Tag: China

The Hagel Hearings: Congressional Politics at Its Worst

The confirmation hearings on Chuck Hagel’s nomination to head the Pentagon are mercifully over. His wobbly performance earned derision among neoconservatives, but he responded as they intended to an interrogation that was all about politics, not policy. 

As I have noted before, Hagel is under fire because he disputed neoconservative nostrums to speak unpleasant truths to the Republican Party. He was an orthodox conservative, including on foreign policy. However, he was an Eisenhower, not a Dubya, Republican: Hagel criticized the debacle in Iraq, urged negotiation to forestall Iran from developing nuclear weapons, and backed reductions in today’s bloated military budget. General turned President Dwight Eisenhower could not have put it better. 

But this enraged a GOP that has turned perpetual war into its most important foreign policy plank. Hence the ludicrous attempt to paint him as an anti-Semite. Only slightly less dishonest was the performance of Hagel’s Republican interlocutors in the Senate, who asked the sort of questions which could not be honestly answered without wrecking the political façade behind which legislators on both sides of the aisle hide. His performance was disappointing, but far more striking is the fact that the uber-hawks who badgered him over every past statement exhibited little interest in exploring the most important challenges facing America. 

Consider the analysis of questions from Rosie Gray and Andrew Kaczynski at Buzzfeed.  They counted 166 questions about Israel—an important ally, but more important than every other ally combined? There were 144 questions about Iran. No one wants Tehran to build nukes, but U.S. intelligence does not believe Iran has an active weapons program and there is no evidence that the Iranian government cannot be deterred, as were Joseph Stalin and Mao Zedong. Surely there are options short of war. And is Iran that much more important than Afghanistan, where Americans continue to die, which rated only 20 questions? Sen. John McCain (R-AZ) fixated on Iraq, an invasion that should never have been launched, irrespective of the impact of the “surge.” And from which, if he hadn’t noticed, U.S. troops have been withdrawn. 

Nothing else received serious attention at the hearings. Not how to adjust America’s foreign policy to reflect inevitable Pentagon budget cuts, since Washington no longer can afford to police the globe. Not China, including the worrisome possibility of war between Japan and China over worthless islands in the Sea of Japan. Not North Korea and the enduring challenge of dealing with the world’s most malign actor.  

Not Europe, which continues to under-invest in the military while relying on America for its defense. Not Africa, where the U.S. is steadily being drawn into more conflicts. Not Russia, which, despite the difficult bilateral relationship, has been helpful in Afghanistan and Iran. Not Venezuela, where the possible death of Hugo Chavez could open up opportunities for reform and engagement with America.

And the neoconservatives claim to be serious about international issues and military capabilities. 

Chuck Hagel is eminently qualified to be Secretary of Defense. As my colleague Chris Preble has noted, Hagel’s thinking is mainstream and noncontroversial. Obviously, one can disagree with him on particular issues, such as the possibility of nuclear disarmament.  However, the president still will make the ultimate decisions. Hagel will bring a fresh perspective to administration discussions of foreign and military policy. That is reason enough to welcome him to the Pentagon. 

How to Respond to North Korea’s Latest Threats

Relations between North Korea and the world are off to a familiar start in 2013. Last week, the United Nations Security Council passed a resolution tightening sanctions on Pyongyang in response to its missile test last December. The reclusive regime responded by predictably issuing threats against America and its allies. It seems likely now that Kim Jong-un will order a nuclear test in the next few weeks. What will follow? The kabuki dance continues. 

If North Korea does indeed detonate a nuclear device, the United States and its allies should avoid reacting hysterically. As I counseled on the missile test in December, provocative acts by Pyongyang do not deserve a response from Washington. The North carries out these tests to upset its rivals. The White House’s reserved response to the missile test was an encouraging sign. Any nuclear test warrants only an extended yawn. 

But what can Washington do to ultimately prevent North Korea from developing its nuclear program further and force it to engage the international community? I authored a piece running today at the National Interest that provides a few suggestions: 

The United States should not push for renewal of the Six Party talks. The North announced that it would not surrender its nuclear weapons until “the denuclearization of the world is realized.” This may well be yet another negotiating ploy. However, Washington and its allies should take it seriously.

Instead of begging Pyongyang to return to negotiations and requesting China to make Pyongyang return, the administration should indicate its openness to talks but note that they cannot be effective unless North Korea comes ready to deal. No reward should be offered for the North’s return to the table. 

Third, the United States should spur its allies to respond with the only currency which the Kim regime likely understands: military strength. Washington has had troops on the peninsula for nearly 63 years, far longer than necessary. That has left the ROK and Japan dependent on America. They should take over responsibility for dealing with the North’s military threats.

Washington should unilaterally lift treaty restrictions on the range and payload of South Korea’s missiles, a bizarre leftover from Seoul’s time as a helpless American ward. The administration also should indicate its willingness to sell whatever weapons might help the ROK and Japan enhance their ability to deter and even preempt a North Korean attack. The changing security environment should cause Japan to formally revise the restrictions placed on military operations by its post-World War II constitution.

I have a number of other policy recommendations in the full article, which you can find here

Wall Street Journal: Romney Should Be a Neocon, but Hide It in Debate

Would you buy a foreign policy from this man?

Imagine a world in which the Iraq War had gone exactly as marketed. The United States invaded in March 2003. The Iraqis, with the help of Ahmed Chalabi, rapidly transitioned to become a stable, liberal democracy allied with the United States against Iran. The marvelous and smooth transformation had ripple effects throughout the region: a handful of Arab states followed suit, and the United States had drawn down to under 30,000 troops in country by September 2003, setting up a basing agreement with the new Iraqi government to stay indefinitely. Few American lives were lost, the swamp of terrorism was drained, and an oil pipeline has just been completed running from Iraq to the Israeli port city of Haifa.

Imagine, at the same time, that opponents of the war, despite having gotten every major judgment about the prudence and consequences of the war comically wrong, had been vaulted to positions of power and prestige in foreign affairs commentary. Meanwhile, the war’s proponents, despite their support for a strategy that yielded huge strategic dividends for the United States at a low cost, were banished to the wilderness, heard from sporadically on a few blogs and at a think tank or two.

It would be strange, wouldn’t it?

And yet that situation is roughly analogous to the one in which we find ourselves today, except in real life the war was an enormous disaster, just as its opponents predicted, and the proponents of the war are the ones in denial about its implications. Foremost among the salespeople for war who have yet to come to grips with the facts are the members of the Wall Street Journal’s editorial board.

But hey, let’s let bygones be bygones: they’ve got some advice for Mitt Romney in his upcoming foreign policy debate.

First, the good news: Even the editorial board of the Journal seems to understand that speaking openly about their plans for more wars would be bad politics. Accordingly, the Journal doesn’t “expect Mr. Romney to offer an explicit defense of the Bush Doctrine” and they worry about the implications of Obama charging Romney with wanting to get the United States into a third (and fourth) Middle East war. This is in keeping with the previous assurance of Bret Stephens (pictured above) that Romney wouldn’t start any new wars. Romney should deny wanting any more wars while doing a number of things that make them inevitable.

Second, the bad news: Instead of suggesting that Romney actually trim the neocon sail a bit, the article suggests Romney continue his strategy of wheeling out a fog machine and saying “leadership” and “strength” instead of discussing details. The American people who tune in Monday night deserve to hear some specifics. Not the level of specifics that would satisfy the people who think about international politics for a living, sure, but some specifics. Instead, while suggesting that Romney “offer[] a serious critique of Mr. Obama’s foreign policy that doesn’t descend to clichés,” the article suggests clichés but not seriousness.

This blends with the ugly news: like an insular clique of Bourbon royalty, the neocons at the Journal appear to have learned nothing and forgotten nothing about strategy over the last 10 years. To the extent their suggestions do go beyond clichés, they are a reminder that Bush-era neoconservatism still lies at the center of their world view, and the world view of the Republican establishment. A few examples:

  • The war in Iraq, we are informed, had “already been won when Mr. Obama became president.” Mission accomplished? Come again?
  • Obama turned that win into a loss by failing to secure “a viable alliance with Baghdad and a bulwark against Tehran.” When you have allocated yourselves 1,608 words, you may want to show your work about how this could have happened.
  • Another Obama failure is that he allowed Israel to have a partially independent defense strategy. He should have “provide[d] Israel with reassurances that it needn’t consider its own military options” on Iran. If Israelis should just rely on the United States to defend them from the most important threats facing their country, why does Israel have such a powerful military in the first place?
  • Obama’s “policies of premature military withdrawals [in Iraq and Afghanistan] have increased rather than diminished the chances that we will be at war in the Middle East again.” How? In which countries?

One could go on. But more broadly the piece suffers from the flaw that has characterized the whole foreign-policy discussion in the election: the idea that the outside world begins at Algeria and ends at Afghanistan. The sprawling essay says exactly nothing useful when it comes to the most important foreign policy challenges facing the United States: the prospect of a European implosion, the wreckage of our war on drugs in Mexico, and preventing American entanglement in a prospective World War III in Asia.

The essay closes by invoking Robert Gates’s invocation of Ronald Reagan, who said that he had lived through many wars but none of them began because the United States was too strong. Gates and the WSJ’s editorial board probably ought to think a little harder about whether the United States blundered into any costly quagmires as a function of its overweening strength and insulation from the costs of its strategic choices. The answer is obvious.

Washington Post Sees Solar Panel Duties for What They Are: Self-Flagellation

The Washington Post was channeling the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies in this morning’s succinct and insightful editorial about the foolishness of taxing imports of Chinese solar panels.

The editorial picks up a few of the themes and draws very similar policy conclusions to those we have been advocating for many years and, without stating it explicitly, presents a compelling case for major reform, if not repeal, of the trade remedies laws.

For context, last week the U.S. Commerce Department published the final rates of duty calculated in both antidumping and countervailing duty (anti-subsidy) investigations of imports of Chinese solar panels, which were initiated in October 2011. (Here are some earlier thoughts on the matter.)

Formal antidumping and countervailing duty orders will take effect, probably, next month following a final determination by the U.S. International Trade Commission that the U.S. solar panel industry has been materially injured by these Chinese imports.

The thrust of the editorial is that the antidumping and countervailing duties, which are “calculated” by Commerce using an absurdly inaccurate, punitive methodology, will hurt other U.S. companies that are downstream and upstream of the solar panel producers in the production supply chain.

Noting the transnational nature of solar panel production, the editorial states:

U.S. firms that export polysilicon, a key material in the panels’ manufacture, or machinery to Chinese solar-panel makers could lose – if not because of the direct influence of the tariffs themselves, then because of the Chinese government’s likely reaction. Analysts worry that the Chinese will retaliate by slapping duties on U.S. polysilicon. Also at risk is the U.S. solar installation business, which has thrived during this period of low-cost panels.

This is one of the critical defects of the AD/CVD regime. It focuses like a laser on assisting industries seeking protection from competition while systematically—indeed statutorily—ignoring the adverse impacts of that “assistance” on downstream U.S. industries. (Bastiat points out that people tend to err by focusing on what is immediately seen, while failing to consider the ripple effects of actions that are less readily observed; U.S. trade remedy law demands that we commit that error!)

Much more often than not (80% of AD measures in the last decade), the foreign product subject to duties is an intermediate good required by downstream U.S. industries. And these downstream firms—the overwhelming victims of AD/CVD duties—have no legal standing in the proceedings that lead to the imposition of duties that raise their costs of production and drive them offshore or out of business. Under the statutes, the U.S. International Trade Commission is forbidden from considering the likely impact on downstream firms. In this age of globalized production and transnational supply chains, nothing could be more absurd.

About the so-called non-market economy methodology used to calculate margins of dumping and, ultimately, duty rates in Chinese (and Vietnamese) antidumping cases, the editorial asks:

But how much should a Chinese-made solar panel cost? The answer isn’t obvious. Commerce’s estimating methods—using Thailand’s economy as a surrogate for China’s—don’t inspire confidence.

These Cato papers (here and here) provide the dirty details of the capriciousness inherent in NME antidumping methodology. This brand new Cato analysis from Scott Lincicome, which documents—among other things—the global green energy subsidies race, explains how the U.S. countervailing duty law does not redress foreign subsidization, but rather punishes U.S. consuming industries and end-users. Getting tough on China means America’s wealth and jobs creators take it on the chin.

In closing, the editorial states:

And if the Chinese want to subsidize U.S. solar-panel buyers for the time being, there’s a good case to let them.

This is just another example of the administration’s policies working at cross purposes. To the fanfare of the Sierra Club and other environmental groups, President Obama has rhetorically championed the idea of greening our energy consumption profile. Of course, one of the biggest obstacles to that goal has been that the costs don’t justify the benefits. Hasn’t Chinese dumping and subsidization helped to reduce that obstacle? And aren’t duties on Chinese solar panels anathema to that goal?

Duties on solar panels, wind towers, and presidential interventions to block foreign investments in U.S. wind farms suggest that industrial policy—and not environmental policy—explains the president’s interest in green energy.

Recognizing in an editorial that duties imposed to benefit one industry or one firm (as is often the case with trade remedies measures) cause collateral damage to other industries is a laudable development for the Washington Post.  We look forward to the follow-up editorial calling for explicit repeal of the self-flagellating U.S. antidumping law.

Romney’s Misplaced Obsession with Chinese Currency Manipulation

More than anything else, Mitt Romney’s zealous determination to pin a scarlett “CM” on the Chinese government’s lapel has defined his trade platform.  And that draws an unfavorable contrast for Romney, since President Obama’s repeated decisions not to label China a currency manipulator make him look the more cautious, circumspect, risk-averse business executive that Romney portrays himself to be.

In any event, the currency issue is very much last decade’s battle.  By continuously harping about it, Governor Romney evokes tales of old Japanese soldiers, left behind on South Pacific islands, still fighting WWII well into the 1960s.

As I noted in this piece on Forbes yesterday, if Romney is elected he will  have to renege on this silly commitment (substantively, at least), and change focus:

If Mitt Romney believes in “free trade,” his focus with respect to China should be on correcting that government’s failures to honor all of its commitments to liberalize and on the misguided efforts by U.S. policymakers to thwart legitimate commerce between Chinese exporters and American consumers.

21st Century U.S. Trade Policy Should be Pro-Market, not Pro-Business, Pro-Labor, or Pro-Lobbyist

The difference between the trade policy we have today and the trade policy we should have is like the difference between crony capitalism and free-market capitalism. The sausage grinder that is U.S. trade policy serves politicians and rewards lobbyists and gate-keeper bureaucrats, who have the gall to presume entitlement to limiting Americans’ options and picking winners and losers.

In a country that exalts freedom, the default trade policy should be free trade. But it’s not. Why?

The public has been trained to accept that special interests—companies seeking exemptions from competition; unions demanding that citizens ”Buy American”; investors and intellectual property holders demanding the U.S. public assume part of its business risks; enviros insisting on measures that punish developing countries for being poor—are rightly entitled to negotiate, abridge, impair, or sacrifice those freedoms in the name of Team USA.

So how are we free if decisions about how, with whom, and how much we transact with foreigners are decided by parties in Washington, who profit from denying us that freedom?

Trade policy should be about maximizing the freedom of Americans to choose, and distinctly not about bestowing certain advantages on particular companies, industries, or special interests. Trade policy should be about maximizing opportunities for Americans as consumers, workers, and investors, and not about impeding those opportunities.

In a globalized world where businesses are mobile and, ultimately, untethered to a homeland, what is the point of policymakers going to bat for U.S. producers? Usually, policies adopted to assist particular companies or industries handicap or subvert companies and industries upstream or downstream in the supply chain, or in other sectors. What even defines a U.S. producer anymore? GM builds more vehicles in China than it does in the United States.  Should Washington and Beijing both claim GM as national treasures and craft policy to serve its needs?

No. Policy should be neutral with respect to the goals of particular companies and industries, and designed to attract investment and human capital, and to maximize opportunities for Americans to partake of the global economy. Trade policy should be about ensuring certainty and eliminating policy-induced frictions in supply chains. As I wrote in this article (21st Century Economy Deserves Better Than 16th Century Trade Policies), which expounds upon the thoughts in this post:

This 21st century economic reality demands better than trade policies rooted in 16th century mercantilist dogma. It demands policies that are welcoming of imports and foreign investment, and that minimise regulations or administrative frictions that are based on misconceptions about some vague or ill-defined “national interest”.

Obama, Romney Avoiding a Serious Discussion on China

Mitt Romney attempted to refine his foreign policy platform in a speech at the Virginia Military Institute on Monday, but he was again long on rhetoric and short on strategy. What passed for substance in the speech was largely focused on the Middle East. Predictably, most of the reactions to the speech also focused on the Middle East, mainly President Obama’s policy toward Iran’s nuclear program and his response to the attack on the U.S. consulate in Benghazi, Libya, last month.

Notably absent from the media coverage and the speech itself was China. In fact, Romney mentioned China only once. This is discouraging since the U.S.-China relationship will likely be the most important foreign policy issue over the next few decades.

In today’s Cato Podcast, Justin Logan, director of foreign policy studies, discusses America’s China policy and the presidential candidates’ lack of focus on the issue. Obama and Romney have each spent time demagoguing China on their currency and other trade issues. But this political rhetoric has been at the expense of any serious effort to discuss at length how the candidates disagree when it comes to the U.S.-China relationship. Instead, the foreign-policy debate has centered on the greater Middle East, where U.S. interests are much smaller. The candidates exemplify a bipartisan obsession with the Middle East when in large part the consequential issues that the United States will face in the years to come will be much further to the east.