What’s Former Representative Beto O’Rourke’s Policy on Trade?
September 12, 2019
This is the second in a series on 2020 presidential candidates and their trade policies. As more candidates release their detailed trade plans, the Scholl Chair will write similar in-depth analyses. Former representative O’Rourke is the second major candidate to do so at length. Read our analysis of Senator Elizabeth Warren’s plan here.
In late August, former representative Beto O’Rourke became the second candidate to release a comprehensive trade platform. His plan has many similarities to the goals of the Trump administration’s current trade agenda with its emphasis on improving U.S. trade agreements for workers and getting tougher on China. However, O’Rourke denounces the recent tariffs on China and calls for cooperation with allies and the World Trade Organization (WTO) to resolve disputes. His plan would alter the approach the United States takes to trade negotiations by placing higher priority on labor and environmental standards and benefits for domestic workers.
Q1: What does O’Rourke think about China?
A1 : In “Trade for America” O’Rourke takes a tough stance on dealing with China. His policy platform emphasizes working through the WTO and with allies to put pressure on China to rectify its trade policy and put it in line with U.S. objectives. He stated in the first Democratic debate, “. . . when have we ever gone to war, including a trade war, without allies?” In line with the Trump administration’s diagnosis, O’Rourke alleges that China is engaged in currency manipulation, unfair subsidies, restrictions on market access, and corporate espionage. His plan calls for immediately suspending all tariffs the Trump administration has implemented on Chinese goods and states that China would in turn remove its retaliatory tariffs. However, O’Rourke pledges to continue to press China on its trade practices. Other actions O’Rourke suggests his administration could take on its own to pressure China include delisting Chinese companies from U.S. stock exchanges, preventing access to U.S. financial systems for companies found to be stealing intellectual property, and limiting Chinese access to investment in the United States.
O’Rourke’s plan relies on working with and through the WTO to address disputes with China. He calls for the modernization of the WTO through new agreements and dispute settlement systems to handle currency manipulation, subsidies, competition, and overcapacity. He also wants to amend WTO agreements to create enforceable labor standards. He would achieve this by classifying a failure to uphold standards as an unfair subsidy, making rule-breakers subject to countervailing duties. However, it is not clear how O’Rourke would go about achieving these changes in the WTO. He also plans to leverage existing WTO rules to hold China accountable. His trade policy agenda calls for an international coalition to bring a WTO case against China on the grounds that China has failed to fulfill its WTO commitments.
Chinese currency manipulation is also a major concern. He calls for the United States to increase analysis to detect and counter currency manipulation and revamp the Department of Treasury’s currency report. The Trump administration recently formally called China a currency manipulator even though China’s recent actions do not meet the definition of currency manipulation as defined in the 2015 Trade Facilitation and Trade Enforcement Act. China had previously been engaging in actions to strengthen the renminbi (RMB), which may have qualified as currency manipulation under the Omnibus Trade and Competitiveness Act of 1988. However, the Trump administration moved to formally declare China a currency manipulator only after China allowed the value of the RMB to drop against the dollar by not intervening to artificially strengthen their currency. Due to these circumstances, most experts do not consider China to currently be engaging in currency manipulation. Democrats could challenge President Trump on this issue and argue that China is not a currency manipulator, but such a route would not be politically popular.
Q2: How does O’Rourke’s approach to free trade agreements (FTAs) compare to other candidates?
A2: O’Rourke shares the same broad goals as other candidates and President Trump in prioritizing U.S. workers in trade negotiations. He emphasizes his belief that trade should provide economic opportunities for the working class while also uplifting labor and environmental standards. His plan calls for a commitment to the core labor rights of the International Labor Organization (ILO) and the provisions of the Paris Climate Accord in new trade negotiations, both of which Senator Elizabeth Warren also includes in her plan . He also intends to avoid declines in union membership and to require major employers that would benefit from a free trade agreement to sign neutrality agreements with labor unions to ensure workers share the gains from trade. O’Rourke also plans to create an independent Trade Enforcement Commission, which would operate separately from the U.S. Trade Representative (USTR) to identify violations of labor and environmental standards. If the commission concludes that a violation occurred, the U.S. government would be required to bring forth a case. The plan additionally calls for strict enforcement of rules of origin.
O’Rourke and President Trump differ in negotiating policy in that President Trump has not put forward compressive guidelines for negotiating trade agreements, although the United States-Mexico-Canada Agreement (USMCA) is considered a template for comprehensive agreements under the Trump administration moving forward. President Trump has generally called for improved trade deals that work better for U.S. workers and decrease U.S. trade deficits, but he has not talked specifically about labor or environmental standards nor made them a centerpiece of his negotiations.
Senator Warren, Senator Bernie Sanders, and former representative O’Rourke share many similarities in their approaches to negotiating new trade agreements. All three call for increased enforcement of labor and environmental standards. Senator Warren goes further than O’Rourke on this issue, as she calls for the renegotiation of any trade agreement that does not meet the set of labor, human rights, and environmental standards outlined in her plan (some of which the United States does not currently meet). Senator Warren’s plan provides more specifics and standards than O’Rourke’s, as Warren discusses agriculture, prescription drugs, and other topic areas that O’Rourke does not. Warren also calls for the creation of a new government entity, the Department of Economic Development, which, unlike O’Rourke’s Trade Enforcement Commission, would consolidate agencies rather than work alongside them. Senator Sanders’ plan is generally similar but does not include any detailed policy proposals.
Q3: How does O’Rourke address workforce issues in the context of trade policy?
A3: O’Rourke dedicates a section of his trade plan to improving the competitiveness of U.S. workers and small businesses. He states that his administration would repeal the Tax Cuts and Jobs Act of 2017 and reform the tax code so that it does not benefit companies who shift production overseas. The plan also advocates for increased funding for workforce development training, the Manufacturing Extension Partnership, manufacturing innovation institutes, and research and development.
Other candidates have also considered the issue of workforce development, though not directly in the context of their trade platforms. The Trump administration put forward a policy specifically on apprenticeship programs. President Trump signed an executive order in 2017, which called for reducing the barriers to apprenticeships as part of workforce training efforts. The Labor Department in June 2019 began working on this request through a proposal that would expand apprenticeship programs by increasing funding and decreasing federal oversight on such programs to allow for more companies to participate.
Senator Warren also includes similar notions in other parts of her Economic Patriotism platform. Like O’Rourke, Warren also calls for investing in research and development and increasing worker training programs. Warren’s plan includes greater detail than O’Rourke’s, as it is separate from her trade proposal and features many domestic policies.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Lydia Murray is an intern with the CSIS Scholl Chair in International Business.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2019 by the Center for Strategic and International Studies. All rights reserved.