Thursday, July 26, 2007

The New Democratic Scapegoat

By NICHOLAS D. KRISTOF
Op-Ed Columnist
The New York Times
July 26, 2007

Hillary Rodham Clinton and Barack Obama are both serious foreign policy thinkers. So that makes it all the more bizarre that in one important area of foreign policy they both would drag this country backward.

That’s trade, particularly the effort to bash China as a scapegoat for our economic problems.

Mrs. Clinton and Mr. Obama have signed on as co-sponsors of a bill — the latest resurrection of anti-China legislation — that could target China for punitive duties unless it revalues its currency. The China-U.S. relationship is the most important relationship in the world, and this bill would risk trade battles that would disrupt it for many years to come.

It’s precisely the kind of cowboy diplomacy that would infuriate the commentariat if it were coming from President Bush. Yet the president, while reckless in most areas of foreign policy, has been steadfast on trade and his handling of China.

The China bill that Mrs. Clinton and Mr. Obama have co-sponsored would antagonize ordinary Chinese. It would set a precedent for politicizing trade disputes. And it marks a betrayal of President Bill Clinton’s outstanding legacy on economic issues.

For eight years, Mr. Clinton tugged Democrats away from protectionist impulses and toward pro-growth and pro-trade policies that elevated America’s standard of living. Now the Democratic Party as a whole is retreating from that free trade legacy.

Congressional Democrats have been cool or petulant toward a series of free trade agreements in Latin America. This month House Speaker Nancy Pelosi and three other top Democrats bluntly declared that “our legislative priorities do not include the renewal of fast track authority” to negotiate trade agreements. In the trade arena, Congressional Democrats are gratuitously angering our allies in much the way that Dick Cheney has already done in security affairs.

Trade is a particularly useful prism through which to look at politicians, for it offers a litmus test of political courage and economic leadership. That’s because there are no political benefits to a candidate who supports free trade, but considerable benefits to the country.

There are a couple of grim possibilities here. One is that Mrs. Clinton and Mr. Obama really believe in stepping away from the Bill Clinton legacy on trade. The other possibility, perhaps even sadder, is that they are faux China-bashers who stake out myopic positions for political calculations, even if their heart isn’t in those positions.

So maybe Democrats are only seasonal protectionists, enjoying a useful weapon against Republicans in the 2008 campaign. After all, Mr. Clinton himself was a China trade hawk when he ran for president in 1992 but then reversed himself in office — so there’s hope that Mrs. Clinton or Mr. Obama would likewise show more maturity in the White House.

Yet all this is dispiriting to anyone who yearns for positive leadership from the next president. Once in office, Mr. Clinton and Al Gore bravely used the bully pulpit to educate the American public about the benefits of trade and to challenge those like Ross Perot, who appealed to Know-Nothing nativists. It would be a tragedy for all the world if the next Democratic president followed Mr. Perot rather than Mr. Clinton.

It’s true, of course, that the Chinese yuan is undervalued. That’s bad for China, and it’s one of the imbalances (along with our own addiction to debt) that is disruptive for the global economy. China should sharply stimulate domestic consumption and nudge the yuan upward faster than it has been.

But this legislation vastly exaggerates the impact on the U.S. from the yuan value. China’s manufacturing juggernaut hurts Mexico and other countries that peddle cheap shoes and shirts, but it has much less effect on American workers. Meanwhile, that flood of Chinese imports helps low-income Americans by lowering the cost of essentials like clothing.

Look, there are plenty of valid reasons for Mrs. Clinton and Mr. Obama to stand up to China. One place to start would be China’s disgraceful policy of supplying Sudan with the weapons used to slaughter people in Darfur.

There’ll be a tendency among liberals to excuse Mrs. Clinton and Mr. Obama for pandering on trade, because they are sensible on so many other issues.

But when we see candidates as smart and sophisticated as Mrs. Clinton and Mr. Obama, we should demand more from them than Ross Perot-style populism. And it would be a disaster if eight years of reckless gunboat diplomacy in the political/military realm were followed by reckless cowboy diplomacy in economics and trade.

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