By Michael Stumo
Jennifer Hillman, a former Clinton trade official, recently wrote a misleading opinion article in the New York Times entitled “How to Stop Trump’s Trade War Madness.” Not only did Hillman work in the Clinton’s Office of the US Trade Representative, but she was USTR General Counsel and oversaw implementation the Uruguay Round Agreement that created the disastrous World Trade Organization. Shortly thereafter, the Clinton Adminstration worked to persuade Congress to let China into the WTO.
Here are several ways Hillman’s judgment still cannot be trusted on trade.
1. She wrongly claims that the Administration has not adequately justified the tariffs on China. This is not correct; the President has repeatedly given economic justifications for the tariffs. The key justification is that the tariffs on China are necessary to pressure China to change the unfair trading practices identified in USTR’s Section 301 Report. When the original tariffs were not sufficient to achieve this goal, and China retaliated, the President concluded that additional tariffs were appropriate. Every significant adjustment to the tariffs has been supported by Federal Register notices that clearly explain why the increased tariffs are necessary.
2. Hillman asserts that Section 301 “provides for the imposition of tariffs to address a specific offending act or practice,” and that the Administration has paid only “lip service” to this requirement. The facts show that her charge is not correct. The Administration issued a lengthy report detailing China’s repeated attacks on our intellectual property. Hillman herself admits that USTR’s report was “well-documented.” The record leaves no doubt thatChina’s unfair practices are the reason for the tariffs that have been imposed. Indeed, the Administration has repeatedly explained that the President expects China to make structural changes that will address the problems identified in the report. Of course, the President would like to address other problems as well – including the massive trade deficit between our two countries. But from the beginning, USTR has made very clear to China that it must address the problems in the Section 301 report. China has simply refused to do so – and, in fact, has worsened the situation by imposing tariffs on U.S. goods that are completely unjustified.
3. Hillman wrongly urges Congress to change the relevant statutes “to put limits on when, for how much and for how long the president can unilaterally impose tariffs.” Other countries engage in trade strategy through executive action. Congress has trouble passing a budget. Hillman’s proposal, if adopted, would gravely hinder the U.S. government in trade negotiations, and make it practically impossible to persuade other countries to change their unfair practices. If we took her advice, we would be at the mercy of China or any other bad, and nimble, actors who are out there.
4. Hillman urges Congress to “insist on bringing our allies, including the European Union, Canada, Mexico, and Japan, into our trade negotiations with China.” The Administration has already issued multiple joint statements with the EU and Japan where those countries have clearly indicated their belief that China is engaged in the type of unfair practices described in USTR’s report. Canada and Mexico have agreed in the USMCA that they will avoid making separate trade deals with non-market countries like China. In short, the Administration is already working with other countries to increase the pressure on China.
5. Hillman claims that the EU and other countries “could be asked to join a coalition of countries to challenge China at the World Trade Organization.” On what grounds? Is the idea that we are supposed to file some type of case at the WTO, and not take any action unless we get permission from the WTO? Any such litigation could take many years, and is not likely to result in any outcome that would put significant pressure on China to change its actions. China is using a whole-of-government approach to conduct its trade war. The WTO was not designed to accommodate or address an entire system that comprehensively violates western free market norms. Indeed, USTR has repeatedly explained that because WTO rules are so weak, many of China’s unfair trading practices do not technically violate those legalistic WTO obligations. Waiting for a WTO case that would go nowhere would simply take pressure off of China and encourage unfair trade. If the EU – or any other country – wants to bring its own case against China at the WTO, the Administration has done nothing to stop them. In the meantime, the President has properly decided that we cannot wait for other countries, but must act to protect our own interests.
6. Hillman claims that Congress should insist on regular briefings on the goals for the negotiations with China. She fails to recognize that the Administration has been briefing Congress on these issues for more than two years. There have also been a number of public hearings on the Hill where Ambassador Lighthizer and other Administration officials have testified about the China policy. In general, members of Congress have wisely supported the President’s goal of achieving structural change.
7. Finally, the whole premise of Hillman’s article is that Americans are suffering some sort of harm due to the trade dispute that requires Congressional intervention. But we have the strongest economy of any G-7 country. Unemployment and inflation remain at historic lows, and we have over half a million more manufacturing jobs than we did in January 2017. The tariffs have been good for US economic, employment and wage growth. China’s economy, in contrast, appears to be feeling much more pressure. Under these circumstances, we should not panic and make concessions that will simply encourage China to bully us further in the future. If we aren’t willing to take a firm line now, when we have a golden opportunity to do so, China will never take us seriously.
In short, Hillman’s analysis of the basic situation is incorrect. Her proposed actions are either unnecessary, impractical, or both. After serving at USTR, Hillman was a Democratic member of the International Trade Commission before becoming a member of the WTO’s Appellate Body. It would be worrying if her bad ideas influenced any Democratic candidates for President. Rather than taking her advice, we should continue to press the U.S. government to remain firm and to do everything possible to stop China’s unfair trading practices.
