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What do Obama's top new appointments have in common?

President Obama's top new appointments have more in common than just past involvement in the Clinton Administration. They were involved in the decisions to give China most-favored nation trading status and admit China into the WTO.

President Obama's new chief of staff is William Daley. According to Reuters:

Daley ... was U.S. commerce secretary when he helped usher through most-favored-nation trading status for China.

Obama's new chief economic advisor is Gene Sperling. According to Wikipedia:

Also in 1999, together with United States Trade Representative Charlene Barshefsky, Sperling successfully negotiated and concluded the China-World Trade Organization agreement in Beijing, paving the way for China to enter the WTO in 2001.

Unlike Daley and Sperling, Robert Cassidy publicly regretted the result of these China negotiations. In the June 2008 issue of Foreign Policy in Focus (The Failed Expectations of U.S. Trade Policy), Cassidy wrote:

As the principal negotiator for the landmark market access agreement that led to China’s accession to the World Trade Organization (WTO), I have reflected on whether the agreements we negotiated really lived up to our expectations. A sober reflection has led me to conclude that those trade agreements did not....

The beneficiaries of the agreement with China fall into two groups: multinational companies that moved to China and the financial institutions that financed those investments, trade flows, and deficits. Foreign direct investment (NYSE:FDI) in China accelerated at a time when such investment to other parts of Asia was declining and, in 2001, even matched FDI to the United States. Sourcing from China, whether from direct investment or through licensing arrangements, has allowed companies to cut costs and increase profits, as reflected in increased corporate profits and the surge in the U.S. stock market.

Conversely, it is doubtful that the U.S. economy or its workers are better off. U.S. manufacturing jobs declined by more than 2.5 million since China joined the WTO in 2001. While services jobs increased during this period, with the exception of telecommunications, non-tradable jobs accounted for the most significant portion of that increase. Wages have been stagnant and real disposable income for three-quarters of U.S. households has been stable or declining. Only the top quartile of families has seen significant increases in real disposable income....

President Obama has put together an outstanding team for creating jobs -- in China!




Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I own Chinese yuan through CYB and shares in Vanguard's Emerging Markets Stock Index Fund (MUTF:VEMAX).