Does National Security Trump Free Trade?

Posted: Mar 10, 2017 12:01 AM
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Concerns over America's trade policies – NAFTA, TPP, Brexit, China – have risen to the top of the public discourse.

As free-market conservatives, free trade is in our institutional DNA. For many years now, our sole purpose at the Institute for Liberty  and Capitol Allies has been to advance the principles of free markets and free trade. No philosophy or political system has done more to lift more people out of poverty than free enterprise. The benefits of free trade and free markets are undeniable. 

Our free trade credentials are indisputable, and as advocates for free enterprise, we find ourselves up against the issue of what to do when a free trade deal potentially threatens America’s national security. We all know that too many free trade deals become less free trade when they include non-trade provisions pertaining to issues like the environment. Too often trade deals become less about economic liberty and more about advancing a progressive policy agenda on climate change or workers’ rights. But what do we do when a deal risks American security and the privacy rights of our citizens?

We find ourselves in an odd position over a Chinese investor trying to purchase the American company MoneyGram. Political and policy observers expect the Trump Administration to pursue a less globalist agenda concerning international trade relationships. Some have argued that President Trump wants to end free trade. He’s already jettisoned the Trans-Pacific Partnership (TPP)—the largest proposed free-trade deal in history. However, our concern over the Chinese MoneyGram deal is not an abandonment of our free trade principles.    

When former President Obama took office, American-Chinese relations was enjoying a time of cooperation, in which U.S. China policy emphasized and encouraged economic engagement as well as collaboration in fighting global terrorism. However, after Obama’s disastrous eight years in office, U.S.-Chinese relations is today marked by an aggressive Chinese government flexing its military and economic might in ways that challenge American security. Conflict, not cooperation, is Obama’s legacy concerning China.

Obama’s feckless foreign policy allowed China to solidify its extra-territorial hold over most of the South China Sea and enhance its economic influence over the region. However, since his inauguration, President Trump has wasted no time setting right U.S.-China policy. The new president has promised to reconsider the “One China” policy in the framework of a grand bargain within which America negotiates with China on how to best deter North Korea, on reducing barriers on U.S. exports, and on China halting its expansion in the South China Sea.

It’s a new day in U.S.-China relations, yet there are still concerns that America and China are heading toward a serious confrontation. For this reason, we believe the Chinese takeover of MoneyGram should be examined by the Committee on Foreign Investment in the United States (CFIUS). “CFIUS is an inter-agency committee authorized to review transactions that could result in control of a U.S. business by a foreign person, in order to determine the effect of such transactions on the national security of the United States.” CFIUS, quarterbacked by the Department of Treasury and including sixteen different federal agencies, would study the MoneyGram deal considering U.S. national security and offer its recommendation to President Trump as to whether the MoneyGram transaction should be blocked.   

Free trade and free enterprise are the key components for a growing economy. President Trump is skeptical of multilateral, free-trade agreements, and we see this as a reason for some concern. However, the president’s agenda on tax reform, repealing Obamacare, and rolling back the regulatory state are welcome policy changes from the Obama years of slow growth and falling wages.

It’s our hope that President Trump refrains from adding obstacles to free trade, but at the same time we expect that international transactions that could pose a risk to our national security, like the MoneyGram deal, are given proper scrutiny. Removing existing obstacles to free trade – red tape, tariffs, and quotas – should not preclude the U.S. government from examining international transactions that could harm American security.