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Joe Biden must reflect patriotic globalism in better trade policy

Joe Biden must reflect patriotic globalism in better trade policy
© United Press

President Trump established a clear strategy to reduce the trade deficit, increase manufacturing jobs, and resolve trade problems with China. He failed on all these counts. The trade deficit is higher, manufacturing jobs are fewer, and a resolution of trade problems with China is less clear now than it was four years ago. Trump argued that trade policy is based either on “America first” protectionism or “give the store away” liberalism. It is a false choice. Trade policy based on patriotic globalism could capture the fact that an open market benefits the United States and the world.

Joe BidenJoe BidenCaitlyn Jenner on Hannity touts Trump: 'He was a disruptor' Argentina launches 'Green Mondays' campaign to cut greenhouse gases On The Money: Federal judge vacates CDC's eviction moratorium | Biden says he's open to compromise on corporate tax rate | Treasury unsure of how long it can stave off default without debt limit hike MORE now has an opportunity to establish better trade policy. Here are some principles to guide his process. International trade is not zero sum. Economic growth in other countries does not come at our cost. In fact, we share these gains. Persistent trade deficits reflect the domestic dynamics such as low savings rates. Trade deficits cannot be cured with higher tariffs on imports. All other things the same, federal action to cut imports will also affect exports. If foreigners cannot send imports to the United States, they cannot earn the dollars to buy our own exports.

Tariffs are regressive taxes and the burdens fall the hardest on low income families. Tariffs that assist some domestic producers often harm others by making materials more expensive and by leaving these exports vulnerable to retaliatory foreign tariffs. Further, trade policy is usually crafted through the eyes of producers. That is the opposite of antitrust policy that is made through the lens of consumers. Trade policy should also pay more heed to consumers, especially since the money saved through imports could then be spent elsewhere in the domestic market and creates other jobs.

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Trade must be kept in perspective. Imports comprise about 15 percent of our economy. That is about half of the world average. Getting trade policy correct is important, but education, health care, and further issues remain more critical with families. Technology is also five times more responsible than trade for those declines in manufacturing jobs over the last 30 years, so an excess focus with trade misleads workers. The United States makes more manufactured items than ever, but productivity gains have let fewer workers to make more. Railing against trade as technology still continues to reduce manufacturing jobs does not help the displaced workers.

China has had remarkable economic growth over the last 30 years due to its measured embrace of market forces. The United States benefits overall from the economic growth for China, which has today become our largest trading partner outside the continent. However, China has failed to live up to the letter and spirit of some of its own trade commitments. The United States must take vigorous action for a more reciprocal relationship.

The economic fate for our country will be determined by the mandates within our borders rather than at our borders. We should press China to abide by its trade obligations but not at the cost of delaying necessary steps to get our own house in order. Our national security concerns on China are real, but they warrant a strategy well beyond trade policy.

The invisible hand of the market calls for the visible hand of government. But any industrial policy related to trade should focus on fostering skills, research, competition, infrastructure, and other elements of the market. The government programs aimed at specific firms will often invite crony capitalism and undermine the benefits from any resilient economy.

Trump claims that his trade policy is a success. That is not the case. It has been feckless and harmful to the United States. Biden should enact trade policy built around patriotic globalism. This would unashamedly promote the true benefits of international trade and unflinchingly press China and others to honor trade commitments. Our domestic challenges demand a better strategy rather than partisan politics when it comes to trade.

John Veroneau is senior counsel at Covington and Burling. He served as deputy United States trade representative under President Bush and as assistant secretary of the Defense Department under President Clinton.