Time for America to support its own national champions?

Time for America to support its own national champions?
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One of the truly consequential contests, beneath the surface of blustery but less significant debates about tribes and presidential tax returns, is whether nations that promulgate national economic champions can beat those that don’t. 

The stakes for the U.S. economy are staggering. 

U.S. Trade Representative Robert LighthizerBob LighthizerBiden moves to undo Trump trade legacy with EU deal Whiskey, workers and friends caught in the trade dispute crossfire GOP senator warns quick vote on new NAFTA would be 'huge mistake' MORE has spent most of his career working to redress global trade cheating by nations that resort to predatory trade practices, subsidizing industries and layers of protectionism in their own markets. Lighthizer is famous for challenging, at the World Trade Organization (WTO) and through U.S. trade law, nations such as China, Japan, South Korea, India and Mexico that overproduce steel (in part, to maintain domestic employment) and dump it into the U.S. market, destroying hundreds of thousands of U.S. jobs.  


But the policy “North Star” of Ambassador Lighthizer, Commerce Secretary Wilbur RossWilbur Louis RossBannon's subpoena snub sets up big decision for Biden DOJ House panel, Commerce Department reach agreement on census documents China sanctions Wilbur Ross, others after US warns of doing business in Hong Kong MORE, Trump trade adviser Peter Navarro, President TrumpDonald TrumpPence: Supreme Court has chance to right 'historic wrong' with abortion ruling Prosecutor says during trial that actor Jussie Smollett staged 'fake hate crime' Overnight Defense & National Security — US, Iran return to negotiating table MORE himself and others has been not to promote American national champions but, rather, to attack what they see as unfair trade deals allowing other nations to impede U.S. market access, steal intellectual property, subsidize national champions and dump products. 

Neoclassical economics suggests trade deficits don’t matter: They rise and fall; a trade deficit with one nation is compensated for by a trade surplus with another; in the long run, everything balances out. Last year, China had a $323.32 billion trade surplus with the United States. In 1996 I worked as an economic adviser to then-Sen. Jeff Bingaman (D-N.M.), who convinced President Bill Clinton to investigate what appeared to be endemic, growing trade deficits with Japan and China; at the time, China held just a $10 billion surplus with the U.S.   

Clinton established the Presidential Commission on U.S.-Pacific Trade and Investment Policy. The results were clear: National champions, predatory trade practices, intellectual property theft, dumping and other economy-distorting government policies were big drivers of structurally unfair trade. The establishment of the WTO failed to redress these imbalances at scale and began to reify, or even permanently sanctify, practices by nations that were trade-distorting and harmful to more laissez-faire economies, and that gutted the employment of America’s working families.

At the time, the meme that “America fought the Cold War, but China won” was running the circuit. Over the years, the joke became palpably true, and today it has led to anger. 

The trade-hawkishness of President Trump reflects an economic team unlike any other administration’s in modern history; all of the neoliberal economic voices promoting “borderlessness” and deeper global trade integration, such as Gary Cohn, have resigned or were purged. Nevertheless, the proclivity of other leading nations to invest heavily in and promote the interests of their national champions has not reversed.  

China’s “Made in China 2025” campaign and globe-spanning “Belt and Road Initiative” are two of the most flamboyant cases of a rising Chinese state combining global development aspirations with its own national champions. Huawei is able to count on a foundation of Chinese government economic incentives and cost-free financing to expand its telecommunications infrastructure to other nations. Huawei just offered the United Arab Emirates, at virtually no cost, a national retrofit of next-generation 5G communications infrastructure. The two next-biggest players in global 5G equipment, Ericsson and Nokia, don’t have European economic muscle and support behind them to compete at scale with Huawei.

Today, the Emir of Qatar is meeting President Trump, who last night thanked Qatar for hosting and investing in America’s largest military base in the region and for its global economic contributions. Treasury Secretary Mnuchin thanked the Emir for supporting the Terrorist Financing Targeting Center (TFTC), for upholding its U.N. counterterror obligations and for investing in U.S. tech and real estate companies.

Yet, even Qatar has a major national champion that has stirred the ire of a key U.S. industry. Qatar Airways — an airline I admittedly fly and like a great deal — is accused by U.S. airlines of violating a key “Open Skies” agreement.

To make a complex story short, Qatar Airways pumped a lot of cash into a short-haul Italian airline, now known as Air Italy. Qatar Airways, owned by Qatar’s government, owns 49 percent of that expanded airline, and now Air Italy flights are enabling Qatar Airways to expand further into U.S. travel destinations under a European brand.

A Qatari official told me that the dispute over Air Italy has been resolved with the U.S. State Department. The major U.S. passenger carriers — Delta, United, American — don’t see this as resolved. In a recent interview with The Hill’s Editor-in-Chief Bob Cusack, Secretary of State Mike PompeoMike PompeoNo time for the timid: The dual threats of progressives and Trump Psaki: Sexism contributes to some criticism of Harris Mnuchin, Pompeo mulled plan to remove Trump after Jan. 6: book MORE said of the Qatar Airways issue: “(The) Trump administration will endeavor to make sure every commitment made by every party of that agreement will continue to be honored and enforced.” 


The Qatar dispute — along with America challenging China’s champions, Russia’s champions, Japan’s champions, South Korea’s champions, India’s champions, and on and on — raises the question of whether it’s time to return to national champions in America. We did it once: Alexander Hamilton helped to finance and sponsor intellectual property theft from Great Britain’s textile industries, supported domestic economic development of that and other industries in America, mixed with a level of protection until those firms had incubated and grown and could compete globally. We still do it to some extent with two key industries, agricultural products and military hardware.

Such an effort wouldn’t be just about challenging Qatar’s airline expansion or blocking Huawei but, rather, putting American economic muscle and design behind key U.S. industries that matter for the future. 

On the 5G front, for example, Qualcomm ranks as the world’s leading developer of the chips that animate 5G networks. The U.S. blocked the acquisition of Qualcomm by the previously Singapore-headquartered Broadcom, signaling that 5G was an industry that the White House and the nation cared about — yet, the Federal Trade Commission sued Qualcomm for what it said was uncompetitive pricing. 

One hand supports — and the other hand slaps down — part of the foundation of one of America’s key industries. What the heck? 

There is a lot of elegance in the notion that free, unregulated, liberal markets deliver greater growth, more diversified and innovative options for consumers, and can theoretically fire up a fast-growth economy — but it’s a reality that other nations game the system and find ways to rip chunks of jobs and markets from otherwise healthy U.S. sectors. It’s happening in the health and communications tech sectors now, and has been for a generation in steel, aluminum, cement and other building-commodity sectors.  

To build American national champions, President Trump will have to do much more than impose tariffs or threaten to deny access to firms such as Huawei. He will have to reignite and amp up investment in science and tech, fuel more research, create incentives for the jobs and firms that flow from that research to embed themselves deeply in America, and create the conditions that make investing and operating in America overwhelming, while simultaneously protecting healthy industries from foreign predators.   

It’s a strategy that could level the global playing field in trade and innovation as America builds a future of renewed investment, competition and restoring high-wage jobs at home.

Steve Clemons is editor at large of The Hill. Follow him on Twitter @SCClemons.