WA China Watch Digest Special!

Interview: Eric Schinfeld on Washington state China trade, TPP, and Trump, Clinton trade rhetoric

Eric Schinfeld in 2012. Source: YouTube screenshot.By Wen Liu   Aug. 16, 2016

Washington Council on International Trade (WCIT) has been promoting the state’s international trade since 1973 and China trade since 1979. While Washington has done really well in China trade, running a surplus instead of a deficit, studies show millions of American jobs lost, including in Washington, since China’s WTO accession. So does Donald Trump have a point? Meanwhile, TPP, the Trans-Pacific Partnership, which the Council has been actively promoting, is now opposed by both Donald Trump and Hillary Clinton. How is the Council reacting to that? With populism surging in this election year, would Washington’s trade be affected under a new president, either Trump or Clinton? For these and other questions, we have none other than Eric Schinfeld, president of WCIT and executive vice president of the Seattle Metropolitan Chamber of Commerce:

WCWD: China trade has been a big deal for Washington state. In 2014, we exported over $20 billion to China and imported about $8 billion from China. And in 2015, we exported over $19 billion while imported about $10 billion. Would you say that China trade has been pretty good a deal for Washington state, ever since the normalization with China in 1979?

Eric Schinfeld: Trade with China has absolutely benefited Washington state. China is our largest trading partner, and our exports to China have increased almost 600 percent from 2004 to 2013. Not only do Washington companies look to China as a key export market, but China is also an important part of our manufacturers’ and retailers’ supply chains. Our thriving relationship with China also brings around 100,000 Chinese tourists to Washington state each year. Trade with China – both imports and exports – create thousands of local jobs in Washington in everything from agriculture to tourism.

WCWD: But Donald Trump, the Republican presidential nominee, has been very critical of China trade, China’s accession of the WTO, its currency policy, its intellectual property theft, etc., saying that China was “raping” the U.S. with its unfair trade policy. Economic Policy Institute said that growth in the U.S. goods trade deficit with China between 2001 and 2013 eliminated or displaced 3.2 million U.S. jobs, 2.4 million of which were in manufacturing, with 59,000 jobs lost in Washington state, including 26,700 jobs in computer component and semi-conductor manufacturing. So do you think Trump has a point in blaming China trade for the massive American job losses?

Eric Schinfeld: The way we do business has changed rapidly over the past few decades due to technological advances and globalization. We should be careful in blaming any one country or getting into a trade war – especially with our top trading partner. An example of how a trade war can harm local businesses is REC Silicon in Moses Lake, which has been caught in the crossfire of retaliatory tariffs on solar panels between the U.S. and China; REC has had to temporarily shut down some of their facilities, costing high paying U.S. jobs in a part of our state that needs them badly. Yes, there are significant changes to China’s trade policies that we must work to resolve, such as making sure we have the same access to their market as they have to ours, and can invest in the Chinese industry sectors in a competitive manner. Yes, China must increase its efforts to end cyber theft and piracy, to enforce current trade policies and protect intellectual property. But overall trade with China has benefited our state much more than it has harmed it, by providing enormous markets for our goods and services and helping our companies leverage efficient supply chains that create jobs and lower costs for U.S. consumers. We must keep this in mind when we consider the tactics we use to address trade policy issues with China.

WCIT

WCWD: You worked hard in promoting TPP, the Trans-Pacific Partnership, for Washington state and have been very vocal in criticizing Donald Trump who called the TPP a horrible deal that would hurt American workers and that the U.S. should withdraw from it. In an official response you said that “Donald Trump makes sensationalist claims to generate attention,” and that “he is flat out wrong about the role international trade plays in our economy.” What would the TPP do for Washington state and why is Trump wrong?

Eric Schinfeld: WCIT doesn’t make attacks on specific candidates; in fact, we’ve been critical of both major parties’ presidential candidates in terms of their rhetoric on trade policy. The most frustrating part of the campaign conversation is that the TPP actually addresses the very issues that they claim makes the TPP problematic; it tears down trade barriers in foreign countries that prevent U.S. exports from being competitive and helps the U.S. write the rules for the way global trade is conducted. In fact, the TPP improves NAFTA, something Trump himself has said he wanted to do. In addition, the TPP not only eliminates 18,000 tariffs, but also addresses other trade barriers that are important in the 21st century economy. For instance, it makes rules, regulations and customs procedures consistent and transparent, it prevents state-owned enterprises from having unfair advantages, it opens opportunities in digital economy by enabling flows of data across borders and protecting a free and open internet, and it raises environmental and labor standards in places like Vietnam and Malaysia. With Washington state’s trade-dependent economy (40 percent of our jobs are tied to trade) and strong trade relationships in the Pacific Rim, our state in particular stands to benefit from the TPP.

The Washington Council on International Trade and Association of Washington Business released a study last month that found that – had the TPP been implemented in 2015 – Washington’s exports would have been up to $8.7 billion higher and we could have created up to 26,000 additional jobs. Washington industries that would especially benefit are agriculture, aerospace and software. In addition to the valuable market access provisions in the TPP, the trade agreement also gives us the tools to raise global trade standards and enforce those standards – something we do not have the power to do without the trade agreement.

WCWD: But it is not just Donald Trump, Democrat presidential nominee Hillary Clinton has also taken positions against the TPP and against China regarding the WTO, saying the TPP agreement didn’t meet her high bar for creating jobs, advancing national security, etc., and that China benefitted from WTO and should play by WTO rules, etc. Do you agree with her criticisms?

Eric Schinfeld: Again, WCIT is disappointed by the anti-TPP rhetoric that is so prevalent this election season, and we are working hard to get the actual facts out into the public discussion. As Secretary of State, Clinton referred to the TPP as “the gold standard,” and the agreement has only improved since she left office. It’s important not to let politics overshadow the clear benefits of this high-standard agreement.

Clinton’s newfound TPP criticisms ignore the vast benefits of this pioneering agreement. Not only could the TPP create up to 650,000 American jobs, but it could increase real incomes by $131 billion by 2030. Like I said, our own study shows that the TPP could spike Washington exports by $8.7 billion in a single year, and generate up to 26,000 local jobs. But not all the benefits are so easily quantified: the TPP would also enhance national security, create strong trade ties with allies, and provide an avenue for economic integration with the booming Pacific Rim region. Through the “Pivot to Asia,” the U.S. formally recognizes the significance of this region, and the TPP is a key tool for collaboration and partnership.

Like Clinton, WCIT is hopeful that China will be an active player in the WTO, a negotiating mechanism that can establish high-standards for Pacific trade. The WTO is an important tool in creating and enforcing rules that benefit all of its member states, their businesses, and their residents.

WCWD: The 2016 presidential election season seems to say what the former Secretary of the Treasury Larry Summers put it recently, “It is clear after the Brexit vote and Donald Trump's victory in the Republican presidential primaries that voters are revolting against the relatively open economic policies.” With this in mind, are you worried that Washington state’s China and international trade could be affected under either a President Donald Trump or a President Hillary Clinton, and how?

Eric Schinfeld: Given the volume of anti-TPP rhetoric, you might be surprised to learn that the majority of Americans understand the economic benefits of the TPP and free trade in general. Our recent poll shows that 54 percent of Washington’s registered voters support the TPP, with only 23 percent in opposition. Further, 58 percent of Democrats are supportive of this agreement, as well as 56 percent of Republicans. National polls tell the same story: 55 percent of voters back international trade.

We hope that what Clinton and Trump purport while campaigning is just that – campaign politics. For a state like Washington, where 40 percent of jobs are linked to trade, it is imperative that leadership stands for good trade policy, whether it’s with China or the Pacific Rim at large. Businesses, employees, and residents alike stand to benefit from the global competitiveness that the TPP would offer.

(For more information on major events in Washington state-China relations, go to WA China Chronicle.)