Hillary Clinton is promising to take a tougher stand on U.S. trade deals, but is that just campaign talk to appease supporters of Bernie Sanders and steal some backing away from Donald Trump, asks JP Sottile.
By JP Sottile
Did perennial Clinton rainmaker and current Virginia Governor Terry McAuliffe let the cat out of the bag? The “cat” is the widely-held suspicion that Democratic presidential candidate Hillary Clinton isn’t really opposed to the Trans Pacific Partnership (TPP). The “bag” is the campaign narrative that frames her election year reversal on the controversial trade accord as the outcome of an honest re-examination of a deal that she once hailed as “the gold standard in trade agreements.”
Just to add to the confusion, Hillary Clinton failed to declare her opposition to the TPP in her historic acceptance speech. Instead, she asked assembled Democrats to join her if they “believe that we should say ‘no’ to unfair trade deals” and “stand up to China.”
It was an understandable omission given the grievances of Bernie loyalists poised to pounce on her every misstep. By avoiding the minefield completely she disappointed union leaders and deferred the issue until she debates Donald Trump.
Until then, she — and notable surrogates like economist Joseph Stiglitz — will try to convince a trade-weary public that she’s truly committed to renegotiating the increasingly unpopular deal. She’ll also be beating-back the ghost of trade deals past.
United Auto Workers President Dennis Williams claims Hillary assured him during the primary that she’s also committed to reopening the North American Free Trade Agreement (NAFTA). Like the TPP, she was for it before she was against it. And like Hillary’s campaign promise to tweak NAFTA, McAuliffe suggested in an interview with Politico that – if she wins the White House – Clinton would make a few tweaks in the Trans Pacific Partnership trade deal and then support it.
These caveats fit into a long pattern of trade policy triangulation that raises the question: Is this policy reversal truly a switch or just another bait and switch? There is good reason for the buyer to beware.
“Once the election’s over, and we sit down on trade, people understand a couple things we want to fix on it but going forward we got to build a global economy,” McAuliffe said.
NAFTA is America’s most notorious trade deal. Although It was negotiated by the first Bush Administration, it was Bill Clinton who closed the deal. At the end of his first year in office he guided NAFTA through the House and Senate by offsetting Democratic resistance with significant Republican majorities. Its ratification fit perfectly with the “centrist” mission of the Clinton-led “New Democrat” movement incubated by the Democratic Leadership Council (DLC) during the preceding decade.
From its inception in 1985, the DLC triangulated against the Democratic Party’s “liberal” moniker that the GOP so effectively turned into an epithet after Ronald Reagan’s election in 1980. The historic loss of “liberal” former Massachusetts Governor Michael Dukakis in 1988 set the table for the DLC’s corporately-minded “New” Democrats. The election of DLC star Bill Clinton in 1992 was the turning point.
With the DLC’s best salesman and former chairman in the Oval Office, the Democratic Party was open for business. His wheeling-dealing economic team opened a whole new avenue for Wall Street to influence U.S. government policies. The Democrats were no longer a political roadblock.
Even if these New Democrats weren’t completely trading places with the GOP, Team Clinton was certainly willing to triangulate against Democrats’ traditional constituencies … particularly on trade.
The biggest signal of Clinton’s brand new deal was Al Gore’s smug dismissal of Ross Perot’s NAFTA warning on Larry King’s CNN show about the trade deal causing a “giant sucking sound” of American jobs going to Mexico. In dismissing Perot’s worries, Gore fired the starting gun for the go-go globalization of the 1990s.
The Morning NAFTA
For the first decade of NAFTA, Perot’s “sucking sound” seemed to go in reverse. As Sonali Kolhatkar detailed on TruthDig, big U.S. agribusinesses flooded Mexico with cheap, subsidized corn and seven other market-crushing products. That tidal wave put small Mexican farmers out of work. Ironically, they flooded back across the border to work in — surprise! — Big Ag’s burgeoning factory farming operations in states like Iowa, North Carolina, Alabama and Arkansas. Go figure.
According to a 2014 assessment by the Center for Economic and Policy Research, Mexico is still waiting for the promise of NAFTA’s economic leveling effect to be fulfilled. It’s actually lost ground on economic growth and GDP per person. And the poverty rate remains essentially unchanged.
But NAFTA did offer another low wage alternative to manufacturing in the United States. That helps keep retail prices low enough to match the eroding purchasing power of American consumers, which suffers because their wages are, like Mexican workers, flat or declining. The one thing that hasn’t suffered? Corporate profits and the executive compensation it is predicated upon. Again, go figure.
Where Credit Is Due
Although NAFTA is the usual target of ant-trade fervor, it simply doesn’t compare with the transformative impact of Bill Clinton’s biggest “trade deal” — securing Most Favored Nation (MFN) trade status for China. Repeated approval of Chinese access to U.S. markets set off a wave of job losses in America’s industrial heartland. It stoked corporate profits and consumer debt. And it ushered in the often-lamented era of the big box store.
Rising retail titans like Arkansas-based Walmart rushed into China’s incredibly favorable labor market. The cheap products they made turned the 1990s into a decade of plenty. Big box stores were stocked with cheap plastic stuff and consumers gobbled up the bargains with one or more of the credit cards they’d been given during an unprecedented era of ubiquitous consumer credit.
A study by Demos published in 2003 found that during Bill Clinton’s tenure the “average American family experienced a 53 percent increase in credit card debt, from $2,697 to $4,126.” Low-income families experienced a “184 percent rise in their debt.” And, despite the rise in income inequality during his presidency, even “high-income families had 28 percent more credit card debt in 2001 than they did in 1989.”
Demos also found a sharp rise in credit card direct mail solicitations from 1.52 billion in 1993 to a staggering 5 billion in 2001. Monthly minimums where lowered from 5 percent to 2 percent, thus making it easier to carry debt. And the consumer credit industry “tripled the amount of credit it offered customers from $777 billion to almost $3 trillion” by the time Clinton left office. It was a bill of sale first written by Bill Clinton on the campaign trail in 1992.
When Bill Clinton ran for president, the Cold War was over; the Savings and Loan scandal had exploded; the economy was mired in a sharp recession; and incumbent President George H.W. Bush couldn’t do a damn thing right. He seemed bored by people’s “pain.” He looked woefully out of touch in a grocery check-out line. And he’d broken the infamous “no new taxes” pledge that helped him defeat “Taxachusetts” Governor Michael Dukakis in 1988.
With Reaganomics on the ropes, Team Clinton scored repeatedly with their “It’s the Economy, Stupid” campaign. But Clinton also exploited another weakness — the Bush Administration’s quick embrace of the Chinese Government after the Tiananmen Square massacre in 1989. That embrace was sealed with a discomfiting handshake by Bush’s national security advisor Brent Scowcroft.
Shortly thereafter, President Bush renewed China’s “Most Favored Nation” trade status, which, among other things, lowered tariffs on Chinese imports into the U.S. He was widely criticized, often from within his own party, for cutting a deal with a regime some called “The Butchers of Beijing.”
In the 1992 campaign, Bill Clinton exploited Poppy’s “kowtowing” to great effect. Clinton accused Bush of “indifference toward democracy” in China. And Clinton famously said Bush was willing to “coddle dictators.” On March 9, 1992, Clinton proclaimed, “I do not believe we should extend ‘Most Favored Nation’ status to China unless they make significant progress in human rights, arms proliferation and fair trade.”
Of course, that all changed after he took office. On March 28, 1993, the cagey President announced he’d cut a deal with a Congress to extend a waiver that effectively approved MFN while deferring human rights-related conditions to the following year. Clinton even outlined other concerns, including China’s “$18 billion trade surplus” with the U.S.
But all those concerns, along with his campaign pledge, where jettisoned on March 27, 1994 when Clinton made the economy-changing decision to “de-link” China’s MFN status from human rights. That decision buried Tiananmen Square in the crowded graveyard of America’s often-trumpeted “advocacy” for human rights around the globe.
It also unleashed American corporations to dive headlong into China’s vast, cheap pool of low-wage labor. By the time Clinton made his state visit to China in the summer of 1998, MFN was becoming a footnote to the amazing story of China’s skyrocketing industrial output. Facing charges of hypocrisy on human rights, Clinton countered, “I’m going because I think it’s the right thing to do for our country.”
That may be a debatable point. What’s not in doubt is that it, like MFN, was the right thing to do for the bottom line of American business. And it was specifically beneficial for an emerging retail behemoth that had a long, close relationship with the Clintons.
The Power Greeter
Alice Walton likes Hillary Clinton. That’s a fairly safe assumption given the $353,400 check she cut for the Hillary Victory Fund during a mad dash of pre-election year fundraising at the end of 2015. And she also kicked in another $25,000 into the “Ready for Hillary” SuperPAC. Those big donations are, like the estimated $130 billion net worth of Walton family, a legacy handed-down from Walmart founder Sam Walton.
That legacy dates back to Bill’s time as Governor — when the Walton family began a long history of financial support of the Clintons, according to Bloomberg. It made sense given Walmart’s supersized role in Arkansas.
It also made good political sense that, as Michael Barbaro of the New York Times reported back in 2007, Hillary was brought onto Walmart’s Board of Directors back in 1986 at the behest of Walton’s wife Helen. That effort to add a woman to the boardroom turned into a six-year stint that cemented the long relationship between Arkansas’ most famous corporation and its most famous political family.
As Brian Ross of ABC News reported in the lead-up to her 2008 run, Hillary notably left that glass ceiling-shattering appointment out of her biography. She basically “de-linked” herself from a stridently anti-union company that was also a notoriously thrifty spender on employee wages and benefits. The ABC report also referenced a 1992 report showing her trumpeting Walmart’s “Buy America” campaign in spite of Walmart’s reliance on children working in sweatshops in places like Bangladesh. That’s a practice Walmart continued into the 1990s.
It came to a head in 1996 when All-American “sweetheart” Kathie Lee Gifford got embroiled in a child labor scandal in Honduras. Coincidentally, that scandal broke the same year Walmart entered China “through a joint-venture agreement.” And that was just two years after Bill Clinton “de-linked” human rights from MFN.
It was also the same year that he successful renewed MFN with an overwhelming vote of support by the House of Representatives. The timing couldn’t be better for Walmart. They’d auspiciously formed their international division in 1993 and were poised to profit off Bill’s broken promise to “not coddle dictators.”
But, as with all things Clinton, there really isn’t a “smoking gun” linking Bill’s MFN reversal with Walmart’s amazing good fortune in China. There is just the lingering miasma of happy coincidences. Bill Clinton’s crowning coincidence before exiting the Oval Office was Congressional approval of his proposal to give China permanent Most Favored Nation trading status in 2000.
The New Normal
On Oct. 10, 2000, he signed the U.S.–China Relations Act of 2000 into law. Most Favored Nation status officially became Normal Trade Relations. Also in that year, the $18 billion trade deficit he decried in 1993 ballooned to $83 billion. Meanwhile, Walmart rode low-cost Chinese manufacturing to the top of the retail heap. Walmart’s massive workforce is now the third largest in the world behind the U.S. Defense Department and, ironically, China’s People’s Liberation Army.
Amazingly, the U.S. trade deficit with China more than tripled to $263 billion in the eight years after Clinton secured “Normal” trade relations in 2000. Meanwhile, Walmart’s infamous low-wage practices at home were subsidized annually to the tune of “an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing,” according to 2015 report in Forbes.
Also amazingly, the Clintons’ wealth skyrocketed to $111 million in the years after Bill left office. Hillary spent those years in and out of “public service” and the former President turned the Clinton Foundation into a $439 million powerhouse by 2014.
While the Foundation’s philanthropy is demonstrable, criticisms of it as a de facto slush fund remain. But the link between political promises and trade policy persisted. This time it was Hillary running for president. The trade deal was with war-torn Colombia. And the campaign trail leads back to the Clinton Foundation.
There is a strange symmetry between China’s MFN status, the TPP imbroglio and a notable “flip-flop” on the Colombia Free Trade Agreement by first-time presidential candidate Hillary Clinton in 2008. Then like now, she was competing against a movement candidate in newcomer Barack Obama. And then like now, she struggled to protect her “left” flank on economic issues.
At issue in 2008 was a sweeping deal negotiated by the second Bush Administration with the U.S.-supported, civil war-wracked narcostate of Colombia. Obama “vowed” to oppose the deal. To keep pace with her high-octane opponent, Hillary repeatedly reassured labor leaders of her opposition to the deal.
The rub was two-fold. Not only did she have a decidedly pro-free trade voting record as a senator. But both her free-trading husband and her chief campaign strategist were on record supporting the deal. She ditched her Colombia-linked strategist and matched Obama’s anti-deal stance. But, just like China’s MFN before it, the trade agreement with Colombia eventually became a “big win” for a Democratic President who was for it before he was against it.
This time it was a flip-flopping President Obama. With the help of his flip-flopping former foe and then-current Secretary of State Hillary Clinton, he scored a trade deal trifecta on Oct. 12, 2011. That’s when Congress approved the United States-Colombia Trade Promotion Agreement (CTPA) and separate deals with both South Korea and Panama. Obama called the trio of trade deals “a major win for American workers and businesses.” Alas, it turned out that there was a lot more change on trade than reason to hope Obama or Hillary would keep their promises.
Mining The Depths
Meet billionaire mining magnate Frank Giustra. According to the New York Times, the financial power-player’s global interests have included philanthropy and a $45 million stake in a deal to sell strategic uranium mines in Central Asia and the United States to the Russian atomic energy agency Rosatom. Strangely enough, those two interests — charity and strategic resources — fit together nicely. That’s because the uranium deal required U.S. agencies — including the State Department — to sign-off before it was approved.
The eight-year process for the uranium deal required approval by the U.S. Committee on Foreign Investment of which the State Department is a member. That approval finally came in 2010 when Hillary Clinton was Secretary of State and while the Clinton Foundation was continuing to collect millions of dollars from related investors.
Throughout, Giustra’s wheeling and dealing continued with his close friend and private jet-setting partner Bill Clinton, who gave a $500,000 speech to a Russian investment bank that gave the stock a buy rating.
Since 2005, Giustra has lavished the Clinton Foundation with repeated donations, adding up to in excess of $100 million. Yet, putting Bill Clinton’s oddly remunerative, but not uncommon $500,000 speech in Moscow aside, there still is no smoking gun linking then-Secretary of State Hillary Clinton to the actual approval of the deal. Once again we just have that miasma of happy coincidences.
More troubling, though, is the coincidence that her husband’s friend Frank Giustra did benefit from the Colombia Free Trade Agreement deal’s “extreme” protections for foreign investors and special rights for corporations engaged in “resource extraction,” according to an eye-opening exposé by David Sirota, Matthew Cunningham-Cook and Andrew Perez of the International Business Times.
At issue is a company formerly known as Pacific Rubiales, an oil company founded by (you guessed it) Frank Giustra. The State Department repeatedly fielded accusations of workers’ rights and human rights abuses, particularly related to strike targeting Pacific Rubiales in 2011. Strangely, the State Department not only ignored these accusations, but actually praised the Colombian government’s stellar progress on human rights. Was this Hillary Clinton’s “de-linking” MFN moment?
Maybe it’s worse. It looks like there’s a little smoke coming out of this gun. As Sirota, Cunningham-Cook and Perez reported:
“At the same time that Clinton’s State Department was lauding Colombia’s human rights record, her family was forging a financial relationship with Pacific Rubiales, the sprawling Canadian petroleum company at the center of Colombia’s labor strife. The Clintons were also developing commercial ties with the oil giant’s founder, Canadian financier Frank Giustra, who now occupies a seat on the board of the Clinton Foundation, the family’s global philanthropic empire.”
Those “commercial ties” include the “Clinton Giustra Enterprise Partnership” which its snazzy website calls a “pioneering an innovative approach to poverty alleviation” that “generates both social impact and financial returns by addressing existing market gaps in developing countries’ supply or distribution chains.”
Really, doesn’t that “pioneering approach” sound a lot like the long-term project of the Democratic Leadership Committee?
The “pioneering” privatization of “poverty alleviation” was a big part of then-President Bill Clinton’s famous “welfare reform bill” of 1996. Profitable privatized prisons grew to match the skyrocketing demand created by infamous “crime bill” of 1994. The “financial returns” flowed as the prison “market gap” was closed. And like neoliberal trade policy, deregulation of Wall Street and the media, it’s all symptomatic of the Clinton-led move of the party toward the corporate-friendly “center.”
As Frank Giustra said in a 2006 profile of Bill Clinton for The New Yorker, “All of my chips, almost, are on Bill Clinton. He’s a brand, a worldwide brand, and he can do things and ask for things that no one else can.” Based on a Giustra’s latest venture in Colombia — a big financial play in the Gran Colombia Gold Corporation — he’s still reaping the “free trade” rewards of his bank-shot bet on Hillary Clinton.
In fact, he’s not just going for the gold … but some silver, too.
Big Box Democrats
Back in 1992, the phenomenal Clinton political machine successfully sold the “new,” improved Democratic Party to Reaganomics-starved political consumers. He felt their pain. He also changed his party and opened the door to the big-box consumerism. Now that same sharp messaging machine is repackaging Hillary’s free-trading past, pulling Bill’s mixed political record from the shelves, and hard-selling her latter-day transformation on trade and economic policies.
The question is: Will suspicious voters buy her “Come to Bernie” moment as a wholesale conversion on the road to the White House? Disgruntled and disaffected voters have to buy into the idea that she’s truly changed on trade and is not, as Terry McAuliffe implied, simply repeating a well-worn pattern of bait and switch.
Simply put, she’s got a long, demonstrable history of supporting trade agreements. And by one account she specifically “pushed” the Trans-Pacific Partnership 45 times. But that was then and this now. And now she’s got a disillusioned cadre of #BernieOrBusters to her left and a new army of anti-trade Trumpsters to her right. That’s left her stuck in the “centrist” middle with the corporate donors, financiers and loyalists who’ve been shopping in the supermarket of political influence ever since the Clintons transformed the Democrats into the party of Big Box-style democracy.
JP Sottile is a freelance journalist, radio co-host, documentary filmmaker and former broadcast news producer in Washington, D.C. He blogs at Newsvandal.com or you can follow him on Twitter, http://twitter/newsvandal.