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WEDNESDAY, AUGUST 15, 2018
Click HERE for Monday's quote from Senator Alexander.
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SEN. SCHATZ QUESTIONS THE TRADE REPRESENTATIVE
"Why would you stare down a non-democracy [China]? They can incur more pain over more time than we can ... . We're a democracy, and so we take a shorter-term view because we are responsible to our voters periodically?"
Senator Brian Schatz
July 26, 2018
"So, does that mean that democracies always lose to authoritarian governments?"
Ambassador Robert Lighthizer
July 26, 2018
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We continue today with our series of quotes from last month's hearing, when USTR
Robert Lighthizer appeared before the Subcommittee on Commerce, Justice, Science, and Related Agencies, a subcommittee of the Senate Appropriations Committee. For readers who would like a look ahead, there are about three more entries in this series. In them, we expect to deal with the $12 billion for farmers hurt by the new tariffs; the repeated question, "Is Canada a national security threat to the United States?" and the economics of aluminum.
All of those issues are important, but in terms of the chemistry of the July 26 hearing - the chemistry of constituent concerns is a different matter - but in the hearing no issue was more emotionally charged or philosophically more significant than this one raised by Senator
Brian Schatz of Hawaii, a Democrat. We'll pick this up where the highlighted exchange leaves off. When Ambassador Lighthizer asked if the reasoning was such that democracies would always lose to authoritarian governments, Senator Schatz responded.
SENATOR SCHATZ:
Sir, it just means you don't pick stupid fights.
AMBASSADOR LIGHTHIZER:
Look it, if your conclusion is that China taking over all of our technology and the future of our children is a stupid fight, then you are right. We should capitulate. My view is, that's how we got where we are. I don't think it's a stupid fight. I don't know a single person that's read this report [USTR's Section 301 report on China and U.S. intellectual property] that thinks it's a stupid fight to say China should not be able to come in and steal the future of American industry. That doesn't make any sense.
SENATOR SCHATZ:
I'm not suggesting that we have any disagreement about our end goal. But that's like telling me... . You're like a golf pro saying, "Make sure you hit it in the middle of the fairway." Everybody wants to hit it in the middle of the fairway. Everybody wants better trade deals. We are doing it badly right now. That's what's happening.
The same issue, that is the concern that authoritarian governments may have more staying power than democracies, specifically the United States, was raised as well by Senator
Christopher Coons of Delaware, also a Democrat. That gave Ambassador Lighthizer an opportunity to say a bit more on the essential problem.
AMBASSADOR LIGHTHIZER:
On the question of how long will it take to resolve the issue with China, my guess is, candidly, it's going to take longer. Because I do think they take a longer view, which, by the way, I think is the right view, and to the extent we can, we ought to be taking [a longer view].
I realize we have a political system that makes it difficult, but nonetheless the reality is an awful lot of our senior politicians do take a long view. Right. I mean, it's not fair to say that every politician is dictated to by what his next election is. A lot of them take risks and do the right thing.
So, I don't know the answer to the question on China. I just know that I believe we have a strategy. ... I don't think the President created the problem with China. I think it was created over a period of time, basically by benign neglect. And I think it's a situation where you have to make a change or the consequences are grave for the country.
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The exchanges quoted above need no explication, and so we shall keep our comments to just three points.
First, it is easy enough to put all the new U.S. tariffs that have gone into effect this year into the same basket, but it is important to keep them separate. Lots of people have questions about the Section 232 tariffs, those instituted on steel and aluminum in the name of U.S. national security. Where those tariffs are concerned, the administration is routinely challenged on its goals as well as on the means for achieving those goals. That is true not only for steel and aluminum but for other products that might be the subject of Section 232 tariffs in the future, notably automobiles. Let's put those aside for now.
Few if any U.S. politicians challenge the goals associated with the Section 301 tariffs against China - those levied in the name of changing China's behavior with respect to U.S. intellectual property. Almost all support that goal, but they don't support the tariffs.
Second, "no pain, no gain," as the athletic adage goes. It is simply unrealistic to believe that the United States can achieve a major objective, a change of behavior, in the world's most populous country, second-largest economy, and a declared rival of the United States at zero cost. So, has there been a touch of unreality in the Congressional discourse on this issue? Yes, there has. But the fault here is collective. To be sure, the Administration is making some effort to ease the injury to U.S. agriculture from China's retaliation, and we will discuss that in a later entry. At the risk of getting ahead of ourselves, however, this would seem to be as much a challenge for Congress as it is for the Administration, or, more accurately, one that cries out for increased cooperation between the two.
Third and finally, we are not China experts, but the facile assumption that China can hold out indefinitely in this contest while the U.S. is going to have to cave very soon is just that, facile. To quote from a recent New York Times article by Keith Bradsher and Steven Lee Myers, "[T]he Communist Party is vulnerable in its own way. It needs growth to justify its monopoly on power and is obsessed with preventing social instability."
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At Senate Appropriations is a link to the page video recording of the hearing held on July 26 by the Subcommittee on Commerce, Justice, Science, and Related Agencies, which is chaired by Senator Jerry Moran (R-KS). This was the source for today's featured quote.
China Tech Giants Down is a link to a Wall Street Journal story which notes that the stock prices for all three of China's tech giants - Tencent, Baidu, and Alibaba are all down.
China Rattled is a link to the New York Times article mentioned above. This is as it appeared in The Seattle Times.
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