“Mary Erdoes, JP Morgan Chase,” Trump said. “They just announced earnings, and they were amazing. … Would you say “thank you Mr. President” at least? Hey? I made a lot of bankers look great. “
The exchange may have been just kind ribs. But he illustrated how a president who once criticized the greed of the financial industry and promised to remake the Republican Party as a “workers’ party” has prioritized the corporate wishes of the United States.
The conclusion of Trump’s high-profile Chinese deal included billionaire Stephen Schwarzman, a private equity investor; Sheldon Adelson, whose company owns casinos in the Chinese territory of Macau; and Hank Greenberg, the former head of the American International Group.
Numerous representatives of companies such as Honeywell and Boeing that have outsourced jobs to China in recent years joined them, but no representatives of organized labor attended.
“There is very little in this agreement that addresses China’s long denial of basic labor rights,” said Richard Trumka, president of the AFL-CIO. “It’s another great gift for Wall Street and Big Pharma and prioritizes new protections for companies that move to China, creating even more incentives for outsourcing.”
The US authorities deny that the agreement encourages the migration of additional US jobs to China, a phenomenon that Trump attributes to his motivation to run for office. The protections obtained with so much effort for US trade secrets will make it harder for Chinese companies to steal innovations that create jobs and will lead to greater profits for domestic workers, they say.
But the place of workers outside the negotiations with China contrasted strongly with the influential role it played during the development of a new trade agreement in North America.
Robert E. Lighthizer, the president’s chief negotiator, consulted with labor representatives since the beginning of the talks aimed at the Agreement between the United States, Mexico and Canada. Originally from an industrial port city in eastern Ohio, Lighthizer received praise from Democrats and union officials for designing that agreement to direct more manufacturing work to the United States.
Unlike his Republican predecessors, the veteran trade lawyer did not welcome industry groups during the North American talks, but called them “special interests.” Lighthizer set the goal of developing a new bipartisan trade coalition that would link Democratic unions with those of Trump’s Republican Populists.
Lighthizer wrote about the requirements of the USMCA for Mexico to improve its treatment of workers, even guaranteeing the right to collective bargaining. Over time, that could help reduce the huge gap between Mexican and US wages, which encouraged decades of outsourcing.
The agreement, a replacement for the 1994 NAFTA agreement that unions blame for the loss of millions of factory jobs, devotes an entire chapter to labor problems.
The word “work” does not appear once in China’s 86-page agreement.
The influence of work in USMCA and its impotence in China’s talks reflect a cold political calculation. In the case of USMCA, which changed US law. UU. And, therefore, required the approval of Congress, the administration needed labor support to obtain Democratic votes in the House. The agreement with China did not require a vote in Congress.
“That’s why the workforce was in the room; they had influence,” said Robert Scott, an economist at the Institute of Economic Policy. “The workers had no influence on this agreement (from China). None.”
It would also have been much more difficult to impose political terms on China, the world’s second largest economy and a military power of increasing stature. Securing new rights for Chinese workers would have political ramifications that China’s authoritarian president Xi Jinping would surely reject.
Undoubtedly, China’s “phase one” agreement includes a Chinese commitment to refrain from manipulating the value of its currency to gain a commercial advantage. Trade union officials have long blamed an undervalued yuan for making Chinese products less expensive than American alternatives, although in recent years the Chinese government has tried to prevent its currency from falling.
The agreement also requires that China buy $ 200 billion in additional US products above 2017 levels, which should benefit manufacturers, energy companies, service providers and farmers.
Trump has already begun promoting the deal with China in the election campaign. A week before the East Hall ceremony, he called it a “great beautiful monster” in a noisy concentration of re-election in Toledo, Ohio, and advised farmers: “Go buy bigger tractors.”
Workers have also benefited from the continued expansion of the economy under the president. Unemployment is near a minimum of half a century at 3.5 percent, jobs are plentiful and wages are rising, particularly for low-income workers.
However, the labor part of the economic pie is still depressed. The wages and benefits of workers represent 77.9 percent of corporate income, according to the latest figures from the Office of Economic Analysis. That is improved by 1.5 percentage points under Trump, continuing a gradual rebound that began in 2014.
But workers have recovered in the last five years less than half of what they lost since the early 2000s. Meanwhile, Trump’s potential Democratic rivals in the November elections are immersed in a fierce debate over income inequality and huge influence of the richest people in the nation.
If the deal with China left work almost empty-handed, Wall Street collected money.
Treasury secretary Steven Mnuchin, a former Goldman Sachs partner, who remains close to the financial industry, helped lead the talks along with Lighthizer. And among Trump’s trusted external confidants in China is Schwarzman, executive director of the Blackstone Group, a private equity firm.
One of the seven chapters of the agreement details the ways in which China should open its financial services market to US institutions.
The agreement contains detailed provisions governing the treatment of banks, credit rating agencies, electronic payment providers such as Visa and MasterCard, insurers and securities firms. (The executive directors of Visa and Mastercard attended the signing ceremony of the White House and were publicly thanked by Trump).
While China has often discussed plans to relax restrictions on foreign financial institutions, it has never before committed itself to specific short-term terms.
“Then the banks will be fine,” Trump said shortly before signing the agreement.
By April 1, in just over 10 weeks, Chinese officials must allow foreign companies to take majority interests in fund management companies, insurers, futures traders and other securities firms. That fulfills a long-sought goal for Wall Street.
“It allows us to do in China what we do anywhere else in the world,” Jamie Dimon, CEO of JPMorgan, told reporters last week. “China will grow and we will grow with them.”
Christopher Nixon Cox, grandson of former President Richard Nixon, is among those seeking potential opportunities.
“China has been talking about opening financial services for years. Now it is happening, “said Cox, global strategist at Brightsphere Investment Group in Boston.
Opening the Chinese market is just the latest good news for Wall Street under the Trump administration. Like other industries, large banks have benefited from the president’s corporate tax cut and deregulation.
Last year, the Federal Reserve eased the annual stress tests that large banks must perform to demonstrate that they can survive a financial crisis. Regulators also made the “living wills” less expensive that banks should develop to show how they would be liquidated if necessary.
“This administration has delivered historic levels of deregulation to the financial industry, and there is more on the way,” said Dennis Kelleher, president of Better Markets, a nonpartisan vigilance group.
The Federal Reserve and four other financial regulators proposed in October to loosen the rules governing financial exchanges between affiliates of the same financial matrix. The review was proposed by officials appointed by Trump and with the opposition of at least one remnant of the Obama administration, Fed governor Lael Brainard.
If approved, the change would release $ 40 billion in reserve capital that banks could use in profitable activities, according to Kelleher.
The signing ceremony of the East Room last week came a day after JPMorgan, the country’s largest bank, reported annual earnings of more than $ 36 billion, 50 percent more than in 2016.
On Wednesday, Trump joked with Erdoes, the head of the asset and asset management division of JPMorgan, whom American Banker once called “the most powerful woman in finance.” The president said he expected to see Dimon the next day.
Since Trump took office, the bank’s share price has easily surpassed the broader stock market.
Putting the financial industry at the center of its new version of China’s trade policy was not what the Trump candidate promised.
At a campaign stop in June 2016 in Monessen, Pennsylvania, Trump said that globalization had enriched “the financial elite” while ruining the lives of American workers. Standing in front of an imposing mound of recycled aluminum, Trump promised to defend the country’s “incredible workers” and recover lost jobs in factories.
His attack that day on “global finance” was consistent with his promise to raise taxes on hedge fund managers who he accused of “escaping with murder.”
Almost four years later, in the East Room, Trump still paid tribute to American workers and the beaten middle class. But many of the negotiation achievements he boasted, such as the new intellectual property protections, were of greater benefit to corporate executives sitting in front of him.
“Unlike those who came before me, I kept my promise,” said the president. “In fact, I think more than I kept my promise.”