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“The Biggest Player In The History Of The World”

Back in the 1990s, Robert Rubin, a Secretary of the Treasury under Bill Clinton, was negotiating the terms under which China would be allowed into the World Trade Organization. My sources say he was basically asking for many of the exact same things Trump wants now … But in 1998, in the middle of the Monica Lewinsky scandal, Clinton wanted a “win” (Not unlike the current president.) And Rubin wasn’t delivering, holding firm on his demands for market access and guarantees on intellectual property, etc. Clinton then took the Chinese negotiations away from Rubin and gave it to Secretary of State Madeleine Albright with the instructions to get it done.

Not being a trade expert, Albright didn’t understand the underlying issues. The Chinese recognized she was playing a weak hand and held firm. To make a long story short, my sources say she effectively caved. Clinton got his “win” and we got stuck with a lousy trade deal. When Trump alleges that we got snookered in a bad trade deal, he is correct—although I wonder if he understands the history. Maybe somebody gave him the background, but it never came out in any of his speeches. That WTO access, which finally happened in 2001, let China begin capturing markets through legal means, and access US intellectual property without paying for it …

Does this make a difference now? Probably not … But it gets to the rivalry we discussed above. Is it possible for both the US and China to stay in an organization like WTO? Trump seems to doubt it, as he’s threatened to withdraw from WTO. We may someday look back at this period of a single body governing international trade as an aberration — a nice dream that was never realistic. If so, prepare for some big changes.

This goes to the crux of one of the biggest geo-political issues facing Europe and America. Mauldin then gives us what very much the consensus view that, “despite some of his rhetoric, I don’t believe [Trump] is ideologically against trade. I think he just wants a US “win” and is flexible on what that means”. Yes, Trump quite possibly will end up doing ‘a Clinton’, but does America have a realistic alternative but to accommodate a rising China?  The world has changed since the Clinton era:  this no longer is just a matter of tussling over the terms of trade.

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