Lawmakers vote to shut down Philippines’ largest TV network

Philippine lawmakers voted Friday to reject the license renewal of the country’s largest TV network, shutting down a major news provider that had been repeatedly threatened by the president over its critical coverage.

The House of Representatives’ Committee on Franchises voted 70-11 to reject a new 25-year license for ABS-CBN Corp. The National Telecommunications Commission had ordered the broadcaster to shut down in May after its old franchise expired. It halted broadcasting then, but the vote takes it off the air permanently.

Source: Lawmakers vote to shut down Philippines’ largest TV network

‘Epic failure’: U.S. election officials warn of November chaos due to budget crunch | Reuters

A Michigan town wants machines to speed up counting of absentee ballots. In Ohio, officials want to equip polling places so voters and poll workers feel safe from the coronavirus. Georgia officials, rattled by a chaotic election last month, want to send voters forms so they can request absentee ballots more easily.

In all three cases, the money is not there to make it happen, say local officials responsible for running elections in the states – any one of which could determine who wins the Nov. 3 presidential election.

Source: ‘Epic failure’: U.S. election officials warn of November chaos due to budget crunch – Reuters

Corona Capital: Mets star bidders, Robot slayers | Reuters

LOVE DON’T COST A THING. Perhaps the only thing with more emotional attachment than a losing investment is a losing sports team. That could be why the auction for the New York Mets baseball team is heating up: Pop sensation Jennifer Lopez and her fiance Alex Rodriguez – who played for Mets’ crosstown rival the Yankees – are interested in the franchise, according to the New York Post.

The duo is hot on the tail of hedge fund manager Steve Cohen’s $2 billion bid for the Queens’ sluggers. Some private equity bigwigs are in the mix too.

Sports teams are famously bad investments, and this year proves particularly challenging.

Source: Breakingviews – Corona Capital: Mets star bidders, Robot slayers – Reuters

The Case for the Trump Administration’s Approach to Trade

Charting a Path Between Protectionism and Globalism

The new coronavirus has challenged many long-held assumptions. In the coming months and years, the United States will need to reexamine conventional wisdom in business, medicine, technology, risk management, and many other fields. This should also be a moment for renewed discussions—and, hopefully, a stronger national consensus—about the future of U.S. trade policy.

That debate should start with a fundamental question: What should the objective of trade policy be? Some view trade through the lens of foreign policy, arguing that tariffs should be lowered or raised in order to achieve geopolitical goals. Others view trade strictly through the lens of economic efficiency, contending that the sole objective of trade policy should be to maximize overall output. But what most Americans want is something else: a trade policy that supports the kind of society they want to live in. To that end, the right policy is one that makes it possible for most citizens, including those without college educations, to access the middle class through stable, well-paying jobs.

That is precisely the approach the Trump administration is taking. It has broken with the orthodoxies of free-trade religion at times, but contrary to what critics have charged, it has not embraced protectionism and autarky. Instead, it has sought to balance the benefits of trade liberalization with policies that prioritize the dignity of work.

Under this new policy, the Office of the U.S. Trade Representative, which I head, has taken aggressive and, at times, controversial actions to protect American jobs. But it has done so without sparking unsustainable trade wars and while continuing to expand U.S. exporters’ access to foreign markets. The U.S.-Mexico-Canada Agreement (USMCA), which was first signed in 2018 and is scheduled to enter into force this year, offers the best and most comprehensive illustration of this new approach. This new way of thinking has motivated the administration’s policies toward China and the World Trade Organization (WTO), as well. In addressing the challenges that remain, the administration has the same goal: a balanced, worker-focused trade policy that achieves a broad, bipartisan consensus and better outcomes for Americans.

Before World War II, tariffs were high by contemporary standards. From the 1820s until the late 1940s, the weighted average U.S. tariff (which measures duties collected as a percentage of total imports) rarely dipped below 20 percent. President Franklin Roosevelt and the New Deal Congress ushered in a period of relative tariff liberalization in the 1930s, but the rate remained in the mid- to high teens throughout the decade. After the war, however, both Democrats and Republicans came to champion tariff reduction as a means of preventing yet another conflict, arguing that trade fostered interdependence between nations. Trade liberalization therefore came to be seen not just as a tool of economic policy but also as a path to perpetual peace.

Subsequent events seemed to vindicate this view. Exports to U.S. consumers helped Japan and West Germany rebuild and become responsible members of the world community. The tearing down of trade barriers within Europe, starting with the establishment of the European Coal and Steel Community in 1951, surely contributed to postwar security, as well, by bringing the democracies of Western Europe closer together and setting a template for future cooperation.

But interdependence does not always lead to peace. In the United States, economic ties between the North and the South did not prevent the Civil War. Global trade grew rapidly in the years right before World War I; exports as a percentage of global GDP peaked at nearly 14 percent in 1913, a record that would hold until the 1970s. Likewise, it would be hard to argue that the rise of Germany as a major exporter in the late nineteenth century helped pacify that country in the first half of the twentieth. Japan’s dependence on raw materials from the United States motivated its attack on Pearl Harbor. More recently, China’s accession to the WTO in 2001—which was supposed to make the country a model global citizen—was followed by massive investments in its military capabilities and territorial expansion in the South China Sea.

On the flip side, conflict over trade is not always destabilizing or a threat to broader foreign policy objectives. The NATO alliance survived the tariff hikes associated with both the 1960s “chicken war,” when the United States clashed with France and West Germany over poultry duties, and the 1970s “Nixon shock,” when the United States effectively abandoned the Bretton Woods system. The United States and Japan fought about trade in the 1980s, but their bilateral security alliance stayed strong. Countries, like people, compartmentalize.

There may be situations when it is appropriate to make concessions on trade in order to achieve broader diplomatic aims, but one should keep in mind that such bargains can prove costly in the long run. Letting India join the General Agreement on Tariffs and Trade (the precursor to the WTO) in 1948 with nearly a third of its industrial tariffs uncapped, for example, no doubt made sense to Cold Warriors, who thought that it would help bring India into the U.S. camp. Yet the negative repercussions of that decision persist to this day, now that India has become one of the world’s largest economies and, at times, a troublesome trading partner for the United States. Over the years, such concessions have piled up.

Sometimes, the tendency to view trade through the lens of diplomacy has led to excess timidity. The most vivid example is the failure of the George W. Bush and Obama administrations to meaningfully confront China’s market-distorting subsidies and policy of forcing foreign companies to share their technology. But there are many others. For instance, until the current administration took office, the United States had never invoked the procedures for enforcing environmental commitments it had bargained for in its free-trade agreements. The Trump administration has used those tools to crack down on illegal timber harvesting in Peru and illegal fishing in South Korea.

Although the United States should not wield its economic leverage blithely, fear of rocking the diplomatic boat cannot be an excuse for inaction. The Trump administration has demonstrated that it is possible to take targeted yet aggressive trade actions while managing the risk of escalation. Despite the “sky is falling” rhetoric that has greeted many of the administration’s policies, the United States has remained the most open of the world’s major economies throughout Donald Trump’s presidency. Even with the recent tariffs imposed against China, along with efforts to rescue the domestic steel, aluminum, and solar power industries, the United States’ weighted average tariff was only 2.85 percent in 2019 (and 1.3 percent for imports from countries other than China). That’s slightly higher than the 1.5 percent rate that prevailed during the last year of the Obama administration but still lower than a comparable figure for the EU: the 3.0 percent weighted average rate it imposes on imports from other WTO members.

History will judge the ultimate effectiveness of the Trump administration’s targeted duties. But experience has already proved wrong the Cassandras who said that its actions would inevitably lead to a 1930s-style trade war.

The other dominant school of thought in trade policy is the economist’s perspective. For adherents of this faith, the sole objective of trade policy is market efficiency. Lower tariffs and nontariff barriers reduce the costs of producing and distributing goods and services; that, in turn, makes society as a whole better off—so the argument goes. How such policies affect the men and women who do the producing and distributing is of little or no consequence.

Rather than envisioning the type of society desired and fashioning a trade policy to fit, economists tend to do the opposite: they start from the proposition that free trade should reign and then argue that society should adapt. Most acknowledge that lowering trade barriers causes economic disruption, but very few suggest that the rules of trade should be calibrated to help society better manage those effects. On the right, libertarians deny that there is a problem, because the benefits of cheap consumer goods for the masses supposedly outweigh the costs. On the left, progressives promote trade adjustment assistance and other wealth-transfer schemes as a means of smoothing globalization’s rough edges.

Neither response is satisfactory. Those obsessed with efficiency tend to see employment simply as a means of allocating resources and ensuring production. In so doing, they greatly undervalue the personal dignity that individuals derive from meaningful work. Commentators from Pope Leo XIII in the nineteenth century to Arthur Brooks and Oren Cass today have written eloquently about the central role of work in a well-ordered society. Doing honest work for a decent wage instills feelings of self-worth that come from being needed and contributing to society. Stable, remunerative employment reinforces good habits and discourages bad ones. That makes human beings better spouses, parents, neighbors, and citizens. By contrast, the loss of personal dignity that comes from the absence of stable, well-paying employment is not something that can be compensated for either by increased consumption of low-cost imported goods or by welfare checks.

None of this is to suggest that market efficiency should be irrelevant. But it should not be the sole factor in trade policy, and certainly not an object of idolatrous devotion, as some have made it. When it comes to taxes, health care, environmental regulation, and other issues, policymakers routinely balance efficiency with other competing goals. They should do the same for trade.

In recent years, however, the fixation on efficiency caused many to ignore the downsides of trade liberalization. Particularly as elites came to accept free trade as an article of faith, businesses found that they could send jobs abroad without attracting much negative publicity. General Electric’s hard-charging CEO from 1981 to 2001, the late Jack Welch, told suppliers at one point that his company would stop doing business with them if they weren’t outsourcing jobs. “Supply chain relocation” became a cure-all peddled by management consulting firms. Unfortunately—as COVID-19 has made painfully apparent—many companies caught up in the outsourcing frenzy failed to appreciate the risks.

Economic groupthink also led policymakers to stop worrying about trade deficits. In recent years, the U.S. trade deficit in goods has rivaled the size of many G-20 economies. In theory, if the United States could produce enough goods domestically to eliminate its $345 billion goods deficit with China, that would be the equivalent in revenue terms of adding two and a half more General Motors to the U.S. economy. Yet in most policy circles, discussion of the trade deficit has been limited to why it supposedly doesn’t matter.

Many take comfort in the following trope: “I run a trade deficit with my barber; since both of us are better off as a result, trade deficits are benign.” This analogy is flawed. A deficit with the barber is one thing, but if I run a deficit with the barber, the butcher, the baker, the candlestick maker, and everyone else with whom I transact, the situation is altogether different. Moreover, long-term trade deficits must be financed through asset sales, which can prove unsustainable over time. To carry the analogy further, the trade deficit I run with providers of goods and services I consume is benign if it is offset by the surplus I run with my employer through the sale of my labor. But the situation may prove unsustainable if I’m funding my consumption by taking out a second mortgage on my home. And that is essentially what the United States has been doing over the past three decades by running a trade deficit year after year. These persistent deficits are financed by net inflows of capital—which means that every year, the country must sell U.S. assets to foreign investors in order to sustain the gap between exports and imports.

Academic theory also cannot hide the basic fact that if a country imports goods it could produce domestically, then domestic spending is employing people abroad rather than at home. This tradeoff might be worth it if it frees up workers to move to more productive, higher-paying jobs. It might make sense, too, if reciprocal agreements for market access create new export-related jobs that replace those lost to competition from cheaper imports. But persistent trade deficits should, at the very least, cause policymakers to question the tradeoff and inquire as to the reasons behind the imbalance. Such scrutiny should increase with the size of the deficit. And particularly when trade deficits are the result of currency manipulation, a lack of reciprocity in market access, unfair labor practices, or subsidies, the United States should try to change the rules of trade.

The trade policy of the future should be informed by a balanced assessment of the past. On the positive side of the ledger, lower trade barriers and the proliferation of free-trade agreements in recent decades swelled the profits of many multinational corporations. That benefited not only CEOs but also middle-class Americans who hold equities in their retirement accounts. Trade helped revive many of the country’s great urban centers. Cheap imports and the rise of big-box and online retailers have made an ever-expanding class of consumer goods available to the masses. In China, India, and throughout the rest of the developing world, millions of people have been lifted out of poverty.

Yet the dark side is undeniable. Between 2000 and 2016, the United States lost nearly five million manufacturing jobs. Median household income stagnated. And in places prosperity left behind, the fabric of society frayed. Since the mid-1990s, the United States has faced an epidemic of what the economists Anne Case and Angus Deaton have termed “deaths of despair.” They have found that among white middle-aged adults who lack a college education—a demographic that has borne much of the brunt of outsourcing—deaths from cirrhosis of the liver increased by 50 percent between 1999 and 2013, suicides increased by 78 percent, and drug and alcohol overdoses increased by 323 percent. From 2014 to 2017, the increase in deaths of despair led to the first decrease in life expectancy in the United States over a three-year period since the 1918 flu pandemic.

Trade has not been the sole cause of the recent loss of manufacturing jobs or of the attendant societal distress. Automation, productivity gains, foreign currency manipulation, and the financial crisis of 2008 have played key roles, as well. But it cannot be denied that the outsourcing of jobs from high- to low-wage places has devastated communities in the American Rust Belt and elsewhere.

Of course, economic upheaval is often the price of progress, and, economists insist, comparative advantage should encourage workers to move to more productive and higher-paying jobs. But this theoretical phenomenon has failed to materialize in recent years.

Compared with those who lost their jobs in earlier periods of economic change, displaced workers in modern, developed economies typically have fewer and less attractive options. In the United Kingdom in the nineteenth century, for example, the repeal of the protectionist Corn Laws prompted agricultural workers to flee the countryside for industrializing urban areas where factory jobs were waiting. By contrast, the American factory workers who were displaced beginning in the 1990s either had nowhere to go or ended up working in low-skill, low-paying service jobs.

Rather than attempt to reverse these trends, some argue that mature economies should double down on services, the digital economy, and research and development. These sectors contribute greatly to the United States’ competitive edge, and the service sector employs most Americans today and will likely continue to do so for the foreseeable future. At the same time, however, it is difficult to imagine that the U.S. economy can serve the needs of working people without a thriving manufacturing sector.

The technology sector, for all its virtues, simply is not a source of high-paying jobs for working people. Over half of the United States’ roughly 250 million adults lack a college diploma. Historically, manufacturing jobs have been the best source of stable, well-paying employment for this cohort. Perhaps with massive new investments in education, former autoworkers could be taught to code. But even so, there probably wouldn’t be enough jobs to employ them all. Apple, Facebook, Google, and Netflix collectively employ just over 300,000 people—less than half the number that General Motors alone employed in the 1960s.

Moreover, the service and technology jobs most accessible to working people, such as data entry and call center jobs, are themselves vulnerable to offshoring. Economists have estimated that nearly 40 million service-sector jobs in the United States could eventually be sent overseas—that’s more than three times the number of current manufacturing jobs in the country.

Cheerleaders for globalization are quick to point out that many products manufactured abroad were designed by engineers and researchers located in the United States. But those jobs are not safe from offshoring, either. China is investing heavily in its universities, and India has no shortage of capable engineers. In the technology sector, in particular, there are valuable synergies from having engineers located close to manufacturing facilities. The back of today’s iPhone reads “Designed by Apple in California. Assembled in China”; tomorrow, it easily could read “Designed and Assembled by Apple in China.”

COVID-19 has exposed other problems with the erosion of the United States’ manufacturing capacity. The country has found itself overly dependent on critical medical equipment, personal protective gear, and pharmaceuticals from abroad. Even Germany and South Korea, strong U.S. allies, have blocked exports of key medical products as their own citizens have fallen ill. The crisis also has demonstrated how overextended supply chains increase the risk of economic contagion when a single link in the chain is broken. Even before the crisis reached American shores, many U.S. companies were feeling the effects of China’s economic shutdown. Now, as companies prepare to reopen their U.S. operations, many still can’t produce what they want, since their overseas suppliers do not yet have government permission to reopen.

The United States should not attempt to wall itself off from the rest of the world in response to the current pandemic, but it should reinforce its determination to maintain and grow its manufacturing base. Trade policy alone cannot do that. But as part of a broader suite of tax and regulatory policies designed to encourage investment in the United States, reforms to the rules of trade can play an important role.

A sensible trade policy strikes a balance among economic security, economic efficiency, and the needs of working people. When the administration began the task of renegotiating the North American Free Trade Agreement—one of the president’s signature campaign promises—two things were clear. One was that the agreement had become wildly out of balance, badly out of date, and hugely unpopular. The second, however, was that undoing 25 years of economic integration in North America would be costly and disruptive. The challenge in negotiating the USMCA was to right NAFTA’s wrongs while preserving trade with the United States’ two largest trading partners.

We started by identifying the main imbalances, particularly in the automotive sector, which accounts for nearly 30 percent of North American trade. Before Trump was elected, nine of the last 11 auto plants built in North America were built in Mexico. Yet 80 percent of the cars manufactured in those facilities are sold in the United States. Over time, auto companies started to use Mexico as a place not only for assembling compact sedans but also for manufacturing high-value-added parts such as engines and transmissions, as well as for producing highly profitable trucks and suvs. The net result was that the United States lost a third of its auto-industry jobs to Mexico: 350,000 since 1994, while Mexico gained 430,000.

This wage-driven outsourcing was not simply the work of Adam Smith’s invisible hand. The gap between U.S. and Mexican wages exists in part as a result of widespread corrupt labor agreements in Mexico. “Protection contracts,” as these deals are known, are struck between employers and unions, but the unions do not in fact represent workers. And the workers have no opportunity to vote on the contracts. No wonder predictions that NAFTA would cause American and Mexican wages to converge never came true. In fact, wages in Mexico are lower today in real terms than they were in 1994.

The USMCA requires Mexico to eliminate protection contracts, ensure basic union democracy, and establish independent labor courts. Rather than seek to micromanage labor policies in Mexico— as critics have charged—the USMCA sets reasonable standards that correct a major source of labor-market distortion in North America. Although the new labor provisions received a chilly reception by some parts of the Mexican business community, they were warmly embraced by President Andrés Manuel López Obrador and his government. The new obligations will not prevent companies from taking advantage of efficiencies in integrated North American supply chains. But they will eliminate a form of regulatory arbitrage that hurts American workers.

The USMCA also overhauls the “rules of origin” that govern trade in the automotive sector. All free-trade agreements contain rules of origin, which require goods to be made mostly with component materials sourced from within the free-trade area in order to qualify for duty-free treatment. In theory, NAFTA’s rules of origin specified that 62.5 percent of the value of an automobile had to be made up of parts manufactured in North America. But the rules contained a peculiar quirk: the only parts that counted in the equation were those listed on a schedule created in the early 1990s and frozen in time. As cars evolved, many expensive parts, such as dashboard electronics and navigation systems, simply didn’t figure in the calculation of North American content. As a result, cars with more than half of their value composed of parts from outside the continent could still be exempt from duties. And the problem was only going to get worse over time, as electric and autonomous vehicles came online.

After discussions with the Canadian and Mexican governments, American labor unions, and the auto companies themselves, we arrived at a solution that will result in more investment throughout the region while still allowing manufacturers the flexibility to stay competitive. The USMCA sets a higher threshold for the minimum fraction of a car’s value that must be produced within North America (75 percent). It also includes separate requirements for the minimum share of regional content in the highest-value-added parts, as well as for steel and aluminum. The USMCA makes these requirements meaningful by eliminating loopholes, and it includes a mechanism for revisiting the rules of origin in the future to keep up with industry trends.

For the first time in any trade agreement, the USMCA also includes provisions that discourage a race to the bottom in wages, by requiring that 40 percent of the value of a car and 45 percent of the value of a light truck be manufactured by workers who make at least $16 per hour. This rate is aspirational for Mexico, where wages are closer to $3 per hour, but it will create new incentives for companies to invest not only in Mexico but also in Canada and the United States. The U.S. International Trade Commission, an independent, nonpartisan federal agency, projects that increased demand for U.S.-sourced engines and transmissions alone will create roughly 30,000 new automotive-sector jobs. By my office’s estimates, the effect on the entire supply chain will be close to 80,000 new jobs.

Critics have labeled these changes “managed trade,” whereby governments set specific goals in lieu of letting market forces do their work. But rules of origin feature in all free-trade agreements. The key difference between those in the USMCA and those in NAFTA and other agreements is that the USMCA’s rules have been designed to actually work. They will ensure that the benefits of the agreement will flow principally to Canada, Mexico, and the United States, not to other countries that have not provided reciprocal market access. Indeed, NAFTA-enabled free-riding has long undermined U.S. leverage in negotiations with other trading partners. Until now, foreign automakers have been able to obtain duty-free access to the U.S. market by setting up assembly operations in Mexico, while manufacturing most of the high-value parts outside North America. With the loopholes closed, the United States will be in a stronger position to negotiate with China, the EU, and others.

The USMCA can be updated as circumstances change. It contains a sunset clause stating that it expires after 16 years. Every six years, however, the parties will have an opportunity to review the agreement and extend it for another 16 years. These periodic reviews will force policymakers in all three countries to avoid the temptation to defer maintenance of the agreement and will allow them to respond to unanticipated developments in their economies.

The principles of a worker-focused trade policy should be front and center as the United States confronts two of the most significant trade challenges it will face in the coming years: market-distorting state capitalism in China and a dysfunctional WTO.

No trade policy decision since the end of World War II proved more devastating to working people than the extension of permanent normal trade relations to China in 2000—a legal status entitling it to the lowest possible tariffs. Despite President Bill Clinton’s prediction that the move would allow the United States to “export products without exporting jobs,” the opposite occurred. The U.S. trade deficit with China ballooned to over half a trillion dollars at its peak, and economists have calculated that the loss of at least two million jobs between 1999 and 2011 was attributable to the influx of Chinese imports. At the same time, Beijing increasingly forced foreign companies to share their technology, a policy that resulted in the theft of billions of dollars in U.S. intellectual property and helped China become the world’s top exporter of high-tech products.

Without much success, the George W. Bush and Obama administrations tried to correct these problems at the WTO. Our team has taken a different approach. We spent much of the first year of the Trump administration investigating China’s history of intellectual property theft and forced technology transfer. Where the WTO rules provided a remedy—as was the case with China’s discriminatory patent-licensing practices—we filed a complaint with the WTO. But where they did not, we turned to remedies available under U.S. trade law. We carefully identified products produced by Chinese companies that had benefited from China’s market-distorting practices and imposed a 25 percent duty on those produc

We remained open to a negotiated solution, however, and in January, the administration reached a Phase 1 agreement with China under which it will stop forced technology transfer, refrain from manipulating its currency, strengthen protections for intellectual property, and eliminate a host of nontariff barriers to U.S. exports. For the first time, these commitments are in writing and enforceable through a dispute-resolution mechanism. The agreement by no means resolves all the outstanding issues, but in roughly three years, we’ve made more progress than the previous two administrations made in 16.

Most important—and often overlooked by knee-jerk, partisan critics of the deal—is that the administration has maintained pressure on China through a 25 percent tariff that remains on half of its exports to the United States, including nearly all high-tech products. These duties help offset the unfair advantage China has obtained through forced technology transfer and market-distorting subsidies. At the same time, China has made a series of purchasing commitments that will create long-term market access for U.S. exporters, particularly farmers. Whether there will be a Phase 2 depends on whether China complies with the terms of Phase 1 and whether it is willing to fundamentally change its model of state-run capitalism. Regardless, the policy in place today protects American jobs, blunts China’s unfair advantages, and minimizes the pain to U.S. exporters and consumers.

The challenges in the WTO are also vexing. Like many international organizations, the WTO has strayed from its original mission. Designed as a forum for negotiating trade rules, it has become chiefly a litigation society. Until recently, the organization’s dispute-resolution process was led by its seven-member Appellate Body, which had come to see itself as the promulgator of a new common law of free trade, one that was largely untethered from the actual rules agreed to by the WTO’s members. The Appellate Body routinely issued rulings that made it harder for states to combat unfair trade practices and safeguard jobs. This was one of the reasons why the Trump administration refused to consent to new appointments to it, and on December 11, 2019, the Appellate Body ceased functioning when its membership dipped below the number needed to hear a case.

The United States should not agree to any mechanism that would revive or replace the Appellate Body until it is clear that the WTO’s dispute-resolution process can ensure members’ flexibility to pursue a balanced, worker-focused trade policy. Until then, the United States is better off resolving disputes with trading partners through negotiations—as it did from 1947, when the General Agreement on Tariffs and Trade was signed, until 1994, when the WTO was created—rather than under a made-up jurisprudence that undermines U.S. sovereignty and threatens American jobs.

In confronting these and other challenges, the path forward lies somewhere between the openness of the 1990s and the barriers of the 1930s. Navigating it successfully will require flexibility, pragmatism, a willingness to break with past practice, and the courage to take positions that sometimes are unpopular with international elites. The United States must avoid the stale, reductionist paradigm of free trade versus protectionism, which oversimplifies complex issues and stifles creative policymaking. This almost religious approach to trade policy also obscures the fact that trade is an issue on which it is possible to achieve broad, bipartisan consensus in an otherwise divided time. After all, the USMCA won the support of 90 percent of both the House and the Senate.

This powerful consensus should last, because it is rooted in deeply held values. Where trade is concerned, most Americans want the same thing: balanced outcomes that keep trade flows strong while ensuring that working people have access to steady, well-paying jobs. Neither old-school protectionism nor unbridled globalism will achieve that. Instead, as the United States confronts future trade challenges, it should chart a sensible middle course—one that, at long last, prizes the dignity of work.

Source: The Case for the Trump Administration’s Approach to Trade

Is Taiwan the Next Hong Kong? | Foreign Affairs

China Tests the Limits of Impunity

Pro-democracy protests have rocked Hong Kong for more than a year. Now, China has imposed a draconian national security law that will undermine the territory’s autonomy and, by extension, its identity. The new law is a profound tragedy for the people of Hong Kong, but unfortunately, there is little the international community can do to halt its implementation. The administration of U.S. President Donald Trump has suggested that it will dial up pressure on Hong Kong’s government. But doing so risks hurting Hong Kong’s economy more than Beijing’s and accelerating the territory’s absorption into southern China.

Some analysts have therefore counseled U.S. restraint, arguing that a softer touch could encourage Beijing to moderate its implementation of the law and avoid making the situation worse. But there are larger issues at stake. U.S. policymakers must consider more than Hong Kong when formulating their response. A tepid U.S. reaction could leave Beijing with the impression that it can proceed with relative impunity on other contentious issues in Asia. The shadow of Taiwan looms large in this context. Unless the United States demonstrates the resolve and ability to resist Chinese coercion and aggression, China’s leaders may eventually conclude that the risks and the costs of future military action against Taiwan are low—or at least tolerable.

There isn’t a straight line from Hong Kong to Taiwan, of course. A Chinese assault on the island is neither imminent nor inevitable. But Beijing’s recent actions in Hong Kong—and elsewhere in Asia—raise worrying questions about its evolving objectives and increasing willingness to use coercive tactics to achieve them. In short, the United States must be careful not to play a narrow game on Hong Kong when Beijing is positioning itself for a broader competition for the future of Asia.

Under President Xi Jinping, China has become much more tolerant of friction in international affairs than it once was and much bolder about using coercion to advance Chinese interests—often at the expense of the United States and other powers, such as Japan and India. In recent months, China has increased its military and paramilitary pressure on neighboring countries with which it has territorial disputes, including India, Japan, Vietnam, Malaysia, and Indonesia. Whether these aggressive maneuvers were intended to remind the world of China’s resolve or to capitalize on the distraction caused by the coronavirus pandemic, they offer a stark reminder of Xi’s appetite for risk, tolerance for conflict, and desire to assert territorial claims.

Recent history reveals that the international system is vulnerable to this kind of creeping irredentism. When Russian President Vladimir Putin decided to invade Ukraine and annex Crimea in 2014, he was drawing on lessons from his 2008 invasion of Georgia. The latter created a permissive environment for the former: the Georgia invasion cost Russia little and drew only weak international condemnation. Taiwan and Ukraine occupy very different geopolitical contexts, but just as Putin factored the U.S. response to Russian actions in Georgia into his decision to invade Ukraine, China’s leaders will factor the U.S. response to the Hong Kong security law into their decisions about future aggression in Asia. Given how little Beijing’s crackdown in Hong Kong has cost it to date, we are concerned that Beijing will draw the wrong conclusions about the costs of future coercion against Taiwan.

Hong Kong and Taiwan have more in common than many analysts appreciate, both in the view of Beijing and in the sentiments of their citizens. The protests that have raged in Hong Kong for the last year resonated deeply with the people and the leadership in Taiwan. Taiwanese citizens sent protective gear to the protesters in Hong Kong, and Taiwanese President Tsai Ing-wen won reelection in January in part because she voiced support for Hong Kong’s pro-democracy movement. In a rare bipartisan move, her ruling Democratic Progressive Party, the opposition Kuomintang, and other parties jointly expressed “regret and severe condemnation” of Beijing’s national security law. Taiwanese officials have also pledged to provide refuge to Hong Kong residents fleeing Chinese repression, and some Hong Kongers appear to have taken them up on the offer. According to news reports, the number of Hong Kong residents who moved to Taiwan in the first four months of 2020 was up 150 percent from the same period last year.

The democracy movement that has so united the citizens of Hong Kong and Taiwan has allies in other parts of Asia as well. A social media movement known as the Milk Tea Alliance—a reference to the sweet milk tea popular in East Asia—has brought together activists in Hong Kong, Taiwan, and Thailand who are critical of Chinese nationalist netizens and who oppose Beijing’s new national security law. Recently, the Milk Tea Alliance spread to the Philippines, where some citizens have joined the online movement to voice concerns about Chinese aggression in the South China Sea.

But what many in Hong Kong, Taiwan, and other Asian countries see as online mobilization in support of universal democratic norms, Beijing sees as a dangerous movement of “splittists” who seek to undermine China’s sovereignty, keep China permanently divided, spread Western values, and contain China in Asia. Indeed, Chinese authorities regularly blame “external hostile forces” for the protests in Hong Kong—and for the movement’s resonance in Taiwan and elsewhere.

China’s leaders have always maintained that they are prepared to use force over Taiwan—either to prevent the island’s de jure independence or to compel its unification with the mainland. But Xi has taken a progressively harder line on Taiwan, in word as well as deed. At the 19th Party Congress in 2017, he declared that reunification was linked to his “China Dream” of national rejuvenation. Since then, he has twice stated that the separation of mainland China and Taiwan “should not be passed down generation after generation.” And in his most recent speech focused solely on Taiwan, in January 2019, he said that “our country must be reunified, and will surely be reunified.”

Even more ominous, Chinese Premier Li Keqiang omitted the term “peaceful” in front of “unification”—previously standard in official communications about Taiwan—in his annual opening speech to the National People’s Congress in May. A few days later, State Councilor and Foreign Minister Wang Yi did the same in his speech to the congress. As a former head of the State Council’s Taiwan Affairs Office, Wang was well aware of the significance of this rhetorical change. By the end of the NPC’s two-week session, “peaceful reunification” was back in the final version of Li’s work report approved by the congress—along with unconvincing explanations for its initial absence having to do with poor bureaucratic coordination.

In addition to hardening its rhetoric against Taiwan, China has sought to isolate the island diplomatically. In the last five years, Beijing has poached seven of Taipei’s formal allies, leaving only 15 countries that recognize Taiwan as an independent country. At the height of the coronavirus pandemic in May, China even excluded Taiwan from the annual meeting of the World Health Assembly in Geneva, despite the island’s global leadership in containing and mitigating COVID-19.

At the same time, China has ramped up military pressure on Taiwan. Its air force and navy have conducted more than ten transits and military exercises near the island since mid-January, including an increasing number of deliberate incursions into Taiwan’s airspace, according to research by Bonnie S. Glaser and Matthew P. Funaiole of the Center for Strategic and International Studies. In March 2019, China’s air force sent two advanced fighter jets over the centerline of the Taiwan Strait for the first time in 20 years. Since then, it has sent an increasing number of aircraft across the centerline. China’s strategic bombers have also circumnavigated the island multiple times in recent months, while other Chinese aircraft have crossed the Miyako Strait between Taiwan and Japan. All of these maneuvers were intended to intimidate Taiwan by demonstrating Beijing’s readiness to use force at a moment’s notice.

There is little Tsai can do to convince China to dial back the diplomatic and military pressure short of accepting its unilateral definition of “one China” and its “one country, two systems” model, both of which are now wholly discredited by what has happened in Hong Kong. In the worldview of China’s leaders, Tsai’s commitment to Taiwanese independence, her perceived efforts at “de-Sinification” on the island, and the growing connections between Taiwan, Hong Kong, and the democratic world more broadly all legitimize China’s saber rattling—and perhaps, eventually, its use of force. Xi appears to have made up his mind about Tsai—wrongly but perhaps conclusively. He and other Chinese leaders are still weighing the costs and benefits of a harder line on Taiwan as they take the measure of U.S. and international willpower—which is why the U.S. response to the Hong Kong law matters so much.

To deter Beijing from further aggression, the United States must make clear that there will be consequences for the national security law, particularly if Beijing uses it to justify the arrest or rendition of journalists, peaceful activists, or political candidates in Hong Kong. The U.S. Congress has passed bipartisan legislation authorizing the Trump administration to deny visas and impose other targeted sanctions against those directly involved in the crackdown on Hong Kong, and the Trump administration has indicated a readiness to implement these measures. Targeted sanctions won’t be cost-free for U.S.-Chinese relations or for the people of Hong Kong, but the United States can limit the collateral damage by implementing them incrementally, proportionately, and in concert with other powers.

The Trump administration will need to start by improving its coordination with European and Asian allies. It has issued symbolically important joint statements on Hong Kong, first with Australia, Canada, and the United Kingdom and then with the G-7. But much more diplomacy is needed to broaden that coalition and coordinate pressure on Beijing. That so few Asian governments have criticized China’s new law is deeply worrisome, as is the European Union’s initial pledge that it will merely “follow developments closely.” But before Washington can rally its European and Asian allies behind a unified message on Hong Kong, it will have to stop kicking them. Trump’s unilateral withdrawal of troops from NATO, his extreme demands for payment from Tokyo and Seoul, his threats to pull troops out of South Korea, and his disinterest in the G-7 and other groupings have pushed these allies away at a time when they would ordinarily be open to U.S. leadership. These actions have also telegraphed vulnerability, disunity, and lack of resolve among Western allies to Beijing.

But China is creating more favorable conditions for U.S.-led diplomacy on Hong Kong. Beijing’s so-called wolf warrior diplomacy, aimed at intimidating countries critical of its handling of the pandemic, combined with its recent aggression on territorial issues has alienated much of the world. The United States should seize this opportunity to make Hong Kong a diplomatic priority. In the lead-up to the Legislative Council elections in Hong Kong in September, Washington should lead the G-7, the Association of Southeast Asian Nations, the European Union, and the so-called Quad of the United States, Japan, Australia, and India in joint statements and actions warning Beijing against arresting political candidates it dislikes.

The United States and its European and Asian allies should also consider offering Hong Kong citizens residency and a path to citizenship, just as the United Kingdom has done. And if the situation in Hong Kong deteriorates—owing to arrests of candidates in the September elections, for instance—the United States should consider sanctioning the Chinese officials responsible. Such measures won’t restore Hong Kong’s autonomy in the near term, but they could discourage overt acts of repression and help shape Beijing’s thinking about Taiwan.

Staving off Chinese aggression, whether in Taiwan or elsewhere in Asia, however, will also require the United States to get serious about military deterrence in the western Pacific. Over the last two decades, the People’s Liberation Army (PLA) has made advances that seriously eroded U.S. military power in the western Pacific, especially around Taiwan. Recent operations by two U.S. carrier battle groups in the South China Sea were important demonstrations of willpower, but capacity matters, too. As former Deputy Secretary of Defense Robert Work has written, the U.S. military now faces the prospect of losing a fight with China in defense of Taiwan. The Pentagon has focused on building large platforms, such as aircraft carriers and big-deck amphibious ships, but such facilities don’t effectively deter China’s anti-access/area-denial capabilities. The United States needs to rethink its forward-basing posture, increase its cooperation and interoperability with allies such as Japan, and improve its ability to fight in highly contested environments, including through greater use of unmanned systems. The House and Senate Armed Services Committees have proposed a Pacific Deterrence Initiative that would go a long way toward restoring the United States’ competitive edge in these areas. The U.S. Congress should fund the initiative and hold the Pentagon accountable for its timely implementation.

Aiding and cooperating with Taiwan will be crucial to larger U.S. efforts to deter Chinese aggression. Washington should help Taiwan make its political system more resilient in the face of Chinese pressure and its military better able to degrade Chinese capabilities in a fight. The latter objective will not be served by selling the island the billions of dollars’ worth of M1A2 tanks authorized by the Trump administration in 2019. These do little to deter a combined naval, air, and missile campaign from China—and the PLA will always be bigger and better equipped than Taiwan’s army in a ground battle. Rather, the United States should work with Taiwan to develop asymmetric military capabilities that would actually stand a chance of deterring a Chinese invasion or attacks on critical infrastructure. The Pentagon should further assist Taiwan’s military in reforming its reserve and mobilization systems, which are critical to the institution’s long-term strength. All the while, the United States should be quietly intensifying its preparations with Japan and other capable allies for contingencies involving Taiwan.

But even shrewd diplomatic and military preparations won’t guarantee Taiwan’s security unless the United States communicates its intentions, policies, and concerns about cross-strait relations clearly and consistently to Beijing. Doing that will require senior national security officials in China and the United States to resume the kind of candid strategic dialogue that took place during the George W. Bush and Obama administrations but that essentially ended after Trump took office. As former senior directors for Asia at the National Security Council, we can attest to both the value and the limits of such a dialogue with China. Expansive discussions of global order, such as those between Henry Kissinger and Zhou Enlai, are no longer possible, as few Chinese officials now have the freedom to range far and wide in discussing China’s intentions, let alone international politics. Nonetheless, in such talks the United States can set down clear markers that underscore what it will and will not do.

In our experience, dialogue of this nature was exceptionally useful in dispelling Beijing’s worst-case assessments of U.S. intentions and in clarifying that official warnings from Washington should not be dismissed as the isolated rhetoric of “hard-liners.” Even when such discussions are frustratingly one-sided, they should be seen not as a sign of weakness but as a critical investment in avoiding misperceptions that can lead to crises. Many U.S. allies now worry about joining U.S.-led coalitions to counter China, because they fear being pulled into a competitive spiral between Washington and Beijing that has no bottom. Resuming a strategic dialogue with China would signal that the United States is interested in arresting that spiral.

The fundamentals of the U.S.-Chinese relationship are changing as Beijing becomes more willing to take risks internationally and with a larger and more coercive toolkit than ever before. The new national security law is one instance of China’s increasingly assertive behavior. We worry that more instances could be on the horizon. However, U.S. national interests have remained constant for decades, if not centuries, and they must guide U.S. policymakers now. Since the beginning of the republic, the United States has sought to prevent a rival hegemon from dominating the Pacific. The situation in Hong Kong is a reminder that advancing this objective is rapidly becoming more difficult. U.S. pressure must be tempered with skillful diplomacy to ensure that Beijing sees an international coalition moving against it but doesn’t feel so threatened that it lashes out or is able to separate the United States from its allies.

Source: Is Taiwan the Next Hong Kong? | Foreign Affairs

China is Dumping Fiber Optic Cables in the U.S. Market, Commerce Official Says | Nextgov

China is using the same tactics it employed to drive down the price of telecommunications equipment from Huawei to flood the U.S. market with fiber optic cables—crucial underlying infrastructure for fifth-generation networks—a senior Commerce Department official said.

“China is currently driving massive overcapacity in critical sectors including steel, aluminum and optical fiber cables,” said Nazak Nikakhtar, Commerce’ assistant secretary for industry and analysis.

Nikakhtar spoke on behalf of the Commerce Department during an event Thursday hosted by American Council for Technology and Industry Advisory Council (ACT IAC).

Source: China is Dumping Fiber Optic Cables in the U.S. Market, Commerce Official Says – Nextgov

The Supreme Court Delivers A Blow to Trump’s Quest for Power | Time

Trump seethed in response, taking the judicial ruling as a personal attack. “Courts in the past have given ‘broad deference’ BUT NOT ME!” he wrote on Twitter. Trump described being investigated by the Manhattan district attorney as “a political prosecution,” adding on Twitter: “Now I have to keep fighting in a politically corrupt New York. Not fair to this Presidency or Administration!”

In a pair of rulings, a majority of justices said New York prosecutors can see Trump’s financial documents in an investigation into alleged hush money payments, denying Trump’s claim that as president he has total authority to halt those records from being handed over.

In similar fashion, President Bill Clinton was ordered by the high court to provide evidence in a sexual harassment suit and President Richard Nixon was forced to give investigators Oval Office tapes.

Source: The Supreme Court Delivers A Blow to Trump’s Quest for Power | Time

Dalai Lama: ‘The People’ Have Responsibility to Fight Racial Injustice | TIME

Speaking at Thursday’s TIME100 Talks about the mass protests that have erupted across the U.S. and world sparked by the police killing of unarmed Black man George Floyd, Tenzin Gyatso, the 14th Dalai Lama, said that, “ultimately people, the public, have the power to decide.”

“Firstly, people should think more wisely, with more open mind,” he said. “So the government should take the public’s view, that’s very important.”

“The feudal system is in the past, [when] a few people decided … Today is the democratic period.”

Source: Dalai Lama: ‘The People’ Have Responsibility to Fight Racial Injustice | TIME

With ‘judges judging judges,’ rogues on the bench have little to fear

Confidential justice for judges is common in America. At least 38 states – Oklahoma among them – issue private sanctions when judges misbehave. The name of the judge remains secret, and most of these states keep from the public details of the transgression and the discipline. At a minimum, most states release summary statistics of how many judges are privately disciplined each year. Oklahoma doesn’t make that information public.

This practice – law professor Stephen Gillers calls it “judges judging judges” – undermines the system’s ability to prevent misconduct on the bench.

Source: With ‘judges judging judges,’ rogues on the bench have little to fear


Corona Capital: British homes, Asian skies | Reuters

EXTRA BOOST. British housebuilder Persimmon said on Thursday that revenue plunged more than 30% to 1.2 billion pounds for the six months ended June 30 after the housing market screeched to a halt during two months of lockdown as potential buyers were generally unable to visit homes.

But things aren’t all bad. Customer demand in the six weeks since its sales offices in England reopened in mid-May showed signs of life, with around 30% more weekly average net private sales reservations than last year.

On top of that, Chancellor Rishi Sunak confirmed on Wednesday that he will give the housing market a tax break, at a cost of 3.8 billion pounds. Thursday’s hint of a recovery pushed Persimmon shares up more than 5% and suggests Sunak jumped the gun. With the economy expected to contract almost 9% this year, the money may be needed elsewhere. (By Dasha Afanasieva)

Source: Breakingviews – Corona Capital: British homes, Asian skies – Reuters