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Democrats Take Balanced Trade Stance

The party's platform balances free-trade principles with a commitment to enforcement and favoring diplomacy over punitive measures with China.

Michelle Obama

CHARLOTTE, N.C. — Democrats took a pragmatic approach to trade in their party platform that was set to be adopted on Tuesday night, balancing free-trade principles with a commitment to enforcement and favoring diplomacy over punitive measures with China.

This story first appeared in the September 5, 2012 issue of WWD.  Subscribe Today.

The overall platform set to be adopted by delegates at the Democratic National Convention here in the Time Warner Cable Arena Tuesday night upheld some of President Obama’s positions, calling for higher taxes on the wealthy and lower taxes on the middle class.

The sharpest contrast between the two parties on trade came on policy toward China.

“Both publicly and privately, the President has made clear to the Chinese government that it needs to take steps to appreciate its currency so that America is competing on a level playing field,” the Democratic platform said. “This administration has doubled the rate of trade cases brought against China by the last administration and created a new government-wide Interagency Trade Enforcement Center.”

The Obama administration has filed several unfair trade cases against China at the World Trade Organization for tires, credit card companies and chemicals. But the administration, understanding the political sensitivity of relations with China, has repeatedly declined to name China a currency manipulator. Former President George W. Bush also declined to brand China with that label.

This was in contrast to the GOP’s hard line on China in the platform approved at its convention last week, in which the party pledged to have “full parity in trade with China” and warned it will impose countervailing duties if China fails to amend its currency policies.

The fashion industry, which imported $101.5 billion in goods in the year ended June 30, $40.9 billion from China, and U.S. textile producers that have lost tens of thousands of jobs over the years have a lot at stake in trade policy toward China. For importers, getting tough on China would be a major headache since that is where they source a significant portion of their products. For domestic manufacturers, the stance would be a welcome boost for the growing Made in America movement to revitalize U.S. manufacturing.

Critics of China’s monetary policies claim the country keeps its currency artificially low, which in turn makes Chinese imports cheaper and puts U.S. manufacturers at a competitive disadvantage.

“While the Obama administration has filed more cases against China at the WTO than previous administrations, we would have liked to have seen a stronger stance on currency manipulation in the platform,” said Cass Johnson, president at the National Council of Textile Organizations. “There is a disappointment that neither Republican nor Democratic [administrations] have really been willing to take China on in an effective manner regarding unfair trade practices. We’ve seen a lot of textile jobs and over a million manufacturing jobs shipped overseas over the last 10 years to China. I guess the question is, when will that change and is it going to change?”

David Spooner, a trade attorney with Squire Sanders and former special textile negotiator in the U.S. Trade Representative’s office during the Bush administration, said, “It is notable that the Democratic platform is perhaps more measured on currency than the Republican platform. We have seen in the past two to three elections that the party of power has lots of fun bashing China on currency only to backtrack when they are in office.”

The Democratic platform calls for support for the Trans-Pacific Partnership negotiations between the U.S. and 10 other countries, expanding trade with Latin America and the Caribbean, meeting the goal of doubling exports by the end of 2014 and supporting permanent normal trade relations with Russia, which joined the WTO last month.

“I’m glad to see [Democrats] are also talking about the value of trade,” said Stephanie Lester, vice president of international trade at the Retail Industry Leaders Association. “I think they tried to add more language about protections at the risk of upsetting the bipartisan balance and support for trade. New trade initiatives can be controversial for unions, and we haven’t seen much of a proactive agenda [under Obama] as we should have on trade.”

Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, said both parties “want to increase exports…but they haven’t looked at the other side of the fiscal equation at how imports affect our economy positively.” Burke said Democrats seem to overemphasize Made in America at the expense of products being made abroad by our trading partners with whom we have spent a lot of time negotiating free trade agreements that provide consumers the goods they need at a reasonable price.”