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China’s Technological Predation Threatens U.S. Security

February 10, 2021 in Economics

By Daniel J. Ikenson

Daniel J. Ikenson

With broad, bipartisan support from Congress, the Biden administration is expected to commence an all‐​of‐​government effort to confront the profound and rapidly multiplying challenges presented by China’s rise. Exactly what the program will entail remains unclear, but neutralizing Beijing’s web of predatory technology policies should be a priority.

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For many years, China has been funneling hundreds of billions of dollars annually into technology research, development and production. It has been underwriting technology theft on a grand scale. And it has been extorting technological knowhow and other assets from U.S. businesses, as the price of entry into the Chinese market. These practices have made a mockery of the rules‐​based international trading system and have subverted the proper functioning of markets.

But what compels a firm and committed policy response from Biden is that Beijing’s pursuit of technological supremacy presents an intolerable threat to U.S. security.

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The U.S. government restricts the export of fissile materials as a matter of national security. Lockheed Martin is prohibited from selling F-35 fighter jets to China. Advanced technology is essential to national defense, and in the wrong hands, could be used against Americans—to spy, extort, sabotage and conduct warfare. Technology is already employed in the service of repression in China and there is a clear case for restricting its flow.

Economic protectionism …read more

Source: OP-EDS

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With Biden in Office, Has Macron Lost His Zeal for Euro‐​Self‐​Reliance?

February 9, 2021 in Economics

By Doug Bandow

Doug Bandow

In late 2019, French President Emmanuel Macron became one of the fiercest critics of the transatlantic alliance. “What we are currently experiencing is the brain death of NATO,” he famously declared.

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He doubted the continuing value of the alliance’s Article V guarantee of collective defense: the pact “only works if the guarantor of last resort functions as such. I’d argue that we should reassess the reality of what NATO is in the light of the commitment of the United States.”

Which led him to break dramatically with Europe’s continued reliance on America. He advocated that the continent become a “geopolitical power” and “in control” of its own destiny. Last year, he insisted: “We cannot be the United States’ junior partner. I’m impatient for European solutions.”

He continued to advocate “strategic autonomy” after the November election. “We need to modernize our structures and create a level playing field for everyone,” he declared, opining that the “way forward is a strong and political Europe.” He believed this stance was necessary in dealing with America, which, he added, “will only respect us as allies if we are earnest, and if we are sovereign with respect to our defense.”

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Which makes sense. The continent’s interests differ from those of America in many ways. Even when it …read more

Source: OP-EDS

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What Will Biden Do if China Makes a “Limited” Military Move against Taiwan?

February 8, 2021 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

One of the biggest early surprises about the Biden administration’s foreign policy is the extent and intensity of its diplomatic support for Taiwan. An especially stunning gesture took place even before Biden took office when he extended an invitation to Taiwan’s Economic and Cultural Representative in the United States to attend the presidential inauguration. It was the first time that Taipei’s diplomat had been given that opportunity since the United States switched official diplomatic relations to the People’s Republic of China (PRC) in 1979. Even Donald Trump, who significantly increased Washington’s backing for Taiwan in multiple ways, did not display such ostentatious disdain for Beijing’s position.

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Since the inauguration, administration officials have issued several statements emphasizing Washington’s “rock‐​solid” commitment to Taiwan. Those expressions of support also entail tangible military moves. When Chinese military aircraft again penetrated Taiwan’s self‐​proclaimed air defense identification zone over the Taiwan Strait, Washington not only expressed sharp criticism, it dispatched an aircraft carrier battle group to the South China Sea as a display of U.S. military power. That deployment occurred barely a week after Biden took office.

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Given those actions, it …read more

Source: OP-EDS

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Biden Administration Ends US Involvement in War Against Yemen

February 8, 2021 in Economics

By Doug Bandow

Doug Bandow

Secretary of State Antony Blinken announced what is likely to be just the first reversal of many Trump administration policies, in this case Washington’s slavish subservience to the Saudi royal family. Indeed, Blinken’s immediate predecessor, Mike Pompeo, ended his disreputable tenure with a final, and highly dishonest, gift to Riyadh: designating Saudi Arabia’s Yemeni opponents as “terrorists.”

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The label was meant to further impede the operation of Yemen’s government, dominated by a religious and political faction known as Ansar Allah or the Houthis. They had committed no terrorist acts, nor even provided money and personnel for terrorist attacks, as had the Saudis for 9/11. However, for years the legal designation has been applied for political purposes, as in this case.

Humanitarian groups warned Pompeo that the legal ramifications of the declaration would make it impossible for them to work, but that mattered little to him. After all, he spent his entire time as secretary helping the Kingdom of Saudi Arabia commit multiple war crimes and create a humanitarian disaster in Yemen. Indeed, Pompeo’s posture in office was a permanent genuflect toward Riyadh and the palace of Mohammed bin Salman, the Saudi crown prince. For unknown, and perhaps unknowable, reasons – cynics suggested hope for future investment opportunities – the Trump administration’s policy simply was Saudi Arabia uber alles.

The Biden administration’s good news goes further, however.

The Obama and Trump administrations made Americans active accomplices to Saudi (and Emirati) war crimes by supporting the aggressive war against Yemen. That nation, one of the poorest on earth, had been racked by internal conflict for most of its relatively short life. (In fact, there were two Yemens to start, but that is another story.) The Houthis fought the central government for years. Arab Spring protests resulted in the ouster of Yemen’s long‐​serving president in 2012, but he soon joined with the Houthis and together they defenestrated his successor. At which point the KSA and United Arab Emirates joined in a “coalition,” aided by mercenary states paid to join the conflict (for instance, Sudan) to …read more

Source: OP-EDS

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Hong Kong Can’t Be Saved. Hong Kongers Can.

February 8, 2021 in Economics

By Doug Bandow

Doug Bandow

Freedom in Hong Kong continues to die a painful death, strangled by the application of last year’s national security law. Chief Executive Carrie Lam, Beijing’s factotum, recently expressed her hope that the Biden administration would give the territory “a fair hearing.” Alas, its loss of autonomy is too obvious to disguise or wish away. Although the special administrative region will continue to enjoy an extra portion of economic freedom, it will otherwise operate much like any other Chinese city. And there is little that the United States can do to reverse the process.

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What to do? The people of Hong Kong understandably do not want to be ruled by a distant totalitarian state that suppresses freedom of information and expression. But they should not put their hopes in Washington. In 2019, some protesters displayed American flags, which had the same effect on Chinese President Xi Jinping as waving a red cape does on a bull. That was reason enough for Beijing to crack down, attempting to foreclose U.S. intervention in the territory’s affairs.

Nevertheless, democracy activist Nathan Law, who fled to the United Kingdom and was later indicted for his activities there, tweeted: “Statements of concern and condemnation are not enough — and trade or investment agreements with autocracies are even worse.” He urged the European Union to kill the recently negotiated investment treaty and the United States to “continue to consolidate the transatlantic cooperation to combat China’s authoritarian expansion.” He concluded with a call for “the world to stand up and defend our shared universal values with them, not with feeble words but with real actions, shoulder to shoulder.”

American writer Patricia Pan Connor made a similar pitch in the Washington Examiner: She hoped the United States could convince Europe not to ratify the investment accord. “The U.S., Europe, and other democratic countries account for over half of the world’s GDP. Acting in unison, they can curb China’s human rights violations and protect the precious civil liberties of a democratic people.”

…read more

Source: OP-EDS

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The UK and the EU Need a New Approach to Trade Remedies

January 16, 2020 in Economics

By Simon Lester

Simon Lester

Whatever your view is on the merits of the European Union, it would be hard to dispute that it is one of the most innovative international economic arrangements ever created. Its founders had a general vision, but it took a wide range of institutional and policy innovations during implementation to make it all work.

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Seeking institutional innovation

As the UK and the EU undertake the difficult process of undoing their relationship and developing a new one, there will be a need for some additional innovation. Trying to use traditional trade agreement obligations as a replacement for this deep and complex economic relationship will be insufficient.

One area of particular difficulty will be trade remedies, which include tariffs imposed in response to import prices that are deemed too low (anti-dumping duties) and to foreign government subsidies (countervailing duties).

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The term ‘dumping’ is sometimes thrown around loosely in trade policy discussions, but it has a technical meaning that involves a determination of whether the export price of a product is ‘unfairly’ low. A tariff can then be imposed to counteract the impact of this pricing. With regard to subsidies, there is a calculation of the amount of the subsidy, and, similarly, a tariff is imposed to counteract it.

The EU is one of the rare trade agreements that eliminates the use of trade remedies on internal trade. As a result, trade between the UK and other EU countries is not subject to trade remedies.

I have argued previously that tariffs imposed as trade remedies are unnecessary and problematic here, and should be kept out of the UK-EU economic relationship. This relationship would be permanently soured by recurring claims of ‘unfair trade’ by one side or the other.

Nevertheless, trade remedies are an established part of domestic trade policy and are difficult to avoid. Interest groups demand them, and it is hard to have a proper debate over their merits.

The UK has already set …read more

Source: OP-EDS

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Fixing FISA after the Carter Page Report

January 15, 2020 in Economics

By Julian Sanchez

Julian Sanchez

At a Senate Judiciary Committee hearing held shortly after the release of his scathinging report on the FBI’s investigation of erstwhile Trump aide Carter Page, DOJ Inspector General Michael Horowitz had a telling exchange with Sen. Marsha Blackburn (R-Tenn):

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Blackburn:  Let me ask you this, how often do you find mistakes in a FISA Application?

Horowitz: This is actually the first time my office has done a deep dive into a particular application. We’ve done higher level reviews on the FISA process and have found various issues at a higher level, but this is the first time we’ve been able to delve in this way.

Blackburn: It’s a fairly fairly unusual occurrence?

Horowtiz: Let me put it this way, I would hope so.

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Presumably Blackburn had expected a rather different response: That the embarrassing catalog of omissions, errors, and misrepresentations that the IG’s office found in applications for FISA surveillance of Page were extraordinary and unprecedented—suggesting some special vendetta against the Trump campaign.  Horowitz’s discomfiting, candid reply deserves to be unpacked, because it implies at least three important points worth bearing in mind.  

First, while surveillance of an advisor to a presidential campaign is certainly an unusual use of the Foreign Intelligence Surveillance Act, there is no reason to suppose that Page’s case is some sort of extreme outlier. On the contrary—as common sense would suggest and Horowitz’s report confirms—investigators were acutely aware that this was an enormously sensitive case certain to draw intense scrutiny. Thus the initial FISA application targeting Page, at least, was unusually detailed, and received additional layers of review before being submitted to the Foreign Intelligence Surveillance Court (FISC). It’s reasonable to infer, then, that many of the thousands of FISA applications filed each year have defects as bad or worse than those Horowitz identified here.

Second, if we want an explanation for those errors, Horowitz’s answer suggests one more systemic than a cartoonish anti-Trump vendetta: Nobody is doing the kind of thorough investigation that would find and correct those problems. In a criminal investigation, the purpose of a so-called Title III wiretap order is to obtain evidence for a criminal prosecution. While the initial application is submitted in secret, defense attorneys will be entitled …read more

Source: OP-EDS

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It’s Time to Make Congress Great Again

January 15, 2020 in Economics

By William Yeatman

William Yeatman

In contemporary American government, the presidency is dominating Congress in our system of separate-but-competing branches. This constitutional imbalance is a growing threat to liberty, and the only solution is to make Congress great again.

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Let’s start with first principles: The Constitution sets forth our governmental structure in its first three Articles.

Article I of the Constitution establishes Congress. Article II creates the presidency. And Article III renders the Supreme Court.

Did you notice that Congress is number one?

That’s not by accident. The Founding Fathers took it for granted that Congress is first among equals within our tripartite government.

Indeed, the Founders feared Congress most of all. In Federalist 47, James Madison worried that Congress’s “impetuous vortex” would swallow up the authority wielded by its coordinate branches.

Ultimately, the Founders feared most the concentration of power, which Madison described as being the “very definition of tyranny.”

For most of its history, Congress has lived up to these expectations. Now, however, our once-grand legislature is a shell of its former self.

With respect to current events, the best evidence of Congress’s fall is the ongoing impeachment debacle.

The Founding Fathers intended impeachment to be Congress’s ultimate weapon in a permanent competition with the presidency. In Federalist 66, Alexander Hamilton wrote that impeachment is Congress’s “essential check” on “encroachments” by the executive branch.

In accordance with these expectations, past impeachments have been part and parcel of structural battles between Congress and the presidency.

Consider President Richard Nixon. Sure, Congress put him through the impeachment wringer, but lawmakers also enacted reforms to shift the balance of power towards Congress. The Legislative Reorganization Act of 1970, for example, beefed up congressional staff and resources. And the Budget Impoundment and Control Act of 1974 attempted to reassert Congress’s power over the purse.

Similarly, the 19th century impeachment of President Andrew Johnson was emmeshed within a larger struggle between the elected branches of government.

Today’s impeachment of President Donald Trump, by contrast, has nothing to do with checking executive power. Instead, it’s all about winning the presidency on behalf of the two political parties.

Getting two-thirds of the Senate to go along with removing President Trump was never going to happen, so instead House Democrats are using the impeachment inquiry to sway next November’s vote.

For their part, Senate Republicans are embracing a trial, reportedly in the hope that a drawn-out …read more

Source: OP-EDS

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Amtrak's Big Lie

January 14, 2020 in Economics

By Randal O’Toole

Randal O'Toole

Recent articles in respected business journals report that Amtrak lost only $29.8 million in 2019 (out of $3.3 billion in total revenues) and that it expects to make a profit in 2020. This is a remarkable turnaround for a company that cost taxpayers more than $100 billion in its first 49 years of existence. Amtrak accomplished this using a simple yet apparently effective technique: It’s called lying.

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Amtrak’s accounting system is so full of lies that even the pro-passenger train Rail Passengers Association calls it “fatally flawed, misleading, and wrong.”

The first lie is that Amtrak counts taxpayer subsidies from the states as “passenger revenues.” According to Amtrak’s unaudited report, 17 state legislatures gave Amtrak a total of $234 million in 2019. The taxpayers in those states were never allowed to vote on these subsidies, and the vast majority don’t ride Amtrak. These subsidies are no more “passenger revenues” than the subsidies given to Amtrak by Congress. Deducting these subsidies from revenues immediately increases Amtrak’s 2019 losses to $264 million.

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An even bigger lie is Amtrak’s failure to report depreciation in its operating costs. Ignoring depreciation is an old railroad accounting trick aimed at misleading investors by boosting apparent profits.

A classic example was the Rock Island Railroad, which ran many fast passenger trains throughout the Midwest in the 1950s. Then Rock Island proposed to merge with another railroad, and to improve the merger terms it began deferring maintenance. By the time the federal government approved the merger, Rock Island’s tracks were so decrepit that its passenger trains ran as slow as 10 miles per hour. The other railroad backed out, and Rock Island shocked the nation by going out of business.

The Interstate Commerce Commission responded by requiring railroads to include depreciation among their operating costs. This represents the amount of money railroads have to spend or save to keep their infrastructure and equipment in good shape, ensuring that …read more

Source: OP-EDS

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Putin's Russia Is Not the Soviet Union Reborn

January 14, 2020 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

Key Point: U.S. foreign policy must catch up with the developments of the past thirty years and reassess its relationship with Russia.

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The American public and U.S. policymakers both have an unfortunate tendency to conflate Russia with the Soviet Union. That habit emerged again with the media and political reaction to the Helsinki summit between President Trump and Russian President Vladimir Putin. Trump’s critics accused him of appeasing Putin and even of committing treason for not doing enough to defend American interests and for being far too solicitous to the Russian leader. They regarded that as an unforgivable offense because Russia supposedly poses a dire threat to the United States. Hostile pundits and politicians charged that Moscow’s alleged interference in the 2016 U.S. elections constituted an attack on America akin to Pearl Harbor and 9-11.

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Trump’s supplicant behavior, opponents contended, stood in shameful contrast to the behavior of previous presidents toward tyrants, especially toward the Kremlin’s threats to America and the West. They trotted out Ronald Reagan’s “evil empire” speech and his later demand that Mikhail Gorbachev to tear down the Berlin Wall as examples of how Trump should have acted.

The problem with citing such examples is that they applied to a different country: the Soviet Union. Too many Americans act as though there is no meaningful difference between that entity and Russia. Worse still, U.S. leaders have embraced the same kind of uncompromising, hostile policies that Washington pursued to contain Soviet power. It is a major blunder that has increasingly poisoned relations with Moscow since the demise of the Union of Soviet Socialist Republics (USSR) at the end of 1991.

One obvious difference between the Soviet Union and Russia is that the Soviet governing elite embraced Marxism-Leninism and its objective of world revolution. Today’s Russia is not a messianic power. Its economic system is a rather mundane variety of corrupt crony capitalism, not rigid state socialism. The …read more

Source: OP-EDS