specific section 301 tariffs remain in place may depend on China’s reaction to a new president, former officials have said.
“Those 232 tariffs are easier to dismiss than the China-specific section 301 tariffs. I think that is a little bit more difficult,” said James Green, who spent more than five years as Obama’s minister counsellor for trade affairs in the US Embassy in Beijing.
Green would expect China to test Biden on trade early on, perhaps discarding the phase one trade deal – which Green described as “the bamboo deal because it is Chinese on the outside and hollow on the inside” – then gauging the new president’s response.
“And so even if the Biden administration is not super excited about the trade tariffs, I think they’re going to be put in a position where they’re going to either have to walk away from them or double down on them,” Green said.Keeping Trump’s tariffs in place would be a break from Biden’s previous rhetoric on trade. As a senator, he voted to normalise trading relations with China, including support for China’s accession to the World Trade Organisation, and endorsed the North American Free Trade Agreement.
When campaigning for the Democratic nomination, he said that “America’s farmers have been crushed by [Trump]’s tariff war with China”, adding that Trump “thinks his tariffs are being paid by China. Any beginning econ student at Iowa or Iowa State could tell you that the American people are paying his tariffs”.His running mate Kamal Harrishas also strongly opposed Trump’s approach, saying that the “trade war is crushing American farmers, killing American jobs, and punishing American consumers”.
“I would work with our allies in Europe and Asia to confront China on its troubling trade practices, not perpetuate Trump’s failing tariff war that is being paid for by hard‐working Americans,” she said, when campaigning in the Democratic primary.Should the pair win the election, some expect the tariffs to be reviewed, with those perceived to harm Americans most being discarded.
“I could see him undertaking a review of the tariffs and figuring out which ones are actually going to promote his goal of restoring US manufacturing and which are not,” said former US trade official Baltzan. “If you look at some of the Democratic criticisms of the way Trump has gone about the tariffs, it’s not so much the tariffs themselves, it’s that they feel he has gone about it in an inadequately thoughtful way.”
But there may be less room to manoeuvre on some of Trump’s other China-focused trade policies, such as the removal of Hong Kong’s special trading status, sanctions on city and mainland officials over the national security law, export controls on sensitive technology, along with embargoes and sanctions related to China’s human rights abuses in Xinjiang.
All enjoy bipartisan support in Washington and are popular among voters. Biden has described Hong Kong’s national security law as “a death blow to the freedoms and autonomy that set Hongkongapart from the rest of China”, while vowing to “take stronger steps to prevent imports from forced labour” in Xinjiang, suggesting that unless China makes concessions on those fronts, the sanctions should remain.
Biden would almost certainly be more predictable than Trump. He would seek to rebuild alliances with scorned partners, at a time when China has fallen out with Australia, India, Canada and is struggling to make progress on an investment treaty with Europe.
“China may simply be taking advantage of the chaos of the pandemic and the global power vacuum left by a no-show US administration. But there is reason to believe that a deeper and more lasting shift is under way. The world may be getting a first sense of what a truly assertive Chinese foreign policy looks like,” wrote Kurt Campbell, a Biden adviser who was one of the architects of Obama’s “Pivot to Asia” policy, in a recent piece in Foreign Affairs.
But analysts on Chinese politics are divided on whether a return to multilateralism and pursuit of a coalition of allies will strike fear into the corridors of power at the Zhongnanhai leadership compound in Beijing.
“Beijing would still prefer Trump over Biden, because Biden lacks a unique personality guiding China policy. That means he would represent the consensus of the two American parties,” said Wu Qiang, an independent political analyst in Beijing. “Biden said he would improve relations with allies, something Trump has not done this past four years.”
This was a widely-reported view before the nosedive in US-China relations through the pandemic, that Beijing would rather deal with a transactional president than one who pushed for deep-rooted reform. But with Trump getting more hardline on China every day, and the relationship now in tatters, others are less sure.
“It is a common view among Chinese colleagues that yes, Trump has been very bad for China, but it could be worse because he has mainly focused on economic issues, and he is destroying America and its Western alliance, which will help China in the long run,” said Suisheng Zhao, director at the Centre for China-US Cooperation at the University of Denver, who thought that Beijing would now prefer a more conventional opponent in Biden.
“But I have told them that this is totally wrong, even from a Chinese perspective. Trump is destroying America, but he is destroying China too – he is destroying the whole world … so it is not good for China in the long run.”
Whoever is elected, Trump or Biden, Trumpism has shifted the US foreign policy to China sustainably from engagement to congagement or even containment. The last two options and their concrete form will be the only difference between the two parties after Trump. What does it mean for the EU and Germany. Both are still more engaged in engagement with China, multilateralism and value-orientated. If Trump is reelected, he will push the new congagement consenus even more to containment and an escalation of the Sino-American conflict. Some Europeans say that the EU and Germany should say Values First. but Trump doesn’t care about values. And Merkel and the rest of the EU to a very minor degree. The best both sides could have a common sense is a transatlantic dialogue and consensus on a new congagement policy. Neither Germany nor the EU has the potential or interest in a containment policy against China and even the USA might have not. So the specific question would be how Germany and the EU, with their vocal commitment to values, can bring their policy together with the at best only tactical commitment to values of Trump or his administration. Engagement, automobiles and exports first won´t be the transatlantic consensus, even if the EU and Germany have an export dependency of 40% while the USA only has 15%, but Values first also does not mean the real-political future as both are very opportunistic and pragmatic already in this sense. It makes more sense to discuss the real transatlantic consensus of a new Congagement policy and its concrete form after November 3rd between the USA and the EU. And if Trump is reelected it remains to be seen, if he is more a supporter of Congagement or of Containment, even escalating the trade war with China to a financial war and military posturing that in the end could even provoke a Sino-American war.