National Trade Council Director Peter Navarro says the U.S. needs to unwind "bad" trade agreements and strike new ones that would prevent such practices. He says the administration is off to a good start.
[Scott Horsley] May 3rd, 2017 [NPR]
On his 100th day in office, President Trump signed an executive order creating a new Office of Trade and Manufacturing Policy in the White House. The office will be led by National Trade Council Director Peter Navarro, whom Trump called "one of the greats at trying to protect our jobs." NPR's Rachel Martin spoke with Navarro about his mission: "to defend and serve American workers and domestic manufacturers."
"This country is built on manufacturing," Navarro tells Martin. "I'm not talking about metal-bashing manufacturing. I'm talking about a constant renewal of manufacturing. High-tech manufacturing. And what we've seen since 2000, 2001, is we've seen the exodus of our factories and jobs."
The U.S. had more than 17 million factory workers in 2000. But over the next decade, nearly 6 million manufacturing jobs disappeared. Factory employment has rebounded slightly since the depths of the recession. But just over 8 percent of American workers are employed in factories today, down from 13 percent in 2000 and 20 percent a generation earlier.
Navarro says that decline is critical, arguing all jobs are not created equal.
"A manufacturing job has inherently more power to create wealth, because they on average pay more and also to create more jobs," Navarro says. "If you have the manufacturing job as the seed corn, then you have jobs in the supply chain. Then towns spring up around that where you have the retail, the lawyers, the accountants, the restaurants, the movie theaters. And what happens is when you lose a factory or a plant in a small- or medium-sized town in the Midwest, it's like a black hole. And all of that community gets sucked into the black hole and it becomes a community of despair and crime and blight rather than something that's prosperous."
Navarro and Trump blame trade for the decline in factory jobs
Many economists argue that automation and other productivity tools have played a larger role than trade in the decline of U.S. factory jobs. American factories are churning out more products than ever, even as they need fewer workers to do so.
Navarro concedes that "demographics and automation are part of the puzzle." But he insists that "the biggest piece of the action is the unfair trade practices and bad trade deals. And if you don't believe that, just go to the booming factories in Germany, in Japan, in Korea, in China, in Malaysia, in Vietnam, in Indonesia, in Italy — every place that we're running deficits with."
Like his boss, Navarro points to the imbalance between imports and exports as evidence that the U.S. is getting a raw deal.
"We run a chronic, persistent, and large trade deficit in goods on the order of $700 billion a year," Navarro says. "In any given year, that would be OK. But when we do it every year for 10, 15, 20 years, it represents a transfer of our net worth to the rest of the world." (Counting services, where the U.S. has a surplus, brings the overall trade deficit down to about $500 billion.)
Many of the dollars that foreign companies make by selling to the U.S. wind up reinvested in this country. But that's little comfort to Navarro, who describes the purchase of American companies, office buildings and farmland by foreign interests as "conquest by purchase."
Traditional economic theory argues that trade can be mutually beneficial, allowing businesses in each country to focus on what they do best. But Navarro insists those gains are undermined when other countries "unfairly" subsidize exports, manipulate currency, steal intellectual property, or require American firms to transfer technology as a cost of doing business.
He says the U.S. needs to unwind "bad" trade agreements and strike new ones that would prevent such practices. Already the Trump administration has backed out of the Trans-Pacific Partnership, announced its intent to renegotiate the North American Free Trade Agreement, and hinted that a trade pact with South Korea could be canceled as well.
"That hat trick of deals — TPP, NAFTA and South Korea — what do you call that? That's a pretty damn good start," Navarro says.
Critics have warned that administration policies could spark a trade war, hurting U.S. exports. But Navarro is not worried, arguing that other countries have more to lose from such a confrontation than the U.S.
"If you think about America as the largest consumer in the world and the third-largest exporter, we have the most bargaining power of any country in the world," Navarro says.
Navarro underscores the president's "America First" agenda, saying the U.S. should focus on homegrown economic concerns when it negotiates trade deals. He argues the country has gone astray when it tried to achieve larger strategic goals at the bargaining table.
"The thought process over the last 30 years — and it's been a very conscious thought process — has been to sacrifice our economy, often on the altar of foreign policy and geopolitics," Navarro says. "A lot of these trade deals that we enter into are done not to create jobs here in America, not to boost our income, but to forge alliances and to address things other than the economy."
Manufacturing and national defense
The Trump administration has launched investigations into rising steel and aluminum imports, using a 1960s-era law that's designed to protect domestic industries considered critical for national defense. Depending on what those investigations find, the administration could order new tariffs or import quotas.
Unlike former President Dwight Eisenhower, who famously cautioned against the rise of the "military-industrial complex," Navarro and Trump see the military and industry as natural partners.
"How did we beat the Germans and the Japanese in World War II?" Navarro asks. "Certainly we had brave men and women on our ships, planes, tanks, whatever. But ultimately, what we did is we dramatically outproduced both of those countries in armaments, and we simply overwhelmed them."
A "bricklayer" for Trump's wall of protectionism
In announcing the new Office of Trade and Manufacturing Policy, Trump sang the praises of the new director.
"Peter Navarro has fought against trade abuse for a long time," Trump said. He even gave Navarro the ceremonial pen he used to sign the executive order.
"What I love about the president is he creates moments for people who are down the scale in things," Navarro says, "whether it's a bricklayer in one of his buildings or someone who works in the Executive Office Building," across from the White House.
Navarro says he thinks of himself as a kind of bricklayer in the president's effort to build a protective wall around U.S. workers and industries.
"My mission really is to defend American workers and domestic manufacturers. These are the people who built America and who will build America," Navarro says.
While he has a Ph.D. from Harvard, Navarro comes from a modest background.
His father was a musician and his mother worked as a secretary. "I've always — given my upbringing — identified with the working class of this country," Navarro says. "Every day I get up and when I go to work it's to create more jobs for the American people and defend the jobs we have from unfair trade practices and bad trade deals. I take that very seriously."