It’s a big week for foreign economic policy in Washington. The U.S.-China Strategic and Economic Dialogue is going on this week, although whether it accomplishes anything remains to be seen. At the same time, the Senate will vote Tuesday on a key procedural motion to resuscitate the Trade Promotion Authority that was thought to be dead and buried last week. Whether it passes seems to come down to how much pro-TPP Democrats can trust the Republican leadership — and the balance of power among interest groups.
These events means that the hard-working staff here at Spoiler Alerts is reading an awful damn lot about grand strategy towards China and foreign economic policy and the confluence of those two policy streams. Some of it is interesting and provocative. Some of it is just provocative.
And then there’s George Soros, who has written a rambling New York Review of Books essay on the Sino-American relationship. After making a sketchy-on-the-details pitch for “a bona fide attempt at forging a strategic partnership with China,” Soros closed his essay with what might be the oddest argument I have seen yet against trade promotion authority (TPA).
The Trans-Pacific and Trans-Atlantic Partnerships, which are currently being negotiated, could offer an excellent opportunity for a two-pronged strategy but the current approach is all wrong. At present China is excluded; indeed the partnerships are conceived as an anti-Chinese alliance under US leadership. The president has asked Congress to give him and his successor authority for up to six years to negotiate trade agreements under fast-track rules that would deprive Congress of its right to introduce amendments. The bill has passed the Senate and at this writing is before the House. If the House approves, President Xi may be presented with an apparent threat on his visit in September. This is an appropriate response to China’s aggressive behavior in the South China Sea and elsewhere, but it leaves little room for an alternative approach. It would, as a result, be difficult for President Obama to make a bona fide offer of strategic partnership.
It is to be hoped that the House will not authorize putting the bill on a fast track. Instead of railroading the bill through Congress, it ought to be taken off the fast track. In that case, Congress would have plenty of time to correct the fundamental flaws in the proposed treaties that make them unacceptable as they are currently written. And that would also allow President Obama to make President Xi a genuine offer of a strategic partnership with China when he visits Washington in September.
So, these paragraphs provoked a few questions at the Spoiler Alerts morning coffee meeting:
1. Is there an income level for essayists above which the NYRB’s copy editors are told “STAY AWAY”? I ask because there is no “Trans-Atlantic Partnership.” There’s a Transatlantic Trade and Investment Partnership (T-TIP), but not a Trans-Atlantic Partnership.
Yes, this is a small, pedantic fact-checking thing. But it’s an easy-to-fix fact-check that nonetheless didn’t happen, which makes me wonder whether Soros’s essay was edited at all.
2. Does Soros have any knowledge of the history of U.S. trade policy? The paragraphs are written as if trade promotion authority is some new and sinister way to “deprive Congress of its right to introduce amendments.” In point of fact, some version of trade promotion authority has been around for decades, this version of TPA is weaker than previous iterations of it, and it’s been the primary means through which trade deals have been passed by Congress. Also, the notion that TPA is somehow being “railroaded” through Congress is laughable to anyone who has been following the long, slow, tortuous process of congressional-executive negotiations.
3. Does Soros read what he writes? The substantive argument that China will view the Trans-Pacific Partnership (TPP) and T-TIP as “an apparent threat” is kinda sorta understandable but still odd, given that Chinese rhetoric on TPP has softened rather than hardened over the past year. Furthermore, As Soros noted previously in his essay:
China has begun to build a parallel set of financial institutions, including the Asian Infrastructure Investment Bank (AIIB); the Asian Bond Fund Initiative; the New Development Bank (formerly the BRICS Bank); and the Chiang Mai Initiative, which is an Asian regional multilateral arrangement to swap currencies.
4. To repeat a theme: Does Soros read what he writes? Soros claims that TPP “leaves little room for an alternative approach.” If he was right about that I’d be concerned — except he’s not right. Hell, Soros spends a lot of his essay talking about the possibility of including the RMB into the basket of currencies that the IMF uses to determine the value of its Special Drawing Rights. This is a minor policy move that would nevertheless be a big prestige play for China. In other words, it’s a great way for the United States to reassure China while Congress continues to self-sabotage on IMF reform.
Even beyond that, however, there are other ways that the United States can engage China while moving forward on TPP. Indeed, those negotiations did not prevent three significant bilateral accords from being signed between the two countries last fall. And the cornerstone of deeper Sino-American economic engagement will be negotiating a Bilateral Investment Treaty — and hey, what do you know, that’s on the agenda this week!
So, to sum up: It is in fact quite possible for the United States to move forward on TPA and TPP without China feeling isolated, the NYRB’s editors have fallen down on the job, and I don’t know what the hell George Soros is talking about.