International Trade And U.S. Manufacturing Get Prime Time Exposure In Second And Third Presidential Debates by Patrick Togni

by King & Spalding

In contrast to their first debate encounter, President Obama and Republican candidate Mitt Romney engaged on international trade issues extensively during the second and third presidential debates, which were held on October 12 and October 22, 2012, respectively. How to spark a rebirth of American manufacturing was also among the issues debated by the candidates.

Second Presidential Debate (October 12, 2012)

Mr. Romney fired the first salvo in response to a question about tax policy and emphasized his plan for improving the economy through increased international trade, “particularly in Latin America.” This is consistent with the Republican national platform, and Mr. Romney touched on his goal for dramatic expansion of trade with Latin America multiple times.

Mr. Romney also restated his goal that the U.S. should crack down on China “when they cheat.” China trade policy also became a means for Mr. Romney to distinguish himself from former President George W. Bush, when he said that “I’ll crack down on China, President Bush didn’t.”

President Obama responded to that statement that “when he talks about getting tough on China, keep in mind that Governor Romney invested in companies that were pioneers of outsourcing to China[.]” President Obama also highlighted import relief that he imposed against certain imports of Chinese tires, which was the first and only use by any American president of Section 421, a special import safeguard mechanism included in China’s accession to the World Trade Organization (“WTO”) that ends in late 2013. President Obama previously mentioned that trade action in his most recent State of the Union address, and said again in the second debate that “we saved 1,000 jobs. And that’s the kind of tough trade actions that are required.”

Another round of sparring between the candidates on China trade related to currency manipulation. Mr. Romney emphasized that China has not played by the rules by “artificially holding down the value of their currency,” which enables price undercutting by Chinese imports. Mr. Romney noted the President’s ability to label China “as a currency manipulator, but [he] refuses to do so.” As a result, Mr. Romney repeated a long-time campaign promise, on the first day of his presidency, to “label China a currency manipulator, which will allow me as president to be able to put in place, if necessary, tariffs” to assist U.S. manufacturers that are being affected by such practices. Mr. Romney also mentioned the harm caused by continued intellectual property theft by China at the expense of U.S. manufacturing and innovation.

President Obama did not directly respond to Mr. Romney’s promise to label China a currency manipulator at the beginning of his presidency, but explained that China’s currency “has actually gone up 11 percent since I’ve been president because we have pushed them hard.” President Obama also said that “we’ve put unprecedented trade pressure on China” and that this will “help to create jobs here.” Additionally, President Obama cited a “task force for trade that goes after anybody who is taking advantage of American workers or businesses and not creating a level playing field.”

Both candidates again heralded the benefits of free trade agreements and indicated that any Romney administration or Obama second term would continue to push for additional trade pacts to open up more markets to exports by U.S. manufacturers. This is an issue on which the candidates appear to be conveying the same message to voters, although President Obama has also emphasized labor and environmental aspects of those trade deals in the past while Mr. Romney has not.

As to bringing manufacturing back to the U.S., Mr. Romney repeated the need for a level playing field and cited China’s intellectual property theft and currency manipulation as reasons for the decline in the country’s manufacturing base. Mr. Romney also tied back to his general plan to spark growth in the U.S. economy by making “America the most attractive place for entrepreneurs, for people who want to expand their business.”

President Obama stated that “we have to emphasize manufacturing.” He also cited increased commitment to research and development, and the education of a new generation of engineers that will be required to drive the next era in American manufacturing that emphasizes “high wage, high skill jobs.”

Third Presidential Debate (October 22, 2012)

The third and final debate offered the candidates another opportunity to address international trade. Not surprisingly, China once again took center stage.

In response to a question regarding “the rise of China and future challenges for America,” President Obama stated that “we have brought more cases against China for violating trade rules” than the Bush Administration. President Obama also cited a recent victory for the U.S. at the WTO in matter regarding Chinese tariffs on certain U.S. steel products, and that “steelworkers in Ohio and throughout the Midwest” will now be able “to sell steel to China because we won that case.” President Obama also mentioned his Chinese tires safeguards action and highlighted Mr. Romney’s criticism of that move, despite its beneficial impact on American workers and manufacturing.

Mr. Romney again promised that “on day one I will label [China] a currency manipulator which allows us to apply tariffs when they’re taking jobs.” Debate moderator Bob Schieffer of CBS News asked a follow-up question about the risk of what he called a trade war following any decision to declare China a currency manipulator. Mr. Romney responded that China would be averse to a trade war with the U.S. because of the importance of the U.S. to their economy. Mr. Romney further stated that “there’s [a trade war] going on right now that we don’t know about. It’s a silent one and they’re winning.” In particular, Mr. Romney cited the “enormous trade imbalance with China.” Mr. Romney offered a more conciliatory tone and stated that “I want a great relationship with China,” but he concluded “that doesn’t mean they can just roll over us and steal our jobs on an unfair basis.”

President Obama stated his insistence that China “plays by the same rules as everybody else,” but he also identified areas of progress regarding China trade during his term, including the doubling of U.S. exports and an increase in China’s currency level to the “most advantageous point for U.S. exporters since 1993.” President Obama also discussed steps to pursue improvements in the U.S.-China trade relationship on a wider basis, including deeper trade relations “with countries other than China so that China starts feeling more pressure about meeting basic international standards.”

In sum, international trade remains a key issue in several hotly contested states. As a result, the candidates devoted substantial attention to this topic in the second and third presidential debates which will continue through Election Day on Tuesday, November 6, 2012.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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