Taiwan Travel and Tourism Coordination Act

— 772 — Mandate for Leadership: The Conservative Promise FIGURE 1 Mapping Bilateral Trade Deficits Against Tariff Differentials ■ Largest bilateral trade deficit and/or largest tariff differential ■ Second-to-largest bilateral trade deficit and/or second-to-largest bilateral tariff differential ■ Smallest bilateral trade deficit and/or smallest tariff differential AVERAGE MOST-FREE-NATION DIFFERENTIAL, SIMPLE MEAN 10% India 8% Thailand China Taiwan 6% Vietnam 4% 2% Malaysia Japan E.U. 0% 0 $50 $100 $150 $200 $250 $300 $350 $400 $450 BILATERAL TRADE DEFICIT, 2018, IN BILLIONS OF U.S. DOLLARS SOURCE: White House Office of Trade and Manufacturing Policy, The United States Reciprocal Trade Act: Estimated Job & Trade Deficit Effects, May 2019, p. 20, https://www.wsj.com/public/resources/documents/RTAReport.pdf? mod=article_inline (accessed March 21, 2023). A heritage.org against tariff differentials for eight major U.S. trading partners, which account for 47.6 percent of total U.S. trade and 88.6 percent of the U.S. trade deficit in goods. Figure 1 shows that the USRTA priority list would include the countries in red—Communist China and India—along with trading partners in the yellow zone. This yellow zone includes the European Union, which features a very high deficit, along with Thailand, Taiwan, and Vietnam, which feature particularly high tariff differentials. Table 4 estimates the improvement in the U.S. trade deficit under Scenario One, in which partner countries match the U.S. tariff rate under pressure from — 773 — Trade TABLE 4 Trade Defi cit Reductions for Target Countries SCENARIO ONE: SCENARIO TWO: PARTNER COUNTRIES U.S. MATCHES PARTNER MATCH U.S. TARIFF RATE TARIFF RATES Bilateral Bilateral Projected Defi cit Projected Defi cit Change in Reduction Change in Reduction Bilateral Trade as Share of Bilateral Trade as Share of Balance 2018 Bilateral Balance 2018 Bilateral Country ($ Billions) Defi cit ($ Billions) Defi cit India 5.0 24% 18.7 88% Taiwan 1.0 6% 9.2 59% Vietnam 0.7 2% 17.2 44% Thailand 3.2 17% 6.4 34% Communist China 18.5 4% 70.6 17% European Union 8.0 5% 25.3 15% Total 35.4 4% 45.6 5% SOURCE: White House Offi ce of Trade and Manufacturing Policy, The United States Reciprocal Trade Act: Estimated Job & Trade Defi cit Eff ects, May 2029, p. 21, https://www.wsj.com/public/resources/documents/RTAReport. pdf?mod=article_inline (accessed March 21, 2023). A heritage.org the American President, and then under Scenario Two, in which the U.S. matches the tariffs of partners that refuse to lower their tariffs. Columns 2 and 4 in Table 4, when the USRTA is applied first to Communist China and then to the EU, show the largest absolute dollar reductions in bilateral trade deficits. This results in bilat- eral deficit reductions in Scenario One of $18.5 billion for China and $8.0 billion for the EU. In Scenario Two, the impacts for Communist China and the EU are substantially larger: $70.6 billion and $25.3 billion, respectively. Note further that the largest relative dollar reductions in percent terms come from applying the USRTA first to India and then to Taiwan and Vietnam. For exam- ple, if India were to reduce its tariffs to U.S. levels, as in Scenario One, this would reduce the bilateral trade deficit with India by 24 percent. If the U.S. raised its tariffs to mirror India’s levels, the result would be a far more dramatic 88 percent

— 691 — 22 DEPARTMENT OF THE TREASURY William L. Walton, Stephen Moore, and David R. Burton INTRODUCTION The U.S. Treasury Department has a broad regulatory and policy reach. The next Administration should make major policy changes to: (1) reduce regulatory impediments to economic growth that reduce living standards and endanger pros- perity; (2) reduce regulatory compliance costs that increase prices and cost jobs; (3) promote fiscal responsibility; (4) promote the international competitiveness of U.S. businesses; and (5) better respect the American people’s due process and privacy rights. These goals should be accomplished through: executive action (primar- ily treasury orders and treasury directives) and departmental reorganization; rulemakings; promoting constructive policies in Congress; actions in international organizations; and treaties. The primary subject matter focus of the incoming Administration’s Treasury Department should be: l Tax policy and tax administration; l Fiscal responsibility; l Improved financial regulation; l Addressing the economic and financial aspects of the geopolitical threat posed by China and other hostile countries; — 692 — Mandate for Leadership: The Conservative Promise l Reform of the anti-money laundering and beneficial ownership reporting systems; l Reversal of the racist “equity” agenda of the Biden Administration; and l Reversal of the economically destructive and ineffective climate-related financial-risk agenda of the Biden Administration. BIDEN ADMINISTRATION TREASURY DEPARTMENT The Biden Administration Treasury Department has failed badly in achieving every one of the agency’s core objectives. The financial affairs of the nation have seldom been in worse condition, with the national debt expanding by more than $4 trillion in Biden’s first two years in office. No President in modern times—perhaps ever—has been more fiscally reckless than has the Biden Administration. The soundness and stability of U.S. currency, the dollar, has been put at risk because of the worst inflation in four decades. American families have been made poorer by Biden’s economic strategy of taxing, spending, borrowing, regulating, and printing money. The average family has seen real annual earn- ings fall about $6,000 during the Biden Administration.1 In 2022, the average American’s 401(k) plan dropped in value from $130,700 to $103,900—more than 20 percent.2 Why has the Biden Administration failed to achieve virtually all components of its mission? Under the leadership of Treasury Secretary Janet Yellen, the depart- ment has made “equity” and “climate change” among its top five priorities. The next Administration must act decisively to curtail activities that fall outside Trea- sury’s mandate and primary mission. Treasury must refocus on its core missions of promoting economic growth, prosperity, and economic stability. For a clear statement of Treasury’s mission drift, one need look no further than Secretary Yellen’s introduction in the Treasury Department’s Fiscal Year 2022–2026 Strategic Plan: We will have to address the structural problems that have plagued our economy for decades: the decline in labor force participation, income and racial inequality, and serious underinvestment in crucial public goods like childcare, education, and physical infrastructure. And then there are rising challenges, like climate change, which, left unchecked, will undermine every aspect of our economy from supply chains to the financial system.3 Treasury’s mission drift into a “woke” agenda, is exemplified in a comparison of Domestic Finance’s changed responsibilities from 2015 to 2023:

— 817 — Trade Internet memes, fashion, movies, student exchange programs, tourism, and more. China’s leaders are set in their ways, especially with Xi Jinping presumably now in power for life, but the younger generation is more open than their parents were—more individualistic and open to change. Effective outreach to the Chinese people will need the same humility that other sound trade policies require. Government-directed cultural and economic outreach risks being heavy-handed and could backfire. Everyone involved needs to know that the process is generational in scope and will not work overnight. At the very least, Washington should stay out of the way as much as possible when regular people want to contact each other across national, language, and cultural divides. Each of these many components, from tariffs to trade agreements to culture, is a small part of a larger China policy. Many are not attention-grabbing and cannot be put into sound bites. Cultural engagement is not something Washington can plan. China’s own demographic and debt problems, along with aging leadership and growing discontent over the zero-COVID policy, might even cause an internal collapse. American policy must therefore be prepared to face any contingency. CONCLUSION A conservative trade policy needs a conservative vision. America’s found- ing institutions, based on free trade and entrepreneurship, have made America the world’s leading economy and will help keep America strong through the next century. However, recent departures from those principles have hurt America’s econ- omy and weakened alliances that are necessary to contain threats from Russia and China. Reaffirming those principles through policies of openness, dynamism, and free trade will boost America’s economy, make us more resilient against crises, and remove opportunities for progressives and rent-seekers to use the levers of gov- ernment for their own purposes. Rediscovering conservative principles on trade policy and embracing America’s long history as the world’s leading commercial republic are an important part of restoring a government of, by, and for the people. AUTHOR’S NOTE: The preparation of this analysis could not have been completed without the valuable support of a small, sturdy, and principled community of trade policy experts. Among them, my colleagues at the Competitive Enterprise Institute, Ryan Young, Iain Murray, and Ivan Osorio were essential. The author alone is responsible for this report. No views herein should be attributed to any other individual or institution. — 818 — Mandate for Leadership: The Conservative Promise ENDNOTES 1. Warren E. Buffett and Carol J. Loomis, “America’s Growing Trade Deficit Is Selling the Nation Out from Under Us. Here’s a Way to Fix the Problem—And We Need to Do It Now,” Fortune, November 10, 2003, https://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/index.htm (accessed February 25, 2023). 2. 2017 Annual Report to Congress of the U.S.–China Economic and Security Review Commission, 115th Congress, 1st Session, November 2017, p. 24, https://www.uscc.gov/sites/default/files/2019-09/2017_Annual_Report_to_ Congress.pdf (accessed February 25, 2023). 3. JayEtta Z. Hecker, Associate Director, International Relations and Trade Issues, National Security and International Affairs Division, U.S. Government Accountability Office, “China Trade: WTO Membership and Most-Favored-Nation Status,” Testimony before the Subcommittee on Trade, Committee on Ways and Means, U.S. House of Representatives, GAO/T-NSIAD-98-209, June 17, 1998, p. 1, https://www.gao.gov/assets/t- nsiad-98-209.pdf (accessed February 25, 2023). 4. News release, “U.S. Trade in International Goods and Services, December and Annual 2022,” U.S. Department of Commerce, Bureau of Economic Analysis, February 7, 2023, https://www.bea.gov/news/2023/us- international-trade-goods-and-services-december-and-annual-2022 (accessed February 25, 2023); “Table 1. U.S. International Trade in Goods and Services: Exports, Imports, and Balances,” U.S. Department of Commerce, Bureau of Economic Analysis, last updated November 3, 2022, https://www.bea.gov/sites/default/ files/2022-11/trad-time-series-0922.xlsx (accessed February 25, 2023). 5. U.S. Department of State, “Fact Sheet: Activity at the Wuhan Institute of Virology,” January 15, 2021, https://2017-2021.state.gov/fact-sheet-activity-at-the-wuhan-institute-of-virology/index.html (accessed February 25, 2023); Interim Report, An Analysis of the Origins of the COVID-19 Pandemic, Minority Oversight Staff, Committee on Health, Education, Labor and Pensions, U.S. Senate, October 2022, https://www.help. senate.gov/imo/media/doc/report_an_analysis_of_the_origins_of_covid-19_102722.pdf (accessed February 25, 2023). 6. Barmini Chakraborty, “China Hints at Denying Americans Life-Saving Coronavirus Drugs,” Fox News, March 13, 2020, https://www.foxnews.com/world/chinese-deny-americans-coronavirus-drugs (accessed February 25, 2023). 7. Jim Garamone, “Trump Announces New Whole-of-Government National Security Strategy,” U.S. Department of Defense, December 18, 2017, https://www.defense.gov/News/News-Stories/Article/Article/1399392/ trump-announces-new-whole-of-government-national-security-strategy/ (accessed February 26, 2023). Emphasis added. 8. “Remarks by President Trump in State of the Union Address,” The White House, February 5, 2019, https:// trumpwhitehouse.archives.gov/briefings-statements/remarks-president-trump-state-union-address-2/ (accessed February 25, 2023). 9. White House Office of Trade and Manufacturing Policy, The United States Reciprocal Trade Act: Estimated Job & Trade Deficit Effects, May 2019, https://www.wsj.com/public/resources/documents/RTAReport. pdf?mod=article_inline (accessed February 26, 2023); United Nations Conference on Trade and Development, “Trade Analysis Information System,” https://databank.worldbank.org/source/unctad-%5E-trade-analysis- information-system-(trains) (accessed February 26, 2023); Trefor Moss, “China to Cut Import Tariff on Autos to 15% from 25%,” The Wall Street Journal, updated May 22, 2018, https://www.wsj.com/articles/ china-to-cut-import-tariff-on-autos-to-15-from-25-1526980760 (accessed February 26, 2023); U.S. International Trade Commission, Harmonized Tariff Schedule (2019 Revision 3), https://hts.usitc.gov/view/ release?release=2019HTSAREV3 (accessed February 26, 2023). 10. This code is commonly used to determine customs duty classifications for goods internationally. 11. White House Office of Trade and Manufacturing Policy, The United States Reciprocal Trade Act: Estimated Job & Trade Deficit Effects, p. 15. 12. H.R.764, United States Reciprocal Trade Act, 116th Congress, introduced January 24, 2019, https://www. congress.gov/116/bills/hr764/BILLS-116hr764ih.pdf (accessed February 26, 2023). 13. Harvard Center for American Political Studies and Harris Poll, “Monthly Harvard–Harris Poll: February 2019,” https://harvardharrispoll.com/wp-content/uploads/2019/02/HHP_Feb2019_RV_topline.pdf (accessed February 26, 2023).