If you think this is all in the past, fast forward to November 2009 when President Obama concluded his first trip to China with a press conference in Shanghai. In it he noted that the United States had agreed, among a bunch of other things, to assist China in the development of its own indigenous commercial jetliner. Whoa, I thought. Why are we agreeing to do that? We have a huge trade deficit with China, and jetliners are one of the few things we can actually export to them.
So why are we going to help them make their own? I followed that thought up with friends at the State Department who informed me that America wanted China to help with dealing with North Korea, Iran, and other pressing global issues; and anyhow, it would be years before China could field a viable commercial jetliner.
And just last year, Washington concluded a bilateral free trade agreement with South Korea. Do you think this deal will really open up the Korean market and produce a surge of U.S. exports that will wipe out the U.S. trade deficit with Korea? Think again. According to President Obama's own U.S. International Trade Commission, the deal is likely to result in a bigger U.S. trade deficit. When I noted this in meetings at the White House last year, I was told that the deal was important to demonstrate America's "commitment to Korea."
In short, it had little to do with trade and everything to do with geopolitics. Why we needed to demonstrate commitment was never clear to me. After all, we have 30,000 troops in Korea and the U.S. commander is the commander of the Korean army in the event of any outbreak of hostilities. But never mind all that. We did the trade deal primarily to show our "commitment."
Wait, it gets better. Washington is now in the midst of negotiating the so called Trans-Pacific Partnership, a regional free-trade agreement to cover much of the Asia-Pacific area. When I was consulted on the deal by the White House, I noted that the proposed deal doesn't cover a number of key issues such as currency manipulation, anti-trust and competition policy, compulsory technology transfers as a condition of market access, and state-owned corporations. Again, I asked what the main purpose of the deal was. The response from the key White House officials driving the negotiations: America needs to demonstrate its commitment to Asia and to show that it is determined to remain an Asia-Pacific power.
I rest my case. America systematically subordinates its economic interests to achieve geopolitical objectives. What it should do is give back the military bases and go for the exports, and for greatly increased domestic production.
