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Tue Mar 8, 2016, 04:51 PM

Krugman: Republicans and Trade Wars (much less respectful of international obligations).

Actually, a bit of background: establishment Republicans may talk free trade, but they are if anything more protectionist than Democrats in practice (although neither party is seriously protectionist these days.) Remember, it was Bush, not a Democrat, who imposed a WTO-illegal steel tariff, then had to back down in the face of European pressure. And going back, remember that Reagan, not Carter, imposed import quotas on Japanese cars.

The reason for this difference, I think, is twofold. First, Republicans are much less respectful of international obligations; it took a while for the Bushies to realize that trade rules apply to us, too, and that the EU is as big a trade superpower as we are. Second, thereís a level of cynicism, of willingness to play politics with foreign affairs, on one side that isnít matched on the other.

Which brings me to the latest fight. Romney declares with horror that Trump would start a trade war. His economics is all wrong, which is the main thing; but itís also worth noting that three and a half years ago Romney himself argued for exactly the same policies Trump advocates now, blithely dismissing the dangers:

ďIíve watched year in and year out as companies have shut down and people have lost their jobs because China has not played by the same rules, in part by holding down artificially the value of their currency,Ē Mr. Romney said.

Now, Romney could argue that the situation has changed ó as it has since 2010, when I was arguing for the threat of countervailing duties. Back then China was in fact engaged in harmful currency manipulation; these days itís bleeding reserves in the face of YUGE capital outflows (a trillion dollars last year!) that is, itís intervening to prop the yuan up, not hold it down. But thatís not the case Romney is making.


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