Trade Cases

Leibowitz: The Party Platforms on Trade

Written by Lewis Leibowitz

Trade attorney and Steel Market Update contributor Lewis Leibowitz offers the following update on events in Washington:

Time was we looked with great interest at the deliberations of the party platform committees to see who was the most influential—young vs. old, moderates vs. conservatives vs. progressives, etc.

In this year of the pandemic, the entire nominating process has been turned topsy-turvy. The declining role of the party platform reached a new level, for example, with the adoption this year of the Republican Platform of 2020. It turned out that the platform of 2020 is precisely the same as the platform of 2016. The Platform Committee will not meet this year, due to the pandemic, and therefore the 2016 Platform will be readopted.

The Democratic party did not see it that way. Despite the pandemic, and the almost entirely virtual convention, the Democrats adopted a platform at the end of July.

The platforms cover a multitude of issues, of course; I will, as is my mandate, focus on international trade policy. Reading the Republican Platform of 2016, I noted that a number of issues were not exactly timely, but plenty of them were timely. President Trump was true to the basic themes of the 2016 platform, including proposals for an economy de-coupling from China. The 2016 Platform noted that China had manipulated its currency, excluded U.S. products from government procurement and subsidized Chinese companies “to thwart American imports” into China.  “A Republican president will insist on parity in trade and stand ready to implement countervail­ing duties if other countries refuse to cooperate.”

However, the Republican Platform said in 2016 (and therefore repeats in 2020) that “we look to broaden our trade agreements with countries which share our values and commitment to fairness, along with transparency in our commercial and business practices.” While the NAFTA was replaced this year with a quite similar USMCA, and an agreement with Korea was signed in 2018 (which did not increase any U.S. obligations), other trade agreements have been harder to come by. 

On the Democratic side, there was a new platform adopted by the Party last month. The focus is different, but many of the policies are similar. Democrats focus more on labor and less on business; that difference has driven the two parties’ agendas for decades.

The Democratic Platform promises to protect American jobs by focusing on trade deals that protect American workers against unfair foreign competition, including foreign policies that rely “on the abuse of workers.” Again, this is not anything new. However, what is new is that the Democrats make a commitment to no new trade deals “before first investing in American competitiveness at home.” New trade deals, when negotiated, will emphasize “strong and enforceable standards for labor, human rights, and the environment in any future trade agreements, so that they build the American middle class, create jobs, raise wages, and strengthen our communities.” As in the past, these are words we have heard before. If the Democrats are serious about these conditions, the likelihood of new trade deals is not good.

However, the Democrats vow to mobilize “more than half the world’s economy” to stand up to China and negotiate from a position of maximum strength. A tall order without trade agreements to encourage Allied cooperation. 

The Democrats sound very much like Republicans (from four years ago, at least) on the rivalry with China. Democrats resolve to protect American workers from unfair Chinese government trade practices. “We will rally friends and allies across the world to push back against China or any other country’s attempts to undermine international norms.” Republicans are concerned with American workers too.

Neither party platform goes into detail about the future of tariffs on steel and aluminum and other trade restrictions on China, or Iran, or other countries. There is no mention of unfair trade actions, nor a commitment to back the World Trade Organization (or to defy it).

In short, the party platforms in many ways sound more alike than different when it comes to trade policy. The policy choices the next administration makes with regard to international trade matters will depend on constituents and voters pressuring the administration, which, whoever wins, will not be constrained to any great degree by the party platforms of the victors.

Because the Republican Platform is literally a holdover from 2016, it does not address the current disputes with allies that make it difficult to agree with them on common action against China. It is obvious that each party will use trade as a lever with friend and foe alike to alter their conduct. Our trading partners will exert similar pressure on us to alter our conduct.

Ironically, both parties have a chance to accomplish new trade initiatives to encourage our allies to take action to put pressure on China and other adversaries, like Russia and Iran. A second Trump administration may need to walk back some of its actions that hurt our traditional allies, while Democrats will need to convince organized labor that such deals are good for them and the country. Both parties will be challenged to make the trade situation work better for the U.S. and our allies.

Getting cooperation from our allies may be a somewhat greater challenge for a Republican administration than a Democratic one, because the Trump administration trade agenda has antagonized traditional allies over the last four years. However, neither party has articulated a plan to get help from our traditional allies to “stand up” to China or other adversaries without making agreements that are a “win-win” proposition for both sides.

Democrats have put organized labor in the driver’s seat on trade policy by holding up on new trade deals that don’t “protect” American jobs, whatever that may mean. Platforms once meant a lot—not so much anymore.

I look forward to sharing ideas with you at the virtual SMU Steel Summit this week. 

All the best.

The Law Office of Lewis E. Leibowitz

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Lewis Leibowitz, SMU Contributor

Lewis Leibowitz

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