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tv   White House National Trade Council Director Peter Navarro at CSIS  CSPAN  November 10, 2018 4:09am-5:22am EST

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trump and first lady melania trump at world war i ceremonies paris. at 11:00, the wreath-laying ceremony at the tomb of the unknown, live from the arlington national ceremony. and the liberty awards honoring former president george w. bush and laura bush. on american history tv unseat and three at 9:00 a.m. eastern, the 1920 onerrate silent film documenting the journey of a world war i soldier's remains to the arlington national cemetery. at 6:00 p.m., we visit the nne american cemetery in france, the final resting place for 14,000 american soldiers. and president trump at the world war i ceremonies in paris. c-span3 and american history tv.
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white house national train council director peter navarro talked about economic policy and national security at the center for strategic and international d.c. s in washington, he discussed efforts of bringing more manufacturing jobs to the u.s. and areas where china violates international trade rules. this is just over one hour. andrew: good morning, everyone. thank you for joining us at csis for the discussion on international and economic security. we are pleased that dr. navarro has agreed to come and talk on this topic and join in a short
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discussion. hunter,is andrew hundred and i am the director of the group at csis. the origin of this discussion was originally a few weeks back, the industrial base review done by an inter-agency group, led in no small part by dr. navarro, but looking at issues in the defense industrial days. i'm confident this discussion will look at those issues and a broader set of issues related to economic strength and security. today's event is not sponsored , so it is made possible by general support to csis. we are always grateful for those who provide general support to the center. i want to give you a brief security announcement. we work hard on security at csis, and i'm confident this morning's event will be uneventful one. in the unlikely event we were to need to evacuate, i will be your security officer and give you guidance on where to go, whether to exit the way you came in or one of the exits behind us, and
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move to a safe location. as i mentioned, we are pleased to have dr. navarro join us this morning. he is the director of the white house office of trade and manufacturing policies. it comes to this position with a comes to this position with a tremendous background in economics, and a tremendous background looking at the fundamentals of economic strength. he is a phd economist from harvard. he worked for years as a professor at usc irvine. has published 10 books, including "death by china" and "crouching tiger," where he has dealt with economic strength from the perspective of international competition and how that plays out. i think today's event will give us a good focus on the issue of
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u.s. economic strength as an element of national power and how we can think about it that way and think about it in terms of broader u.s. strategy. csis has also looked at this question. earlier this year, there was a report, "meeting the china challenge," put out by a group of us at csis. i was happy to contribute to it. there are fundamental questions that come out when you think about u.s. economic strength as international power, and what that means if it is in competition with the economic strategies of other nations. we are forward to remarks this morning. without further ado, i will ask dr. navarro to come to the stage and give his remarks. [applause] dr. navarro: thank you, mr. hunter.
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thanks to john, the leader of this great institution, for the invitation. i have a great fondness for csis for kind of an interesting and perhaps peculiar reason. the only time i was ever here, i don't know if you know this, was down there in the lobby where i set my film crew up to interview two of the finest scholars we have in d.c. bobby glaser and michael green. that was for my "crouching tiger" documentary series. i was struck by how profound bonnie and michael were in talking about the china challenge. what i would love to do for you today is talk about manufacturing and defense industrial base and its historic effort that has gone under the department of defense under and president trump.
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want to do in order to come to that topic, is start at the 30,000 foot level and offer some perspective on how this particular effort fits into the broader grand strategy of the trump administration in terms of dealing with both economic and defense issues. let me start by observing that some of our greatest presidents are best remembered for short, profound maxims that both guided their policies and led to some of their greatest successes. if you think about william mckinley, one of president trump's favorite presidents, in 1896, his campaign slogan was "patriotism, protection, and prosperity."
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it was that slogan that led to strong tariffs, and sound money policy, and to a profound realignment of the republican party under mckinley as well as what was the catalyst for strong economic growth. that sounds a little bit familiar, you may have been paying attention to what is going on the last couple of years. of course, teddy roosevelt "walk softly and carry a big stick." we moved from what was essentially a coast guard to a global naval power. of course the gold standard in maxims would be ronald reagan, "peace through strength." out of that came a reversal of the decline in the defense budget, the star wars
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initiative, and basically the demise of the soviet union. and so we come to this great president, donald j. trump. in december of 2017, as part of the national security strategy, president trump introduced the maxim that economic security is national security. economic security is national security. if you think about everything the trump administration has been doing in terms of economic and defense policy, you understand this maxim really is the guiding principle. if you think about tax cuts, corporate tax cuts, which essentially spur investment and leads to greater innovation, that helps both our economy and our national security. you think about de-regulation
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under one fine omb director mick mulvaney. he has been leading a tremendous effort to reduce the regulations that were put in place by the obama administration. from a pure economic point of view, a lot of people associate surprise side economics purely with tax cuts, but the more accurate way of thinking about supply side economics is to also consider things like how de-regulation is a pure supply side benefit. when you lower the cost of firms, you make them more globally competitive and you get a twofer there, which is essentially growth in a noninflationary way, which is the best kind of growth there is.
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unleashing the energy sector and ending the war on coal is in the same spirit of the beneficial supply side affect, where you get your manufacturers more competitive globally, and you put more purchasing power in the hands of american consumers so that you get that kind of benefit. steel and aluminum tariffs. what has that done? what it has not done is the gloom and doom of the traditional economics profession where tariffs are bad. what they have done in this case, from the day one when they were announced, we saw a flood of investment and expenditures and capital equipment in that industry. day one, century aluminum, $150 million in a plant in kentucky. day one, u.s. steel opening new boilers.
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we have had, since that point in time, not just domestic companies investing inside our borders, but also foreign investment coming in, so we can make steel and aluminum with american hands. i am halfway there in terms of this. if you look at buy american, hire american policies -- this these are the two simple rules of president trump -- this is actually the equity we have in my office, the office of trade and manufacturing policy. americans.for buy we have seen at the department of transportation a radical change in the amount of waivers that were given out needlessly and wantonly during the previous administration. now those waivers have gone from a flood to a mere trickle. what you do when you do that is a combination of steel and aluminum tariffs and buy american policies using taxpayer
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dollars, you strengthen the manufacturing and defense industrial base. if you go to trade policy, think about the section 301 investigation, i mean, this is brilliant. in my judgment, we have the finest u.s. trade representative we have had in our history. although i like to joke with bob lighthizer that he should not get a big head because it is only been around since the 1960's, so you have to kind of put that in context. but doing the section 301 investigation was a power that was laying dormant for decades. ambassador lighthizer brought back -- the way the white house works is that the president says we need to get this done, how do we do it? this is the way we were able to protect our technologies and intellectual property from chinese predation.
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it has been tremendously successful. the report that the ustr did on the 301 is something i think is required reading for everyone in this country, because it lays out, chapter and verse, how there are many different ways that china goes after our technology. on trade policy, let's think about this, a lot of people in this room likely criticized the president early on for his tough stance on trade. you can't change the korea deal, don't mess with nafta. but that tough talk backed up with tough action has resulted
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in landmark restructuring of two of the worst, basically three of the worst trade deals in history. the korea deal, with its impact on the auto sector, china and the wto, and nafta in 1994. two out of three we have been able to renegotiate in trump time. what does that mean? that bob lighthizer was able to renegotiate nafta in 1/5 of the time it would normally take. it would normally take. and the whole essence of nafta, nsca, is ata, provision to bring domestic content back on shore and share the fruits of that assembly and supply chain with our neighbor to the south and our neighbor to the north. a deal which renegotiated actually strengthens all three
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countries, and strengthens again the manufacturing and defense industrial base. you can see how the grand strategy of this president feeds into this whole idea. this is a man that wakes up every day and thinks about how to put men and women back to work. particularly men and women who work with their hands in our manufacturing base to rebuild our community. guess what? it's working. if you look at every single economic indicator, every single one is up -- the president -- we didn't even have to wait for him to get elected and inaugurated. the day that he was elected, business and consumer optimism jumped up. it has gone straight up since to historic levels. now it is reflected in the data. we have historically low unemployment, 3.7%. we have rising wages for a change.
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we have record low unemployment. record low unemployment among blacks, hispanics, and women. and guess what? the rising wages are disproportionately being shared by the lower portions of the income stream. the deplorables, the trump voters, the people who voted this man into office. and my favorite statistic and my best measure of success of this administration, i remember during the campaign, on the stump, debating the clinton economic advisors, who said, we can never do better than 2%. and all those people who left the workforce are never coming back. they just don't have the -- whatever. those are the discouraged workers. one of the most interesting days i had on the campaign trail was the day that we got news of a study from the federal reserve
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that came out, i don't know when it came out, but it was one out of four people prime age workers are out of the workforce. crazy. what have we done? what has this president done? he has put over a million of those people back into the workforce. the so-called discouraged workers. people sitting on couches with the shades drawn with no hope in their life are back in the workforce. what is going on here with this grand strategy is not just quantities of jobs. it is quality and a fundamental restructuring of our economy back to a strong manufacturing and industrial base whereby people can work with their hands with dignity and earn a decent wage and rebuild their communities. this is something that president obama never understood.
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i'm not coming late to this party. this is something during the obama administration i repeatedly said publicly on tv and in articles. president obama, who wants to claim credit for this trump economy, this is somebody who -- years ago i said this. i said this president, obama, did not understand the difference between a cyclical short-run downturn that you might be able to fix with stimulus, and long-term fundamental structural problems related to high corporate taxes, overregulation, and bad trade deals. because he did not understand that, the only thing that grew during the obama administration was the deficit, the debt. it took us from the birth of our republic to 2008 to run up a debt of $10 trillion.
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it took barack obama 8 years to double that. and as he was doubling it with changing fiscal stimulus, he was bloating the balance sheet of the reserve in a dangerous way. whole notionis that somehow he can claim credit for that -- and the other thing president obama never understood was the concept that economic security is national security. nowhere was this more evident that has policy toward arm sales to our partners and allies. i was blessed to be a part of a large team that worked on two reforms hand-in-hand that were announced. the conventional arms transfer policy and the unmanned aerial systems policy, which basically liberalized our ability to sell weapon systems to our partners and allies.
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this is a policy that obama opposed. not on his moral -- not on the moral high ground, but on his high horse. ihe just did not see the chessboard. 's think about how this works for economic security is national security. if we are able to sell defense systems to our allies and partners, what does that do? it makes that partner stronger. it makes the region where that partner is more stable. and most important to me, most important to me, having gone through the vietnam era and watched afghanistan and iraq, most important to me is fewer american boots on the ground. at the same time, from an economic security point of view,
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that is more jobs right here. good jobs and good wages. for example, take the case of the f-16, this is why we need the cap policy. this president, donald j. trump, with a different attitude, was able to consummate a sale of f-16's to bahrain. what did this do? it helped expand the production line in fort worth, texas and lead to a new facility in greenville, south carolina. it reactivated -- here is the thing that people don't understand. it is not the big factories where stuff is assembled where the action is. it is in the supply chain. when you reactivate that supply chain, you mobilize 400 suppliers in 41 states. that is what it is all about. that is what the usmca is about, getting back the supply chain.
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this policy is one of the purest expressions of economic security is national security. so too is what we will talk about now, the defense industrial base assessment effort that went on. that is the cover of the report that you can see to the right of the smaller chart. what this was, was an expression of the first president since eisenhower to think strategically about the defense industrial base. what this is was the first whole government assessment ever of the defense industrial base. it was an effort that started with the inspiration of the white house with executive order 13806 in july of 2017. my deputy here, alex gray, had a lot to do with that.
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he did a wonderful job on that. the inspiration was turned into perspiration in the defense department working with 16 different working groups across the inter-agencies, 300 subject matter experts, looking at aircraft, shipbuilding, and six crosscutting sectors. machine tools, electronics, software, and engineering. what we found in terms of the big picture punchline of the report was almost 300 gaps and vulnerabilities in the subtiers of our supply chain. the subtiers of our supply chain. the problems we face are not at the assembly level, the final plants, whether it is in defense
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or the auto industry, it is -- where do you have a vital supply chain? if you take something like the f-35, you have a seven-tiered supply chain. it might be a widget or component in that tier that you make sure that production line cannot only continue producing but expand and accelerate production should we need it in a search. if you have a single source made in that that is in danger, a fragile market. if you have labor shortages associated with that because you don't have the skills and trade level or at the s.t.e.m. level, or if you are dependent on foreigners for that, that would be a vulnerability. what are some of these things that we have, what we call single points of failure. we only have one company that
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can make shafts for submarines. they have only one deco that can make turrets. we have space infrared detectors for missile defense. we have 72 different needs for military grade impregnated carbon for the alteration system for biological, chemical and , and nuclear applications. we have fragility there as low. the labor gaps are difficult. at the s.t.e.m. end, we have a shortage of people that can work in electronic controls. we have a shortage of software engineers. we have a shortage of nuclear engineering personnel. this is frightening. you need to modernize and keep in ready shape your nuclear
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arsenal. do we have enough people who are studying in that field in order to sustain us moving forward? these are the things we are looking at in the report. at the other end, trade skills, pipe skinners, machinists. for building shipbuilding and combat vehicles. there are large labor gaps. there is a very high degree of foreign dependency. this is part and parcel a product of the globalization of our economy, globalization of our supply chain. you have a high-tech tent, where you have sophisticated fabric for that, and we cannot make it here in america. you have rechargeable batteries for the war fighters out in the field.
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we have virtually all of the battery production migrating elsewhere now. we have the lithium that is used for some of this is coming under the control of foreign powers. printed circuit boards, machine tools. they all migrated to asia. and then you have critical beryllium,ike tungsten, and the rare earth, which we need for all sorts of applications, whether it is sophisticated electronic systems for our space or aircraft systems, or what dod calls euphemistically calls energetics. [laughs] dr. navarro: the stuff that blows up. munitions for the missiles. what is so alarming about this is one of the conclusions of the
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report, is that these vulnerabilities are not random , in some cases. they are the direct effect of strategic rivals, principally china, targeting somewhere in our supply chain or some sector and basically making that vulnerability either existing or worse. so i guess the question is, how did we get to this place? how do we get to a place where the greatest military power in the world faces gaps, close to 300 gaps and vulnerabilities in its defense and industrial base?
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the answer comes from the report in the form of what is referred to as the five macro forces. the first one budget sequestration, lay that squarely at the blame of the previous administration and the congress, there was no concept of this idea of economic security is national security much less that the world is a dangerous place. what happens when you randomly just cut off the flow of dollars to the defense department? well, one of the things that we have seen in the report is the crippling of design competitions. these are the things you need to develop kind of the next generation of weapon system. i mean, think about this. the only thing that has kept us dominant and free since world war ii is the offset strategy. right? we have been able, through the beauty of this country and the beauty of people who work here,
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through our innovative capabilities, to always leapfrog ahead of whatever threat we are facing. but when you squeeze the defense dollars, and you cannot do the design competitions, you not only don't do the design competitions, but the people who would otherwise be working it on the design competitions migrate out of the defense industry into other applications. ground vehicles. this is fascinating to me. it is subtle stuff. if you think about the ground vehicles we use. they look a lot like b-52s, right? with some tweaks. right? well, the squeezing of the defense budget forced the army to pursue a strategy of incremental change to the existing technology, rather than continually moving ahead with what the next generation of ground vehicle would look like.
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and again, once you get through that incremental change is you sideline the people who were important in the design area and you lost an edge. inefficient procurement, as a second macro force. six years to develop the f four. -4. 22 years to develop the f-22. i think they named the f-22 after a number of years it took to make the thing. the third major macro force has to do with the decline of the manufacturing base itself due to the forces of globalization. and, as this report points out alarmingly, due to the policies, the allies
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we are supposed to protect as well as strategic rivals, again, principally china. this report calls on china for economictegy of talkssion, and i will shortly more on that. and dod views china as an identified threat to america's defense industrial base. nothing can be clearer in this report. but this is a very different view that dod and other elements of this government have been the wall street bankers and globalist elites. think about this now. consider the shuttle diplomacy that is now going on by a self-appointed group of wall street bankers and hedge fund managers between u.s. and china.
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as part of a chinese government influence operation, globalist billionaires are putting the full court press on the white house in advance of the g20 in argentina. the mission of these unregistered foreign agents, that's what they are, unregistered agents, is to to pressure this president into some kind of a deal. two points have to be made clear about this. first of all, president donald j. trump has done an incredible job -- incredible job on trade. he has had the courage and wisdom to stand up to the globalist elites, to stand up to the countries of the world that are engaging in unfair trade practices, nonreciprocal trade, high tariffs, high tariff barriers, using the united states as the bank of the world. and running up a trade deficit every year, because they do that of over a half $1 trillion. that is a pure transfer of wealth abroad.
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jobs, factories, and money. donald trump has done an amazing job of addressing that issue and he didn't need the help of wall street, he didn't need the help of goldman sachs, and he doesn't need it now. it here is the most important point. when these unpaid foreign agents engage in this kind of diplomacy, so called diplomacy, all they do is weaken this president and his negotiating position. no good can come of this. if and when there is a deal, it will be on president donald j. trump's terms, not wall street's terms. but if wall street is involved and continues to insinuate itself into these negotiations, there will be a stench around any deal that is consummated. because it will have the and him the input of goldman sachs
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and wall street. i would urge these agents to stand down on this issue. no good can come of it. if they want to do good, spend their billions in dayton, ohio, in the factory towns of america, where we need a rebirth of our manufacturing base and an end to the opioid crisis, which they helped to create by off shoring our production. to convince them and to hopefully enlighten you further about the strategies of economic aggression that dod references in this report, i want to walk through this chart over here, which is basically a chart. it is in the spirit of one picture is worth a thousand words. in this case, one chart basically encapsulates the
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entire policy of the republic of china. if you understand this chart, you not only understand what china is doing to us and the world, you will understand why it is so difficult to undo what they are doing to us. what you have on this chart at the top is the six strategies of economic aggression they pursue. this is intuitive. this should ring a harmonious note with you. you will understand this immediately. what do they do? they protect their markets. they attack global markets. they go around the world trying to secure resources in places like the congo for cobalt or chile for copper. they seek to dominate traditional manufacturing, which what i would say is pretty much check that box at this point. and the last two columns are the
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section 301 problems. column five is to acquire the technologies and intellectual properties of the world by any the purposeary for of column six of capturing the emerging issues of the future -- artificial intelligence, robotics, everything in between. the kind of industries going forward where our sons and daughters and their children will find the good jobs at good wages in the future economy. and then the left column going down. i call it my paul simon chart, the 50 ways to leave the american economy behind. these consist of more than 50 tax policies and practices, many documented in that
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historic usgr report. over 50 ways that china basically pursues its strategies of aggression. high tariffs, 25% on autos. vs. 2.5% here. high non-tariff barriers, things like having indigenous standards standards for products, so that we can't sell into their market. currency manipulation. there's a great debate whether china's manipulating their currency. what we know is that since march of 2018 when tariffs were imposed on china, we saw a dramatic drop in their currency. what is undisputed is that from 2003 to 2014, china is regarded
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, by both the right and the left, by the peterson institute , the economic policy institute -- you cannot have two institutes that are further apart -- that china was the worst currency manipulator of any country in the world. cyber theft and industrial expo espionage go hand-in-hand. it is much worse than that. ok, you want in our market, you also have to bring your r&d over. when you bring your r&d over, you are basically bringing over the rest of your manufacturing, and you are leaving your country behind. massive subsidies, state owned enterprises concrete the world. predatory debt financing. china foreclose on a port in sri lanka and took control of that. did anybody notice that?
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malaysia is a colony, sri lanka is a military outpost. this is what is going on here. the list goes on and on. and here is the point. if you think about the art of the deal with china, even if you take 25 of those things off that list, and they are all structural. this is not about buying more soybeans or more coal. this is not about that. this is structural change. if you take 25 of those off, you still have 25 left, and that it bebably still would enough to hurt us. but there are other difficulties here. we went on a trip, let's go to beijing and negotiate with the chinese. so we sat across the table with the chinese team, and it's like we put our demands down.
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they were tough demands. they were a long list of demands. kind of like the chart here. what do we hear? "we don't engage in cyber theft, we are the biggest victim of cyber theft. we don't force technology transfer. that is not our --" i mean, how do you have a deal with somebody if they won't even acknowledge your concern? it is alice in wonderland. but here is another problem. think about this. what's the difference between the soviet union and the chinese model? they are both state-run economies. china may have to little bit more market stuff, but at the end of the day, they are state
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directed. soviet economy was a mess. how did china get profitable? you know the answer. they steal stuff. they take the technology. if you are able to take the technology of the world and avoid the 10%, 20%, or 30% r&d expenditures that other companies have to spend every year, don't you think they will have a cost advantage? that's the difference. that's the difference. if china were to say, well, we will stop doing all that stuff, they would be left with an economy that would effectively lose its edge. i believe there is deep concern in china that if they make the kind of structural reforms that are necessary for them to be reasonable, fair, responsible citizens of the global trading system, they will not be able to compete. the biggest problem is the trust issues. the trust issues.
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somewhere i have -- the beautiful thing about working at the white house is you can ask for stuff. give me all the things -- all the instances where china has agreed to something and then not kept their promise. i get, like, five pages of stuff going back 30 years. it's frightening. bonnie glaser, she knows all about the south china sea thing, shoal,ough schulz how we try to make a deal and we thought we had a deal and now china owns scarborough shoal.
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the one deal we made with them was the beef deal, they will buy more american beef. where's the beef? where's the beef? the game that china has played, and they played people in the bush administration like a violin. is like a cap dance of economic dialogue. that's all they want to do. they want to get us to the bargaining table, sound reasonable, and talk their way while they keep having their way with us. here's all you need to know when you think about the prospect of a deal. we had a high-ranking member of the chinese government agree with barack obama on two things. this was back in 2015. two things. the chinese official agreed to
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no militarization of the south china sea. within two years, those artificial islands were armed to the teeth. the second thing that official agreed to was to stop hacking american businesses. the weird thing about that -- i remember watching that press conference and watched the president obama joke about that that he wasn't going to crack down on their weapon systems, which they had done with aplomb. i mean, every single weapon system has been hacked into. the chengdu fighter is basically f-22, andombo of the we can't even afford to build f-22's.
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so obama jokes and says "everybody hacks defense." the chinese have promised to stop hacking at least their businesses. that lasted about six months, and now the u.s. government will tell you unequivocally that those hacks are back up, they are serious, and they are coming to get us. the point is, if you think about a deal, it's been great having the president and ambassador kaiser --ambassador like and ambassador bob lighthizer work with the koreans.
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we were able to negotiate with canada and mexico, and we can trust them. we are entering into negotiations with japan. we are in the process of negotiating with europe. we are negotiating with everybody around of the world, there is a deal, but when it comes to china, it is different. wall street, get out of those negotiations. go to dayton, ohio, bring your goldman sachs money to dayton ohio. the president does not need shuttle diplomacy. what we need is to rebuild our manufacturing and industrial base. that is what this president is doing. we like to do things differently in the trump administration. this is a different culture. the culture is to do a report , hand it on in, and go on to your next report. that is not what we did here. the day that report was handed
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in by pat shanahan, the dod and other agencies, we are all ready, the day the report was handed in, we signed to defense production act title iii orders that would help a couple of small companies in that fragile supply chain help us with things like the future, navy unmanned systems. we had initiatives for the national defense stockpiling program to help with critical materials issue. we have an effort ongoing to modernize the organic industrial base. we are developing with department of energy a title iii silent mechanism to deal with some of our vulnerabilities in energy and nuclear. this administration is working
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tirelessly to fix those gaps in vulnerabilities. this effort is one of the purest expressions of the principle that economic security is national security. we will strengthen american manufacturing and industrial base, and in the process, we will create jobs, we will build factories and better protect our home life. i salute the department of defense for its effort in this. i salute this resident for having the courage and the vision, the grand strategic vision to pursue the rebuilding of this country, and this country's manufacturing and defense industrial base through broad range efforts of which this is a small but important part of. there is more work to do. one of the next things on our agenda is dealing with some of the infrastructure issues in the defense industrial base. hopefully we can come back some point and talk about that.
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now i will turn it back to andrew, and i guess he will put me on the griddle. thank you for your patience on this. [applause] andrew: thank you so much, dr. navarro, for those remarks. i want to start with the question of strategy and policy mix. you talked about a wide range of policy tools that this administration is using to pursue its economic and national strategy, including tax policy, trade and tariff policy, and a variety of national security policies. spending, arms exports, investment security, targeted measures like the defense production act project.
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i want to start with your chat about the chinese policies and their objectives from the perspective of, i presume they might lay it out a different way. dr. navarro: to that to that pos is on the white website. my third ring that has effort in it that will not ever be seen by the light of day by the people of china, this is banned in china come up the leadership is well aware of that. so if we were to have a chart like that of u.s. policy objectives, the tools that we reach and the overarching goals we are to achieve, robust manufacturing, innovative r&d and innovative services sector, what with that look like? what are the goals? so, here is what is
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really important to understand about this chart. on theart is founded underlying assumption in china that they are a nonmarket economy, a state directed economy. they use international rules when it is in their interest to do so and when it is not, they violate them. violationshese are of international trade rules. we may have some of the same objectives broadly, we want to strengthen our manufacturing and to certainly we want to lead the industries of the future. but we do not do is any of the stuff that china does in violation of international rules. we have the lowest tariffs on average in the world.
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we of the lowest nontariff barriers. i'm talking about not just china but europe, for example. allowed this to happen. bush, clinton, obama appeared why is it that europe gets to charge us 10% to try to sell them a ford or gm automobile and they get 2.5%? that is insane. the answer to your question is what the president is clear about seeking his free, clear, and reciprocal trade. i like to refer to the five zeros. my brother kudlow only goes for three, but i like the five. what are they? zero tariffs, zero nontariff barriers, zero subsidies, zero currency manipulation, and a tax versusage from
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income tax treatment. if we lived in that world, and everybody actually played by the rules, this country would theper and the rest of world would prosper. we would be the most competitive nation and the world. we don't need cheap labor and we don't need pollution havens to gain competitive advantage like some other countries around the world. we have the finest education system in the world. with the most innovative thinkers in the world because we are a free people. all the want to do is compete. that is the difference. adrew: so the objective is china and other nations would pursue policies that would also have the result of that five zero approach. , fair, and: free reciprocal trade. just like you read about it in the textbook. surethe thing about -- i'm
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there's some free traders in the audience who might think i'm a protectionist. -- thank youtand for referencing my phd at alex from harvard. you can't buy those, by the way. but, the point of want to make is that i taught macroeconomics for years. courses to doline can go look at what i did there. is simplyardian model this. if two countries engage in free each will work to their competitive and comparative advantage. resources will be used more efficiently. the pie collectively will be bigger and there will be more gains to share among the nations.
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predicated on floating exchange rates that allow trade balances to always be roughly around zero. if country a is selling country be too much stuff, their currency builds up, becomes weakerr, hours becomes we buy more exports, fewer if they're important trade comes back to balance. that is not the world we live in. it would be nice to get there andrew: i should mention at the -- we collected 25 questions and i'm drawing off of these. thank you for committing these questions. let me talk about the policy
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next. obviously, your main focus is on the trade policy. but, traditionally this policy recognized and trade has been handled reluctantly as a primary lever and u.s. national strategy. for what i would say, a few to have it can be hard an exit strategy. tools to try to , souence broader economic there has been a reluctance to use tariff increases as a tool. can i suggest something though. that is a historical. ii whenck to world war we were the richest nation in the world.
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that if otherew countries were prosperous, we would be more prosperous to pair it we got in the habit as a rich country of trading off pieces of our economy for national security. we were willing to give deals that were better than they .hould be two different it never really matter until it did. did, i think the culture in particularly in washington was such that it was very difficult to see. recognize and economic security, we will continue to believe it is ok to get into evenhing like the tpp
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though getting into the ttp would have devastated our auto industries. so, that is the way to think about it. allre not reluctant at about imposing tariffs on other countries when they impose higher tariffs on us. it's madness not to do so. andrew: is that an endless cycle or does it end? dr. navarro: clearly intends episodically with certain countries. a lot of people in the audience is like at the beginning of the trump administration we started and what have we got. we have a better nafta deal. you could stop there is a president and say i did it. we're not stopping there.
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trying to get a better relationship on trade. is sewage and errors. negotiating more soybeans are more cold. andrew: you referenced the upcoming g20. do you think that's just one ?tep on a longer road dr. navarro: one of the things i have a spouse of the white house is that we have one trade representative and his name is property like kaiser. great american patriot who springs from a family that if i get this correct, someone in his was with george washington crossing the delaware.
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you are not in good hands when the negotiations get outside to those two people. i don't presume to get in the middle of that. i don't think anyone else should. anticipate the change in control of the house of representatives to impact your policy approach at all? exogenous?something dr. navarro: outside of my lane. about: let me talk than the defense industrial base review that you mentioned and some of the findings that came out of that. 300e were about vulnerabilities that were
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identified. as a comes to going after those in the action plan you intend to take, do you see a hierarchy in your policy tools, you mentioned the defense production act as one of the early actions being taken. is there a role for trade policy and addressing those vulnerabilities as well and is there a hierarchy for how you approach them? dr. navarro: my friends at c-span, there is a great c-span3 talking right about that. one thing that was said that is exactly right is what you want in pure mackenzie consulting style, which is where he came from is a wheremensional chart highest impact implement. is themove forward,
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highest impact ones that are easy to implement moving forward. his view is that because get a third of the things out of the way very quickly within six months. the rest of them will be ongoing struggles because of things like resource constraints. to rebuild our tungsten domestic industry or rare earth, that takes time. it takes investment. it takes creativity. it takes innovation. the other thing i will say about this is everything this president does is viewed multidimensional he with multi-vector lines of attack on a problem. this is a unique perspective of this president. he really does see the chessboard. every time i have been blessed
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to be in the oval or roosevelt room with him, he is always the smartest guy in the room. he is always three steps ahead of everybody else. he listens to everybody's points of view and he always gets it right at the end. the only thing that can cripple him is when he doesn't get the opinions. but he sees the chessboard. to your question, this issue of a strong manufacturing and defense base is as i said a multi-vector attack. think about, like the old days. some standard defense expert may be here at csi s would never think about tax cuts or deregulation as instruments to further our defense corps. does.resident economic security, national security. andrew: so, with the things like you are talking about, these
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materials that we might feel the need to start production in the united states, something we no longer produce here are we want to see produced here in greater abundance and maybe a project would support that. some trade policy to ensure that production wasn't immediately obliterated by normal global competition or less than normal global competition. if there a way in which that transitions at some point and we reach competitiveness and that point? how to achieve that objective? there is some skepticism and some folks that even if we were to start a nasa tungsten production in the united states, would it still be competitive in 10 years time or when we continually have to support that? dr. navarro: it's a great question. it cuts to the heart of the matter. it also cuts to the heart of the matter of the trump culture. we do things from a business
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perspective and try to figure out what is the most efficient way to solve the problem. that will be the kinds of solutions we face. money,s of giving out this will not be corporate welfare, but seed money. we view at the same way a venture capitalist in silicon valley would view it. seed money to get the venture going, to get the venture healthy. you, if a foreign country is dumping particular critical material or mineral into this country, dumping being selling way below cost, there are many, many costs -- parts of anyrnment about countervailing duties.
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if you think tariffs don't work, spent hour on the internet looking at all the tariffs that like 100% tariffs, 200% tariffs on countries that are just killing us by dumping materials into this country. i know your time is limited and you are already over time with us so i appreciate you sticking around. i want to tell everybody you understand what i do. mission coming to washington is to create good paying jobs in the manufacturing sector for america to work with their hands. that's what we do every day. that,policy is part of but when i was on the campaign
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trail as the chief economic four points of the compass. tax cuts, deregulation, unleashing the energy sector, and fixing our trade deal. i said that if we did that, we could get out of the new normal of 2%, which was not a world any of us wants to live in. the obama years were not fun. we cut to 3% or more. so what is the last question? what does a teacher come i would only say this better be a good one. we don't want to end on an anti-climax. andrew: the good news is you rolled right into it. --question was kind of about
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how you fit these pieces together. process, youry office, national security council, omb, department of defense, clearly you have indicated you will follow-up on this review and that is a thread of activity that will keep pushing this objective. are there others we should be paying attention to? i'm sure the budget process is one come up there are others -- how you translate into direct policy. certainly an ongoing concern is going to be maintaining a healthy defense budget in which we not only spend sufficient dollars, but we spend them wisely. cusp of the next industrial revolution, where we are moving into these industries of the future where the
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manufacturing process will be radically altered. where we have things like artificial intelligence which will radically change the battlefield. space is increasingly coming into play. concern is to make sure we spend the money, and the expenditures. if we don't engage on the economic policies you need, you will not have the tax base to fund national security. andrew: dr. navarro, thank you for joining us. [applause]
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[captions copyright national cable satellite corp. 2018] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit] tonight, to retiring members of congress, republican senator orrin hatch of utah and democratic senator sander levin the state ofiscuss washington and what is next after retiring from politics. was sent the free c-span radio app. i thought about forgotten presidents even before i wrote the book. then it occurred to me there might be something that they all had in common. >> university of north carolina constitutional law professor
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michael gerhardt talks about two of his books. the forgotten presidents and him peter. clinton did al lot to merit his own impeachment. i think he knew members of congress were looking for him to make mistakes come and when he made those mistakes and later testified under oath in a way that was false, for which he was later held in contempt by a judge for perjury, bill clinton made his impeachment almost inevitable. >> sunday night at eight eastern on c-span's q&a. >> c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies. today, we continue to bring you unfiltered coverage of congress, the white house, the supreme


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