“Fewer Americans are working today than when President Obama took office. It doesn’t have to be this way if Obama would stand up to China. China is stealing American ideas and technology — everything from computers to fighter jets. Seven times Obama could have taken action. Seven times he has said no. His policies cost us 2 million jobs.”
-- Narration from Mitt Romney campaign ad
GOP presidential nominee Mitt Romney continued to stress President Obama’s handling of U.S.-China relations last week, claiming with this ad that the policies of the current administration have cost the U.S. 2 million jobs.
What policies have done this? The ad refers to China’s alleged stealing of “American ideas and technology -- everything from computers to fighter jets.”
Let’s examine those issues and determine whether the president has said “no” to taking action on them. This ad is the lastest in a series of tit-for-tat exchanges on China between the two candidates. (President Obama, for instance, previously earned Three Pinocchios for making misleading claims about Romney’s business record.)
There’s little doubt that Chinese companies have infringed on U.S. intellectual property rights, just as the Romney ad claims. China essentially acknowledged the problem by agreeing to implement stricter measures to curb piracy and counterfeiting during the U.S.-China Joint Commission on Commerce and Trade meetings in 2010.
Not only did China promise better intellectual property protections that year, but it consented to stop discriminating against U.S. technology in government procurement, effectively opening up a new market for American innovators.
A 2011 report from the independent U.S. International Trade Commission noted that “these issues were among the central themes of the December 2010 U.S.-China Joint Commission on Commerce and Trade (JCCT) meetings.” So the 2010 agreements count as wins for the Obama administration, and they run counter to the notion that the president has stood by while China stole American innovation.
What is the economic impact of Chinese intellectual-property infringements? The trade commission report found that improving protection of U.S. intellectual-property rights could lead to an additional 2.1 million full-time equivalent jobs.
But again, the Obama administration has taken action on this issue. Furthermore, the Romney ad said the president “cost” 2 million jobs, as though those positions actually existed and then disappeared during his administration. The difference here is missed opportunity versus actual loss of jobs, and the video was not clear about which it referred to.
As for China stealing fighter-jet technology, the Romney campaign pointed us to an April 2009 Wall Street Journal report that said “Computer spies have broken into the Pentagon’s $300 billion Joint Strike Fighter project -- the Defense Department’s costliest weapons program ever.”
The article quoted former U.S. officials saying the attacks “appear to have originated in China,” so the Romney campaign seems to be correct about the culprit. But the report noted that the infiltration dated back at least as far as 2007,” which was during the George W. Bush administration. A separate Washington Post piece on the issue said experts and former defense officials did not believe the attackers were able to access classified information.
Bush had planned to spend $17 billion on a new initiative to help combat the online-security breach, according to the Journal article. The Obama administration decided in May 2009 to expand on that program, which the Washington Post’s Ellen Nakashima reported on shortly before the administration’s decision.
Roughly two months after the Journal report, Defense Secretary Robert M. Gates established a new U.S. Cyber Command to address “growing threats against the Defense Department’s computer networks.”
These actions alone contradict the notion that the current administration has sat on its hands when it comes to dealing with China. But the president has also supported the Cybersecurity Act of 2012, which fell eight votes short of advancing on the Senate floor in August -- 40 Republicans voted against cloture, which helped block the bill from advancing.
That brings us to the “seven times Obama could have taken action.” The Romney ad mentioned only intellectual-property theft and the online-security breach, but this claim has nothing to do with those issues. It actually refers to seven opportunities the Obama administration had to apply the currency manipulator label to China through the Treasury Department’s Semiannual Report on International Economic and Exchange Rate Policy to Congress.
Setting aside the fact that Romney’s ad has conflated several issues, let’s look at the one it didn’t even bother to mention -- currency manipulation. We addressed this issue in a previous column.
U.S. officials believe — and economic experts generally agree — that China keeps its currency artificially low to give its exports an advantage. The Obama administration has opted against using the currency manipulator label, instead filing at least seven World Trade Organization complaints against its Asian trading partner relating to specific industries.
The WTO has largely upheld four of those complaints, but the president’s critics say this is a piecemeal approach. They point out that addressing China’s currency policy would be a far more sweeping approach.
Indeed, the Obama administration has pressured China to change its currency policy, and President Hu Jintao in 2011 promised to enact reforms — although the implementation seems to be inconsistent so far.
Romney is not alone in talking tough about China. Sen. John Kerry (D-Mass.) used the same kind of rhetoric during his 2004 race against Bush, and Obama vowed to stop the Asian nation from manipulating its currency during his 2008 run.
But neither Bush nor Obama ever tried to tag China as a currency manipulator. That’s probably because applying the label could heighten tensions between the United States and one of its largest trading partners — not to mention one of its largest debt holders. It could also affect unity between the two nations in dealing with such geopolitical issues as Iran’s nuclear ambitions.
Former Bush White House chief of staff Joshua Bolten had this to say recently in regard to Romney’s China talk: “If history is a guide, such sharp campaign rhetoric is blunted by the reality of governing.”
The Pinocchio Test
The Romney ad states that Obama had seven opportunities to take action against China. The average viewer — having limited knowledge of U.S.-China relations— could easily assume that the first claim relates to fighter-jet technology and intellectual-property theft, but it actually refers to currency manipulation, which the campaign didn’t even mention.
The ad also said that Obama’s policies toward China have cost 2 million U.S. jobs. But it fails to mention that this figure applies to intellectual-property theft, and it technically refers to missed job opportunities, not jobs lost.
On top of conflating multiple issues, the ad overlooks steps the Obama administration has taken to address those problems, including currency manipulation to an extent. The Romney campaign earns Three Pinocchios.
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