Asia should not bet on Democrats on trade

NIKKEI ASIAN REVIEW – Regardless of who wins the US 2020 election, Trump has shifted the globalization debate

For the 21 candidates now officially vying for the U.S. Democratic Party’s presidential nomination — as well as their supporters — defeating U.S. President Donald Trump in the 2020 election is a crucial task that will allow the U.S. to return to a pre-Trump sense of normality.

But in some key areas of foreign policy, particularly concerning Asia, Trump’s narrow brand of nationalism and opposition to multilateral trade deals are proving to be less of an aberration than America’s new normal.

The days of globally-minded Democratic leaders championing a free trade, internationalist agenda as seen under Presidents Bill Clinton and Barack Obama seem long gone. This is the result of the 2008 financial crisis and a rising tide of global populism that includes the 2016 Brexit vote, Trump’s election and a steady surge of populist parties entering parliaments across Europe.

Among the U.S. candidates hoping to replace Trump, none of the top-tier contenders are openly defending the virtues of free trade and the globalized economy. On trade policy in general and relations with China in particular, most of leading contenders sound a lot more like Trump than Obama or Clinton.

On the Trans-Pacific Partnership, the multinational trade pact negotiated during Obama’s tenure, the positions of Senators Bernie Sanders, Kamala Harris, Elizabeth Warren, Cory Booker, Amy Klobuchar and Kirsten Gillibrand, and House members Tulsi Gabbard and Tim Ryan range from open skepticism to outright opposition. Former Congressman Beto O’Rourke, generally a free trade proponent, voted to give Obama “fast track” authority to negotiate the TPP, but was non-committal on the final deal.

On China, most of the top Democrats sound even more Trumpian. In their statements, the candidates have labeled China a trade cheat, a technology thief, a currency manipulator, and rival that must eventually be checked. “I do believe that China is emerging as… not just a competitor but, in many ways, an adversary,” said Mayor Pete Buttigieg. Kamala Harris said China is “using its economic might to bludgeon its way onto the world stage and offering a model in which economic gains legitimize oppression.”

Most of the top contenders back Trump’s tough line on China, although some from large agricultural states or those with trade-dependent industries, like Klobuchar from Minnesota and Harris from California, have complained about the trade war’s impact on farmers and small businesses. They have also chided Trump not for launching a trade war with China, but for doing it alone without allies.

One exception to the new trade bashing trend is former Colorado Governor John Hickenlooper, who previously cultivated Chinese investment in his state. China is Colorado’s third largest export market. But Hickenlooper currently polls only 2%.

The other obvious exception would be the current Democratic front-runner, former Vice President Joe Biden. As Obama’s number two in the White House, Biden enthusiastically supported that administration’s free trade agenda, which included backing TPP and forging close relations with China’s leaders, particularly Xi Jinping.

But when Biden held his first recent campaign rally at a Teamsters union hall in Pittsburgh in the crucial swing state of Pennsylvania, he never mentioned free trade or TPP. Asked later whether he was still a free trader, Biden replied: “I’m a fair trader,” adding that “we should treat other countries the way in which they treat us, which is particularly as it relates to China.”

Biden then made what was seen as stumble shortly afterward when he seemed to play down China’s significance as an economic rival. “I mean, you know, they’re not bad folks,” Biden said of the Chinese, “But guess what, they’re not, they’re not competition for us.” Biden’s rivals pounced, saying his remarks showed his misunderstanding of how trade with China had damaged U.S. manufacturing industries.

That even a longtime free trade Democrat like Biden is now having to watch his words and modify his past positions is evidence that the political ground has shifted dramatically since 2012 when Obama was re-elected as an unabashed globalist who proclaimed that “Today’s world presents not only dangers, but opportunities.”

Obama often argued that free trade and TPP was necessary to preserve America’s global leadership, saying that if the U.S. did not write the rules of global trade in the future, China would.

Now Obama’s unabashed enthusiasm for free trade seems hopelessly out of date in today’s Democratic Party. The inequality that he recognized as a consequence of globalization is now the main issue animating the 2020 race. Multiple polls have found a majority of Americans calling income inequality a serious problem.

Multilateral trade deals and engagement with China had previously been supported by an unlikely constituency that did not neatly divide along traditional party lines. Generally pro-business “Chamber of Commerce” Republicans joined with higher income, college-educated Democrats and liberals from the coasts to promote trade. Republican populists, nativists and Democrats from Rust Belt manufacturing states typically joined forces in opposition.

But Trump’s election shifted the political tectonic plates, virtually eliminating the traditional moderate and pro-business branch of the Republican Party. By winning the White House with his appeal to unionized blue collar states like Michigan, Pennsylvania, Wisconsin and Ohio, Trump has forced the Democratic Party to shift to a more hostile trade stance.

Trump seems to recognize the centrality of China and the trade issue in stoking his base and increasing his re-election prospects, which explains his recent decision to escalate the trade war by doubling tariffs on $200 billion of Chinese imports.

Some hard line Trump advisers are warning that any compromise trade deal with China that fails to tackle the trade deficit and open China’s protected markets will be derided by Democrats as a sellout. But the longer the trade war drags on, the more some of his key constituencies, like soybean farmers in the Midwest, will feel the pain.

The first Democratic debates begin in June, and the candidates will be jostling to stand out in the crowded field. Foreign policy will not loom large as they argue over issues such as affordable health care, illegal immigration and how far leftward the party should go.

But one issue where most are likely to agree is that Asia’s unfair trade policies have hurt U.S. industries, with China posing an existential economic threat that needs to be confronted.

The 11 countries moving ahead without the U.S. to implement the Trans-Pacific Partnership Asian countries — including Japan, which agreed to open its markets to more foreign beef and agricultural products — should not waste time thinking the next American president will be more willing to join the deal. And Asian countries hoping to wait out the Trump administration may need to adjust to the reality that Trump’s anti-trade rhetoric has now become America’s new normal.

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