Posted Wednesday, Aug. 29, 2012, at 12:46 PM
A lion statue stands outside an Agricultural Bank of China in Haikou, south China's Hainan province on August 29, 2012.
Photo by AFP/AFP/GettyImages
The only mention of trade I heard last night watching the convention was John Boehner saying something boilerplate about the virtues of free trade (though I may have missed something), but the Republican platform is surprisingly protectionist. After saying that free trade agreements are awesome, the platform says the Obama administration's approach to bilateral economic ties with China "has been a virtual surrender" and calls for a much more aggressive trade war:
Republicans understand that you can succeed in a negotiation only if you are willing to walk away from it. Thus, a Republican President will insist on full parity in trade with China and stand ready to impose countervailing duties if China fails to amend its currency policies. Commercial discrimination will be met in kind. Counterfeit goods will be aggressively kept out of the country. Victimized private firms will be encouraged to raise claims in both U.S. courts and at the World Trade Organization.
Back in 2010 and 2011 Paul Krugman spent a fair amount of time advancing arguments along these lines, even though economists generally don't embrace this approach. Krugman's take was that the unusual features of a depressed economy with near-zero short-term interest rates undermined the standard economist's case for unilateral free trade. But I didn't see tons of support for his take in the profession, and certainly not among conservatives. What's more, by now I'm not sure that we actually have much excess capacity in the relevant sectors and almost certainly won't by January 2013. At any rate, it's a noteworthy break from conservative orthodoxy rendered all the more noteworthy by the fact that it's been strongly echoed in some of Mitt Romney's campaign rhetoric.
It's hard to know when politicians are actually going to do what they say they'll do, but it's always a possibility worth considering. If we take Romney and the GOP at their word, expect them to initiate a major trade conflict with China.