Given the ongoing trade dispute between the U.S. and China, this should be required reading for anyone following politics and international affairs.
- Build coalitions. I believe this is biggest mistake but also most easily rectifiable error the Trump administration has made to date. I cannot think of an issue in recent modern political history which garnered more broad-based support that a major political figure worked so hard to turn into opposition. Democrats, Republicans, business, labor, nationalists, globalists, Australians, and Germans believe Chinese economic behavior is a fundamental threat. Virtually any constituency you turn to would express profound concern about Chinese economic policy. The Trump administration however has managed to turn virtually all of them against their poorly conceived Tweet led trade conflict strategy. Get a political director and Capitol Hill liason who does nothing but shuttle between meetings to get Democrats and labor on board as well as GOP inclined business, bankers, and nationalists. At the same time, hire people in State and Treasury and put them on a never-ending plane ride between capitals rounding up international support to confront China. You are building a 21st century economic version of NATO for the new Cold War. You have to build a deep and coordinated economic alliance.
- Show your dedication to free tradeand alliance partners. If Trump wants to confront China, which he should, he needs to show his dedication to the principle of free trade. From NAFTA to TPP, the Trump administration should make showing US commitment to those agreements and allies a priority. Any disagreements you have with TPP wording or specific industries in NAFTA, are literally the definition of Jeff Bezos spending time chasing a $1 bill in the wind. This is important for three reasons. First, Beijing strategy is always to separate alliances. US going all in on TPP and NAFTA will cause a mushroom cloud from Chairman Xi’s office. Second, alliance partners are not going to challenge Beijing unless Washington is unconditionally providing cover. One of the things that has happened is no one has challenged Beijing because they are so afraid of what Beijing will do. If other governments and firms do not believe this is a concerted and sustained effort where they feel they will be protected, you will struggle to build a coalition. Third, President Trump cannot actively confront China over free trade and impose punitive measures restricting trade with China, when he is actively engaging in trade restriction with even long trusted allies. If the target is China, target China. If the target is an industrial dispute with a ally like Canada, seek to resolve the dispute rather than turn them into larger conflicts between allies. You need to be consistent in your approach.
- Develop the argument and intellectual framework. I cannot think of a time when such an overwhelmingly strong intellectual and evidentiary argument was so poorly presented. That means focusing on what really matters: Chinese protectionism from trade and investment. Forget the obsession with bilateral trade deficits and arguing over whether China should be in the WTO. Whatever you think President Trump, those are irrelevant points that make you seem petty, vindictive and lacking understanding about what is happening. The goal is not to subjugate or humiliate China, the objective is to get them to change their behavior to they behave like the rest of the world with regards to trade and investment openness, respecting contracts, and intellectual property acceptance. This pushing for increased market access in trade and investment where evidence of rank protectionism and national discrimination is simply overwhelming. Focus, focus, focus, and repeat, repeat, repeat the argument and present the evidence of how even by emerging market standards, China is a closed market. We are not talking national security secrets here, China still maintains an effective state-owned monopoly on salt. Focus on what matters, what you want, and where your strongest arguments and evidence are.
- Expand the board. While One Belt One Road program is little more than a PR campaign, perceptions matter. While China is touting this revolutionary plan that in financial terms from Beijing is effectively a rounding error, the Trump administration downsizing key organizations like the State Department and talking about closing of America from the world. You cannot effectively challenge China’s creeping authoritarianism globally by retreating from investing in American influence internationally. George Bush remains very popular in Africa for his administrations efforts in development assistance specifically targeting anti-AIDS work. Emerging Asia is practically crying out for US attention after the benign neglect of the Obama administration. Much of emerging Asia have decidedly favorable views of the US and would welcome a balancing influence to China with India being decidedly concerned over Chinese influence. This requires filling senior positions as well as rank and file State Department and related position. Furthermore, the Trump administration should actively pursue a new development assistance plan designed to build up allies with improved market access, investment schemes, and public health and infrastructure development on a concessionary or grant assistance basis.
- Institutions matter. Whether it is the WTO, the ADB, the World Bank, the IMF, or ASEAN, liberal international interests and the United States are better served by investing in them how they serve a law based system that restrains power. The United States is at cross purposes confronting China about a range of activities while simultaneously retreating from its role of international leadership. There are lots of good people, both Republican and Democrat to career civil servants, that are well placed to lead efforts in this Herculean task that has been put off for so long. It is in the US interest to invest in them.
- Messaging and perceptions matter. Even though you are fundamentally right about Chinese protectionism, Trump administration are losing the messaging and perceptions battle because of the complete lack of messaging discipline from the top down. From the Twitter that veers from angry rants to conciliatory note passing to the constant stream of conflicting and back biting leaks, messaging is a complete and total mess. What makes this so inexplicable is that the White House can stand on facts. As the saying goes in the legal profession, if your client is innocent you argue facts and if your client is guilty you argue the law. Somehow despite having the best and easiest argument that China is a protectionist country, the Trump White House has singularly failed in presenting straight forward fact based evidence and arguments. This means taking the argument and evidence to the American people. This means using language and messaging that brings in allies who feel protected about their firms complains in China. Probably the biggest thing: GET OFF THE DAMN TWITTER ABOUT CHINA!
Also, keep your eyes peeled for a new post from me in the next few days. I’ve lacked the motivation to write these past few weeks, but I’ve just about finished a new piece on Germany’s international leadership (or lack thereof).