Ellis – 2018: The Year of Convergence of Trade and National Security

AP Photo
The Associated Press/ Carolyn Kaster

Candidate Donald Trump promised to Make America Great Again with tax, trade, and regulatory policies that put the interests of the forgotten men and women of America First.

In the closing days of 2017, President Trump not only signed sweeping tax cuts for businesses and individuals, he issued a National Security Strategy declaring economic strength is essential to national security, and fair and balanced trade is essential to preserving American economic strength.

Several important trade issues will command the attention of the president and Congress in 2018. 

While China is the Great Offender when it comes to predatory trade practices, it is not alone — South Korea is right up there. The U.S. International Trade Commission found South Korea’s crony conglomerates Samsung and LG have been illegally dumping washing machines on the American market below the cost of production, hurting our own appliance industry. The ITC recommends President Trump hit the offending importers with a hefty tariff.  

This can be a Ronald Reagan moment for President Trump: When the Gipper limited imports of Japanese cars in the 1980s, Toyota, Honda, and Nissan responded by opening factories in the U.S. Strong action by President Trump will assure Samsung and LG follow through on their plans to manufacture washing machines in Tennessee and South Carolina.

Our trade preference program for India is also up for renewal in 2018. Literally, thousands of India’s products enter the U.S. tariff-free under the Generalized System of Preferences, GSP, a 43-year-old trade program designed to lift underdeveloped countries out of poverty. In return, member countries are supposed to open their markets to American goods and respect U.S. intellectual property and rule of law.  

India doesn’t qualify on any count. It is no longer the famine-ridden basket case it was when it joined the program — half the country’s 1.2 billion people are now middle class, and it has thriving IT and service outsourcing industries. To boot, it routinely rips off U.S. intellectual property and blocks U.S. imports through a combination of high tariffs, taxes, and corrupt bureaucracy

When Congress renews the GSP in 2018, it should knock India off this international welfare program. There’s been chatter about Congress taking up welfare reform next year — this is the place to start.

The biggest trade issue in 2018 promises to be the Trump administration’s renegotiation of NAFTA. Talks are at a critical stage and an agreement could come up for a vote just as Congressional primaries are in full swing. This promises to make trade a central issue in the midterm elections just as it was in the 2016 cycle.

The administration’s proposals for NAFTA 2.0 provide a sturdy platform for populist-nationalist candidates: end the outsourcing of American jobs, buy American with taxpayer dollars, and protect American sovereignty.  

This last point concerns NAFTA’s dispute resolution mechanism. Fixing it is key to bringing jobs back to America.

The dispute resolution mechanism is called ISDS, for Investor State Dispute Settlement. ISDS enables foreign corporations to challenge actions of the United States government before international arbitration tribunals composed of three private-sector lawyers.

These faux courts operate outside the judicial system established by the U.S. Constitution. They can even award foreign corporations unlimited sums of money, paid by U.S. tax dollars. They are not bound by constitutional due process guarantees or judicial precedent, and their decisions are final, no appeal.

ISDS not only threatens American sovereignty by exposing our laws to challenges before foreign courts, it also encourages businesses to move to cheap labor havens outside the U.S.

Investors are typically (and understandably) fearful of confiscatory-minded foreign governments and corrupt courts and therefore favor placing their assets in countries that respect property rights and the rule of law — such as the United States. 

But the ISDS standalone court system guarantees businesses won’t deal with corrupt foreign officials when they invest overseas. This essentially erases America’s comparative advantage — honest courts, rule of law — and green lights businesses to move abroad. Previous administrations endorsed this perverse arrangement that has American taxpayers footing the bill to make the world safe for outsourcing our jobs.

President Trump’s chief trade negotiator Robert Lighthizer asks, “Why is it a good policy of the United States government to encourage investment [abroad]?… To me that’s absurd.” He’s right. 

President Trump wants to make ISDS optional — with the U.S. opting out.  

This is a clear example of how trade reform will work hand in glove with the president’s tax cuts and National Security Strategy to bring jobs and industries back to America.

One the one hand, companies will not be given U.S. taxpayer-subsidized risk insurance to invest overseas. On the other, companies will see lower tax taxes and faster write-offs when they invest here. 

The National Security Strategy sends a clear signal the Trump administration will no longer coddle the communist regime in Beijing.  

It rightly identifies Chinese economic aggression as a national security threat, declaring, “the United States will no longer turn a blind eye to violations, cheating, or economic aggression.”  

For decades, Washington was at best indifferent and at worst complicit as China coerced American businesses to surrender trade secrets as a pre-condition of gaining access to the China market. 

The naïve “We are the World” feel-good globalism endemic to the swamplands of the Potomac gave corporate executives a rationale for their short-sighted, short-term-profit-driven decisions to kowtow to Beijing’s Red mandarins.

Elite opinion has long held that Western investment would make China more democratic as it became more prosperous. As the NSS explains:

The United States helped expand the liberal economic trading system to countries that did not share our values, in the hopes that these states would liberalize their economic and political practices and provide commensurate benefits to the United States. Experience shows that these countries distorted and undermined key economic institutions without undertaking significant reform of their economies or politics.

Instead of reforming its economy and politics, Communist China modernized its military and built a digital totalitarian surveillance system that tracks its citizens’ every move to enforce loyalty to the one-party state. At the same time, government-owned enterprises used subsidies, cyber-espionage, and stealth to grab global market share and target American industry for extinction.

Western executives felt they had no choice but to yield to Beijing’s extortionate demands.   

With his National Security Strategy, President Trump is telling them: “I have your back,” while his tax and regulatory reforms say, “America is open for business again.”

For 70 years, our economic, as well as foreign policy, was driven by the State Department. The striped pants set at Foggy Bottom subordinated the interests of working Americans to globalist geopolitical stratagems, giving away American industries, technology, and jobs to other nations to buy votes in the U.N.

President Trump has fundamentally realigned American policy: America will regain control of its technological and productive capacity again. America will control its destiny and security again.

2018 is the year President Trump’s tax and trade policies will work synergistically to make the United States the best place on earth to live, work, invest, and do business.

And Make America Great Again. 

Curtis Ellis is the founder and chairman emeritus of the American Jobs Alliance, an economic nationalist trade non-profit. He and his organization were instrumental in building public awareness about the “Trans-Pacific Partnership” that lead to that trade deal’s defeat. He served as senior policy adviser on the Donald J. Trump for President campaign and Presidential Transition Team. You can find his work at http://www.americanjobsalliance.com/.

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