President Trump’s disastrous trade war, which he claims was designed to save American jobs, has done just the opposite. “If I’m elected,” President Trump told workers and businesses, “you won’t lose one plant.” Yet, across our country, factory after factory has shuttered its doors. Manufacturing just shrank for the first time in nearly a decade. Trump’s tariffs have amounted to one of the largest middle-class tax hikes in decades. And many farmers — already underwater from climate change — have nowhere to export their crops because President Trump’s tantrums and tweets destroyed their markets overnight.
Beto has a better way. Having grown up in and represented El Paso, the fourth largest port of entry in the United States, Beto’s approach to trade has been shaped by his hometown experiencing the opportunities trade brings as well as the consequences workers face when labor standards are not enforced. In the wake of NAFTA and its failure to protect American workers, El Paso lost more than 22,000 jobs. But in recent years, the community’s economy has begun to recover and county unemployment has reached a 29-year low.
As President, Beto will:
- End Trump’s trade war
- Defend American values and interests against competitors like China
- Pursue trade agreements that support working families
- Work to enhance the competitiveness of U.S. workers and small businesses
I. End Trump’s trade war
Donald Trump has enacted tariffs on over $500 billion worth of goods from China, which amount to a $100 billion tax increase on American consumers and businesses, hitting low-income Americans especially hard.
Trump’s tariffs are an attack on U.S.exporters. They have driven up the price of imported intermediate parts, made the dollar less competitive, and caused other countries to retaliate against us with their own tariffs. And they have been a disaster for American farmers and ranchers, destroying their long-standing relationships with customers abroad and forcing many family farms into bankruptcy.
Beto recognizes that targeted tariffs are a tool that may sometimes be necessary, but they must not be used as a threat to drive anti-immigrant agendas or in a way that causes further pain to American businesses and workers. Trump started his trade war with China to reduce the U.S. trade deficit, but the deficit is rising, not shrinking. Auto plants have been closing, not opening. Manufacturing activity has declined. And as the U.S. may now be headed for a recession, it has become increasingly clear that tariffs are not part of a larger strategy, but rather part of a pattern of conducting foreign policy by tweet.
As President, Beto will:
- Suspend Trump’s tariffs immediately. On day one, Beto will end the trade war with China by eliminating the Trump tariffs. In exchange, China would revoke its retaliatory tariffs on American products like soybeans, beef, cars, and planes.
II. Defend American values and interests against competitors like China
The failure of President Trump’s strategy is no reason to ignore China’s anti-competitive actions. China made several commitments to open up its markets in exchange for joining the WTO, but it has failed to honor them. Instead, China has used currency manipulation, subsidies, restrictions on market access, corporate espionage and other strategies to frustrate U.S. companies’ attempts to compete in China. And it is deploying these powerful tactics as part of a “Made in China 2025” initiative to dominate industries of the future like green vehicles, telecommunications, and artificial intelligence. This is not just a question of ensuring that the United States is competitive in the 21st century — American dependence on China for our robotics, aeronautics, and information technology also constitutes a threat to our national security.
As President, Beto will:
- Modernize the World Trade Organization to address 21st century trade issues. Our difficulties with China reflect the failures of the World Trade Organization (WTO) to deal with the trade issues of the 21st century. The WTO has generally been successful in reducing tariffs around the world, resulting in lower prices and higher productivity. Yet it has proven itself unable to deal with key topics of international trade disputes, such as currency manipulation and state-owned enterprises. Moreover, despite the hopes of the architects of the post-World War II trading system, the WTO still lacks robust, enforceable labor rights. And it similarly lacks strong, enforceable environmental standards despite the clear need to address global climate change. That is why an O’Rourke Administration will demand the following reforms of the WTO:
- Updating the WTO agreement to tackle currency manipulation, competition, overcapacity, industrial subsidies, and other modern trade issues. These issues are the main obstacles to a level playing field in international trade today and a global body for solving trade disputes needs rules addressing them.
- Creating enforceable labor standards. By amending WTO agreements to include the International Labor Organization’s core conventions, Beto would ensure the WTO combats child labor and protects collective bargaining rights. Countries’ failure to uphold these standards would be considered an unfair subsidy and subject to countervailing duties.
- Making “sustainable development” an explicit goal of the WTO. This would require that WTO rules be interpreted consistent with this fundamental value and ensure that any national efforts to advance the globally established Sustainable Development Goals should be considered presumptively permissible.
- Improving the WTO dispute settlement system. Beto would solve the current impasse over the WTO’s dispute settlement system while ensuring that it respects negotiated outcomes.
- Lead a global coalition to stop China’s anti-competitive behavior.Modernizing the WTO is critical for the long-term health of the global trading system. But as it does not have adequate authority or appetite to address the most pressing problems in international trade, Beto will not take action off the table to defend our values and interests.
As President, Beto will launch an aggressive WTO case with other countries against China, arguing that it has failed to live up to the specific commitments it made when it joined the WTO. If the case does not bring swift changes in China’s behavior, he will also be prepared to act unilaterally to enact a series of progressive actions that will increase pressure on China. Unlike Trump, Beto will work with our allies while bringing that pressure. Actions Beto will consider taking against China if it does not change its behavior include:
- Delisting Chinese companies from U.S. stock exchanges when they refuse to make their audit work-papers available for inspection by the U.S. Public Company Accounting Oversight Board
- Limiting access to the U.S. banking and financial system to Chinese companies that have been found — after receiving due process — to be stealing U.S. companies’ intellectual property.
- Screening and potentially limiting Chinese investment in certain U.S. sectors until it ends its most egregious anti-competitive practices.
- Working with our allies to be prepared to engage in concerted countervailing duties cases in sectors that are injured as a result of Made in China 2025 subsidies. This is in stark contrast to the broad duties Trump has announced, which cover over half a trillion dollars in imports, and which have already pushed the average tariff rate on Chinese imports from 3 percent to around 20 percent.
- Aggressively counter currency manipulation. The most effective way for a country to boost its trade balance is not tariffs — but rather by reducing the value of its currency to make its exports cheaper and imports from other countries more expensive. China recently taught President Trump this lesson when it reacted to a recent round of announced tariffs by letting its currency fall. Over the course of the “decade of manipulation” of 2003–2013, currency manipulation cost the U.S. up to 5 million jobs.
Beto will take real action to address currency manipulation when it arises including:
- Investing in the analysis needed to detect currency manipulation.Countries increasingly rely on informal forms of manipulation that are difficult to detect by, for example, using state-owned enterprises to intervene in currency markets. Beto will invest in the expertise needed to study and detect those forms of manipulation.
- Revamping the U.S. Treasury Department’s currency report to focuson countries that have large trade surpluses and substantial trade balances with the U.S.
- Enabling the federal government to engage in defensive, countervailing currency intervention in extreme cases. When countries continue to engage in currency manipulation after warning from the U.S. Treasury Department, the federal government could intervene by offsetting another country’s purchases of dollars by purchasing other countries’ currency. The U.S. would encourage other countries that have been afflicted by manipulation to participate as well.
- Consider other ways to counter currency manipulation, particularly in the case of China — which forbids the purchase of its domestic bonds by foreigners. The U.S. would consider options such as taxing its purchases of U.S. assets if the revamped currency report finds it to be a manipulator and it ignores our warnings.
III. Pursue trade agreements that support working families
Beto not only believes that trade can unlock economic growth across the country, but that trade agreements can provide opportunities to address income inequality as well as global problems that require international coordination. As president, Beto will aggressively seek trade agreements that center on the needs of working families and will prioritize labor rights and environmental standards during trade agreement negotiations. Trade agreements will not include provisions that restrict governments’ ability to regulate in the public interest, such as locking in pharmaceutical patent lengths. Beto will not sign any agreement unless its benefits for working families and the environment are clear.
As President, Beto will:
- Negotiate trade agreements with strong labor and environmental standards. This will make it easier for countries to compete with one another based on productivity and innovation instead of how successfully they suppress labor unions and how much they pollute the environment. All agreements will:
- Include the core labor rights of the International Labor Organization and other key labor protections such as strong country-specific minimum wages.
- Include the provisions of the Paris Climate Accord and other key environmental protections addressing issues such as deforestation, wildlife trafficking, and whaling.
- Prevent the race to the bottom that is international tax competition by committing to the OECD Base Erosion and Profit Shifting Project.
- Avoid net declines in union membership or increases in U.S. income inequality without offsetting changes to tax, labor and other economic policy as part of the same legislative package.
- Require major employers in industries that would benefit from an agreement to sign neutrality agreements with labor unions that will make it easier for their workers to form a union. This will help ensure that workers share in the gains of trade instead of having their voices diminished.
- Create an independent Trade Enforcement Commission. Beto will call for creating a Trade Enforcement Commission that is independent of the Office of the U.S. Trade Representative to identify violations of labor and environmental standards. It will use dedicated resources, technology, and data to dramatically increase the speed with which violations can be investigated and determined. When the commission concludes that there is a violation, the U.S. government will be required to bring a case. This will come with a commensurate increase in the number of trade prosecutors with the authority and technical tools to investigate violations — and bring cases against violators.
- Build enforcement capacity in developing countries. Recognizing the difficulty some developing countries have in enforcing labor and environmental standards, the U.S. and foreign governments would collaborate on the inspection of facilities that may be violating standards. Facilities found to be in violation would be denied preferential tariffs and, in some cases, access to the U.S. market altogether. This is modeled off the U.S.-Peru agreement’s timber annex.
- Enact strict rules of origin. Rules of origin ensure that only the parties in the agreement benefit from it, but those rules are typically weak. Under the Trans-Pacific Partnership, for example, 55 percent of the components of a car could have been made in countries that were notparty to the agreement and its rules on labor and the environment. Beto will enact strict rules of origin in new trade agreements while collecting better data so that exports from countries not party to the agreement do not get the benefit of tariff reductions without playing by those rules.
- Include labor, environmental and consumer groups in trade agreement development. Beto will include representatives from each of these groups and small business in every Trade Advisory Committee to ensure that their voice is heard. U.S. International Trade Commission reports will include specific analyses of industry- and region-specific dislocations and job losses, assessments of environmental risks and opportunities, and potential effects on small and minority-owned businesses, union membership, and income inequality. The ITC will also periodically perform analyses of existing trade agreements and reciprocity evaluations to identify countries with unfair practices that could be worth addressing in future agreements such as labor rights, environmental practices, and misaligned currencies.
IV. Work to enhance the competitiveness of U.S. workers and small businesses
Beto also believes that strengthening American workers will require more than trade policy. Trump has used his attacks on immigrants and other countries to distract from his broken promises of an infrastructure bill, ending tax incentives for corporations to invest overseas, and making policy decisions that create “more jobs and better wages for Americans.”
Beto has proposed several domestic investments that will make American workers more competitive, such as a plan to boost small business growth, a 21st Century Labor Contract to support workers’ opportunities and rights, a plan to address inequality in K-12 education and an immigration plan that would increase U.S. competitiveness by further unlocking the potential of immigrants.
He will also adopt several other policies aimed at specifically boosting U.S. competitiveness including:
- Reverse Trump’s tax bill rewarding companies who shift jobs overseas. Reform our tax code so it no longer rewards companies for shifting production and jobs overseas. This includes taxing corporations’ overseas profits at the same rate as their U.S. profits, ending the deduction for Foreign Derived Intangible Income, and strengthening the Base Erosion and Anti-Abuse Tax. Moreover, Beto would couple this with a major increase in IRS enforcement resources directed to auditing large corporations, which are far less likely to be audited today than a decade ago.
- Make a substantial investment in workforce development and training for American workers. As outlined in his plan to support American workers, Beto will provide free community college with credits leading to a four-year degree or high-quality occupational training that is in demand among employers. He will also invest $90 billion to help create 5 million paid apprenticeships linked to good jobs over the next decade and will triple funding for the Department of Labor’s Adult Training programs to $2.4 billion a year to allow more Americans to attend higher quality training programs. Beto will also require publicly traded corporations that boost executive pay to also invest in training for their workers making less than $100,000.
- Triple funding for the Manufacturing Extension Partnership to help America’s small and medium-size manufacturers compete in global markets. Beto will increase federal funding from $140 million to $420 million for the Manufacturing Extension Partnership in order to boost the competitiveness of America’s small- and medium-sized manufacturers. Independent research indicates that the program generated a financial and economic return of 14 to 1. The Trump Administration, on the other hand, has proposed eliminating this highly effective program in the middle of its unnecessary trade war.
- Increase and sustain federal funding for the 14 manufacturing innovation institutes, which are public-private partnerships where industry, academia, and government scientists conduct and apply research in advanced manufacturing. Federal funding is limited to just $1 billion over five years at which point private support is intended to fill the gap. Yet, relying on private support could mean that the institutes may shift their focus from the needs of small and medium-sized U.S. manufacturers.
- Scale up U.S. federal spending on research and development from its current level of 0.7 percent of GDP so it doubles to the level where it was in the early 1980s. This includes tripling the amount of federal funding for research in Artificial Intelligence, an area where China is mobilizing massive amounts of resources and leaving us behind.