Elizabeth Warren Details Her ‘Economic Patriotism’ Trade Policies, Hardly Mentions China

Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., speaks during a campaign stop at town hall in Peterborough, N.H., Monday, July 8, 2019. (AP Photo/Charles Krupa)
AP Photo/Charles Krupa

Elizabeth Warren pushed her agenda of economic patriotism a step further on Monday, releasing a trade program that would use access to U.S. markets as a tool to force other countries to adopt new U.S. standards on labor rights, climate change, currency manipulation, and religious freedom.

“Trade can be a powerful tool to help working families but our failed pro-corporate agenda has used trade to harm American workers and the environment. My plan represents a new approach to trade — one that uses America’s leverage to boost American workers and raise the standard of living across the globe,” Warren wrote in a post on Medium.

The trade program in many ways resembles that of the president that Senator Warren (D-Mass) hopes to challenge in 2020, promising to put American interests first. In some way, Warren’s plan goes further than President Donald Trump’s trade agenda in seeking to unilaterally impose a broad array of policies—including environmental and labor policies favored by progressives—on the rest of the world.

But unlike President Trump’s agenda, Warren’s lacks a focus on China. That’s surprising because China is the world’s second-largest economy, our largest trading partner, and runs the world’s largest trade surplus against the U.S. The absence of a direct confrontation with China in her trade post may raise questions about the seriousness of her proposal. Her proposal also makes no mention of intellectual property theft by Chinese enterprises, forced technology transfers, or China’s predatory mercantilist subsidies and trade barriers.

Warren also does not seem to anticipate how the rest of the world would react to the U.S. attempting to impose a broad range of reforms through trade policies. It seems very likely that such policies would provoke retaliation by countries who regard her requirements as unfair, too stringent, or impositions of American values on their domestic economies.

Senator Warren wrote that she would impose nine preconditions on U.S. trading partners. These include recognizing labor rights, the elimination of child labor, upholding human rights, enforcing religious freedom, participating in the Paris Climate agreement, compliance with tax treaties, and not appearing on the Department of Treasury’s list of countries closely monitored for currency practices.

“A country should only be considered an acceptable partner if it meets these basic standards,” Warren wrote.

It was not clear, however, what penalty Warren would impose on countries around the world that fail meet the standards of “acceptable partner.”  The answer might be tariffs. In her post, Warren embraced the use of tariffs—and criticized the Trump administration for not using them as part of a broader agenda of coercing trading partners to adopt reforms demanded by the U.S.

“Unlike Trump, I think tariffs are an important tool, they are not by themselves a long-term solution to our failed trade agenda and must be part of a broader strategy that this Administration clearly lacks,” Warren wrote.

Warren’s trade policies would certainly cause major disruptions in global trade. China, Japan, Germany, Korea, Ireland, Italy, Malaysia, Singapore, and Vietnam are all currently on the Treasury Department’s list requiring special monitoring for currency practices. Few trading partners—if any—would likely meet all of Warren’s criteria.

Even the U.S. falls short. “Shamefully, America itself does not meet many of these labor and environmental standards today,” Warren wrote.

But Warren implies that she would be fine with an end to much global trade until other countries agree to abide by U.S. standards.

“We will engage in international trade — but on our terms and only when it benefits American families,” she wrote. “If we raise the world’s standards to our level and American workers have the chance to compete fairly, they will thrive — and millions of people around the world will be better off too.”

The Warren trade agenda marks a wide departure from the stance of many of her rivals for the Democratic nomination and the Obama administration. Many Democrats have criticized the Trump administration for unilateralism and tariffs, while Warren has embraced the idea that the U.S. should lead the world by requiring compliance with its own policy goals as a precondition for market access.

“Trade can be a powerful tool to help working families but our failed pro-corporate agenda has used trade to harm American workers and the environment,” Warren wrote. “My plan represents a new approach to trade — one that uses America’s leverage to boost American workers and raise the standard of living across the globe.”

Warren also called for more transparency in trade negotiations, promising to put U.S. negotiators’ positions into the federal registrar for public comment, and said she would “ensure that there are more representatives from labor, environmental, and consumer groups than from corporations and trade groups on every existing advisory committee.” That too would amount to a unilateralist policy since our trading partners typically demand trade negotiations largely, if not entirely, take place behind closed doors.

She said trade deals would have input from advisory committee for consumes, rural areas, and regional interests.

“Trade agreements can hollow out communities and transform regional economies,” Warren wrote. “I will push for the agency to provide a region-by-region analysis so the public and Members of Congress can understand how an agreement is likely to affect the places they live and represent.”

Warren also said she would impose a tax on imports from countries with weak environmental protections.

“I will impose a border carbon adjustment so imported goods that these firms make using carbon-intensive processes are charged a fee to equalize the costs borne by companies playing by the rules,” Warren wrote.

This would largely be a tax on imports from China, whose economy is several times less energy efficient than the U.S. Such a tax would likely dwarf the Trump administration’s tariffs and likely would provoke retaliation by China.

Warren announced her trade program ahead of a campaign stop in Ohio, a state that many Democrats view as vital to winning back the White House after Trump won it by eight percentage points in 2016. And this week Democratic hopefuls will hold their second debate in Michigan, another state where trade policy is closely watched by voters.

Warren’s policy proposals are so severe that even some critics of free trade doubt they could actually be implemented. And others say that the wide range of requirements to trade with the U.S. risks diluting the urgent task of containing China’s hegemonic ambitions, one of the primary focuses of the Trump administration’s trade policies.

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